Episode 111: Buyer sentiment weakens but seller’s are still getting paid

I made a mistake in last week’s market report. I referenced Gen X’ers, but I meant Millenials and Gen Zeds. Sorry! But, the message is still the same.

You can complain about how Toronto is unaffordable and is pricing out an entire generation of humans, but you’d be wrong.

Today’s young people have the same opportunities to get into real estate. But, they have to think differently about their purchase.

You don’t get to have the same access your parents or grandparents had. Why? Toronto has gone big time. Started from the bottom, now we’re here – as the great poet Drake once said.

I’ve started to tell you my story before, but have never completed it. One day I’ll dig deeper into it for you, but for now, I’m hoping that the young people of Toronto understand the many ways they can participate in one of the hottest markets on the planet.

And, it’s not going to start with a detached house. Or a house altogether. You may not even be able to get into the 416 market at all.

What does today look like for an enterprising Gen Z or Millenial? Maybe you’ve saved $35K in your RRSP or have grown a couple of grand trading crypto during COVID. You dream of owning a house in Toronto. You have access to dozens of entry-level condos.

$400-500K condos exist in Toronto and surrounding communities. You’re not going to be in prime Leslieville or right on the Roncy strip. But, you can be close to the communities you love. Why can’t that be a compromise? When I was down and out and finally squirreled together $25K, Christ, I bought a small dirty cottage 2.5hrs away from Toronto and spent the winter/spring fixing it up. I flipped that into the $2mm house I live in Today, for over five years.

If you’re struggling to get into the market, you don’t have to live in what you buy. Many investors continue to rent to keep their lives flexible. Still, if you’re young and have trouble buying what would suit your lifestyle, you can get into the market by buying whatever you can afford, renting it out, wherever you can afford it.

When the market has done its thing, you can consider selling and moving into a home that works for you.

Or consider co-buying. Find like-minded people and talk about getting into real estate together. There’s a lot of power there that many dismiss because you don’t have the same access to real estate as your parents did.

That’s a mistake that’s going to cost you a comfortable retirement.

Governments aren’t going to make real estate affordable again. None of the kicking and screaming will make real estate affordable again. So. you can either do what you can to get into the market or don’t, but you have a choice—way more choice than you think.

Anyway, how’s the market right now and what does it all mean to you?

Today, the market in the areas I’ve been tracking for 111 weeks in a row are all extremely active. It’s essential to understand that all of these measures put in place don’t result in immediate market changes or corrections.

As we approached the April 13, 2022, interest rate announcement, a few buyers took their foot off the gas and decided to step aside.

We had some pre-con purchasers back out of their deals as they felt “Toronto wasn’t a place for them to invest right now,” but, you know what happened to those rescinded units? We sold them to other buyers at higher prices immediately. That’s what happens when you back out of a pre-con purchase. The developer takes it back, they increase the prices and resell them.

Who buys them? Long-term thinkers. People who don’t care and have never cared about what happens in the short
term. A long-term bet on Toronto is a sure thing.

You may have noticed properties re-listed after not generating enough action (when under-listing to attract multiple bids). Do you know what happens after they relist? They sell for a price close to the previous record or at the last record.

Looking at the number of house listings on the market, you’ll notice a drop in supply from last week. Do you know why? Toronto’s popular markets aren’t entirely over-leveraged panic sellers. If the market does not give them what they want, they’ll pull the listing and wait until they can get what they want/need. If the uncertainty of COVID didn’t prove this to you, then nothing will.

Condos have been consistently adding supply weekly for a while now. The peak condo selling time has passed for this cycle, so if you’ve been waiting for that “spring market” like some uneducated realtors have been telling you to wait for…sorry, you’ve missed the boat!

But, missed the boat on what exactly? Honestly, nothing. Well, I guess you’re not likely to set a new record with your sale, but you will still sell. And, you’ll sell for somewhere close to the last recorded sale. Depends on the building, though.

In Q1 of this year, we could sell any house or condo for a record price no matter the deficiency, terrible view, or noisy street. That’s what changes during times like this. Those less-than-ideal properties take a little longer to sell. But, they sell.

So, it looks like announcement season is over with way fewer measures put in place than anticipated—especially the increase in down-payments for investors. Every mortgage broker in town was 100% certain that this was happening.

It didn’t.

Anyway, if you’re a seller concerned about the market, please don’t fret. Buyer sentiment is weaker, but there’s so much activity in all price points from $400K to $10mm, and there will continue to be. Multiple offers and big numbers are all over the place still.

It’s not rational to assume rates would stay historically low. The Toronto market has thrived in much more expensive borrowing conditions than this. Granted, these new high prices are going to be testing the wallets of buyers going forward in a way that’s never been tested before, but just like every other major city in the world, we’ll be just fine as long as there’s no panic, and long term glasses are firmly on your faces.

Take a breath and buy what you can when you can and sell only when you absolutely need to. We’re not day trading real estate here!

Now go forth and conquer.

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: $1,877,735
House Median Price: $1,625,000
394 Active Listings
97 Firm Sales This Week
Months of Inventory (MoI) ~ 1.072
Average Days on Market ~ 8.15 DoM

Condo Average Price: $907,192
Condo Median Price: $822,500
1222 Active Listings
147 Firm Sales This Week
MoI ~ 1.12
Average Days on Market (DOM) ~ 10

Urban North: Rosedale, Deer Park, Moore Park, Forest Hill, & Lawrence Park
House Average Price: $3,510,335
House Median Price: $3,100,000
105 Active Listings
15 Firm Sales This Week
Months of Inventory (MoI) ~ 1.47
Average Days on Market ~ 13.13 DoM

Condo Average Price: $1,509,919
Condo Median Price: $1,172,500
176 Active Listings
24 Firm Sales This Week
MoI ~ 1.76
Average Days on Market ~ 13,38

Leaside, Davisville, Yonge & Eglinton
House Average Price: $2,401,701
House Median Price: $1,970,000
29 Active Listings
19 Firm Sales This Week
Months of Inventory (MoI) ~ 1.07
Average Days on Market ~ 10.16 DoM

Condo Average Price: $891,127
Condo Median Price: $876,400
107 Active Listings
15 Firm Sales This Week
MoI ~ 1.18
Average Days on Market ~ 9.47 DoM

Birch Cliff
House Average Price: $1,674,922
House Median Price: $1,525,000
20 Active Listings
5 Firm Sales This Week
Months of Inventory (MoI) ~ 0.98
Average Days on Market ~ 9.2 DoM

Kingston Rd Corridor to Highland Creek
House Average Price: $1,526,200
House Median Price: $1,490,000
60 Active Listings
10 Firm Sales This Week
Months of Inventory (MoI) ~ 1.10
Average Days on Market ~ 7.5 DoM

Condo Average Price: $657,475
Condo Median Price: $672,500
38 Active Listings
8 Firm Sales This Week
MoI ~ 0.63
Average Days on Market ~ 8.63 DoM

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