Toronto Housing Prices from 1967 to 2020
Jordon Scrinko
Published by Jordon Scrinko
Last Updated On: October 16, 2024

Average Toronto Housing Prices from 1967 to [2024] – What’s Going to Happen Next?

The Toronto housing market has experienced significant fluctuations over the past decade, and it continues to evolve.

As both investors and potential homeowners navigate this landscape, a pressing question arises: "Will Toronto real estate prices continue to appreciate?"

This inquiry is straightforward, especially with a wealth of publicly available data on key fundamentals such as historical sales trends, new housing supply, and net population growth.

In this article, we will explore the historical patterns of house price growth in Toronto. By analyzing past real estate market trends, we aim to provide valuable insights into what the future may hold for the Toronto housing market in 2025 and beyond.


 

Historical Toronto Housing Graph Index:

1. Housing Bubble Example Graph
2. Historical Detached & Condo Median Price in Toronto
3. Supply: New Homes Sold per year
4. Demand: Immigration into Toronto
5. Average Detached Home Price vs Inventory
6. Average Condo Price vs Inventory
7. Mortgage Stress Test Impact
8. Condo Rental Rate inflation graph

"A housing bubble occurs when there's a surge in real estate prices, driven by demand, speculation, and enthusiasm." - Investopedia

It's important to point out that, naturally, all investors are "speculators". Unless you get a kick out of losing money, the only reason you'd even consider investing in a given asset class in the first place is based on you 'speculating' that the market is going to go up. Therefore, by definition, all property investors are speculators.

The question, then, is do we have too many speculative investors? Moreover, too many investors who are so leveraged that should mortgage rates increase - they'd topple.

Secondly, - is the housing market appreciation fueled by supply and local demand, or are there external factors driving up competition and Toronto home prices?

Let's take a look at Toronto's housing price history and price growth to determine the answer.

Comparing Toronto's Price History To A 'Housing Bubble Example'

First, take a look at Toronto's detached and condo price history at the top of the page. Then, compare the detached price to this graph below, a 'textbook example of a housing bubble' price trend.

toronto house prices graph

At first glance, it may seem like we're in a housing bubble due to the detached price trend resembling a typical bubble. However, two key points are often overlooked.

First, the condo market saw both a price increase and an inventory decrease during the detached price dip.

Second, while graphs are great for visualizing data, they don't explain the underlying factors driving price changes. For instance, a graph showing Toronto's median home prices or mortgage rates doesn't reveal the reasons behind price fluctuations, such as the dip seen in housing bubbles.

In Toronto, however, the detached price started to dive at precisely the time that the Fair Housing Plan was announced [1]. It then regressed further as the Mortgage stress test was announced and subsequently implemented. There's nothing spontaneous about a market change following closely after the government rolls out new legislation taking aim at the housing market.

condo affordability

The Fair Housing Plan and the mortgage stress test have significantly impacted the Toronto real estate market, particularly leading to a decline in detached home prices. In contrast, the condo market has shown resilience, remaining bullish since 2016, while the detached market only began to recover in 2019.

Recent data reveals that condo sales in the Greater Toronto Area (GTA) plummeted to a 27-year low in the first half of 2024, with just 1,688 sales in Q2, a 66% year-over-year decline [2]. This drop has pushed unsold inventory to a record high of 25,893 units, indicating a significant oversupply.

The widening gap between median condo and detached home prices highlights the affordability crisis; owning a detached home has become increasingly expensive. This disparity is compounded by legislation that has shifted many buyers from the detached segment into condos due to reduced purchasing power.

Low Supply + High Demand = Housing Appreciation

wooden human holding a wooden model house

Also known as Economics 101. Most markets are driven by simple supply and demand at their core, and the housing market isn't much different.

In Toronto, our rapid condo appreciation has been entirely at the hands of a stagnating supply and an exponential growth in demand. 

1. Supply: New Condo & Home Completions

Housing Supply is more readily measured and more absolute than demand. It's simply a question of how many new homes were constructed/completed and added to the market pool in a given year. 

The graph below shows new pre-construction condos sold each year. A couple thousand get cancelled a year, and additionally, a few thousand detached get built as well.

All in - we complete ~30,000 new homes each year.

New condo apartment sales. Toronto house price history

2. Demand: Immigration Growth

Immigration remains the strongest driver of housing demand in Toronto. The federal government plans to welcome 1.5 million new immigrants by 2025, with a significant portion expected to settle in the Greater Toronto Area (GTA). This influx will further increase the demand for housing, exacerbating the existing supply shortage.

Recent statistics indicate that Toronto experienced a net population gain of over 125,000 people in 2023 alone. However, the city has struggled to keep pace with this growth, constructing only about 35,000 new homes annually. This imbalance highlights the urgent need for more housing to accommodate the rising population.

The current housing crisis is characterized by high demand for both rental properties and homes for sale, particularly in neighborhoods popular with immigrant communities, such as Scarborough and Brampton. As many newcomers initially rent before transitioning to homeownership, this trend is expected to drive rental prices higher and increase occupancy rates.

Despite efforts to increase housing supply through initiatives like the HousingTO plan, which aims to create 65,000 rent-controlled homes by 2030, challenges remain. The city requires between $500 million and $800 million annually in grant funding and an additional $6.5 billion to $8 billion in low-cost financing from provincial and federal governments to meet its targets.

To break down this housing supply crisis further, we've gone ahead and analyzed what's going on with housing prices in Toronto.

3. Historical Toronto Housing Price vs Months of Inventory Chart

In real estate market, we have a convenient little metric called Months of Inventory. It’s exactly what it sounds like - a measurement of how much inventory is on the market, and how quickly it’s selling.

Housing Market months of inventory indicator

To put it in perspective: if the market sees 1000 new listings each month, and each month 250 listings sell, you have 4 months of inventory.

1000 Listings / 250 Sales = 4 Months of inventory.

Under 4 months is a Seller’s Market - Prices increase

Over 7 months is a Buyer’s market - Prices stagnate or decrease

It's simple to understand, and it’s the perfect metric to look at versus historical prices to understand how supply and demand affect the market in real time.

Below is a graph showing the detached average house price in Toronto + months of inventory

You’ll notice that months of inventory inversely correlates directly with average price. When we see months of inventory spike, we see home prices dip, and vice versa.

Clearly - right at the time of the Fair Housing Plan, and shortly after the Stress Test, we see the detached home price in the Greater Toronto area market swing very quickly from 1 month of inventory to 3-4 months of inventory. 

The detached buyer pool halved, literally overnight, causing that sharp decline in prices.

4. The Mortgage Stress Test Impact

The Mortgage stress test bit a 20% chunk out of your buying power with higher qualification standards - that’s a ton. It impacted the detached market negatively, and the condo market positively.toronto mortgage stress test income required

At a household income of $150,000, you’d be qualified for a $1M detached home prior to the stress test.

After the stress test? $835K - you’re now in the condo market, or you’re looking at a much longer commute.

The stress test was introduced to cool the housing market. The intention was actually to help out first-time buyers but it did the opposite [3]. Not only did it make it much harder to qualify for a mortgage as a first-time buyer with no existing home equity, but it also increased the demand in the Condo market, which is where most first-time buyers are looking.

5. Detached Home Prices in 2019

toy house with golden coins

It’s fairly self-evident that the Stress Test & Housing plan triggered the detached price regression. With that said, the condo-to-detached price gap had grown to nearly 2.5X.

  1. Average Price Trends:
    • As of September 2024, the average price of detached homes in Toronto has decreased by 1.2% year-over-year, bringing the average to approximately $1.42 million. This decline reflects ongoing market adjustments amid rising interest rates and economic uncertainties.
  2. Comparative Market Performance:
    • In contrast to detached homes, the semi-detached home average price also saw a slight decrease of 0.3%, settling at around $1.09 million. Freehold townhouses experienced a more significant drop of 5.8%, averaging $983,000.
  3. Market Dynamics:
    • The Greater Toronto Area (GTA) benchmark home price was recorded at $1,068,700, down 4.6% year-over-year as of September 2024. The overall market is characterized by a significant increase in new listings, which rose by 35% compared to the previous year, leading to an oversupply situation.
  4. Sales Activity:
    • Despite the price declines, sales activity showed some resilience with a total of 4,996 homes sold in September 2024, marking a 7.6% increase year-over-year. However, the sales-to-new-listings ratio dropped to 28%, indicating a shift towards a buyer's market.
Toronto real estate
Courtesy of Financial Post

What Caused Toronto’s Housing Supply Shortage?

I’ve often heard “the government needs to do something” about Toronto's rapid housing appreciation. They tried twice and failed. Less government regulation, not more, is part of the solution to improving supply.

Why do we only deliver 35,000 homes when 50,000 could easily sell? Developers simply can't afford it due to Ontario’s costly, lengthy condo approval process, which takes 2-5 years, plus city development charges that have increased nearly 300% in five years.

The fair housing plan aimed to control rent but backfired, leading to a 25% increase in condo rental rates in just two years.

To be ahead of any news, updates, and upcoming condo listings in Toronto, visit our website for more information.

Median rent in toronto graph for the fair housing plan increase. Property listing service. Toronto real estate


References:

  1. https://news.ontario.ca/mof/en/2017/04/ontarios-fair-housing-plan.html
  2. https://www.urbanation.ca/news/slowest-first-half-gtha-new-condo-sales-27-years
  3. https://www.thestar.com/business/2019/06/10/is-the-mortgage-stress-test-making-torontos-housing-crisis-worse.html

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