13 Sep 2022
Week 132: Skyrocketing interest rates crush some buyer’s homeownership dreams
Week 132: Skyrocketing interest rates crush some buyer’s homeownership dreams
First of all, did you realize that the word meow is in homeownership? I can’t unsee this and have been pronouncing it that way for a week now.
Spring Team agent Mila Sheina has been producing amazing content on instagram for a long time now but she had a post today that really got me thinking about renting vs. owning in a different way. Check our her reel and give her a follow here.
Sure, interest rates are high today. Higher than they’ve been for a long time. But would you rather pay 5% interest or 100% interest?
That’s essentially what you’re doing if you can afford to buy but are sitting on the sidelines until prices come down to where you feel comfortable. (continued below chart)
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Urban Markets: Downtown & Surrounding Areas
House Average Price: $1,608,868
House Median Price: $1,423,000
469 Active Listings
34 Firm Sales This Week
Months of Inventory (MoI) ~ 1.33 (down from 1.54 last month)
Average Days on Market ~ 22.12
Condo Average Price: $784,179
Condo Median Price: $675,000
1525 Active Listings
67 Firm Sales This Week
MoI ~ 1.78 (down from 2.02 last month)
Average Days on Market (DOM) ~ 29.28
Today’s $850K house costs you the same as February’s $1.25mm house. In terms of carrying cost anyway.
But today you have an amazing opportunity to get that home that would have traded over a million, for less than a million. And because it’s less expensive, your closing costs will be lower and you can even choose a smaller downpayment as the requirements aren’t as aggressive.
So opportunities do exist and when we look back on today in about 18 months, you’re going to realize just how big this opportunity actually was.
The team has been spekaing to many buyers and sellers directly. The Sellers we’re speaking to aren’t in any rush or in despirate need to sell.
The team’s sample size may be small but it’s reflrected in the market as well.
Many expected a flood of new listings to hit hte market by now.
Although listings edged up for the first time in 8 weeks, we’re still in strong seller’s market territory, but of course, so many buyers are either out of the market or continuing to take the “wait and see” path. (continued below chart)
Urban North: Rosedale, Deer Park, Moore Park, Forest Hill, & Lawrence Park
House Average Price: $3,375,429
House Median Price: $2,950,000
118 Active Listings
7 Firm Sales This Week
MoI ~ 1.29 (down from 2.40 last month)
Average Days on Market ~ 17.67
Condo Average Price: $949,500
Condo Median Price: $607,500
168 Active Listings
6 Firm Sales This Week
MoI ~ 2.12 (down from 2.43 last month)
Average Days on Market ~ 52
To all of the Wait and See’ers. I respect that you didn’t get caught up in the FOMO buying frenzy of Q1 2022. Honestly, that’s impressive.
Everyone was buying whatever they could whenever they could for as much as they could. It was bonkers.
During that period you said to yourself “I’m going ot wait this out and see what happens” prices were high and you wanted nothing to do with it.
But there was one flaw in your thinking at that time.
You likely thought that prices would come down simply because they were to high.
Sadly, that’s not how it worked out.
Prices come down when there’s a trigger of some sort. An economic event.
The reality is, you won’t be insulated form these economic events when the change comes.
So Buying then or buying now, you’re still paying the same to carry the place.
The big difference is some properties are now more accessible because they require lower down payments and your closing costs may be been reduced.
So that’s a good thing. The changes you were waiting for happened.
But you’re still sitting on the fence.
(continued after chart)
Leaside, Davisville, Yonge & Eglinton
House Average Price: $2,850,000
House Median Price: $2,850,000
36 Active Listings
1 Firm Sales This Week
Months of Inventory (MoI) ~ 0.73 (down from 0.85)
Average Days on Market ~ 25
Condo Average Price: $677,947
Condo Median Price: $700,000
166 Active Listings
7 Firm Sales This Week
MoI ~ 2.50 (up from 2.38 last mth)
Average Days on Market ~ 17.86
What does the market’s bottom look like for you?
For me, waiting for a bottom to buy or a top to sell are flawed ideologies. We’re not day traders. We’re buying and selling homes.
There will always be demand for homes in densely populated urban communities.
Always
Regardless of what happening in the short term.
Granted, there are issues around the world that are causing huge problems for the Western world at the moment. China’s lockdowns and supply chain disruptions are skyrocketing local prices for all things from shipping to microchips.
So there’s going to be a few months to a year or so of pain to come.
But that’s where the opportunity lies.
Why do you think companies like Blackstone are going all in on Canadian Real estate? (continued after chart)
Birch Cliff
House Average Price: $885,000
House Median Price: $885,000
27 Active Listings
2 Firm Sales This Week
Months of Inventory (MoI) ~ 1.63 (up from 1.52)
Average Days on Market ~ 22
My message to Sellers is still the same.
If you want to make a move to upgrade your lifestyle, be closer to work, family or whatever the reason. If the reason is strong enough, then go to market. Worst case scenario is you buy low and sell low. Versus the opposite scenario back in Feb of this year.
Still, consider finding ways to keep the property and rent it out while making your move. The rental market is strong enough to provide decent cash flow, especially if you’ve owned the home for a while, and you’ll be able to benefit form a much better market in 18-24 months when we dig out of this recession.
Buyers, it’s your time to shine! There may be some more downward pressure on pricing but as long as the rental market remains strong, there will always be buyers here so don’t expect and major discounts better than what we have out there today.
Buy but don’t overleverage yourself as the next couple of years will be somewhat unpredictable.
(continued below chart)
Kingston Rd Corridor to Highland Creek
House Average Price: $810,000
House Median Price: $810,000
78 Active Listings
1 Firm Sales This Week
Months of Inventory (MoI) ~ 1.35 (down from 1.84)
Average Days on Market ~ 29
Condo Average Price: $643,333
Condo Median Price: $620,000
62 Active Listings
3 Firm Sales This Week
MoI ~ 2.34 (down from 2.44)
Average Days on Market ~ 40.33
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.
