Week 121: Supply is up and savvy buyers are buying all the real estate

Believe it or not, there are still some realtors and armchair professionals out there who believe in month-over-month figures.

I started this reporting 121 weeks ago weekly out of pure necessity.

There were too many people focused on old data that doesn’t matter.

They made predictions confirming what happened vs. what’s happening and spotting trends to show you what may happen.

The information presented was not correct! Some would tell you the condo market is tanking! But they weren’t aware we had three weeks in a row of dropping supply, signalling a return to a Seller’s market.

It was hard to see that trend if you were focused on month-over-month data, especially when we had over 3000 listings on the market and a month of inventory stat at over five months!

Today, we have the 2nd highest supply of Urban Houses that we’ve experienced during Covid. The peak supply was 680 units in week 34 (hyperlinked above).

But from week 34 to week 35, there were nearly 70 units removed from the market. A huge change! But if you were focused on month-over-month numbers, you’d still think the sky was falling, and you’d miss that trend.
Week 36 saw another drop to under 600 houses. And in week 38, there were nearly 150 fewer houses on the market, and I officially called the comeback. Again, able to spot the trend before anyone else.

This is why week-over-week reporting matters.

By the time we got to week 42, house supply was historically low, and prices were popping off. But our buyers were able to take advantage and get in while others were still fearful.

At the same time, let’s not forget about condos. From week 35 to week 42, condo supply dropped from nearly 3500 units to just under 2000 units.

Again, I spotted that drop weeks ago, and it allowed our Buyers to pull the trigger ahead of the pop and our Sellers to see the light at the end of the tunnel.

So right now, we’re going in the opposite direction.

We’ve had a consistent supply of houses and condos, driving inventory levels up not quite as fast as we experienced in the early covid days but up nonetheless.

Aside from single-week pullbacks, Houses and Condos have added supply weekly for about ten weeks.

But it came a bit slower this time around.

And Sales numbers were dropping.

Why?

Early covid, the answer was easy; People were terrified and thought we would all die, and the market would go to zero. So there was some panic selling.

But MOST owners decided to pull their homes back as they weren’t getting the prices they wanted.

This time around, it’s interest rates.

What’s going to happen to interest rates???

One place says, “oh, we have at least 11 more hikes by the end of 2023,” while others say that’s unlikely.

The government must walk this tightrope or thread the needle precisely to manage inflation. Through a series of Quantitative Easing (money flowing more freely), Quantitative Tightening (restricting monetary supply), and interest rate hikes.

Right now, we’re in a phase of Quantitative Tightening.

Money is more expensive and harder to get, while the prices of our daily necessities are skyrocketing.

Every day there’s another supply chain issue causing a shortage in this or that.

I’ll admit, I was wrong when I thought this inflationary period was transitory. I didn’t understand the long-term effects of the enormous backlog in supply chain issues the global lockdowns caused (and are still causing). And I wasn’t Globally aware enough to anticipate the Oil price issues Russia’s criminal occupation of Ukraine would cause.

So what’s next?

Will supply be an issue forever? Will interest rates keep climbing? Will real estate prices keep going down to zero? Will Toronto become a place nobody wants to be, and buyer demand vanishes overnight?

The key word here is Toronto! I care about other markets as I have friends and family all over the World but what matters most to me (and you) is Toronto real estate. More specifically, urban Toronto real estate.

So it doesn’t matter what might happen to “Canadian real estate” as that’s not a relevant statistic to anyone who owns and invests in urban Toronto.

What happens in other Canadian markets is not an indicator of what will happen in Toronto’s various micro markets.

Toronto’s micro-markets have always reacted very differently to economic changes and proven repeatedly. I wrote about it when Covid first hit us.

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

2022 is presenting a much more balanced market than I had initially thought. And let’s remember, what we’re seeing now is balance.

Some properties that deserve all the attention are getting it, and Sellers are getting paid. With so much supply available, homes that leave a little to be desired are sitting for a little bit longer. But they’re still selling.

We’re down off the highs of early 2022 (going to stop talking about that soon).

That’s another problem with focusing on month-over-month figures. It paints a much more dramatic picture than reality. Anything is down compared to Jan/Feb/March of this year. But we’re not on a weekly downward spiral now, but Buyers are still highly cautious, and some are nervous.

Back in 2021, I remember thinking that buyer sentiment would be pretty strong throughout 2022, but with all of the chaos in the world from crypto crashing and going to zero in some cases, the stock market not performing, and inflation not being as transitory as many thought, ti’s affected sentiment quite a bit.

But that will return.

So my advice to you now is to get buying and don’t sell unless you have to.

Our investor clients are picking up great deals on land value properties and homes that need a ton of work. I sold a property off-market one day after showing it to only one buyer. A 29’ x 75’ foot tear down for $1,150,000.

I sold a commercial/residential property at 807 Gerrard in 3 days for a record number.

So it seems that some local market makers and investors are still spending. This gives me hope for a bounce back to a Seller’s market over the next 12-18 months. But we’ll see where interest rates land.

That’s a long one today, so if you’re still here, thanks for reading, and I’d love nothing more than to hear from you. Send me your comments, ideas, and thoughts. I would love to start a conversation.

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!

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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: $1,598,089
House Median Price: $1,487,500
625 Active Listings
64 Firm Sales This Week
Months of Inventory (MoI) ~ 1.74
Average Days on Market ~ 13.89 DoM

Condo Average Price: $849,806
Condo Median Price: $720,000
1946 Active Listings
104 Firm Sales This Week
MoI ~ 2.06
Average Days on Market (DOM) ~ 21.65

Urban North: Rosedale, Deer Park, Moore Park, Forest Hill, & Lawrence Park
House Average Price: $2,924,772
House Median Price: $2,650,000
153 Active Listings
13 Firm Sales This Week
Months of Inventory (MoI) ~ 2.24
Average Days on Market ~ 10,85DoM

Condo Average Price: $1,383,214
Condo Median Price: $680,000
233 Active Listings
7 Firm Sales This Week
MoI ~ 2.36
Average Days on Market ~ 22.29

Leaside, Davisville, Yonge & Eglinton
House Average Price: $2,256,250
House Median Price: $2,081,250
54 Active Listings
6 Firm Sales This Week
Months of Inventory (MoI) ~ 1.30
Average Days on Market ~ 12.66 DoM

Condo Average Price: $729,714
Condo Median Price: $629,000
183 Active Listings
7 Firm Sales This Week
MoI ~ 2.20
Average Days on Market ~ 21.71 DoM

Birch Cliff
House Average Price: $2,341,333
House Median Price: $2,799,000
32 Active Listings
3 Firm Sales This Week
Months of Inventory (MoI) ~ 1.38
Average Days on Market ~ 9.67 DoM

Kingston Rd Corridor to Highland Creek
House Average Price: $1,067,167
House Median Price: $1,025,000
98 Active Listings
9 Firm Sales This Week
Months of Inventory (MoI) ~ 1.33
Average Days on Market ~ 9.67DoM

Condo Average Price: $1,024,750
Condo Median Price: $992,500
56 Active Listings
10 Firm Sales This Week
MoI ~ 1.82
Average Days on Market ~ 10.8 DoM

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