Toronto’s real estate landscape has shifted dramatically in 2024, making it both challenging and promising for first-time homebuyers. With interest rates experiencing a slight decline and the market moving towards a buyer’s favour, this year presents a unique opportunity for those looking to break into homeownership. In this blog I will help you understand the Toronto buyers market, navigate the complexities, and make informed decisions during this transitional period.

Understanding the Toronto Buyers Market Shift

The Toronto housing market is currently experiencing a buyers market, driven by increased inventory levels and declining sales. The sales-to-new-listings ratio (SNLR) in Toronto stood at 40% as of August 2024, reflecting ample choices for buyers and more negotiating power compared to previous years. The city’s average home price was approximately $1,087,436, marking a slight year-over-year increase of 2.0%, yet a monthly decrease of 7.4%. These dynamics indicate that buyers have more options and can be more selective in their property searches.

Key Factors Affecting Toronto First-Time Home Buyers

Understanding the key factors affecting first-time buyers is crucial for navigating the Toronto buyers market effectively:

• Higher Inventory Levels: Toronto’s real estate market currently has elevated inventory levels, providing buyers with more options. New listings increased by 1.5% year-over-year in August 2024, contributing to an overall increase in available properties. This surge in supply has moderated price growth, creating opportunities for first-time buyers to negotiate better deals.
• Affordability Concerns: Despite rate cuts and increased inventory, affordability remains a significant challenge. Toronto’s average home price has remained relatively high, and many first-time buyers are still struggling to qualify for mortgages due to stringent stress test requirements. However, with interest rates trending lower, experts anticipate a gradual improvement in affordability heading into 2025.

These factors highlight both the opportunities and challenges that first-time buyers must consider when entering the Toronto buyers market.

Strategies for First-Time Buyers in Toronto’s Buyers Market

First-time buyers can benefit from adopting the following strategies to navigate the Toronto buyers market:

• Explore Incentive Programs: Look into federal and provincial incentive programs, such as the First-Time Home Buyer Incentive (FTHBI) and the Ontario Home Buyer’s Plan, which can help reduce upfront costs and improve affordability. These programs are designed to make homeownership more accessible by offering shared-equity mortgages and tax-free withdrawals from RRSPs for down payments.
• Focus on Emerging Neighbourhoods: With increased inventory levels, certain neighbourhoods in Toronto offer more affordable options for first-time buyers. Areas like East York, Danforth Village, and Weston have seen a rise in available listings and relatively stable prices, making them attractive options for those entering the market.
• Consider Condo Purchases: Condos remain one of the more affordable property types in Toronto, with the average price of condo apartments hovering around $718,698 in August 2024. This makes it a favourable time for first-time buyers to consider condos, especially given the city’s elevated condo inventory.

By implementing these strategies, first-time buyers can make the most of the current market conditions and increase their chances of securing the right home in Toronto’s competitive market.

Potential Challenges and How to Overcome Them

First-time buyers may face several challenges in the Toronto buyers market. Understanding these challenges and planning ahead can make a significant difference in successfully purchasing a home in Toronto.

• Navigating High Prices: Even with recent rate cuts, high property prices in Toronto can be daunting. To mitigate this, consider co-ownership options or purchasing a smaller property as a stepping stone to a larger home in the future.
• Securing Mortgage Approval: With stricter lending criteria and the mortgage stress test, getting mortgage approval can be challenging. Working with a mortgage broker can help identify lenders who are more accommodating to first-time buyers.

By addressing these potential obstacles proactively, first-time buyers can better position themselves for a successful purchase in the Toronto buyers market.

The 2024 Outlook for Toronto First-Time Home Buyers

The outlook for first-time buyers in the Toronto buyers market appears cautiously optimistic. With lower borrowing costs and an increasing inventory of properties, the market is providing more opportunities for those ready to buy. However, challenges such as high property prices and economic uncertainty mean that buyers must remain diligent and proactive in their approach.

Experts predict that as interest rates continue to decrease, more first-time buyers will enter the market, leading to increased competition in 2025. The current conditions suggest that now might be an ideal time for Toronto first-time home buyers to explore the market, take advantage of lower rates, and find a property that fits their budget and needs.

Conclusion

For Toronto first-time home buyers, navigating the current buyers market can be challenging but rewarding. Understanding market dynamics, leveraging available resources, and acting strategically can help make homeownership a reality. With the right approach, first-time buyers can capitalize on current conditions and secure a foothold in one of Canada’s most competitive real estate markets.