GTA Home Sales: December 2024 Overview – According to the Toronto Regional Real Estate Board, In December 2024, 3,359 homes were sold in the Greater Toronto Area (GTA), a small drop compared to December 2023. Meanwhile, new listings increased, keeping the market well-supplied. The MLS® Home Price Index Composite Benchmark rose by less than 1% year-over-year. Additionally, the average home price was $1,067,186, showing a slight decline from last year. Mississauga House Price Report January 2025 – Scott Brubacher
Overall, the market remained stable as we move into 2025. With plenty of inventory available, there are opportunities for both buyers and sellers. Consequently, prices remained steady, reflecting a balanced market shaped by supply and demand.
The Condo Market: Understanding the 411 Condo Crash
Understanding the 411 Condo Crash – Mississauga House Price Report
The condo market has been undergoing significant shifts, and recent developments are creating a ripple effect for investors, buyers, and builders alike. To fully grasp what’s happening, it’s important to dive into the details of what has been dubbed the “411 Condo Crash.”
A Market Snapshot
Back in 2017, condos were selling for approximately $750 per square foot (psf). By the market’s peak in 2020/2021, prices had skyrocketed to $1,200 psf, reflecting an unprecedented demand. However, since then, the momentum has clearly reversed. As of now, there are about 20,000 newly built condos set to close within the next 12 months. The challenge? Buyers can purchase resale condos across the street for $950 psf. Consequently, this price disparity is creating significant challenges for investors who purchased these new builds at the peak.
Investor Challenges in the GTA Condo market
For investors who bought pre-construction condos, the current market downturn has brought several obstacles. First, they are facing losses of roughly $350 psf. Moreover:
Rental Market Pressure: Lower rental rates, combined with higher interest rates, mean investors are losing $500–$600 per month on their properties.
Appraisal Issues: Banks are no longer appraising these new builds at their original purchase prices, which forces investors to cover additional funds to meet shortfalls in their down payments.
Additionally, many buyers are now hesitant to make purchases, preferring instead to wait for prices to drop further. This cautious behavior only adds more downward pressure on condo prices, further straining investor confidence.
Builders of GTA Condo Hit Pause – House Price Report
In response to these market dynamics, many builders have decided to halt new condo construction until the current surplus is absorbed. Industry experts predict it could take approximately two years for the market to stabilize before developers begin new projects again. While the condo market is expected to recover eventually, it is likely to lag behind the recovery of the low-rise housing market.
Regional Variations in the Condo Crash
It’s worth noting that the “411 Condo Crash” is primarily concentrated in downtown Toronto (416) and smaller, 500 sq ft condos. Meanwhile, older, more established areas outside the downtown core have been less affected. For example, larger resale condos in well-maintained buildings or those near subway stops in suburban locations—such as Islington Centre at Bloor and Islington—are continuing to hold their value more effectively. (Mississauga House Price Report January 2025)
The Low-Rise Advantage over Condo highrise
In contrast to the condo market, the single-family low-rise home sector is performing significantly better. Due to strong demand and limited inventory, prices for low-rise homes have remained relatively stable. Moreover, builders have not been constructing new low-rise homes at scale, which has only further contributed to the imbalance between supply and demand. As a result, low-rise housing remains a highly attractive option for buyers.
The Interest Rate Factor for existing home owners
Interest rates, as expected, play a critical role in shaping market dynamics. For now, many buyers are holding off on making purchases, anticipating that rates may decrease in the future. For existing homeowners, however, the situation is also challenging. Mortgages secured at historically low rates—such as 1.75% before 2021—are now being renewed at rates closer to 4.75%. For a $525,000 mortgage, this jump means an increase of $800–$900 in monthly payments. As a result, higher costs are putting pressure on family budgets, which, in turn, slows down the “move-up” buying process for families seeking larger homes.
Final Thoughts
The condo market’s current challenges emphasize the importance of understanding market dynamics before making real estate investments. While the market is expected to recover over time, patience and strategic decision-making will be essential for both investors and buyers. Furthermore, for those exploring the low-rise housing market, limited supply and strong demand make it an appealing alternative.
Mississauga House Price Report January 2025