Sean's Market insight Volume 10
Sean Zahedi
Executive Sales & Marketing Strategist - New Developments/ Philanthropist / Columnist/ Speaker
At current sales levels, it would take over 50 months to absorb the available supply in the new and resale Condo Markets
The Greater Toronto Area (GTA) is currently facing nearly 40,000 condo units in limbo—encompassing unsold units in development, assignment listings, and resale listings on the MLS. This unprecedented level of supply, as detailed in recent figures, is expected to take some time to absorb, especially as condo completions are projected to remain at record highs over the next few years.
Breaking down the stagnant supply, there are approximately 24,000 unsold condo units under development, around 9,000 active resale listings, and an estimated 5,000 units nearing completion and listed for assignment. At current sales levels, it would take over 50 months to absorb the available supply in the new and resale condo markets—well above the typical pace of absorption. A balanced market typically absorbs supply in 14 to 16 months, meaning the current supply is at least 3.5 times higher than normal.
The slowdown in new condo sales since the second half of 2022 is a significant factor behind the rising inventory. While many projects that were set for presales were delayed, a considerable number still launched, contributing to the growing inventory. About 35,000 units were launched for presales since mid-2022, with only 22,000 new condo sales during that period. As a result, unsold new condo inventory has increased by 58% in the past two years.
Meanwhile, condo completions reached a record high of 24,114 units in 2023, with projections of 24,386 units for 2024 and 29,409 units in 2025. Investors looking to offload units have also contributed to the rise in resale and assignment listings, pushing resale inventory up by 92% over the past two years.
As interest rates begin to fall and market optimism grows, sales are expected to improve, and developers remain cautious in launching new projects. Some developments may be canceled or converted to rentals, which should help reduce supply next year, though it may take time to restore a balanced market.
Vaughan Takes the Lead in Reducing Development Charges to Boost Housing Supply, with Other Cities Expected to Follow
BILD commends Mayor Steven Del Duca and the City of Vaughan for reducing development charges (DCs) to address the region’s housing supply challenges. The reduction, effective November 19, 2024, will lower Vaughan’s DC rates significantly—by 88% to 92%—making future residential projects more financially viable and stimulating much-needed housing supply. The new DC rates will save substantial costs on various residential developments, ranging from single-detached homes to apartments. For example, single-detached homes will see a reduction of $44,273.
In the Greater Toronto Area (GTA), government fees and taxes account for nearly 25% of the cost of a new home, contributing to a severe downturn in housing sales and starts. Vaughan’s DC rate reductions will provide a competitive advantage and help alleviate the housing shortage. Other municipalities, such as Burlington and Toronto, have also taken steps to address development charges, but Vaughan’s approach is considered one of the most comprehensive.
BILD urges other GTA municipalities to follow Vaughan’s lead to reduce barriers to building and jump-start stalled construction. As the region faces an ongoing housing crisis, BILD stresses the importance of addressing construction costs to ensure the region’s long-term economic stability and social well-being.
Quarterly GDP Growth to Fall Short of BoC Forecast as Jumbo Cut Debate Lingers
Canada's economic growth is expected to have slowed in the third quarter, falling below the Bank of Canada's forecast. Economists are divided on whether this will lead to another large rate cut.
Consensus estimates predict a 1% annual growth for Q3, significantly lower than the 2.1% rise in Q2 and below the Bank of Canada's forecast of 1.5%. GDP is expected to rise by 0.3% in September, in line with earlier estimates.
Some economists believe the slower growth, pointing to ongoing slack in the economy, will push the central bank to implement a second consecutive 50 basis point rate cut in December. Others argue that the rate cut will be smaller, at 25 basis points, due to stronger-than-expected inflation in October and recently announced fiscal stimulus measures. GDP revisions are also expected to show higher-than-previously estimated growth for 2023.
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In summary, while Q3 GDP growth is likely to fall short of the Bank of Canada’s forecast, the upward revisions and fiscal stimulus are expected to lead the Bank to implement a 25 basis point rate cut in December.
Canada's Housing Market to See Price Growth in 2025
Canadian home sales surged to their highest level in over two years, driven by interest rate cuts from the Bank of Canada that brought buyers back to the market. In October, transactions jumped 7.7% from the previous month, reaching their highest point since April 2022, according to the Canadian Real Estate Association (CREA). The benchmark home price dipped slightly by 0.1% to C$716,800 ($509,500).
The Bank of Canada reduced rates by the most since March 2020, aiming to stimulate the economy. Policymakers expect the housing market to respond more quickly to lower borrowing costs than other sectors, as reduced rates boost purchasing power. Further cuts are anticipated.
The October surge in home sales was unexpected, with many viewing the data as an early indicator for 2025. While home prices fell, other signs showed tightening conditions. New listings dropped 3.5%, partially reversing a nearly 5% rise in inventory the month before. The months of inventory, a key gauge of supply and demand, fell to 3.7 months from 4.1 months in September.
October’s strong sales suggest that buyers have been active since rates began to decline earlier this summer, but waited for the right properties, which didn’t become available in significant numbers until September.
Looking ahead, the Canadian housing market is poised for strong activity in 2025, supported by further rate cuts. According to the 2025 Housing Market Outlook, national average residential prices are expected to rise 5%, with sales increases in 33 of 37 regions—some seeing rises as high as 25%. Key highlights include:
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