31 Aug 2021

Episode 78: Affordability is not a problem that can be solved in Toronto real estate

Urban Markets: Downtown & Surrounding Areas
It looks like people are finally taking some time to enjoy the last days of Summer as both house and condos sales are down to expected seasonal lows.

Last year, there were 33% more houses and a whopping 52% more condos on the market during the last week of August.

The critical product to watch here is condos.

With listings down 33% year over year and sales up 40%, you can easily see that not enough condo listings are coming to market to satisfy demand.

Expect condo prices to jump as buyers emerge from the Summer and pile on to the demand side of things.

Entry-level buyers are going to have an even harder time getting into the market after the Federal election. With the liberals thinking they did something by announcing insane plans like banning foreign investment for two years or making the closed bidding process “illegal.”

Real Estate is best when governed at the municipal level. Toronto is very different than Vancouver, which is very different than Montreal and so on. Creating some BS blanket policy and applying it to an entire country as if they all have the same problems will help no one.

Part of the problem is that people are confusing what affordability means.

Let’s get it straight…Toronto is not a city that will all of a sudden become Affordable. That’s not going to happen, and nothing any government does is going to change that.

People are droning on about Affordability when the real conversation should be around accessibility.

Real Estate can be more accessible by managing interest rates. By making it easier for first-time buyers to access funds from RRSPs and so on.

Creating an environment where more people can access real estate will also contribute to increased demand…which results in increased prices. That’s what any initiative that adds more buyers to the pool will create.

Then you want to go on and talk about taxing the gain on a principal residence? How is that going to add to the supply issues? It’s going to tighten supply further and do nothing to change buyer demand. Result? More increased prices.

So, where does it end?

It doesn’t. As long as the entire World considers Toronto the place to be, with World-class education, uniquely diverse communities, the tech hub of Canada, the Film hub of Canada, the financial corner of Canada, globally recognized sports teams, culture-changing artists and so on…Toronto will not be affordable the way people want it to be.

What’s the moral of the story? Buy real estate and hold it. Do whatever you can to get into your first property, and don’t let go.

If all you can afford is a 265sqft unit at The Goode Condos in the distillery, then buy it. Start anywhere you can on the ladder and keep buying till you’re ready to retire.

House Average Price: $1,489,641
House Median Price: $1,271,000
351 Active Listings
43 Firm Sales This Week
Months of Inventory (MoI) ~ 0.93
Average Days on Market ~ 15.02 DoM

Condo Average Price: $824,657
Condo Median Price: $714,200
1243 Active Listings
125 Firm Sales This Week
MoI ~ 1.42
Average Days on Market (DOM) ~ 17.34

Urban North: Rosedale, Deer Park, Moore Park, Forest Hill, & Lawrence Park
Not much activity to get excited about in both condos and houses this week. Buyers are certainly there and waiting but listing supply, as in previous weeks, is seriously low.

Money is moving, as a massive $15mm Lawrence park home traded after being on the market for nearly 100 days. Aloof with a handful of other big sales.

Expect much more activity here in the coming weeks as people get ready to make moves for the Fall.

House Average Price: $5,426,500
House Median Price: $2,662,500
93 Active Listings
4 Firm Sales This Week
Months of Inventory (MoI) ~ 1.16

Condo Average Price: $1,718,333
Condo Median Price: $980,00
218 Active Listings
9 Firm Sales This Week
MoI ~ 2.79

Leaside, Davisville, Yonge & Eglinton
If you’re looking for condos, then consider these communities. With the most supply out of all condo communities, you may find what you’re looking for easier than downtown or the Leslieville-type district you may want. You may still be in competition, and units here aren’t cheap, but there’s just more to choose from at the moment.

Houses on the other hand…forget about it. Virtually zero supply and oodles of demand is going to cause all sorts of price gains here in Q4 of 2021.

If you’re shopping with less than $2mm and need a finished turn-key home…it’s going to be tough. $1.5 to $2mm seems to get you something that could need a bit of work to modernize. The home would be totally liveable and in a great community but not quite as turn-key as you’d expect.

Working with a local professional is super important in a hot market like this. Why? To get access to properties before they hit the market, to be able to leverage local relationships to make offer processes a bit easier and so on.

House Average Price: $1,997,750
House Median Price: $1,885,500
27 Active Listings
4 Firm Sales This Week
Months of Inventory (MoI) ~ 0.66

Condo Average Price: $708,838
Condo Median Price: $642,000
117 Active Listings
13 Firm Sales This Week
MoI ~ 1.72

Birch Cliff
Entry-level bungalows on desirable streets like Courcelette are fetching upwards of $1.4mm while bungalows on less desirable streets (think Hollis) are trading at around a million.

We have weeks of proof here to now firmly establish those price points as entry level for Birch Cliff.

This Fall should bring us some pretty big sales as we see some developers getting ready to finish off their new builds. Don’t be surprised if we see a serious jump in average price as much more expensive product starts to hit the market.

It’s tough to take the condo market stats seriously here as there was only one sale of a 450sqft condo for $490K. Meaning, $1000/PSF is now a very real thing this far east.

Units at Merge Condos up near Midland are now selling at $1000/PSF so there’s no going back now.

The condo market along Kingston Rd is now well on its way to setting new highs. As we’ve explained over the past year!

House Average Price: $1,100,000
House Median Price: $975,000
15 Active Listings
3 Firm Sales This Week
Months of Inventory (MoI) ~ 0.54

Condo Average Price: $490,000
Condo Median Price: $490,000
18 Active Listings
1 Firm Sales This Week
MoI TBD

Thanks so much for your energy and attention! If you need clarity on any of this or want to talk about your specific situation, then call/text/email anytime: ara@thespringteam.ca or 416-434-1511

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