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Greater Toronto housing market tightens as home sales surge 37% in January

In a remarkable surge, Greater Toronto's housing market witnessed a 37% increase in home sales in January compared to the same month last year. This substantial rise is attributed to lower borrowing costs associated with fixed-rate mortgages, attracting a renewed interest from homebuyers.

The Toronto Regional Real Estate Board's recent data release on Tuesday revealed that last month saw 4,223 home sales, marking a substantial 22.9% month-over-month increase from December. The market, as reported, is notably tighter than it was a year ago, with new listings increasing by 6.1%, unable to keep pace with the heightened demand.

Breaking down the figures, sales across all housing categories experienced annual growth, with townhouses leading at 54.5% and semi-detached homes following closely at 42.9%. Condominium sales saw a significant uptick at 41%, while detached home sales rose by 27%.

Despite the surge in sales, the average home price displayed a different trend, dropping by one percent from the same time last year to $1,026,703. This also marked a 5.4% decrease from the final month of 2023.

Jennifer Pearce, president of the Toronto Regional Real Estate Board, sees this as a positive start to the year. She pointed out that the Bank of Canada's expectation of receding inflation could lead to lower interest rates, potentially boosting homebuyers' confidence and making homeownership more affordable, especially for first-time buyers grappling with high average rents.

Jason Mercer, the board's chief market analyst, anticipates that once the central bank starts cutting its key rate in the second half of 2024, heightened competition amid constrained supply will likely push prices higher. Real Broker Ontario's Jessica Hammell concurs, stating that "prices will continue to go up."

Hammell advises prospective homebuyers not to wait, emphasizing that in the face of rising demand, it's crucial to make plans, evaluate personal circumstances, and secure pre-approval to understand where they stand in the market. She believes that even the promise of lower rates in the near future has encouraged people to take action.

While the Bank of Canada has expressed caution about the potential impact on the housing market if it moves too quickly to lower its policy rate, many buyers seem undeterred. Hammell notes that buyers are savvy, understanding that as rates trend down, prices are likely to come back up. This perception of opportunity is driving prospective buyers to seize the moment and make their move in the current market conditions.