October has brought some eye-opening statistics to Toronto’s real estate landscape. With sales declining by 5.8 percent compared to the same month last year, it’s clear that the region has experienced one of its lowest October home sales figures in history. This decrease in sales is a clear indicator that the Toronto real estate market is currently in a state of recession.
In addition to the slump in sales, we’ve observed a significant increase in available inventory. Monthly new listings have surged by 38 percent compared to October of the previous year, which aligns with the long-term average.
Active listings have surpassed the long-term average by a significant margin, with a whopping 50.1 percent increase in October compared to the same month in 2022. This surge in listings suggests that the market is not absorbing the available supply, leading sellers to leave their listings on the market. If this trend continues, the market could shift further in favor of buyers during the winter months.
The combination of increased supply and reduced demand has firmly placed the Toronto real estate market in the realm of a buyer’s market, as indicated by both the months of inventory and the sales-to-new-listings ratio.
Although there has been a significant shift in market dynamics, house prices have remained relatively stable and have stayed above the long-term trendline. This suggests that, for now, buyers have not entirely dictated the price discovery process in Toronto’s real estate market as it transitions into the slower winter season.
Only time will reveal whether the market will return to the long-term trendline, but it’s not unreasonable to expect the market to trade sideways for the foreseeable future, gradually aligning with the trendline over the course of several years. After all, the last major housing cycle in Canadian real estate during the 1990s also saw a period of sideways movement lasting 2-3 years once the market had hit its “bottom.”