25 Oct 2022
Week 138: Toronto’s Housing Market Goes from Bad to Worse
Week 138: Toronto’s Housing Market Goes from Bad to Worse
Toronto’s housing market appears to be in freefall, with prices dropping month-over-month and few buyers willing to take the plunge. Does this mean it’s a good time to invest in real estate in Toronto?
Or are there still risks involved? Let’s take a closer look.
Remember that while average sale prices have decreased, some neighbourhoods have seen more significant drops. So if you’re thinking of investing in Toronto real estate, it’s important to do your research first. That’s why you’re reading this blog, right?
And if you already own property here, make sure you stay up to date on market trends by following this blog, so you don’t end up taking a bath on your investment.
Earlier this week, a friend of mine asked:
“Any thoughts on the Star article today about house values in Toronto dropping 30% and a repeat of the 90s?”
The one thing to understand is a lot of these articles are referencing drops from the top. So February 2022. Not a further 30% from today.
Still, 30% is a lot, and I’ll be honest, I was wrong earlier this year when I predicted property values in urban markets to hold or take a small 5% hit more in line with what happened in 2008.
My answer to my friend was (continued after chart)
(please subscribe to the YouTube Channel here, where I go over all of these reports in more detail)
Urban Markets: Downtown & Surrounding Areas
House Average Price: $1,510,295
House Median Price: $1,450,000
534 Active Listings
56 Firm Sales This Week
Months of Inventory (MoI) ~ 1.72 (up from 1.33 last month)
Average Days on Market ~ 16.89
Condo Average Price: $795,884
Condo Median Price: $665,000
1619 Active Listings
74 Firm Sales This Week
MoI ~ 2.15 (up from 1.78 last month)
Average Days on Market (DOM) ~ 21.22
“Some areas have already dropped 30% some are flat, and some in between.
The rest of 2022 will be pretty slow for sales, but as long as listing supply doesn’t pile on (which it isn’t), we’ll likely ride out the storm and bounce back deep into 2023, heading into 2024.
Do I think home prices will drop a further 30%? Absolutely not! Condos are holding pretty strong and should continue to. Houses have slipped, but it really depends on the area. Can’t paint the entire market with the same brush.”
Do I expect further declines in 2022? Yes, for sure. But there will always be certain property types that are in demand. Especially houses with income potential and most condos throughout our urban markets. Anyway, continued rate hikes can’t solve today’s inflation problem. But our economy could certainly be damaged by further aggressive hikes.
Tomorrow’s hike should be an unexpectedly high 75bps, and perhaps the same for the next month.
I expected the Government to have learned from past mistakes and not jack rates too quickly, too aggressively, causing absolute pandemonium in the minds of Buyers.
Aggressive rate hikes (another one coming tomorrow) have removed 50-75% of the buyers from most communities we track. (continued after chart)
Urban North: Rosedale, Deer Park, Moore Park, Forest Hill, & Lawrence Park
House Average Price: $3,068,846
House Median Price: $2,850,000
143 Active Listings
13 Firm Sales This Week
MoI ~ 2.49 (up from 1.31 last month)
Average Days on Market ~ 21.54
Condo Average Price: $1,133,423
Condo Median Price: $900,000
196 Active Listings
13 Firm Sales This Week
MoI ~ 2.47 (up from 2.12 last month)
Average Days on Market ~ 21.46
In Toronto’s urban communities, we’d normally have about 120 house sales weekly and well over 200 condo sales in a week.
Looking above, you can see that we’re down to only 56 house sales (glad to see that up from last week’s dismal 32 sales). Looks like we only entered the Ice Age for a week.
In previous weeks, I mentioned that the only real opportunity was in the condo assignment market. Well, now opportunities exist all over the place.
Just today, my client picked up a detached bungalow within a 5min walk to Coxwell subway station for under $800K. A replica of this home sold for $1.3mm in February. That’s a 38% drop in that particular instance.
Big enough deal for you?
So when will we recover from this, and what does all of this mean to you? (continued after chart)
Leaside, Davisville, Yonge & Eglinton
House Average Price: $2,553,143
House Median Price: $2,250,000
52 Active Listings
7 Firm Sales This Week
Months of Inventory (MoI) ~ 1.35 (up from 0.73)
Average Days on Market ~9.14
Condo Average Price: $889,077
Condo Median Price: $768,000
162 Active Listings
7 Firm Sales This Week
MoI ~ 2.61 (up from 2.50 last mth)
Average Days on Market ~ 36.92
I can tell you one thing with certainty – the economy moves much faster today than it did in the ’80s and ’90s. We should recover much quicker than previous recessions that took a decade to recover from.
I expect rates to come down deep in 2023, with some economic recovery in early 2024.
That means you should do whatever you can to hold on to your real estate until then. Nobody wins if you panic sell now. Things will get worse before they improve, and those that hold and buy more will end up on top after recovering from this.
Now’s the time to build, expand, and grow your investment portfolio. Look for phenomenal deals all over the place. Even in markets outside of yoru hometown.
Consider cottage country. Prices will come down there for sure, and people will sell their cottages before they sell their Toronto houses.
That’s where I see an incredible opportunity right now. (continued after chart)
Birch Cliff
House Average Price: $934,167
House Median Price: $947,500
21 Active Listings
6 Firm Sales This Week
Months of Inventory (MoI) ~ 1.36 (up from 1.63)
Average Days on Market ~ 24.17
Keep your eye out for amazing real estate deals, Toronto!
And if you’re a property owner, hang tight. We know it’s a tough market out there, but don’t give in to panic selling just yet.
These things always have a way of evening themselves out eventually. In the meantime, try to do whatever you can to hold on and weather the storm.
After all, we’re Torontonians – we’re good at this kind of thing. 😉 If you’re finding it hard to sleep at night because of all this talk about the housing market, reach out and let’s chat. We might be able to help ease your mind about things.
Kingston Rd Corridor to Highland Creek
House Average Price: $985,000
House Median Price: $962,500
81 Active Listings
4 Firm Sales This Week
Months of Inventory (MoI) ~ 1.56 (up from 1.35)
Average Days on Market ~ 3
Condo Average Price: $545,000
Condo Median Price: $545,000
75 Active Listings
4 Firm Sales This Week
MoI ~ 2.72 (up from 2.34)
Average Days on Market ~ 26.5
Thanks so much for your attention and we’ll see you next week!
(don’t forget to subscribe to my new YouTube Channel here, where I go over all of these reports in more detail)
