High interest rates have been the catalyst for a retreat in new and resale home purchases in Canada in recent years. But even as interest rates drop, homebuyers appear to be waiting on the sidelines rather than buying up ever-growing inventory. In fact, according to the latest data by The Toronto Regional Real Estate Board (TRREB), new home sales in the Greater Toronto Area (GTA) have hit record lows, signaling a significant shift in buyer confidence.
Industry experts point to several factors contributing to this downturn, including higher borrowing costs, economic uncertainty and affordability concerns, which have left many potential buyers hesitant to enter the market. Meanwhile, builders and developers are increasing inventory, leading to more options but fewer transactions.
TRREB reported a 26% increase in new listings from December 2024 and a substantial 48.6% rise compared to the previous year. Despite this, sales of new homes, including pre-construction condos and single-family houses, remain sluggish, reaching some of the lowest levels seen in recent history.
“Buyers are clearly in a wait-and-see mode,” Jason Mercer, TRREB’s chief market analyst told the Toronto Star. “With more homes on the market and borrowing costs still relatively high, many are holding off, hoping for further price adjustments or interest rate cuts before making a decision.”
Market analysts suggest that while increased inventory could present opportunities for buyers, many are waiting for further economic shifts before committing. If this trend continues, developers may be forced to offer incentives or adjust pricing strategies to stimulate demand.
How to know if now is a good time to buy a new home
Deciding whether to purchase a new home involves evaluating various factors, including market conditions, personal financial stability and long-term goals. Here are key considerations to help determine if now is the right time for you:
- Interest rates: With the Bank of Canada lowering benchmark interest rates, mortgage rates have become more attractive. Lower rates can reduce monthly payments and the overall cost of borrowing. However, it’s essential to assess whether current rates align with your financial situation and long-term plans.
- Housing supply and demand: The recent increase in new listings in the GTA suggests a growing inventory, which could provide more options for buyers. A higher supply may lead to more negotiating power and potentially better deals. Conversely, strong demand, partly driven by population growth, can sustain or increase home prices.
- Affordability: Despite favourable interest rates, high home prices in markets like Toronto continue to challenge affordability. It’s crucial to evaluate whether you can comfortably manage mortgage payments alongside other financial obligations. Consider using affordability calculators and consulting with financial advisors to understand your purchasing power.
- Economic outlook: The broader economic environment, including employment stability and income growth, plays a significant role in home-buying decisions. While rate cuts aim to stimulate economic activity, potential buyers should consider job security and future earning potential.
- Personal circumstances: Reflect on your personal and family needs. Are you planning to stay in the home long-term? Do you have sufficient savings for a down payment and emergency funds? Your readiness and life plans are critical in determining the right time to buy.
The bottom line
While recent developments in the GTA housing market, such as increased sales and new listings, combined with lower interest rates, may create opportunities for prospective buyers, it’s essential to conduct a thorough assessment of your financial situation and long-term objectives. Consulting with real estate professionals and financial advisors can provide personalized insights to guide your decision-making process.
Sources
1. Toronto Star: ‘New home buyers are nowhere to be found.’ Toronto-area January new home sales near ‘record low’ despite excessive inventory, falling prices (February 21, 2025)
This article Toronto’s new home market struggles: Is now the right time to buy?originally appeared on Money.ca
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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