Sales in the Greater Toronto Area dropped 18.7 per cent on a seasonally adjusted basis in December from November, according to data from the Toronto Regional Real Estate Board.
The condo segment fared worse than the broader market with a seasonally adjusted decline of 22.2 per cent in December from November.
Market conditions were the loosest on record outside of the early days of the COVID-19 pandemic.
In December, Mr. Bibby notes, many sellers in the condo segment cancelled their listings after failing to find a buyer, yet data show inventory was still 33 per cent higher than in December, 2023.
This dynamic concerns him, because the recent spurt of buying could be swamped by new supply in the coming weeks.
“We’ve had all these units come off and we’re still up 33 per cent. Where did these units disappear to and when do they come back on?”
Consumers are feeling jittery, he adds, as U.S. President Donald Trump threatens to place crippling tariffs on Canadian goods. The Canadian dollar has recently been trading near a four-year low of just under 70 cents to the U.S. dollar, and many on Bay Street warn the loonie will deteriorate further if Mr. Trump follows through.
A federal election on the horizon and the announcement that Ontario voters will also head to the polls also ratchets up tension.
Looking at the national picture, Farah Omran, senior economist with Bank of Nova Scotia, notes that sales dipped across the country in December, but sales still stood 13 per cent above their level in May.
Overall, sales activity in 2024 was on par with the 2000 to 2019 average, she points out, marking a “normal” year of activity relative to historical data.
Ms. Omran concedes that anyone using the postpandemic rally as a point of comparison might be disappointed by last year’s tally.
Most forecasts, including Scotiabank’s, don’t foresee that frenetic level of activity being repeated any time soon.
Ms. Omran recommends that expectations shift back to a performance more in line with historical averages.
That said, she is expecting a healthy level of activity in 2025, driven by improved affordability as borrowing rates have come down while prices held relatively steady.
Government policy changes will likely lead to a slowdown in population growth, which will in turn offset the pickup in sales, so price gains are likely to be modest, Ms. Omran adds.
The economist cautions that 2025 forecasts are a moving target, however, because of the persistent uncertainty that is also worrying consumers.
The outlook is muddied in the face of future trade policies and potential tariffs to which Canada is particularly vulnerable.
A lot hangs on the details, as well as Canada’s retaliation strategy.
The proliferation of scenarios will affect this country’s economic growth, inflation and interest rates in response to various outcomes, Ms. Omran says.
As for buyers, the message Mr. Bibby hears is, “We don’t know what the rest of the year has in store and we’re being cautious.”
Many sellers are feeling the same unease, he senses, but they are reacting by tying up a sale more quickly.
Sellers are being a lot more reasonable so far this year, he says. Some are agreeing to offers 1 or 2 per cent below what they were hoping for. They are weighing the risks of waiting for a stronger price versus accepting the one on the table.
“No sellers think the market’s going to be up significantly in the next few months because of all the uncertainty.”
Some investors too are looking at the lack of capital appreciation in their units in the past few years and they are deciding to sell, says Mr. Bibby, who senses fatigue among some who have been waiting for a strong recovery.
Some long-term investors are planning to take profits and put the cash into other assets or change their lifestyle, he says.
The rental market has also softened in Toronto, which makes holding an asset that does not appear to be appreciating even less attractive, he adds.
Another group feels pressure to sell for financial reasons. Those who purchased during the market mania of 2021 and 2022 will likely only break even or sell at a loss, he says.
“The ones who have to sell are at the mercy of the marketplace.”
Mr. Bibby notes that last year condo inventory in Toronto’s core doubled between February and May.
“Will something like that happen again this year? We don’t know.”
But even if supply does not balloon, he believes it will take time to work through the current inventory, which in turn will weigh on prices.
“We don’t need more supply,” Mr. Bibby says. “We need buyers.”
