New Listings of Toronto Homes Surge 26% on Bets for Lower Rates

The Toronto housing market has witnessed a significant surge in new listings, with a 26% increase in June 2024 compared to the same period last year. This surge in inventory comes as the Bank of Canada cut its key policy rate by 25 basis points in February 2025, signaling a shift towards lower interest rates. The rate cut was expected to have a "psychological" impact on the housing market, providing relief for indebted consumers and businesses and encouraging more borrowing and investment activity (BNNBloomberg, 2025).

The increase in new listings can be attributed to several key factors:

1. Increased Inventory: The GTA has seen a significant increase in the number of active listings, reaching a 14-year high in June 2024. This surge in inventory is a result of more homeowners deciding to sell their properties, leading to a higher supply of homes on the market. As of June 2024, there were 23,613 homes listed for sale, a 67% increase from the same month last year (TRREB, 2024).
2. Buyer's Market Conditions: The GTA housing market has shifted towards a buyer's market, with the sales-to-new-listings ratio (SNLR) dipping to 35% in June 2024. This indicates that demand is growing slower than the supply of available homes for sale, giving buyers more negotiating power and encouraging sellers to list their properties (TRREB, 2024).
3. Mortgage Rate Uncertainty: Home buyers are waiting for clear signs of declining mortgage rates, as indicated by recent polling from Ipsos. As borrowing costs decrease over the next 18 months, more buyers are expected to enter the market, including many first-time buyers. This will open up much-needed space in a relatively tight rental market (TRREB, 2024).
4. Affordability Improvements: As mortgage rates trend lower, affordability is expected to improve, further encouraging buyers to enter the market. This increased demand should lead to renewed upward pressure on home prices as competition between buyers increases (TRREB, 2024).

In the coming months, these factors are likely to evolve as follows:

* Increased Inventory: The high number of active listings may continue to attract more buyers, as they have more options to choose from and can negotiate better prices. However, as demand picks up, the inventory may start to decrease, leading to a more balanced market.
* Buyer's Market Conditions: As more buyers enter the market, the SNLR may increase, indicating a shift towards a more balanced or even seller's market. This could lead to increased competition among buyers and potentially higher home prices.
* Mortgage Rate Uncertainty: As mortgage rates continue to decrease, more buyers are likely to enter the market, further driving demand and potentially leading to a more competitive market.
* Affordability Improvements: With improved affordability, more first-time buyers and investors may enter the market, further driving demand and potentially leading to increased home prices.

The expectations of lower interest rates can significantly influence homebuyers' decisions and have a notable impact on the overall housing market. As interest rates decrease, borrowing costs become more affordable, making it easier for buyers to qualify for mortgages and purchase homes. This can lead to an increase in demand for housing, as more potential buyers are able to enter the market.

In the Greater Toronto Area (GTA), the expectations of lower interest rates were expected to have a positive impact on the housing market, as buyers were anticipated to return to the market in greater numbers (TRREB, 2024). However, the Toronto housing market may still face challenges in terms of demand in 2024, as further projected interest rate cuts would only bring a cumulative 0.75% cut, which may not be sufficient to significantly boost demand (TRREB, 2024).

In conclusion, the surge in new listings in Toronto can be attributed to various factors, including increased inventory, buyer's market conditions, mortgage rate uncertainty, and affordability improvements. As these factors evolve, the GTA housing market may experience a shift towards a more balanced or even seller's market, as demand increases and inventory decreases. The expectations of lower interest rates can have a significant impact on the housing market, influencing homebuyers' decisions and leading to increased demand and potentially higher home prices. However, the extent of this impact can vary depending on the specific market conditions and the magnitude of the interest rate cuts.