The data indicates significant changes in the profiles of buyers and sellers in Ontario, emphasizing the evolution of participation among various groups in reaction to shifting market conditions. Although significant uncertainty is anticipated in the upcoming years, there is an opportunity to share data from the Ontario Land Registry, which may assist you in gaining a clearer understanding of the real estate market.
The Two Housing Markets
The data in regards to houses for sale in ontario ca indicates that several market trends in the province are inverted in its largest city. For example, condos account for only 25% of land transfers throughout Ontario, but this figure rises to 60% in Toronto. Additionally, while condos are exchanged at rates comparable to other property types across the province, the Toronto market has diverged—contrary to what recent headlines may imply.
The Ontario Land Registry monitors shifts in ownership information, encompassing newly constructed properties that were bought in previous years. In 2024, Toronto condominiums experienced a 20% increase compared to the previous year, while the non-condominium sector recorded a slight rise of 4%.
There are Fewer Multi-property Owners
Evolving market dynamics have transformed buyer demographics, leading to a significant decline in activity among multi-property owners (MPOs). Previously the dominant buying segment, accounting for almost 25% of transactions in recent years, MPOs—comprising both investors and leisure purchasers—are now scaling back their involvement.
In the last decade, new MPO acquisitions represented 70% of MPO transactions, while only 30% came from existing MPOs, indicating a significant influx of individuals entering the market to acquire additional properties. The majority of MPO transactions typically feature two buyers, who are often of similar age, suggesting that many are likely to be in a romantic relationship. Millennials currently account for almost 40% of MPOs, outpacing Gen Xers, who constitute approximately 36%.
Big Investors Got Smaller
A considerable number of MPOs possess over 11 properties, yet their market share has significantly decreased due to changing circumstances. In April 2022, prior to the increase in interest rates, those holding 11 or more properties represented 13% of Ontario MPOs; currently, this figure has dropped to 7.2%. Over the past year and a half, many of these MPOs have actively worked to reduce their portfolios, resulting in a noticeable decline in portfolio sizes. Last year, the MPOs that participated in the market primarily concentrated on properties in Toronto, with 30% of them making purchases without the use of a mortgage, indicating a surge of financially robust investors aiming to take advantage of attractive pricing.
More Recent Buyers Took Heavy Losses
It is not surprising that many individuals who bought properties at the peak prices in 2022 and 2023 have ended up selling them at a loss. Historically, Ontario experiences a loss rate of approximately 2% to 4%, indicating that out of every 100 properties sold, around two are sold at a loss. Among properties acquired in 2022 and sold in 2024, one in four were sold at a loss. These losses varied across the province, with some of the most significant declines occurring in Ontario’s cottage regions and the Greater Toronto Area.
First-Time Buyers Are Getting Older
Increasing costs, elevated interest rates, and various difficult macroeconomic factors have significantly impacted the segment of first-time homebuyers. Teranet data indicates that first-time buyers account for almost 25% of Ontario’s condominium market, showing a marked preference for properties located in and near Toronto. In 2011, the average expenditure for first-time buyers in the city was slightly below $500,000; by 2024, this figure is projected to rise to $1.3 million.
Homeowners Aren't Moving Around As Much
The third largest group of buyers in Ontario consists of individuals transitioning from one primary residence to another. Although they do not constitute a significant portion of the market, they attract considerable media attention and tend to spend more than first-time buyers and those purchasing multiple properties.
In 2011, their average expenditure was approximately $700,000, which surged to an average of $1.75 million by 2024. Teranet data indicates that 70% of this group typically remains within the same city. This demographic was notably active during the post-pandemic market surge, but their presence has diminished since then, particularly in Toronto.
The Population Growth Is On An Upward Trajectory
Ontario’s population has consistently increased over time, but the growth rate is crucial for the housing market. If the population growth merely aligns with historical patterns, it does not significantly impact property prices. A rapid increase in population heightens demand and elevates valuations, whereas a decrease or stagnation could lead to the opposite outcome.
After a halt in 2020, Ontario’s population growth surged, compensating for the pandemic’s impact, but this also led to challenges in housing availability. The federal government’s recent shift in immigration policy, aimed at reducing overall immigration, raises concerns about a potential population decline by 2025. A decreasing population could hinder economic growth and housing demand, complicating the market dynamics that have previously driven prices upward.
The Effect Of Government Influence
The Federal Government, through its housing agency, has declared a temporary prohibition on home acquisitions by non-Canadians, effective from January 1, 2023, until January 1, 2027. Exceptions apply for individuals holding temporary work permits, refugee claimants, and international students. This measure aims to provide the government with the opportunity to assess its impact on curbing speculation and commoditization within the real estate market.
Despite Ontario’s population experiencing significant growth, full-time employment has not increased correspondingly. The primary factor affecting core demand is the rise in interest rates. A household that could secure a $600,000 mortgage in 2021 is now limited to $450,000. This, along with unprecedented home prices, explains the decline in home purchases. Many individuals in Ontario aspire to buy their first home or move to a larger one, yet fewer households now possess the financial means to achieve their goals compared to six months prior. So if you’re still looking to make Ontario your new home, be sure you speak to a reputable realtor so that you don’t end up in these pitfalls.
