Factors affecting Toronto Real Estate in 2024

Rising Living Expenses, Property Values, and Taxes Trigger Migration

Navigating the Toronto Housing Market in 2024

In the hustle and bustle of the Toronto housing market, the final quarter of 2023 witnessed a flurry of activity, particularly in the luxury price points. The anticipation surrounding upcoming changes to the city’s 2024 land transfer taxes fueled this surge. As of January 1, 2024, an expanded Municipal Land Transfer Tax threshold took effect in the City of Toronto, for homes valued at $3 million or more, and that have a maximum of two single-family residences. The new levy starts at 3.5% of the home’s value, and ranges up to 7.5% for homes valued at $20 million and above.

Let’s delve into the key highlights and insights shaping the market landscape.

Current Market Trends

Sales in the GTA are now pacing on par or slightly ahead of last year’s figures. Despite this, economic uncertainties and soaring interest rates have left many potential buyers on the fence. The Bank of Canada (BOC) has maintained a steady stance on rates since its July 2023 hike, but inflationary pressures persist, presenting a formidable challenge for the central bank. Nevertheless, indications suggest that quantitative tightening may soon ease, with some economists forecasting a downward trajectory in rates by mid-year.

Spring Market Anticipation

The promise of reduced rates in the near future has ignited anticipation for an active spring market. Move-up buyers, buoyed by substantial equity gains over the past decade, are expected to lead the charge.

Challenges for First-Time Buyers

While seasoned buyers may find themselves in an advantageous position, first-time buyers continue to face hurdles in entering the market. Tight inventory levels, particularly in the entry-level price range of $500,000 to $1,000,000, coupled with stringent government stress tests, pose significant barriers to ownership. Many aspiring homeowners find themselves unable to qualify for mortgages at prevailing rates, further exacerbated by additional stress test requirements.

Regional Dynamics and Lifestyle Preferences

The allure of Toronto’s 416 area code remains strong, particularly among younger buyers seeking proximity to urban amenities. In recent months, employers are mandating return to workplace. This is making people return to Toronto from neighbouring suburbs. The imposition of additional municipal land transfer taxes has done little to deter this demographic. However, for those prioritizing affordability and family-friendly environments, the 905 area code presents a compelling alternative. The rise of hybrid workplaces has facilitated residential relocations to areas beyond the city core, with commuting becoming more manageable.

Renovation as an Alternative

For existing homeowners in the city core, the prospect of relocation comes with significant expenses, including municipal and provincial land transfer taxes. As a result, many are opting for renovations to enhance property value. Upgrading homes with cosmetic improvements to kitchens, bathrooms, and flooring offers a cost-effective strategy to add value over time, albeit with its own set of challenges.

Taxation and Affordability Concerns

Discussions surrounding property tax hikes underscore the broader issue of rising living costs and urban stagnation. Unfair taxes hurt vulnerable homeowners, especially older people living on fixed incomes. While taxation alone may not dissuade buyers, it does pose challenges, particularly at entry-level price points. Despite existing rebates for first-time buyers, the availability of affordable properties remains limited, with the majority falling below the $400,000 threshold consisting of parking spaces, lockers, and vacant land.

Shifting Migration Patterns

The affordability conundrum in Ontario’s housing market is driving migration patterns, with an increasing number of individuals exploring options outside the GTA. Statistics Canada data indicates a net decline in interprovincial migration, offset partially by immigration and non-permanent residency. High housing values and taxation levels are compelling factors prompting residents to seek alternatives in other regions of the country.

In summary, factors affecting the Toronto real estate market in 2024 are influenced by various economic factors, rules, and changing buyer preferences. To address these challenges, it’s crucial for the government to find new solutions that make housing more affordable and support long-term growth.

Outlook for Mississauga Housing Market in 2024

The Mississauga real estate market has witnessed significant shifts and trends over the past few years, and as we step into 2024, it’s crucial to analyze the current real estate landscape and forecast what lies ahead for prospective buyers and sellers alike.

Market Performance

Between 2022 and 2023, the Mississauga housing market experienced a 5.5% decrease in the average sale price, dropping from $1,130,192 in 2022 to $1,068,367 in 2023. Simultaneously, the number of sales saw a notable decline of 16.8%, from 6,176 transactions in 2022 to 5,137 in 2023. However, looking forward to 2024, experts anticipate a stabilization in average sales prices across all property types, while the number of sales is projected to increase by 20%. Moreover, the market is expected to transition from a buyer’s market to a more balanced one this year.

Desirable Neighbourhoods

In 2024, certain neighbourhoods are expected to stand out as particularly desirable in Mississauga, with City Centre, Hurontario, and Erin Mills topping the list. These areas offer a blend of amenities, accessibility, and lifestyle options that attract both buyers and investors.

Trends in Property Types

Condominiums are poised to be in high demand due to their affordability, especially with an influx of newcomers both immigrants and emigrants seeking budget-friendly housing options amidst rising living costs. Additionally, some buyers are exploring duplexes and triplexes as viable options to potentially offset mortgage payments by renting out additional units.

Despite condominium prices stabilizing at a three-year low, first-time homebuyers remain cautious, primarily due to the prevailing high-interest rates, which have led to a delay in their entry into the market. However, this cautious approach is expected to fuel increased demand in the coming months.

Key Considerations for Buyers

Buyers in the Mississauga region prioritize access to public transportation, amenities, and public services when making their purchasing decisions. These factors play a crucial role in determining the desirability of a neighbourhood and ultimately influence the final purchase decision.

Insights

The Mississauga region continues to attract a diverse range of buyers, including first-time buyers, move-up buyers, newcomers, and emigrants. The affordability of entry prices combined with ample supply makes it an appealing destination for homebuyers. However, the impact of higher interest rates remains a significant factor affecting the market dynamics in Mississauga, aligning with broader trends observed across Canada.

Top Trends for 2024

1. Shift to balanced market conditions.
2. Increased demand for condominiums due to affordability.
3. Interest in duplexes and triplexes to offset mortgage payments.
4. Luxury segment attracting a boomer audience, particularly in Lorne Park.
5. Delays in new development projects due to supply chain and labour issues.

As we navigate through 2024, staying informed about these trends and market dynamics will be crucial for making informed real estate decisions in the Mississauga area. Whether buying, selling, or investing, understanding the nuances of the local market will be key to achieving success in real estate endeavors.

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