A noteworthy report from Colliers has recently been released, which highlights key trends in Toronto’s multifamily real estate market that are of interest to investors and professionals in the industry.
The report indicates some positive news for Toronto’s real estate, including market stability despite economic pressures. However, the report also discusses the impacts of recent changes to the capital gains inclusion rate on transaction timings during this period.
The report also notes improvements in financing processes by the CMHC, which could lead to quicker deal closings, as well as forecasts for Toronto’s market in the future.
Market Activity
In Q2 2024, the Greater Toronto Area (GTA) multifamily market showed some improvement, according to the Colliers report, though it continued to face economic challenges.
The quarter saw 21 transactions, just one less than in Q2 2023, with a total sales volume of $374.3 million—down 28.3% from the previous year. The number of suites traded also fell by 16.2% to 1,307 units.
A key factor during this period was the change in the capital gains inclusion rate on June 25th. This change led to a rush in deal-making, with 14 of the 21 transactions happening within a week, as sellers sought to finalize deals before the higher rate took effect.
The average price per suite slightly decreased to $321,280, while the capitalization rate rose to 3.94%, indicating the impact of higher borrowing costs on the market.
Canada Mortgage and Housing Corporation Processing
On a positive note, the Canada Mortgage and Housing Corporation (CMHC) has made significant improvements in processing financing applications. These faster processing times are expected to lead to quicker deal closings, reducing the delays that had previously slowed the market, sometimes by as much as six to 12 months.
The report highlights that despite a slowdown in transaction volumes, strong rental demand continues to support market stability. It also notes a slight increase in capitalization rates, reflecting the changing market dynamics. Looking ahead, the potential for interest rate cuts could stimulate more market activity, suggesting a more active period in the coming quarters.
It is important to continue to monitor these developments in the evolving real estate market. For the full report and more statistics on Toronto’s multifamily real estate market, read Colliers’ Toronto Multifamily Market Report Q2 2024.
