Oh, real estate in Toronto! It’s like a complicated dance with one very opinionated partner: interest rates. And right now, they’ve stolen the show, more than I’ve seen in my 15 years in the industry. Buyers and sellers are monitoring them like they’re checking weather apps before heading out in the morning. And for good reason—interest rates can turn a manageable mortgage into a monthly monster or, conversely, a dream come true.

The Fall Forecast: Inconsistent with a Chance of Chaos

If I had to describe this fall market in one word, it’d be “inconsistent.” Some parts of the condo market are gathering dust, dragging us into a buyer’s market. But in certain neighbourhoods, well-maintained houses are moving fast. It’s clear that this year’s four interest rate drops totally 1.25% are designed to shake things up, and… they kind of have already.

In September 2024, we saw an 8% increase in sales compared to last year, totalling 4,996 transactions. Now, before we feel impressed—let’s add some context. It’s still the second slowest September in two decades. In fact, the past three Septembers (2022, 2023, and 2024) have all been bottom-dwellers for the number of transactions over the last 20 years.

What’s Going On Here? A Bit of History

This is where a little real estate wisdom comes into play. You see, September 2021 was the busiest on record—11,032 transactions! That’s when everyone was emerging from quarantine with “big life changes” on their minds (some wise, some… not so much). After that rush, the market was bound to cool off. We’ve been riding the aftermath ever since.

Then came the rate hikes between 2022 and 2023, designed to reign in inflation and cool the economy—including the housing market. And wow, did they work. Now that rates are falling, you’d think the market would bounce back like a rubber band… but real estate has its own rhythm. Historically, the market doesn’t jump back immediately after rate cuts—it simmers.

Take 2007 to 2009, for example in the chart below. Banks slashed rates, but sales didn’t roar back overnight. But once the market does turn that corner? It comes back fast. Remember the big Covid-era rate cuts? Same thing—things lagged, then the market went into hyperdrive.

What’s Next? Patience is Key (But Don’t Wait Too Long)

So, where do we stand today? Rates are likely to drop further—which means many buyers are holding off, hoping to catch the bottom of the rate dip. But here’s a little insider wisdom: Waiting too long for the “perfect” rate could backfire. The moment rates bottom out, you’ll likely be surrounded by eager buyers AND sellers.

When the floodgates open, it’s likely game on. Typically, listings increase, competition spikes, and that dream home might just become a bidding war battleground. This time, keep in mind we do have a lot of condo inventory to go through. This may slow the pace of return compared to past years, but no promises that it may not be quick.

Looking Ahead: A Slow Burn with a Quick Turnaround

While we’ll probably see more transactions this fall compared to last year, don’t expect a meteoric rise—just yet. Prices are down slightly, but not drastically. What we do have, though, is pent-up demand simmering under the surface. With a few more rate cuts, we could see the turnaround in activity in 2025. Maybe not right away, but possibly at some point during the year.

The key takeaway? Timing the market is tricky. Buyers waiting for rock-bottom rates might end up diving into a feeding frenzy if they  hold out too long. Sellers waiting for the market to heat up might find the competition with fellow sellers heating up with it. In the end, the Toronto market will not announce its return, but you’ll know when it’s back.