There’s something in the air. Can you smell it? I can’t quite put my finger on it.

Is it government intervention? If you subscribe to the “where there’s smoke, there’s fire” mentality; then you probably think there’s going to be some significant rate hikes. You may even think there’s going to be some sort of regulatory action in an attempt to cool the market (we spoke about this last week).

I mean, there doesn’t need to be “smoke” for you to understand that we’ve been thriving in a low-interest-rate environment for a long time (prolonged due to pandemic, obviously), and that needs to change.

Things are getting more expensive out there. Some say this inflation is transitory; some say it’s here to stay, which will be an even bigger problem next year. Will supply chains sort themselves out? Will shipping a container overseas go back down to costing $2500 vs. the $10K it costs today? Or are these new high prices here to stay? Will Russia start the next World War by destroying Ukraine? Will interest rates climb to 1989 levels? Will there be another wave of COVID? Are we ever going to get back to normal?

I feel like people are getting tired. Really tired. Like my friend and client’s son Carter (you have to see this interview).

So much confusion in the air some people are getting paralyzed. Paralyzed by all of the information and not knowing what to believe—forgetting how to think rationally.

What does it all mean to you, the local Toronto real estate enthusiast?

It means buyers are getting tired, but sellers are also shooting for hefty prices. This is the same cycle we’ve gone up and down for nearly a decade. But now, since covid, the waves are closer together.

Instead of three to six month cycles, we’ve got two to eight week cycles.

Cycles of intense buying and price gains followed by a lull.

What is a lull? It’s simply a time when some buyers sit on the bench with a wait-and-see attitude.

While sitting there, they notice that Toronto’s prices aren’t coming down, so they jump back in, creating another bull run.

It’s been happening over and over again and is predictable now.

So, the big difference between previous (during COVID) cycles is that we have a whole bunch more uncertainty in the air now, especially with interest rates.

Tomorrow is the Bank of Canada’s first announcement of 2022. Will they raise rates? Will they wait till their April announcement to increase?

What If I told you it didn’t matter?

Why?

Because I think that too many people come at real estate with a day trader mentality and forget that they’re buying a home, if you’re not an investor, your property is a home first, an investment second.

An extra couple of points on your interest rate will cost you money. That’s real, and I completely understand that. So, if you’re worried about dealing with that uncertainty, lock in a fixed rate, then spend the next five years saving so you can handle the renewal if rates are up again.

If you’re worried, then notch down on the real estate ladder and buy a larger condo instead of a house. I raised a family in a condo until we were lucky enough to buy a fantastic house. Baby steps and rational thinking is the name of the game.

But you know why I’m at peace with everything?

Toronto sellers don’t panic. They didn’t panic during COVID (except for the hundreds of sellers unloading their Airbnb condos on the back of the city’s crackdown on short-term rentals), and they won’t panic now.

Sure, there are thousands and thousands of investors who are leveraged. But, being leveraged doesn’t mean everyone is walking around with no or negative equity.

Our markets are set up for success.

Our borrowers have equity…even if prices adjust in the short term…we don’t have a market full of panic sellers. We, as agents, must advise potential sellers against making irrational, panicked decisions. We’re not here to just take orders and list properties just because someone is panicking and wants to sell.

To make a long story short, I’ll finish with this.

There will be interest rate increases this year. But guess what? Banks have already increased their rates ahead of that. No matter how many times you read it in the news, there’s no chance that we’ll have seven to eight increases in one year. That will not happen, and I wish some “think tanks” would stop droning on about that.

We may have a 25 bps increase tomorrow, then another in April, then another one or two by the end of the year. That’s it.

So with all of that said, let’s move forward calmly and confidently, knowing that Toronto is a unique place on this planet. A place that everyone wants a piece of and that’s not going to change.

There will be ups and downs in the short term as there have always been, but real estate (and most other investments) are long-term strategies.

If you come at real estate with a long-term vision, then none of this noise matters. You will end up ahead if you’re patient, you will buy smart, and work with a professional who’s a consultant and not some pushy salesperson.

If you missed my 2022 real estate forecast post, you can catch up on that here.

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: $1,857,331
House Median Price: $1,672,500
208 Active Listings
54 Firm Sales This Week
Months of Inventory (MoI) ~ 0.43
Average Days on Market ~ 9.52 DoM

Condo Average Price: $817,572
Condo Median Price: $742,000
615 Active Listings
161 Firm Sales This Week
MoI ~ 0.62
Average Days on Market (DOM) ~ 15.01

Urban North: Rosedale, Deer Park, Moore Park, Forest Hill, & Lawrence Park
House Average Price: $2,970,400
House Median Price: $2,585,000
57 Active Listings
5 Firm Sales This Week
Months of Inventory (MoI) ~ 0.65
Average Days on Market ~ 29.67 DoM

Condo Average Price: $1,242,796
Condo Median Price: $1,200,000
105 Active Listings
19 Firm Sales This Week
MoI ~ 1.05
Average Days on Market ~ 26

Leaside, Davisville, Yonge & Eglinton
House Average Price: $2,012,404
House Median Price: $1,920,000
12 Active Listings
5 Firm Sales This Week
Months of Inventory (MoI) ~ 0.22
Average Days on Market ~ 10 DoM

Condo Average Price: $800,778
Condo Median Price: $795,000
30 Active Listings
14 Firm Sales This Week
MoI ~ 0.35
Average Days on Market ~ 16.66 DoM

Birch Cliff
House Average Price: $2,327,500
House Median Price: $2,282,500
6 Active Listings
4 Firm Sales This Week
Months of Inventory (MoI) ~ 0.26
Average Days on Market ~ 8.6 DoM

Kingston Rd Corridor to Highland Creek (NEW Week 2)
House Average Price: $1,841,958
House Median Price: $1,532,500
33 Active Listings
12 Firm Sales This Week
Months of Inventory (MoI) ~ 0.32
Average Days on Market ~ 9.72 DoM

Condo Average Price: $724,550
Condo Median Price: $638,000
28 Active Listings
3 Firm Sales This Week
MoI ~ 0.39
Average Days on Market ~ 20.4 DoM

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