Is Seller’s Market Back in 2024?

What are the numbers telling us?

The residential real estate market has been undergoing a surge since the onset of 2024, particularly after the interest rate hold announcement. Prices are rising rapidly, marking the end of almost two years of price decline that the GTA real estate market experienced since March 2022. It appears that a seller’s market might be making a robust comeback.

In fact, from January 2023 to May 2023, GTA home prices did start to increase, and it seemed that the bottom of the real estate cycle had come to an end in December 2022. However, this was akin to a bear market rally (stock market), with prices initially increasing, followed by consecutive interest rate hikes, leading to a market downturn. This prompted many prospective homebuyers to adopt a wait-and-see approach, anticipating interest rates to decrease.

However, come 2024, buyer confidence has rebounded. The USA’s commitment to reducing interest rates three times in 2024 has bolstered optimism among buyers, with expectations for similar rate cuts in Canada.

While the reported January average GTA home price is still low as seen in the chart below, the number of home sales is higher compared to the previous month (Dec) and Jan 2023. The observations made in this blog post are based on our experience and the market activity our team has witnessed and experienced in the last two weeks.

Growing buyer confidence

Since January, many buyers have rushed into the market all at once, making the limited number of homes for sale even scarcer. It looks like the real estate market is starting a new cycle. Like all markets, it has its ups and downs, and it seems we could be heading towards a high point, unless there are adverse geo-political events or interest rates go up again.

In the Greater Toronto Area (GTA), there aren’t enough homes available, and policymakers haven’t fixed this problem yet. If interest rates don’t go up further and nothing big changes in the economy or global events, it’s likely that the GTA real estate prices will go up.

Our Team has been actively assisting buyers from across the GTA, spanning from Whitby to Hamilton, Mississauga to Vaughan, and beyond, all working within the current market opportunities and limitations.

GTA Monthly Statistics as per TRREB Reports
 Avg. PriceHome Sales
 20212022202320242021202220232024
January$966K$1,242K$1,036K (BOTTOM)$1,026K6,8875,5933,0834,223
February$1,044K$1,334K (PEAK)$1,096K10,9259,0284,754
March$1,097K$1,298K$1,108K15,62710,8646,876
April$1,090K$1,250K$1,153K13,6137,9417,501
May$1,108K$1,210K$1,195K11,9027,2298,997
June$1,089K$1,145K$1,182K11,0526,4247,481
July$1,061K$1,073K$1,118K9,3384,8715,250
August$1,070K$1,079K$1,082K8,5505,5915,281
September$1,135K$1,086K$1,119K9,0105,0084,642
October$1,155K$1,087K$1,125K9,7434,9304,646
November$1,162K$1,079K$1,082K8,9794,5344,236
December$1,157K$1,051K$1,084K6,0133,1173,444
Annual$1,095K$1,190K$1,126K121,63975,04765,936

Multiple offer scenarios are back with a vengeance

Just last week, we had submitted an offer for a home in Whitby, where 20 offers were on the table. There was even a news report on CTV highlighting Mississauga home that received an astonishing 85 offers due to its incredibly low-price strategy in order to attract multiple bids.

While the latter case is an outlier, it’s not uncommon to see 15-20 offers on good homes in the current market where the sellers have priced low to attract multiple-bids. Many sellers are deliberately pricing their properties $50K-$100K below their expectations to gauge the market’s response, hoping for offers well exceeding the asking price.

Just last night, while representing our clients, we submitted an offer on a home in Mississauga. With 25 offers on the table, the home was eventually sold to the buyer who submitted a firm offer.

The importance of home pricing strategy

While pricing a property low to generate interest and stimulate multiple offers is understandable, pricing it well below its realistic value can be counterproductive. Sellers may end up receiving offers that fall short of their expectations, prompting them to reconsider their pricing strategy and relist the property for sale.

Throughout my real estate career, I’ve consistently emphasized the critical role of pricing strategy when listing a home for sale, irrespective of the prevailing market conditions.

Why are buyers submitting firm offers?

Firm offers give buyers the best chance of securing the property, especially in competitive situations with multiple offers. Sellers prioritize the highest price, a strong deposit, and their preferred closing date. Getting a firm offer is like the icing on the cake.

When the listing realtor informs all the bidding realtors on the date of offer presentation that the property is “Sold Firm,” it means that the buyer didn’t include financing, home inspection, or any other conditions.

Is submitting a firm offer wise?

Removing financing conditions isn’t too risky with pre-approved buyers, assuming the purchase price is reasonable. However, in instances where buyers submit an offer well above the asking price and if the bank’s appraisal yields a value lower than your agreed purchase price, the bank will only provide a mortgage based on the appraised value.

For instance, if you’ve agreed to buy a home for $900,000, but the appraisal values it at $850,000, the bank will fund only up to $850,000. Consequently, if you wish to proceed with the purchase, you will have to find a way to fund the difference of $50,000 or come up with a larger down payment, not to mention having to cover other home buying expenses.

Sound guidance on pricing is crucial in such situations. At Team Kalia, we pride ourselves on providing the best advice based on our experience of working in different market conditions.

Implications of waiving home inspection

In the frenzied seller’s market of 2020-2021, many home inspectors left their profession but returned in 2022-2023 when the market had cooled off. During the peak market, most buyers opted for firm offers, while some chose to conduct the home inspection after the purchase to identify any property deficiencies. Some smart home sellers opted for pre-listing home inspections, providing buyers with a level of confidence when submitting firm offers.

Now it appears that the same market conditions of 2020-2021 could return once more.

Will prices continue to climb in 2024?

Returning to the scenario of 25 offers on a home in Mississauga, the unsuccessful bidders (24) are likely to transition to the next property, creating similar competition, if the listing is appealing. The sold price of the initial house serves as a benchmark, influencing the upward movement of prices in the street, neighbourhood, town or city and ultimately the larger GTA market. And of course, condos are expected to follow suit in terms of price increases.

While the assumption is that interest rates will remain stable or decrease, proceeding cautiously with your home purchase is essential. Predicting the market can be uncertain, and at Team Kalia, we always advise our buyers to proceed prudently with their home or condo purchase in the GTA.

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