23 Aug 2022
Week 129: Would you buy real estate in Toronto right now?
Week 129: Would you buy real estate in Toronto right now?
Many homes that you wouldn’t expect to go into multiple offers are seeing just that.
Why?
So far, most of them have basement apartments or income-producing opportunities. It seems like the properties that can combine a great investment to take advantage of the rental market the way it is and provide an amazing home for someone is doing very well now.
This basic home on Alton sold last week for $999K (asking price) with three offers on the table. The home was riddled with mould, had missing rafters, and had a completely unstable and not-to-code rear mudroom – but it had a basement apartment generating $1300/mth in rent, and it’s on a great street.
So any home with income-producing opportunities should sell in this market.
The urban market had more sales this week than the super low week 127 but nowhere near the volume of this time last year or any other week of real estate in Toronto.
The opportunity that exists here is still in condo assignments but also in some freehold properties. There are discounts available of up to 10-15% off-peak pricing for some home types, especially homes that need a ton of work or are less than ideal. (continued after chart)
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Urban Markets: Downtown & Surrounding Areas
House Average Price: $1,283,069
House Median Price: $1,201,000
501 Active Listings
29 Firm Sales This Week
Months of Inventory (MoI) ~ 1.57 (down from 1.77 last month)
Average Days on Market ~ 18.10
Condo Average Price: $761,722
Condo Median Price: $718,000
1567 Active Listings
83 Firm Sales This Week
MoI ~ 2.02 (down from 2.16 last month)
Average Days on Market (DOM) ~ 24.92
Many are still riding out old pre-approvals with lower than today’s rates, so that’s mainly who’s in the market now.
Many buyers are still sidelined, waiting for what they perceive as the bottom or to get a better handle on their finances. Some buyers are out because they’re not getting the deals they hoped for.
Curious: What do you consider a deal? Are you a buyer right now?
Interestingly, the only two sales in our luxury markets sold immediately on day 0 of being on the market for their full asking prices. I’m not surprised at the inactivity in these areas as they’re historically stagnant in the summer months, especially the end of summer, as many are at cottages or out of the country.
The three upcoming interest rate announcements should keep many buyers on the sidelines, but investors are still out and buying.
Remember, this is what many were waiting for. If you’re one of those people that were praying for that sort of market, where are you? Are you buying? Why? Why not?
That’s the problem with hot markets and that day trader mentality. You think that prices come down just because they’re too high.
That’s not the case.
There has to be a trigger. In this case, money tightened up. Borrowing becomes more expensive so that real estate you were waiting to plummet in price essentially costs you the same if not more than Jan/Feb.
2023 will bring some downward pressure on rates. As we dig into a recession, rates will come down to stimulate the economy again.
(continued after chart)
Urban North: Rosedale, Deer Park, Moore Park, Forest Hill, & Lawrence Park
House Average Price: $2,640,000
House Median Price: $2,640,000
124 Active Listings
2 Firm Sales This Week
MoI ~ 2.04 (down from 2.40 last month)
Average Days on Market ~ 0
Condo Average Price: $1,083,771
Condo Median Price: $907,000
179 Active Listings
3 Firm Sales This Week
MoI ~ 2.12 (down from 2.43 last month)
Average Days on Market ~ 19
I wouldn’t get too excited about the easing inflation rates. I get that we’re down to 7.7% (down from 8.1%), but that’s largely due to a decrease in gas prices. Everything else is still extremely expensive, from mortgages to cars to food to services.
So people will continue to be squeezed until the Feds decide it’s time to ease the pain and make the money flow again.
When is that going to happen? Some say mid-2023, and I’d agree. But until then, I see some more pulling back.
I see some houses and condos getting a little less expensive as we approach the Fall market. But as long as listing supply remains relatively low (and even pulls back like it’s been doing), urban prices shouldn’t be affected as much. If I owned a house beyond the Burbs in the Bergs…I may be concerned a little about the value of my home.
But those extreme suburban/bordering on rural areas with less demand are used to the volatility. Or they sould be anyway. That’s why I love the urban markets. You may not have cash flow on your investment, but when the rest of the world is panicking, Toronto real estate seems to be that reliable shoulder you can always lean on.
(continued after chart)
Leaside, Davisville, Yonge & Eglinton
House Average Price: $1,905,000
House Median Price: $1,365,000
30 Active Listings
3 Firm Sales This Week
Months of Inventory (MoI) ~ 0.85 (down from 1.65)
Average Days on Market ~ 7.33
Condo Average Price: $678,750
Condo Median Price: $655,000
163 Active Listings
6 Firm Sales This Week
MoI ~ 2.38 (down from 2.53)
Average Days on Market ~ 18.4
So here we are, in a down market, with some negative news on the horizon.
What should you do?
What should you buy?
What shouldn’t you buy?
Should you sell?
So many questions! Look, as long as I have the money, I’m always a buyer. I just don’t see how I can lose long-term in Toronto. There will always be rental demand for my investment. There will always be Buyer demand should I need to sell. But as a 44-year-old man, I’ve got time to ride out anything.
And that’s the thing. Where are you in life? How old are you? How secure are you in your job?
Investing in real estate isn’t like the stock market or crypto. You often have people telling you “to make sure you only invest the money you’re prepared to lose.”
That’s not a reality in real estate. My only rule is; to be prepared to lock in your investment for the long term should the immediate market not provide the return you need.
This is the case for some would-be sellers today. As you can see from the weekly numbers, nobody is panicking.
And you should take a lot of comfort in that.
(continued after chart)
Birch Cliff
House Average Price: $1,019,000
House Median Price: $1,019,000
32 Active Listings
2 Firm Sales This Week
Months of Inventory (MoI) ~ 1.52 (up from 1.55)
Average Days on Market ~ 13
The Kingston Rd corridor is doing a sneakily supply pullback right now. Down to only 77 available houses from nearly 100 a couple of weeks ago.
I have clients in these areas right now who are getting outbid on some properties, but there are still some good buys available beyond Birchcliff into the Bluffs and even further east to the Port Union/Centennial area.
Demand there is such a strong sill, but there are some older homes that need some cosmetic love that is sitting. Good quick flip opportunities there if you have the stomach for it.
The rental market, of course, is crushing it for investors at the moment. I’ve been talking about investors and the rental market so much that an angry newsletter subscriber called me a “capitalist pig” last week, then followed up by saying she’d be selling her house at some point in the future…let’s see if she decides to run a charity then and sell for below market value to “help out these poor youngsters”.
(continued below chart)
Kingston Rd Corridor to Highland Creek
House Average Price: $1,131,555
House Median Price: $992,500
77 Active Listings
11 Firm Sales This Week
Months of Inventory (MoI) ~ 1.84 (up from 1.82)
Average Days on Market ~ 18
Condo Average Price: $662,000
Condo Median Price: $624,000
65 Active Listings
4 Firm Sales This Week
MoI ~ 2.44 (up from 2.04)
Average Days on Market ~ 29.5
Anyway, I’m in Vancouver now (you know, Canada’s other real estate market) and love the real estate conversations happening here. Very similar to the Toronto market but a little more active.
But one thing remains the same. Everyone loves talking about real estate. Here, there, and everywhere.
Want to talk about real estate? Let’s do it on YouTube 🙂
(don’t forget to subscribe to my new YouTube Channel here, where I go over all of these reports in more detail)
Have a terrific Tuesday, and I’ll see you next week 🙂
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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.
