What will Toronto's spring housing market look like? Experts say first-time buyers are back - and prices could jump 6% this year

• By Kayla Wallingham
• Posted Monday, Mar 18, 2024 12:24 pm

What will Toronto's spring housing market look like? Experts say first-time buyers are back - and prices could jump 6% this year

'It's a return to more historical norms' with sales expected to resemble 2019 levels, experts say.

Over the past several weeks Toronto-based realtor Grace Chan has suddenly received calls from people she tried to help two years ago: first-time homebuyers.

It's a segment of the market that was noticeably absent last year, having called off their search as prices soared during the height of the pandemic. Now that the market has settled — as prices and interest rates have stabilized — first-time buyers are eager to jump back in.

"There are people who I've been in touch with over the last two years and were looking when the market was hot," she said. "But now they feel more secure in the purchase with the uncertainty during COVID subsided." 

Sales typically pick up during the spring market, and experts say the number of sales this spring will likely resemble 2019-levels, not the pandemic highs of 2021 and 2022. It's a forecast that can partially be explained by who is and isn't taking part — over-leveraged investors are now sitting on the sidelines while first-time homebuyers have returned, lured by a resurgence of new listings and the promise of an expectant interest rate cut.

"In 2023, the segment of buyers missing were first-time homebuyers," said Phil Soper, CEO and president of Royal LePage. "Now they're more capable of entering the market. And the group of buyers who are waiting for interest rates to drop is declining more and more as each day passes. Activity is good, but it's not ridiculously good. It's not what we saw in 2021 and 2022 where people came out in droves.

"It's a return to more historical norms."

Homes that go up for sale in desirable neighbourhoods such as the Annex or Leslieville continue to sell quickly, Chan said, and new listings are flooding the market as sellers finally see renewed interest compared to last year, which had the lowest number of sales in more than 20 years. 

"More units are entering the market, there's more choice for buyers," Chan said, "but people are still being careful. There's still uncertainty around when interest rates will drop." 

The one area that may catch fire is the preconstruction condo market. While freehold properties continue to perform well in the city, with some even attracting bidding wars, the condo market continues to find its footing with trouble ahead for preconstruction units as appraisals come up short. It could result in hundreds of marked-down units entering the market leading to a buying frenzy down the road. 

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