18 Oct 2022
Week 137: Toronto Real Estate Enters the Ice Age
Week 137: Toronto Real Estate Enters the Ice Age
Doom and goom only exist in the minds of a few.
Sellers aren’t panicking.
Buyers are taking their time making decisions.
Buyers led by strong, experienced teams are getting great deals out there. If someone is on the market right now, they need to sell, so there’s a ton of room for negotiation.
How much room?
Let’s say you see a property listed at $1.4mm.
How low would be too low?
Where do you start? $1mm? $1.2?
Honestly, there’s no such thing as too low in this market. But keep in mind that making low offers aren’t a guarantee. The goal of making a lowball offer in this market is to start a conversation.
Right now, Sellers aren’t likely to let a deal die in their hands, so you will most likely get a sign back. It may not be the sign-back you’re looking for, but at least we can go back and forth and negotiate right now.
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Urban Markets: Downtown & Surrounding Areas
House Average Price: $1,353,290
House Median Price: $1,179,711
537 Active Listings
32 Firm Sales This Week
Months of Inventory (MoI) ~ 1.72 (up from 1.33 last month)
Average Days on Market ~ 14.23
Condo Average Price: $840,414
Condo Median Price: $780,000
1580 Active Listings
59 Firm Sales This Week
MoI ~ 2.15 (up from 1.78 last month)
Average Days on Market (DOM) ~ 29.41
Negotiation is a skill newer aren’t having a good time with, as it wasn’t part of the conversation for the past five years. The back-and-forth game is back, and you must take the time to engage.
I’m hearing too much “Let’s save the back and forth and get this done…what’s the seller’s bottom line” – a common phrase of the inexperienced agent.
Please don’t misunderstand the above comment. I’m not trying to put down new agents. In this market, however (in any market, really), you need to be led by a strong agent who’s part of a strong team. Teams have various levels of experience and will usually be able to help you navigate markets like this much more efficiently and save you money.
Anyway, let’s talk numbers. (continued after chart)
Urban North: Rosedale, Deer Park, Moore Park, Forest Hill, & Lawrence Park
House Average Price: $2,563,600
House Median Price: $2,350,000
149 Active Listings
11 Firm Sales This Week
MoI ~ 2.49 (up from 1.31 last month)
Average Days on Market ~ 11.3
Condo Average Price: $1,434,880
Condo Median Price: $1,270,500
212 Active Listings
6 Firm Sales This Week
MoI ~ 2.47 (up from 2.12 last month)
Average Days on Market ~ 19.33
See the charts? Stats? What stands out to you?
Do you know what stands out to me?
Two things.
Number one: Listing supply is pretty much down across the board. Such a positive sign and confirms what I’ve always said. Toronto does not panic sell. Remember, once buyer sentiment improves as we head into 2023, prices will pop off again.
What I said would happen is happening.
Sales are down even from the extreme lows of the last couple of weeks.
Sales numbers this low align with what we’d see during Christmas or the last week of August.
Not good, but completely expected.
Can sales plummet even more? I guess it’s possible but never have I seen this little activity in a week in our Urban markets. (continued after chart)
Leaside, Davisville, Yonge & Eglinton
House Average Price: $2,010,833
House Median Price: $1,645,000
54 Active Listings
6 Firm Sales This Week
Months of Inventory (MoI) ~ 1.35 (up from 0.73)
Average Days on Market ~22.67
Condo Average Price: $716,883
Condo Median Price: $661,000
155 Active Listings
7 Firm Sales This Week
MoI ~ 2.61 (up from 2.50 last mth)
Average Days on Market ~ 19.2
October 26th marks the following rate announcement. Projections have worsened for this next hike. Many experts were expecting two more hikes of 25bps each, but now this next hike is pegged at a minimum of 50bps on the heels of the US Feds continued aggressive tightening.
But could this be the year that the Canadian Government goes against the Fed?
One would have said this was impossible as it’s never happened before. Still, we’re starting to see significant differences in our economies, so this time around, it is possible that Canada will not be as aggressive.
These rate hikes cannot solve inflation, though. The hikes did what they were supposed to do. They ultimately quashed demand for real estate and tanked prices in some areas by up to 30%, much less in urban markets and some peripheral municipalities like Pickering and East Scarborough.
Gas prices did come down a bit, but overall, things are getting much more expensive across the board.
Things will worsen before they improve, but continuing rate hikes is not the solution.
But the government is essentially a one-trick pony – what else could they do? I guess started the hikes earlier, but what’s the point of having that conversation?
Birch Cliff
House Average Price: $1,613,460
House Median Price: $1,234,000
21 Active Listings
4 Firm Sales This Week
Months of Inventory (MoI) ~ 1.36 (up from 1.63)
Average Days on Market ~ 14.83
Buyers right now have amazing opportunities despite higher carrying costs due to rising rates. Like I’ve said week over week, move-up buyers have a phenomenal opportunity to save multiple six figures on a purchase and get into a dream home a lot quicker than they may have expected.
Should buyers do fixed or variable right now? I’d go with as short a term fixed rate as possible so you can take advantage of the lower rates as they start to come down towards the end of 2023 heading into 2024.
Sellers, if you are interested in making a move-up into a more expensive asset, now’s the time. Otherwise, please hold and do not sell. Simply “cashing out” because you think the market is going to tank is not a smart move.
Buyers are looking for deals, and you’ll leave too much money on the table. And if you sell to cash out and move into a rental, you will compete with so many tenants and likely pay what you were paying for your mortgage anyway. So I’d stick with the higher rate vs. the 100% interest rate of a rental. (continued after chart)
Kingston Rd Corridor to Highland Creek
House Average Price: $1,190,781
House Median Price: $1,025,000
70 Active Listings
9 Firm Sales This Week
Months of Inventory (MoI) ~ 1.56 (up from 1.35)
Average Days on Market ~20
Condo Average Price: $523,333 (no activity this week, last week’s stats remain)
Condo Median Price: $620,000
74 Active Listings
3 Firm Sales This Week
MoI ~ 2.72 (up from 2.34)
Average Days on Market ~ 5.67
Sellers, if you are going to market right now, you’d better be the best-priced and most attractive place on the market.
Pricing is critical. “Giving it a try” will not work for you at a higher price.
You’re going to spend the next couple of months chasing the market down, and rather than selling for the highest possible price now, you’re going to cost yourself tens of thousands of dollars.
Listen to the experts! (that’s us)
That’s all for this week. I would love to hear your opinions on the market. Comment below or comment on the Youtube Video, and we’ll chat.
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