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In 2023, Ontario experienced a significant slowdown in home sales, marking the lowest figures since the early 2000s. The combination of elevated mortgage rates and prospective buyers holding out for further price reductions contributed to a sluggish market across the province. Particularly in the Greater Toronto Area (GTA), home sales dipped to levels not witnessed since 2001, despite the current population being substantially larger.

According to the Canadian Real Estate Association, the number of homes sold in Ontario dropped by nearly 13 percent in 2023 compared to the previous year, indicating a substantial decline. Various industry sources predict this trend to persist into early 2024, with TD economist Rishi Sondhi expecting sales volumes to remain low, although potentially slightly improved from the dismal figures of 2023. The real estate market experts lack consensus regarding price projections, mainly due to conflicting factors like high mortgage rates suppressing demand while population growth fuels it, creating an imbalance against the pace of new constructions.

Forecasts present differing views on home prices in the GTA and Ottawa for 2024. Royal LePage anticipates a six percent increase in GTA home prices by year-end but a modest 4.5 percent rise in Ottawa. Conversely, ReMax foresees a three percent drop in GTA prices and a two percent increase in Ottawa. This uncertainty is exacerbated by buyer sentiment; many potential buyers believe prices may decrease, prompting a 'wait-and-see' approach that could further impact the market.

Ontario faces challenges in meeting its ambitious 1.5 million new home construction target within a ten-year span. The government, now in its third year of this plan, has struggled to keep pace with the required annual construction rates. Issues such as financing hurdles for developers due to high interest rates, inflation's impact on building material costs, and a labor shortage continue to impede progress. Sondhi predicts a further decline in housing starts in 2024, attributed to decreased pre-construction sales amid rising mortgage rates. Despite this, there's an expectation of growth in purpose-built rental housing, partly driven by governmental exemptions and incentives. However, around 30 of Ontario's largest municipalities may not qualify for government funding in 2024 due to falling short on housing start targets in 2023.

Read the full article on: CBC