06 Dec 2022

Week 144: Three Real Estate News Red Flags to Avoid!

Week 144: Three Real Estate News Red Flags to Avoid!

Could tomorrow mark the end of the hike cycle? Some say yes, and some say no. Some say there’s going to be another aggressive hike; some say it’ll be a baby hike.

What are you to believe? I’ll leave this to the Bank of Canada to announce tomorrow if I have to take a position. I’d guess we’re going to close out the year with a small 25bps raise and potentially have another increase in January. Still, by then, according to our awesome mortgage broker, Lee Welbanks, we’d have hit the Terminal Rate, and the hike cycle should have ended.

Mila Sheina, The Spring Team’s original member and top real estate broker, asked this morning: A million things make an economy move. What are they?

It’s a very good question. And one that more realtors need to be asking of themselves before they start talking.

Social media has given a platform for many to put out opinions, and in a free market like this, it’s a good thing. However, when, as a consumer, you’re exposed to these “professionals,” you don’t know what to believe, what’s real, what’s not, what’s irrelevant, and what’s completely blown out of proportion.

How do you make sure you’re getting the correct information?

Before I get into this, it’s important to note that prices don’t come down because they’re too high. And comments like “this is not sustainable” are meaningless. Never in the history of time has an upmarket been sustained or a downmarket sustained.

They each have an expiry date due to various economic conditions. Both locally and globally.

The only thing you can control is where you get your information. So I’ll give you some Red Flags to avoid.

Urban Markets: Downtown & Surrounding Areas
House Average Price: $1,309,764
House Median Price: $1,188,000
436 Active Listings
38 Firm Sales This Week
Months of Inventory (MoI) ~ 1.60 (down from 1.78 last month)
Average Days on Market ~ 17.68

Condo Average Price: $766,383
Condo Median Price: $729,000
1479 Active Listings
58 Firm Sales This Week
MoI ~ 2.24 (down from 2.25 last month)
Average Days on Market (DOM) ~ 25.47

Red Flag 1: Anomalies as fact

Is the person you’re listening to highlighting a rare occurrence and making it seem like a huge problem? An example would be the “I told you so” comments, as they showcase properties selling for less today than they did at the market’s peak. They are then claiming that everything is in free fall.

Many buyers who entered into contracts from January to March of this year, with closing dates in the Summer or later, were in a position where they had to close on properties that were worth less than they had paid for them a few months prior.

Some of those buyers couldn’t close, so the Sellers had to re-list them and eventually sold them at a loss.

So the Red Flag agent would go on social media and say, “look, I told you, here comes the flood of defaults.” But a whole lot of context was missing. The fact that the occurrence was rare was not mentioned. The fact that the Seller would have had the opportunity to access the deposit funds of the original buyer to make up for the difference in sale price wasn’t mentioned, and the fact that this only happened a handful of times, not affecting the market as a whole, was not mentioned.

But they got attention and could feel super important in their echo chamber Garth Turner wannabes.

Urban North: Rosedale, Deer Park, Moore Park, Forest Hill, & Lawrence Park
House Average Price: $2,237,500
House Median Price: $2,187,500
134 Active Listings
6 Firm Sales This Week
MoI ~ 2.62 (down from 2.78 last month)
Average Days on Market ~ 28.67

Condo Average Price: $818,333
Condo Median Price: $785,000
191 Active Listings
9 Firm Sales This Week
MoI ~ 2.84 (down from 3.04 last month)
Average Days on Market ~ 23

Red Flag 2: Old Macro Data

People who focus on old data.

If the agent you’re listening to isn’t tracking the market weekly, you’re exposed to old data that may not be relevant today.

Most agents, brokerages, teams etc.. don’t take the time to pull their data. They wait until the TRREB (that’s our real estate board) releases their monthly figures, then suddenly, you see a flood of infographics with an average price this, sales volume that, with a bunch of arrows pointing up and down.

There’s no context; you don’t know what areas they’re tracking. It means nothing to the guy living in a condo in City Place or the banker living in their Rosedale mansion.

Markets move faster today than they did 10yrs ago, so weekly reporting is essential.

What’s even more important is having a Microfocus for Macro impact.

Meaning, to drill down into custom searches and pull data that matters to where YOU live, work, and play. Me, reporting dated monthly stats for the entire GTA, 416 or 905 or even works, Canada means nothing.

It could seem like the sky is falling when it’s probably not for you.

Leaside, Davisville, Yonge & Eglinton
House Average Price: $2,175,000
House Median Price: $2,175,000
29 Active Listings
2 Firm Sales This Week
MoI ~ 0.95 (down from 1.71)
Average Days on Market ~22

Condo Average Price: $679,125
Condo Median Price: $677,000
139 Active Listings
4 Firm Sales This Week
MoI ~ 2.52 (up from 2.49last mth)
Average Days on Market ~ 33.5

Red Flag 3: The Victim

This one ties into Red Flag 1 because they often say, “I told you so, and you didn’t believe me, and you hated on me, but look, here it is. I said it was happening.”

This red flag agent loves it when bad things happen. It allows them to dive deeper into your emotions and get more fear-based attention. They thrive off the comments, energy and being deemed a “truth teller” by mobs of pessimists who’ve never invested in real estate.

This same person will also say, “see, I told you that prices don’t always go up,” and then show you similar properties trading for less.

I don’t think any successful agent has ever said prices always go up. This is an out-of-context soundbite some attention seekers like to use to get you to believe they’re the only ones telling the truth.

Birch Cliff
House Average Price: $1,020,250
House Median Price: $960,500
19 Active Listings
4 Firm Sales This Week
Months of Inventory (MoI) ~ 1.01 (up from 0.93)
Average Days on Market ~ 23

Suppose you look at any chart focused on Toronto Real Estate, like the one below from the TRREB. If you zoom out and look long-term, it sure looks like it’s trending upward.

But The Victim will tell you that “agents are saying prices will always go up, and they’re lying…see” and then point to a property that sold for less than a comparable a few months ago.

Anyway, I think that’s enough about this topic for one week! I’m curious to hear your comments on this. Who do you get your real estate content and advice from?

I hope you found this helpful!

Kingston Rd Corridor to Highland Creek
House Average Price: $1,587,000
House Median Price: $1,205,000
55 Active Listings
5 Firm Sales This Week
Months of Inventory (MoI) ~ 1.21 (down from 1.45)
Average Days on Market ~ 17.83

Condo Average Price: $589,500
Condo Median Price: $587,500
59 Active Listings
4 Firm Sales This Week
MoI ~ 2.30 (down from 2.89)
Average Days on Market ~ 40.25

Any questions? The entire team and I are here to help. Email/comment/text/smoke signal, and we’ll get back to you.

Have a wonderful day, and I’ll see you next week. Don’t forget to subscribe to the blog so you get this in your inbox asap, and we’ll see you on Youtube!

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