04 Oct 2022
Week 135: This winter will be the worst time to sell in over 10 years.
Week 135: This winter will be the worst time to sell in over 10 years.
Over the past week, if you’re an avid news consumer, it would have led you down a confusing path.
You’d have read this article in the Start that said, “why is Toronto suddenly seeing a spike in bidding wars?” and you would have thought to yourself, “is the market back to crazy?”
Then you’d come across this article in the same Star asking, “are we now finally in a buyers’ market?”
And a slew of other publications with headlines that range from the cringy BlogTO style of “oh poor young people, they’re all giving up on Canadian home ownership” to the worst publication in existence, Better Dwelling, who’ve been telling you that the “Canadian Real Estate” bubble is ready to pop at any second, for the past five years. They always seem to find the most anxiety-inducing headlines. What a rag!
Anyway, back to this week’s post.
How do you feel about things?
Are you secure in your job? As we head into this recession, people’s jobs could be at risk. When Covid began, we had no idea how companies would be affected when the wage subsidies went away. But employers figured it out, and our unemployment rate stabilized. (continued after chart)
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Urban Markets: Downtown & Surrounding Areas
House Average Price: $1,387,570
House Median Price: $1,294,444
505 Active Listings
42 Firm Sales This Week
Months of Inventory (MoI) ~ 1.33 (down from 1.54 last month)
Average Days on Market ~ 11.74
Condo Average Price: $869,401
Condo Median Price: $735,000
1582 Active Listings
73 Firm Sales This Week
MoI ~ 1.78 (down from 2.02 last month)
Average Days on Market (DOM) ~ 27.39
Will enough money flow to keep people employed over the next two years? A tricky question to answer.
But the three things I’ll be tracking continuously are; the unemployment rate, new listing supply (months of inventory more specifically), and sales volume.
New listing supply but more specifically months of inventory, because it’s a great indicator of who’s panicking and who’s not. So far, as we’ve seen, most property owners in Toronto are not panic sellers. Most people are making moves because they need to.
Upsizers are making moves in this market because it makes sense to upsize when the market is down like this. Remember, leaving 10% of a $900K house/condo on the table vs. saving 10% on a $2mm buy makes sense right now. We talked more about that in last week’s update.
I’m looking at sales volume and the unemployment rate to gauge Buyer sentiment; buyer sentiment is at an all-time low in Toronto. And every other city across the country…well, in most cases with a few outliers, I’d imagine
So, where do we stand as Buyers and Sellers in Toronto today? (continued after the chart)
Urban North: Rosedale, Deer Park, Moore Park, Forest Hill, & Lawrence Park
House Average Price: $3,177,300
House Median Price: $2,875,000
141 Active Listings
5 Firm Sales This Week
MoI ~ 1.29 (down from 2.40 last month)
Average Days on Market ~ 22.6
Condo Average Price: $1,408,250
Condo Median Price: $825,000
200 Active Listings
10 Firm Sales This Week
MoI ~ 2.12 (down from 2.43 last month)
Average Days on Market ~ 26
Today a buyer is likely NOT in competition when offering on a house or condo. But of course, as we’ve seen every week, the under-list strategy is working in some cases, so you’ll see more reports of “property X get’s 8790 offers and sells $400K over ask” type headline.
But buyers should be updating their pre-approvals every 60-90 days to lock in the lower rates.
Should people be buying pre-construction condos right now? Well, it depends. Do you have the cash to get into a resale condo right now? Then I’d say consider resale over pre-con at the moment. The rental market is strong, and you may even have cash flow if you’re an investor. But most likely, just break even.
If you already own property, pre-con can be a great way to slowly add to your portfolio. That’s what I do.
But there are a few projects that do make a lot of sense to us right now. Should we make a video about them? You’ll have to be a Real Estate Raccoons YouTube Channel subscriber to find out 🙂 (continues after chart)
Leaside, Davisville, Yonge & Eglinton
House Average Price: $2,586,667
House Median Price: $2,065,500
45 Active Listings
10 Firm Sales This Week
Months of Inventory (MoI) ~ 0.73 (down from 0.85)
Average Days on Market ~ 8
Condo Average Price: $737,667
Condo Median Price: $820,000
173 Active Listings
3 Firm Sales This Week
MoI ~ 2.50 (up from 2.38 last mth)
Average Days on Market ~ 21.67
Many people like to complain about the prices of pre-con condos. Why would you pay so much more than resale? Honestly, in most cases, it doesn’t make sense right now. But in some, it does. As you know, I love assignments…especially this one that we have for sale at the original builder price $600K all in.
Back to the stats.
Condos and Houses maintain relatively low supply levels.
Will that change as we approach the next rate hike on October 26th?
What will that hike look like?
Many experts are predicting a 25bps hike and another 25bps hike but I’m not as optimistic. I feel like we have another 50bps super hike coming.
And this announcement will also discuss the monetary policy going forward.
Remember, we’re not seeing many of the effects of these changes for at least 6 quarters so it’s safe to expect 2023 to be a relatively slow year in terms of people’s spending.
Birch Cliff
House Average Price: $1,169,600
House Median Price: $1,188,000
28 Active Listings
5 Firm Sales This Week
Months of Inventory (MoI) ~ 1.63 (up from 1.52)
Average Days on Market ~ 25.4
But I know one thing for sure. Prices today are less expensive than last winter, but the cost to carry the cheaper home is pretty much the same today. So there was no benefit to waiting (as we’ve always said).
When markets crash, so do you, so those waiting for “the big one” will not be in a position to take advantage when we are at the bottom. Why? Because they’ll be too scared.
Are you one of those people waiting? Comment below and let me know why. I want to hear all sides.
Kingston Rd Corridor to Highland Creek
House Average Price: $1,034,000
House Median Price: $1,034,000
81 Active Listings
2 Firm Sales This Week
Months of Inventory (MoI) ~ 1.35 (down from 1.84)
Average Days on Market ~52.5
Condo Average Price: $616,000
Condo Median Price: $616,000
67 Active Listings
1 Firm Sales This Week
MoI ~ 2.34 (down from 2.44)
Average Days on Market ~ 29
Want to talk about real estate? Let’s do it on YouTube 🙂
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