Predicting the GTA Real Estate market has been a fools game in the last few years, mainly due to things out of the ordinary happening, like a pandemic that created at first total meltdown, then an unexpected real estate boom nobody expected. 

This was then followed by sky high inflation and ever increasing interest rates to cool an over heat  we dads as  economy, especially in the food and housing sectors. During this time we also saw a massive increase in small investors using home equity to buy rental properties. 

So whilst I’m going to make a prediction for the 2024 GTA Real Estate Market, it’s based on what I can see and know today and is subject to change if forces outside of our control occur. 

Canadian Economy

So firstly let’s look and the economy as a whole.  We have seen interest rates rise faster and higher than we have seen since the 1970’s.  Whilst the BOC rate is sitting at a hefty 5% compared to the 0.25% we were at for most of the last few years, it’s still far from being close to the rates we have seen in the past. 

Whilst the rates have seen some homeowners struggle, most of this increase was built into the lending system by the introduction of the Stress Test in 2017. This meant lenders had to account for higher rates in what they were allowed to lend to new mortgages. This meant whilst many people had to adjust their spending habits, they could do so and continue to make their payments.  Which is why we’re seeing very low delinquency rates in mortgages. 

We are now seeing inflation becoming under control, whilst the more tricky core inflation is also getting close to the Bank Of Canadas  target rate of 2%. This is the number that’s really being managed by the recent rate hikes. 

One good move the government has recently made is to allow current homeowners who are renewing their mortgage to no longer have to pass the stress test again, and more importantly allow them to shop around for the best rates. Previous banks had you over a barrel as many owners wouldn’t qualify and just had to accept whatever their current bank was offering.  So while we may see some home owners struggle as they more options for renewing and financing and have access to longer amortization times to wait for lower interest rates to come, as they are predicted to do by as early as this spring. 

https://nationalpost.com/news/canada-mortgage-stress-test

So whilst we have seen a slowing of the Canadian economy, we may even be in recession at this point. This has all been done to slow the economy and return is to more stable time. With job numbers still strong and a rising population, the Canadian economy looks well set going forward with no foreseeable large bumps in the road. 

GTA Real Estate Market

We have seen and up and down year in 2023. The year started off with a jump, sales and prices rose and by late Spring prices had increased by an average of 17%. 

Then came the new round of rate hikes, which took all of the heat out of the market and saw prices soften and sales slow until the last month of the year where we saw a mini rally in some areas as inventory dropped. 

One of the main indicators of the market is the HPI or home price indicator, which saw a small drop towards the negative in the last part of the year.  However it’s predicted to rise to 2% by the end of 2024. With prices generally holding to 2022 prices, but interest rates being significantly higher, affordability has still been difficult to many first time home buyers.  Which has caused many to sit out and wait in the hope that market forces will benefit them, which has always been a very risky strategy that almost never pays off. 

Whilst rental rates have slowed slightly towards the end of the month, this is likely just a pause and we will continue to see added pressure on renters affordability as we go through 2024, with competition and demand likely remaining high. 

Investors were also a key to the rise for demand in homes as small investors jumped in as they saw the chance to make significant profits.  Many of these were first time investors. 

2024 Prediction 

Economy 

With an increase in students, immigration on the rise and lower interest rates the economy looks in good shape to rebound swiftly.

Interest rates. 

They look set to drop in 2024, with a strong prediction of them going lower by as much as 1.5% by year end 2024.

One caveat to this, we are heavily reliant on the USA economy and their rate changes.  They have not seen as much pressure on homeowners as we have here as they were able to lock in rates for as long as 30 years at the record low pandemic rates. So they don’t have the renewal rate issues we have experienced here. 

So their economy is still running hot, and until it cools they may not feel the need to lower rate’s to compensate. If that’s the case the BOC will be under pressure to keep rates close to the USA lending rates as we will see a return to inflation on imports and we may be back to square one.  As they enter an election year we should keep a close eye on our neighbours, as their actions will dictate ours. 

Investors 

Many of the small investors will continue to see little value in buying. The numbers simply don’t work for many right now so they will seek better opportunities or timing. 

Rental Market

Their will be some easing on supply as more condo projects are completed in 2024, but this will likely be eaten up by international students, new comers to Canada and in some areas a return to the office for some as more and more return to full time or increased part time office hours, which may see a return to the GTA as they have to move back.  We may see a reduction on demand though as buyers jump back into a recovering market. With rents now reaching the same cost as home ownership. 

Home prices

There are many market indicators that the GTA Real Estate market will rebound strongly in 2024.  Even though 2023 ended on a whimper, inventory levels have dropped dramatically from October and we will see this causing pressure on prices as we go through the year. I believe we will see more and more buyers come back as affordability improves with steady prices and potentially lower interest rates. 

Anything close to a 3-5% gain should be expected by year end, possible peaking in the late Spring or early summer, especially if rates drop and inventory stays stable.  This will mean we have a healthy GTA real estate market in 2024 with positive growth.  Over that amount and we risk going back into bubble territory and a rising of interest rates increasing to compensate. much like 2023.

Any lower and this will be because more homes have hit the market as owners and investors can’t afford their mortgages. 

With small investors continuing to sit out they will have little impact on the market. Whilst speculative buyers will always exist, many will see other avenues for a ROI in other areas. 

Summary

I believe we will see a return to more ‘normal’ and healthier real estate market. With modest and reasonable gains in equity and a lot less speculation and bubble pricing.  However, let's be clear, this will almost certainly not be a record setting year for sales and prices.

With smart buyers often able to secure a home without facing too much competition and negotiation a good deal for themselves without having to pay over the odds for a GTA Property it may be time to consider your next move.

If you’re ready to get started to buy your next home, our team of experts are here to help you achieve your real estate goals.