Episode 107: There is no such thing as the Canadian real estate market

Canada is made up of a ton of micro markets. You can never take what may happen nationally too seriously.

This one news article is based on a “study” by Oxford Economics that all the news outlets picked up talking about Canada pulling back 24%.

But, what does that mean to Toronto? Nothing. I’ll talk about where I think the market will take the biggest hit below.

House buyers and sellers seemed to take their feet off the gas during March break, with the sale of houses down about 40% week over week, and new listings only adding a few homes yesterday and today.

Not the dramatic flood of listings some agents have been predicting, and the decrease in average price was due to some lower-end, March break slow down, and a halt in some luxury sales. Numbers should be way back up next week as things get back to normal.

Remember, Toronto is not “panic seller central.” During times of economic uncertainty, Toronto holds firm. It’s what we’ve done, and it’s what we’ll continue to do. The only reason condos tanked in 2020 was because of the poorly timed Airbnb restrictions imposed by the city.

We’re a lot less vulnerable now with too many strong purchasers in good equity positions on day one.

Many predicting a suburban crash similar to 2017 are also entirely wrong. Those suburban markets (think Richmond Hill, Pickering, Oshawa, Markham, etc…) are not built on a shaky, speculator-heavy market like in 2016/17. The area’s prices have reached new highs, which have been supported repeatedly. Many gains have stopped growing aggressively, and each new sale supports the newly set high prices.

The markets people need to be more concerned about are the rural ones. The areas further out than the suburbs had all kinds of buying activity with no real reason other than “cheaper than the suburbs.” Those communities should experience a severe pullback in the coming months, similar to what the burbs did in 2017.

So it’s the Bergs (you know..that towns that end in berg, they’re called the Bergs, right?), not the Burbs, that is a concern this time around.

So let’s talk about urban condos. During March break, condos didn’t skip a beat last week, with sales up 8%. Not just any deals either; we had some massive sales $4 to $7mm that pulled that average price way up. But, you’ll notice the median price didn’t tick up that much, so don’t worry, the average Toronto condo doesn’t cost a million – not yet anyway.

Don’t you think it’ll happen? Why?

Why is it impossible for the average condo to be $1mm? There’s no good answer to this question.

Before 2016, we didn’t think $1000/PSF would be achievable in my lifetime. But, here we are. The talk of the world, and everyone wants a piece of Toronto. That’s not going to change.

Did you see the new Disney movie Turning Red by Domee Shi? Full-on Toronto! The effects of these things are something that data scientists never talk about. They can’t measure the impact of sentiment. It matters just as much as large companies setting shop here and creating jobs.

All of that matters when people are deciding where to emigrate.

How people feel about Toronto and what they’re willing to pay to live here are limitless. Today, we are selling 500 sqft condos in Yorkville for $1mm. So the tiny, million-dollar condo has already happened.

The writing is on the wall. No interest rate hike, federal government announcement or any other measure will affect the Toronto real estate market long term. Anyone who buys today at what some consider the top of the market will be in a better equity position in five to seven years. No question. This has been proven repeatedly over the past 60 years (or more).

So, I’m going to repeat myself in caps this time for the people in the back: YOU CAN NOT DAY TRADE REAL ESTATE! You should always be a buyer and rarely be a seller. Well…that sort of mentality is what got Toronto to where we are today.

Who do you think controls the supply after all? Developers? Nope, it’s you.

Speaking of supply, next week, I’m going to be part of a group of experts tapped by the Urban Land Institute (if you’re not a member, you should be) creating a report at the request of the city of Toronto regarding density on residential streets.

We’re going to be spending a ton of time reviewing various property types throughout the city of Toronto and then making recommendations to the city on maximum density and, as of right, multiplexes on every single residential street in Toronto.

That should ruffle a few nimby feathers! But, don’t get it twisted. You cannot outbuild demand in Toronto, so this is not a path to affordability. Remember, we have to rely on individual property owners to do this, and if laneway homes are any indication, there won’t be enough built to even make a micro dent in supply. But, it’s nice to incentivize homeowners to create these types of dwellings. Very much needed, especially in our urban centers.

Sellers of both houses and condos still have much of the control when selling. But, please beware of the stat that’s being misrepresented out there by many keyboard warrior realtors. When you see a property not sold on offer night or show up as a PC (price change), that doesn’t mean the sky is falling, or the market is crashing.

That simply means that grossly under listing a property, (which works in an extreme seller’s market like Jan/Feb of this year) does not work as well in a market that is better supplied and occupied by fatigued buyers.

What do you think happens to the majority of the properties that don’t sell on offer night?

1. They come off the market and don’t sell
2. They terminate the listing and relist at a higher price and sell within a week or so at the expected high price
3. They change the price to a higher, more reasonable price and get what they want

So, when you hear a sound bite, “x amount of properties were terminated then relisted” or “x amount of properties had a price change.”

Anyway, please, please, please dig deeper and ignore attention-seeking sound bites. There’s a lot of that noise out there, and it’s terrifying to think that good people are being influenced by so much wrong, and out-of-context information.

Long-term vision, calm during times of uncertainty, and quick and consistent action will help you retire like the kings and queens you all are!

Turn off the noise, subscribe to this blog!

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 Areas
House Average Price: $1,656,560
House Median Price: $1,520,000
303 Active Listings
73 Firm Sales This Week
Months of Inventory (MoI) ~ 0.94
Average Days on Market ~ 9 DoM

Condo Average Price: $942,995
Condo Median Price: $782,500
963 Active Listings
236 Firm Sales This Week
MoI ~ 0.91
Average Days on Market (DOM) ~ 9

Urban North: Rosedale, Deer Park, Moore Park, Forest Hill, & Lawrence Park
House Average Price: $2,158,760
House Median Price: $1,863,800
78 Active Listings
5 Firm Sales This Week
Months of Inventory (MoI) ~ 1.05
Average Days on Market ~ 9.27 DoM

Condo Average Price: $1,347,992
Condo Median Price: $1,188,333
148 Active Listings
21 Firm Sales This Week
MoI ~ 1.67
Average Days on Market ~ 6.4

Leaside, Davisville, Yonge & Eglinton
House Average Price: $3,186,000
House Median Price: $2,965,000
34 Active Listings (nearly doubled week/week)
13 Firm Sales This Week
Months of Inventory (MoI) ~ 0.95
Average Days on Market ~ 8.6DoM

Condo Average Price: $843,846
Condo Median Price: $850,000
79 Active Listings
13 Firm Sales This Week
MoI ~ 0.85
Average Days on Market ~ 4.9DoM

Birch Cliff
House Average Price: $1,673,938
House Median Price: $1,704,000
16 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: $1,585,333
House Median Price: $1,380,000
63 Active Listings
9 Firm Sales This Week
Months of Inventory (MoI) ~ 0.822
Average Days on Market ~ 12.1 DoM

Condo Average Price: $529,800
Condo Median Price: $500,000
32 Active Listings
5 Firm Sales This Week
MoI ~ 0.88
Average Days on Market ~ 15.6 DoM

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