The current Toronto real estate market is a tale of two cities, starkly contrasting the freehold and condo markets. The condo market faces strong headwinds as investors battle stubbornly high interest rates, which results in negative cash flow. Current inventory levels have been at their highest since the peak of COVID, when no one wanted to live in the downtown core. On the other hand, the freehold market is again showing its resilience. Even though active listings have increased each month this year, they are still 20%-30% lower than in this same period last year, and prices have remained relatively flat. 

In January, the 5-year government bond yield was at its lowest in 12 months, which helped lower mortgage interest rates. At the same time, speculation was that the Bank of Canada would reduce its rate in April, giving buyers the confidence they needed to return to the market. Renovated homes in desirable neighbourhoods are often sold in multiple offers well over asking. Then April 10th came and went, and the BOC did not cut their rate, raising concerns that high mortgage rates could be around longer than expected. These concerns, coupled with the typical influx of spring inventory, have moderated the market, and competition has waned. Good products are still selling, but frequently, it takes more than a week to move. 

The upcoming Bank of Canada announcement on June 5 is anticipated to be a significant event for the real estate market. If the expected rate cut occurs, sellers may see a boost in the market. However, if the rates remain unchanged, buyers may hesitate, potentially leading to price drops and increased inventory over the summer.