Ontario Real Estate 2024: A Year in Review

These are the numbers with which Ontario real estate closed in 2024. On a month-over-month basis, they reflect the typical slowdown expected during the winter market. However, when compared year-over-year with 2023, the numbers show significant improvement.

This improvement can be attributed to 2024 being a year of stabilisation for the Ontario housing market—not only in terms of housing statistics but also in areas like interest rates, inflation, GDP, and policies. While 2024 began with a 5.00% policy rate that slowed demand and led to cautious buyer behaviour, 2025 has started more optimistically. The current policy rate of 3.25%—the lowest since September 2022—combined with new mortgage laws that enhance the purchasing power of aspiring homebuyers positions 2025 as a much brighter year for the market.

UNIT SALES 2023-2024

The graph above shows that 2024 began with significantly higher unit sales in January than 2023. This upward trend continued into February 2024. However, starting in March, the gap between the two years began to narrow, and by the end of May 2023, sales had surpassed 2024—a pattern that persisted through June.

Beginning in July 2024, sales started to regain momentum, and by October 2024, unit sales peaked. In fact, since July, transaction levels have consistently remained above those of 2023. This shift can be attributed to rate cuts introduced by the Bank of Canada. July 2024 marked the first reduction, with a 0.25 basis point cut.

Overall, 2024 saw 5% more properties sold than 2023, primarily driven by increased activity between September and December following the Bank of Canada’s third rate cut in September.

LISTINGS 2023-2024

The story is slightly different when it comes to listings. Except for January and August, there were more listings in 2024 compared to 2023, with a peak in October and November. Ontario saw 346,000 listings in 2024—53,000 more than in 2023.

This increase was likely driven by speculation of a surge in buyer activity, as policy rates had already dropped to 3.75%. Additionally, CIBC became the first bank to reduce its five-year fixed mortgage rate to 3.99%, further fueling market optimism.

HOME PRICE 2023-2024

It follows the natural order of economics: prices tend to fall when demand is low, but supply is high. This was the case with home prices in 2024. From January to March, home prices in 2024 were higher than in 2023. However, starting in April, there was a notable shift.

Throughout 2024, home prices experienced multiple fluctuations, though they never reached the levels seen in 2023, except in October and November, where the difference narrowed to just $4,000 to $5,000. Due to the high volume of listings, home prices in 2024 remain 1.45% lower than in 2023, declining from $902,983 to $889,847. This ongoing decline reflects the persistent downward pressure on prices since the start of the year.

ONTARIO’S TOP PERFORMING CITIES

Of Ontario's top 25 cities (ranked by population, price growth, and annual home sales), 15 cities experienced an upward trend in home prices in 2024. North York had the smallest increase, with a modest 0.8% growth, while Whitby led the pack with an impressive 15.1% growth rate.

If you’re an investor exploring opportunities in 2025, monitor the top three cities for price growth and investment potential.

OUTLOOK FOR 2025

The Factors

“The year 2024 marked a significant improvement for the Ontario housing market compared to 2023. It was a stabilisation period, and I firmly believe the market is now in a much stronger position. With factors like inflation and interest rates at more favourable benchmarks, the Ontario housing market in 2025 is poised for even greater promise." -Manoj Karatha, broker of record at The Canadian Home.

As of November 2024, the inflation rate stands at 1.9%, slightly below the Bank of Canada's target of 2%. According to the Bank's projections, this rate is expected to hold steady through 2025, creating an environment where further interest rate cuts are highly likely.

Canada’s GDP also demonstrated resilience in 2024 and is anticipated to maintain moderate growth in 2025. The Royal Bank of Canada predicts GDP growth of approximately 1.1% for the year, a more measured pace than previous years but indicative of ongoing economic stability.

However, unemployment remains a pressing concern. In 2024, Canada's unemployment rate rose significantly to 6.3%, which places Canada with the third-highest unemployment rate among G7 nations and seventh among G20 countries. The Bank of Canada and the federal government are actively working on strategies to address this issue. Economists at the Royal Bank of Canada forecast that unemployment will continue to rise through the first three quarters of 2025 before experiencing a decline in the final quarter.

Market Activity in 2025

"With the Bank of Canada lowering the key interest rate by 1.75% in 2024, it’s highly likely that this year’s spring rush will start earlier than usual. From a home-buying perspective, the conditions are highly favourable, encouraging many prospective buyers to act."
—Robin Cherian, CEO of The Canadian Home

The majority of experts echo Robin Cherian’s optimism. Given the current inflation numbers, the probability of further rate cuts remains high. Additionally, new mortgage laws have significantly enhanced aspiring homeowners' buying power, creating one of the most supportive environments for homebuyers in recent years.

THE BOTTOM LINE

As we enter 2025, the housing market is poised for gradual growth, supported by stabilising interest rates and improving economic conditions. With new initiatives aimed at affordable housing and incentives for first-time buyers, demand will likely rise, especially in suburban and mid-sized urban regions. However, persistent challenges, including housing supply shortages and regional disparities, will significantly shape the market’s trajectory.

While the outlook remains optimistic, addressing these challenges will be crucial to ensuring a balanced and sustainable housing market in the years to come. For buyers, sellers, and industry stakeholders, 2025 represents a year of cautious opportunity and strategic decision-making.