Where Ontario's housing market is headed in 2024

The pace of home sales in Ontario in 2023 hit lows not seen the turn of the century, and with little evidence that mortgage rates will drop significantly any time soon, forecasts are predicting the sluggishness to continue into early 2024. 

While prices have dropped somewhat from their pandemic-driven highs, the combination of high-interest rates and buyers waiting for prices to tumble further has created a slow sales market throughout much of the province, according to a range of industry information. 

The number of home sales in the Greater Toronto Area in 2023 is on track to be lower than in any year since 2001, when the region's population was roughly 25 per cent smaller than it is today.

The latest figures available show the number of homes sold across Ontario last year to be down nearly 13 per cent from the previous year, described by the Canadian Real Estate Association as a substantial decline.     

CBC News interviewed three experts on the real estate market to find out what they expect to happen in 2024. 

There's general consensus among those experts that sales volumes will remain sluggish in the first part of 2024, until or unless mortgage rates come down significantly, or sellers start accepting lower bids.

"The general trend we're probably going to see is one of continued stagnation," said Ron Butler, a broker with Butler Mortgage.

He doubts that mortgage rates will drop quickly enough or low enough to jolt reluctant buyers off the sidelines in the early part of 2024. 

John Pasalis, president of Realosophy Realty Inc., adds that sellers have yet to bring down their asking prices deeply enough to offset the increased borrowing costs that buyers face. 

"It's the combination of these high prices and high interest rates that is keeping a lot of buyers out of the market right now," Pasalis said.

TD economist Rishi Sondhi predicts sales volumes to remain relatively low in the coming year, although better than what the numbers were in 2023. 

"We think that the bottom has probably been reached," Sondhi said. "Sales levels were just so darn low in Ontario [in 2023]. It's hard to go lower from there." 

There's not a lot of consensus on what will happen with prices, in part because of supply and demand factors that are expected to have conflicting effects.

For instance, while decade-high mortgage rates are suppressing demand, rapid population growth is pushing it upward and new construction isn't keeping pace.