A Closer Look at the Ontario Housing Market Over the Years

By Shaun Bernstein for REALTOR.ca



Contrary to popular jokes, Toronto is not, in fact, the centre of the universe. Canadians are fortunate to live in a massive, diverse country with amazing cities and towns from coast to coast, each of which have their own unique qualities particular to their geography. Yet given Ontario’s population (and yes, the hype Toronto gets), it’s easy to see why it often gets a lot of attention. 

 

Even Ontario is not uniformly one thing or another. With more than one million square kilometres, you’ll find significant differences in visiting Moosonee than you would Chatham. And while Toronto and Ottawa are both capitals, they bear little resemblance to one another. 


 

Yet when it comes to the Ontario real estate market, it’s true the Greater Toronto Area (GTA) is a major driver of real estate in this province, and that market’s activity impacts the rest of the province significantly. The COVID-19 pandemic may have made a significant impact on Ontario’s market, but there were changing forces at play well before 2020. 


 

For a province-wide perspective, we spoke with Dr. Murtaza Haider, an associate professor at the Ted Rogers School of Management at Toronto Metropolitan University and author of Real Estate Markets: An Introduction for his thoughts.

 

A look back

 

While the U.S. economy took a serious financial hit in 2008 that required nearly a decade of recovery, our fiscal policies meant the Canadian real estate market was relatively unscathed. Haider notes the province of Ontario actually came out stronger for it, and the market kept moving upwards. 


 

It should also be noted that even though there are vibrant communities outside of Toronto, the real estate numbers from Toronto and surrounding areas are the key drivers of market success. There is activity in the Ottawa market, as well as in other suburban areas, but comparatively those numbers become a “rounding error” when weighed against Toronto’s activity, particularly given that the Greater Toronto Area accounts for roughly 45% of Ontario’s population. 


 

There were pre-pandemic changes that had an impact. In 2018, the stress test was introduced, which first impacted uninsured mortgages and then insured ones. 


 

“People had to qualify at 2% higher than the negotiated mortgage rate,” explained Haider, “so  buying power was reduced, prices were impacted, and ultimately transactions were as well.” 


 

While those changes may have been significant, they were far less jarring than the roller coaster to come.
 

The COVID-19 curveball

 

Most Canadians didn’t see the COVID-19 pandemic coming, and the swift lockdowns put an unsurprising hold on the market. However, something surprising happened next that no one had expected. As interest rates plummeted to their ultimate lows, Haider notes the market “was administered a steroid.” Sales began to skyrocket that summer, and rose to unprecedented levels in 2021, with more than 650,000 homes sold in Toronto that year, with prices up 23% over the previous year and up 39% over the previous 2019 average. 


 

“With a limited housing supply and cheap borrowed money, buyers were itching to get into the market, and many of them were willing to go all in to win a house,” said Sara Walsh, Team Lead and REALTOR® of the Sara Walsh Real Estate Team in Durham Region. “It was a frenzy.”


 

For buyers, taking advantage of the low rates made sense. 


 

“At that rate, when you’re paying 1.5% interest rates, your payments are essentially going towards equity,” noted Haider. “You’re putting money back in your pocket.” 


 

Then, as interest rates began increasing once again, there was a significant downward pressure in the market throughout 2023. While the tides may change again, there are currently a far greater number of listings than there are buyers. 


 

One other interesting note: the mass migration out of the Greater Toronto Area when COVID-19 began? Haider notes it was more myth than reality, and the numbers simply do not reflect that reality. 


 

“People leaving the GTA may have left in larger numbers than before,” he recalls, “but it certainly wasn’t an exodus.” 


 

Moreover, buyers who made those moves expecting to telecommute permanently are now facing the dilemmas of a return to hybrid work, and weighing their options of moving back to the city.
 

What’s next?

 

As of spring, 2024, sales in the Greater Toronto Area are 5% lower than they were the previous year, while active listings are 74% higher, according to data from the Toronto Regional Real Estate Board (TRREB). The result is a heyday for buyers, who have plenty of inventory to choose from and do not have to worry about those emotional multiple-offer situations of 2021. The average sale price in Toronto, currently, is about 1% above listing prices, not to mention 5% over listing prices east of the city, but even lower than listing prices in Mississauga.


 

Similar trends in demand are playing out in northern Ontario, where sales in Thunder Bay are currently trending about 2% lower compared to a year ago although active listings are up only 23% over the same period. Average sale prices are also currently trending just over 1% above list prices and are up almost 9% on a year-to-date basis versus the January-May period from 2023.


 

With homes moving slower, buyers are able to negotiate, and hold firm on important conditions that they were quick to surrender during the frenzy. Moreover, with returns to office and caring for ageing parents, fewer buyers may be looking to move far from home. 


 

Asked if he was surprised by any of the past decade’s events, Haider admitted he’s been surprised every step of the way, but sees a path back to a more normalized market 

 

“Affordability and the cost of living is front and centre for many people, so unless we see significant interest rate cuts, buyers’ confidence and their ability to purchase a property may stay on the sidelines,” said Walsh.


 

“I believe that [the June 5 rate cut] may reinvigorate some buyers, but I don’t think we’ll see a repeat of 2021,” she added.


 

However, with this many twists and turns in Ontario’s market, no one may be able to accurately predict what’s coming next. 




 

Shaun Bernstein article was initially published on REALTOR.ca.  You can find it by clicking here. 

Thanks for reading today’s BLOG!!!

Brian Kondo
Sales Representative / Team Leader
The Brian Kondo Real Estate Team
Re/Max Hallmark First Group Realty Ltd.
905-683-7800 office
905-426-7484 direct
brian@briankondo.com
www.BrianKondo.com
www.BrianKondoTeam.com

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