Toronto's Property Paradox: Detached Dreams vs. Condo Conundrum
The once-feverish Toronto property market is experiencing a significant recalibration, presenting a curious dichotomy between its detached housing segment and the burgeoning condominium apartment sector. While both markets are trending towards a more buyer-friendly environment, their current states reveal distinct opportunities and challenges for prospective homeowners and investors.
The Detached Dilemma: A Shift in Equilibrium
For years, the detached house in Toronto was a symbol of aspirational ownership, often commanding bidding wars and relentless price appreciation. Today, the narrative has subtly shifted. The market for detached homes, while still favouring sellers, is exhibiting clear signs of moving towards a more balanced state, offering a nascent window of opportunity for discerning buyers.
Evidence of this shift is abundant. Months of inventory, a critical indicator of market balance, have surged by a remarkable 59% year-on-year, rising from 2.9 to 4.6 months. This influx of available properties signals improved choice for buyers, diminishing the fierce competition that characterized previous years.
Concurrently, purchase demand has contracted by 7%, while the supply of active listings has swelled by a substantial 48%. This divergence in supply and demand dynamics is undeniably working in favour of those seeking to acquire a detached home.
Price trends further underscore this rebalancing. The benchmark detached house price, currently standing at $1,322,400, has seen a modest 4% decline over the past three months, offering a slight reprieve for buyers. The median price, at $1,230,000, has remained flat, suggesting a stabilization rather than a freefall, but nonetheless a pause in the relentless upward trajectory. This implies that while sellers still hold some leverage, they are increasingly compelled to temper their expectations.
The Condo Kaleidoscope: A Buyer's Bazaar
In stark contrast, the condominium apartment market has firmly entered a buyer's domain. Here, the upper hand in negotiations has decisively shifted to purchasers, making it a potentially opportune time for those eyeing a smaller footprint in Canada's largest city.
The statistics paint a clear picture of improved supply and flagging demand. Months of inventory for condo apartments have soared by an even more dramatic 69% compared to last year, reaching 7.1 months from 4.2. This substantial increase indicates a considerable selection of available units, granting buyers time and leverage to negotiate. Purchase demand has plummeted by 24%, a far steeper decline than seen in the detached market, while active listings have risen by 29%.
The pricing in the condo market reflects this buyer advantage. The benchmark condo apartment price, at $593,200, has remained flat over the past three months, while the median price, at $595,000, has dipped by a modest 2% in favour of buyers. This suggests that while prices aren't crashing, they are certainly not appreciating, and sellers are more likely to entertain offers below asking.
The Economic Undercurrents
So, why are detached homes and condos behaving so differently? It boils down to a few big economic forces:
Moderately high interest rates: In simple terms, borrowing money to buy a home is more expensive now than it was in the previous decade. While rates aren’t at historic highs, people have become accustomed to much lower rates, and it will take time for the market to adjust to “normal” rates. The current rates have cooled down enthusiasm for buying across the board.
Investor participation: Higher rates and lower rents hit the condo market harder because condos often attract investors, who don’t need to buy property and are more sensitive to the amount of their mortgage payments and the ability of rents to cover monthly expenses.
Economic uncertainty: Concerns about the economy, partly due to global trade disputes and changes in immigration policies, are prompting people to think twice before making a home purchase.
Even though Toronto remains a desirable city with lots to offer, people are being more careful with their money right now.
A Tale of Two Markets: Strategic Implications
If you're thinking about buying a home in Toronto, the current market offers different paths depending on what you're looking for:
For those seeking a detached house: If you have the financial means and prefer a detached home, now may be a smart time to buy. Sellers are no longer in complete control, meaning you have more room to negotiate. With more homes available and slightly lower prices, the buying process should feel less rushed, and you might get a better deal than in recent years.
For those considering a condo: The condo market is clearly in favour of buyers right now. With many more condos for sale and fewer people looking to buy, you have a strong position to negotiate. This means you could potentially get better deals or even buy a condo for less than the advertised price. This is especially good news for individuals buying their first home or investors seeking a more affordable way to enter the Toronto market.
In both cases, there is a risk that prices could continue to fall throughout 2025, so waiting may offer advantages. However, it isn't easy to time the market, so making a move and negotiating a good deal today will be the right choice for some people.
Overall, Toronto's housing market is changing. This isn’t a market with soaring prices and bidding wars. This period presents unique opportunities if you're ready to understand its various components. The key question for anyone looking to buy isn't just "Is it a good time to buy?" but rather, "Which part of the market fits my budget and my long-term goals?" Your decision will depend on how much risk you're willing to take and how well you time your purchase.
Many developers are offering deals and discounts for new build apartments.
Read our article: Canada's Developers Offer Unprecedented Perks Amidst Market Shift
