Episode 106: Could this be the end of the year of the condo?

In a strange turn of events, condo supply is surging a lot quicker than expected, as sellers clamour over themselves to get to market, to take advantage of the hefty prices being tossed around by condo buyers. Could this be the end of the “year of the condo?”

Of course not, but supply is certainly something to keep an eye on.

Over the past 106 weeks of reporting, we’ve noticed that as condos approach the 1000 unit mark, things start to balance out a bit.

As they approach 1200 to 1300, some sellers don’t get the prices they want.

As we head north of 1300 new listings, things tend to skew in the buyer’s favour, with only the unique spaces ending up in competition. And, as we head north of 2000 listings, buyers take a bit of control in most cases.

The way things are going, we should be at the 1300 mark in about three weeks. That leaves about two weeks of runway for you to sell your condo for a more predictable result. If supply keeps piling on (we’ve added about 300 units in the past four weeks), the condo market will balance out ahead of April’s announcement by the federal government.

So, sellers of condos better get moving here as the window to take advantage of this round could be coming to an end sooner than anticipated.

Does this mean you’re screwed if you don’t sell now? Come on, you know me better than that! We all know that long term, everything’s going to be alright. But, all things are cyclical. Our urban markets ebb and flow like everything else.

You can do your best to time the market, but if you’re not ready, you’re not ready. There’s no shame in that game.

House supply has been increasing for a few weeks in a row, but a 21% drop in listing supply and a 35% increase in sales this past week may signal the quickest rebound of all time. I wish! The decrease in supply is most likely due to March Break and people taking their feet off the gas for a while.

We’ll see if next week rebounds to give these numbers any real meaning.

Some agents have been calling what we’re seeing in the market a “slowdown” for a couple of weeks now. It’s hard to argue with some as they take one-off situations as signals of market changes.

They’re not entirely wrong though. If you were a buyer in the market for a house, you would have noticed more options for you to choose from and perhaps a little less competition.

But, you know what you wouldn’t have noticed? A drop in prices.

As predicted, some selling strategies that work in an overheated market don’t work as well as supply improves.

Some agents conclude that a slowdown or a crash may be imminent if a home doesn’t sell on their designated offer night.

But, what they’re failing to point out is that exact property, if the seller is motivated to sell, is re-listed the next day and then sold relatively quickly at a high price. A price that was previously considered “crazy” as new normals were being set.

It’s easy to get caught in the drama of short-term activity and anecdotal evidence. Still, those in the market for a decade or more understand that Toronto’s urban markets are the most resilient in the world, and those with a long-term vision have never lost.

What’s my famous line? You can’t daytrade real estate, so stop trying to be the Wolf of Toronto. Buy when you need to buy (which is all the time, by the way) and sell when you need to sell (which is hopefully not until you retire).

But, what about the ‘80s? I was only two years old when interest rates hit 21% in Canada. What caused that? If you look at the market today and compare it to the ‘80s, there are some similarities.

High oil prices, real estate prices going insane, and inflation at record highs are all realities of today. But, we’re not seeing the levels of unemployment that ravaged Toronto during that time. We currently have the opposite situation here.

Our unemployment rate is low, 7.4% in February. The baby boomers entering the market had something to do with unemployment in the ‘80s. But the global profile of Toronto has skyrocketed since then, and we have many more high-paying jobs.

Do you think Toronto’s real estate market would have reacted the same to high-interest rates if the demand was the same then as it is today? If Toronto was a global leader in so many industries, do you think things would have turned out the same?

Yes, there are many similarities between today and the high-interest rate environment of the ‘80s, which lasted until the early ‘90s. But, there are also some crucial differences.

Many lessons have been learned since the ‘80s, and especially in the ‘90s, when mortgage rates ducked below 10% for the first time in 20 years.

The government overreacted back in the ‘80s with these massive rate hikes. Like our favourite economist Benjamin Tal said, “there have been a lot of lessons learned in the past 30 years of dealing with inflation.”

A slower, incremental approach to interest rates, along with some federal measures to remove buyers from the market, is likely what we have to look forward to.

And, in my expert opinion, I believe that the demand for Toronto is too strong for our urban markets to experience significant price fluctuations long term.

However, a recent surge in COVID cases in China causing widespread lockdowns will continue to affect supply chains and drive up prices even more in the short term. And, of course, the war (or should we say criminal occupation) of Ukraine by Russia will have unpredictable results, especially if Putin continues to press forward.

Anyway, sellers, you’re still ok out there for both houses and condos. Buyers, you should see more condo options for you, but you’re likely still in competition on most units as buyers seem to be out in droves at the moment.

Let’s see if the housing supply improves after March Break to draw accurate conclusions.

Have a question about something you’ve seen another realtor post? Ask! I guarantee you there will be more to the story.

Have a wonderful day, and don’t forget to share this. We have over 42,000 subscribers, and the list keeps growing. Thank you for that!

Don’t forget to follow us on Instagram and Facebook. We post some real-time stats on our channels you don’t want to miss. You can also catch up on my 2022 real estate forecast post here.

And, please find me on Twitter as I’ve been more active there these days.

That’s all for today; thanks so much for your energy and attention. If you want some clarity on the market and your specific situation, please DM, comment below or email Ara@thespringteam.ca.

Urban Markets: Downtown & Surrounding Area
House Average Price: $1,776,652
House Median Price: $1,650,000
284 Active Listings
119 Firm Sales This Week
Months of Inventory (MoI) ~ 0.94
Average Days on Market ~ 7.67 DoM

Condo Average Price: $855,075
Condo Median Price: $775,000
928 Active Listings
218 Firm Sales This Week
MoI ~ 0.91
Average Days on Market (DOM) ~ 10.22

Urban North: Rosedale, Deer Park, Moore Park, Forest Hill, & Lawrence Park
House Average Price: $3,094,920
House Median Price: $2,769,400
76 Active Listings
18 Firm Sales This Week
Months of Inventory (MoI) ~ 1.05
Average Days on Market ~ 9.27 DoM

Condo Average Price: $1,131,973
Condo Median Price: $999,900
154 Active Listings
23 Firm Sales This Week
MoI ~ 1.67
Average Days on Market ~ 6.4

Leaside, Davisville, Yonge & Eglinton
House Average Price: $2,631,309
House Median Price: $2,423,000
33 Active Listings (nearly doubled week/week)
13 Firm Sales This Week
Months of Inventory (MoI) ~ 0.95
Average Days on Market ~ 4.3DoM

Condo Average Price: $919,435
Condo Median Price: $863,000
66 Active Listings
23 Firm Sales This Week
MoI ~ 0.85
Average Days on Market ~ 12.6DoM

Birch Cliff
House Average Price: $1,686,000
House Median Price: $1,622,000
15 Active Listings
6 Firm Sales This Week
Months of Inventory (MoI) ~ 0.72
Average Days on Market ~ 9 DoM

Kingston Rd Corridor to Highland Creek
House Average Price: $1,546,510
House Median Price: $1,410,000
50 Active Listings
26 Firm Sales This Week
Months of Inventory (MoI) ~ 0.822
Average Days on Market ~ 6 DoM

Condo Average Price: $677,244
Condo Median Price: $631,500
32 Active Listings
20 Firm Sales This Week
MoI ~ 0.88
Average Days on Market ~ 8 DoM

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