The GTA new home market kept cooling in July 2024, and condos took the hardest hit. The Building Industry and Land Development Association (BILD) has released its July 2024 report on the Greater Toronto Area (GTA). High interest rates are taking a toll on sales. Still, inflation is now at its lowest in years. So there is cautious optimism that further rate cuts by the Bank of Canada (BOC) could revive consumer confidence.
This post was first published in January 2025. The figures below come from BILD’s July 2024 report.
High Interest Rates and the GTA New Home Market
The July 2024 report shows a clear decline in both new single-family homes and new condominium apartments. However, condos saw a much steeper drop. High interest rates, which have lasted over the past year, are a primary factor behind this downturn.
Why do rates hit new homes so hard? Buyers of new homes often sign years before they close. So they must feel sure they can qualify for a mortgage later. When borrowing costs stay high, many buyers simply wait. Investors, who are active in the new condo market, also find the numbers harder to make work.
New Condominium Apartments: A Sector in Decline
Condo sales took a significant hit in the GTA new home market. July sales were down 67% from the prior year, at just 287 units. Year-to-date figures were just as weak, with sales down 60% to 3,379 units. Meanwhile, the remaining inventory of condos grew to 17,445 units, a sign of significant oversupply.
The benchmark price for new condominiums also fell 6.0% from the prior year, to $1,020,179. This price drop may look attractive to buyers. Yet it also reflects the wider challenges in the condo market, as high borrowing costs keep deterring buyers.
New Single-Family Homes: Modest Declines Amid High Hopes
Single-family homes fared slightly better in the GTA new home market, though they also declined. July sales were down 1% from the prior year, with 367 units sold. Year-to-date sales dropped 15% to 3,326 units. Inventory for single-family homes remains substantial at 4,215 units.
The benchmark price for new single-family homes also fell, down 5% from the previous year to $1,585,881. These figures point to a cooling market. Even so, the decline is much milder than in the condo sector. That suggests single-family homes remain relatively more resilient.
Looking Ahead: Rate Cuts and the GTA New Home Market
Inflation is now within the BOC’s benchmark range at 2.5%. As a result, many expect the BOC to announce further rate cuts on Wednesday, September 4, 2024. Such cuts would continue the downward trend in borrowing costs and could revive consumer confidence in real estate. (The Bank did cut on that date. You can read about it in my post on the September 2024 rate cut to 4.25%.)
For condos, which high rates hit hardest, these cuts could be a turning point. Lower rates would make financing easier to get. In turn, that could reduce the oversupply and help stabilize prices. However, it will take time for any rate cut to work its way through the market. Single-family homes could also benefit. Lower borrowing costs could bring more buyers back and help absorb the existing inventory. You can follow the Bank’s decisions on the Bank of Canada website.
What the Report Means for Buyers and Sellers
The July 2024 report shows the strain that high interest rates put on the GTA new home market, especially condos. Still, with inflation under control and more rate cuts in view, there is cautious hope for a rebound in the coming months.
For buyers, these conditions may offer a chance to buy at lower prices, especially if rates begin to fall. Compare builders, check deposit terms and read the agreement with a lawyer. For sellers, rate cuts could help lift demand, so now is a good time to prepare for a possible rebound. If you are weighing your options, see my post on condo or townhouse for first-time buyers and my earlier look at frozen Toronto-area new home sales. As we wait for the BOC’s next move, the market remains in flux, with both challenges and opportunities ahead.
Talk to a Mississauga Real Estate Agent
Do you have questions about new construction, condos or buying a home in Mississauga, or about buying or selling a home in Mississauga? I am always glad to help. You can send me a message here or call me at 416 908 5600. If this post helped you, a Google review is always welcome. A. Q. Mufti, Sales Representative, RE/MAX Real Estate Centre Inc., Brokerage
Disclaimer: this article was published on 17 January 2025 and reflects the information available at that time. Interest rates, prices, and government programs change, so check the current position before acting on anything here. It is provided for information only and is not financial, mortgage, tax or legal advice. A. Q. Mufti is a registered Sales Representative with RE/MAX Real Estate Centre Inc., Brokerage, Ontario, Canada.
