Toronto's real estate market sees a rebound in January as challenges persist

Last month, Toronto's real estate market decided to give the illusion of a comeback, with sales picking up compared to the ghost town vibes of January 2023.

I expect this theme to continue for most of 2024. Given that 2023 was a record low year, every month of 2024 could look like a big improvement on a year-over-year basis.

The real estate industry no doubt holds these annual data points for high valuations, but it's also important to look at the monthly context to establish a trend.

Monthly context

Most importantly, the price dropped from December to January, which is very rare. According to X on GTA realtor Vasily Staikov, this has happened twice (2009 and 2019) in the last 16 years. His analysis shows that we typically start the year with an average price increase of about 2 percent.

Let's identify two key facts for context as we look at the key trends ahead:

1. December was relatively strong and saw a very atypical jump in price and sales volume from November.

2. 2023 was a very weak year for price growth and sales volume, resulting in a 23-year record low for sales.

Looking at the annual context, things may look good throughout the year. But what happened since last month? Let's take a look.

New listings

New listings go up from December to January. This is a common trend given that most listings expire on December 31st and are often relisted in January.

Listing growth in January is slightly higher than last year:

Source: DoorInsight.com/GTA-real-estate

Sales

Sales numbers are up about 10-16 percent across the GTA, typical from December to January:

Source: DoorInsight.com/GTA-real-estate

Relationship to sales and inventory

After a big jump in December, sales to new listings fell. The market showed signs of returning to a seller's market towards the end of the year, but since 2024, supply has slightly exceeded demand, so we are back in balanced market territory.

This oversupply may be the result of relistings, so we'll have to wait until the spring market is in full swing to understand the market balance:

Source: DoorInsight.com/GTA-real-estate

Days on Market (DOM)

The DOM continues its upward trend, with listings spending more time on the market than in the last three years. If this trend continues, it could predict a more balanced or spring market that will turn in buyers' favor as new listings can begin to accumulate against a period of slow absorption.

This seems to suit a cautious buyer re-entering the market from the sidelines after a volatile few years in GTA real estate:

Source: DoorInsight.com/GTA-real-estate

Price

Average prices fell from December to January in all GTA markets except Durham, while average prices in Toronto, Halton and York fell from the previous month and rose in Durham and Peel:

Source: DoorInsight.com/GTA-real-estate

Ratio of sales to list price

In December, the sales-to-list price ratio tightened to the 98-99 percent range from 95-98 percent.

This is consistent with industry anecdotal evidence that we see a few increases in bids, but not a significant increase in bids over the asking price:

Source: DoorInsight.com/GTA-real-estate