01 Nov 2022
Week 139: This Toronto housing downturn is nothing like the last one
Week 139: This Toronto housing downturn is nothing like the last one
No matter where I go, I can’t seem to shake the “but remember the 80’s and 90’s” people.
Look, I get it, you peaked in the ’80s and early ’90s, and that’s all you remember.
You remember condos getting slaughtered in the market at the time. Like big-time drops in condo values, then. Houses did better at the time, but that was expected.
How do you think condo culture was perceived in the ’80s and ’90s? Was there even a culture? What was immigration like? What was the high-paying jobs environment like in Toronto then?
All these real estate bears seem so tunnel-visioned on past events that they can’t see what’s happening under their noses.
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Urban Markets: Downtown & Surrounding Areas
House Average Price: $1,521,014
House Median Price: $1,351,000
500 Active Listings
58 Firm Sales This Week
Months of Inventory (MoI) ~ 1.72 (up from 1.33 last month)
Average Days on Market ~ 17.7
Condo Average Price: $810,021
Condo Median Price: $722,000
1614 Active Listings
74 Firm Sales This Week
MoI ~ 2.15 (up from 1.78 last month)
Average Days on Market (DOM) ~ 25.46
In 2022, we’re experiencing the most significant downturn Toronto has seen since the Ontario Fair Housing Plan was announced by the Wynne Liberal government back in 2017 and the late 80s.
But back then, we didn’t have massive tech companies setting up their headquarters here in Toronto, attracting hundreds if not thousands of high-paying jobs.
We didn’t have the glamourized condo culture that we have today.
In the 80s, condo pioneers like Brad Lamb were hiring models to ride up and down elevators at Harbour Square to help people see the true glamour in Condo Life. Condos then were almost always seen as inferior housing.
Pioneers like Brad Lamb started the change. They slowly chipped away at the idea that condos are inferior to houses. They built a community around condos and created a lifestyle that has morphed into something very few believed could happen in Toronto.
Urban North: Rosedale, Deer Park, Moore Park, Forest Hill, & Lawrence Park
House Average Price: $3,327,556
House Median Price: $2,052,500
149 Active Listings
9 Firm Sales This Week
MoI ~ 2.49 (up from 1.31 last month)
Average Days on Market ~ 10
Condo Average Price: $1,033,333
Condo Median Price: $1,000,000
209 Active Listings
3 Firm Sales This Week
MoI ~ 2.47 (up from 2.12 last month)
Average Days on Market ~ 16.67
Some call it the Manhatization of Toronto, but I’m not too fond of that term. I discourage any sentiment that tries to uplift Toronto’s profile by comparing it to other world-class cities. We don’t need to do that.
I don’t need to justify a $1500/PSF pre-con condo here by saying, “look, that same unit would cost $3000/PSF in Manhattan” it’s a lazy argument with more holes than my favourite pair of underwear. If your Realtor tells you something like this, they cannot be trusted.
Speaking of pre-construction, if an agent tells you to buy something you cannot afford because you can “assign it before you have to close on it,” also run away. There is no guarantee that you will be able to assign the unit. When buying any real estate, you should be buying it to hold it long term. To rent it out and provide housing to the renters of Toronto.
Leaside, Davisville, Yonge & Eglinton
House Average Price: $1,888,000
House Median Price: $1,575,000
55 Active Listings
7 Firm Sales This Week
Months of Inventory (MoI) ~ 1.35 (up from 0.73)
Average Days on Market ~12.5
Condo Average Price: $706,667
Condo Median Price: $645,000
165 Active Listings
7 Firm Sales This Week
MoI ~ 2.61 (up from 2.50 last mth)
Average Days on Market ~ 23
Of course, there are many types of investing. Buying to renovate and sell is certainly an option, but you’ll most likely lose your shirt if you’ve never done it before and aren’t partnered with someone who knows what they’re doing.
If it still needs to be said, condo culture today is different. Condos today are one of the most stable investments you can make. They provide fantastic housing options for anyone, from singles to families. And if you look at the condo charts in this article, you’ll see much less volatility than any freehold product.
For the first time in history (ok, I don’t know for sure, but I’m making an assumption there), condos are outperforming houses. They’re holding their prices much better.
Condo prices in Toronto’s urban markets are down 9.6% from what you’d call the market’s peak in March of 2022. Look at the numbers yourself. You can go back 140 weeks on the blog if you want. Houses in that same period are down 15.55%.
So while some may draw comparisons to ancient history, the actual numbers today tell a different tale.
Birch Cliff
House Average Price: $1,012,500
House Median Price: $1,012,500
18 Active Listings
2 Firm Sales This Week
Months of Inventory (MoI) ~ 1.36 (up from 1.63)
Average Days on Market ~ 18
Torontonians are confident and comfortable condo owners. Both investors and end users love condo life, and that’s not going to change, no matter how many times you scream, BUT THE 80s, THE 80s. It’s a different time, Boomer; calm down.
Looking at supply, does anyone surprise you there? Especially in our urban markets? Notice that the supply of houses has dropped AGAIN by 6.4%?
I don’t know what will if that doesn’t give you confidence in our market.
People are about to dig in for the long-awaited Holidays. Sales activity is about to grind to a halt in the coming weeks. So be prepared for the big “sales numbers plummet” headlines.
What should you do if you’re a Buyer or Seller right now?
Kingston Rd Corridor to Highland Creek
House Average Price: $1,109,432
House Median Price: $1,050,000
70 Active Listings
9 Firm Sales This Week
Months of Inventory (MoI) ~ 1.56 (up from 1.35)
Average Days on Market ~ 16.56
Condo Average Price: $445,000
Condo Median Price: $445,000
79 Active Listings
1 Firm Sales This Week
MoI ~ 2.72 (up from 2.34)
Average Days on Market ~ 8
Buyers should ensure they have fresh pre-approvals ahead of the December 7th rate hike, and you should be lowballing every property you come across. But remember, Toronto sellers aren’t in panic mode, so you’re likely only to start the conversation with a lowball.
Stubborn lowballers who think they can get the craziest deals ever are being disappointed every single day. Lowball, and start the convo, and if you’re in the hands of a good agent, you’ll get a great price.
Sellers, take your dang home off the market if you don’t have a specific reason to be there. Only those looking to take advantage of this downturn to MOVE UP into a larger, more expensive home should be selling right now.
Sellers now’s not the time to “see if you can get that big number” or to “test the market” If you need to achieve a certain number for your home to make that next move, wait. 2024 will be a better year for you.
Thanks so much for your attention, and we’ll see you next week!
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