Week 149: Headlines are going to get nasty, and some of 2023 is going to suck

Five houses were sold in the Urban markets (DVP to the Lake, Etobicoke to Scarborough border), and none were south of Danforth/Bloor.

I’ve never seen that before. This time last year, with a severely depleted supply of properties and rising prices, we had triple the house sales and more than double the condo sales. But buyer sentiment was at an all-time high, and rate increases were only an idea at the time.

Three communities, Urban North, Leaside, Davisville, Yonge & Eg, Rosedale, Deer Park, Moore Park, Forest Hill & Lawrence Park, all reported ZERO sales in either houses, condos or both (see the stats below). (continued after chart)

Urban Markets: Downtown & Surrounding Areas
House Average Price: $1,835,600
House Median Price: $1,255,000
270 Active Listings
5 Firm Sales This Week
Months of Inventory (MoI) ~ 0.94 (down from 1.60 last month)
Average Days on Market ~ 34,4

Condo Average Price: $753,195
Condo Median Price: $680,000
1164 Active Listings
25 Firm Sales This Week
MoI ~ 1.81 (down from 2.24 last month)
Average Days on Market (DOM) ~ 30.5

This could be all chalked up to the weird week off kids had from school that kept parents busier than usual, but something tells me we’re in for a rough few months with very little sales activity.

Sellers will be expecting decent numbers for their homes; some are even choosing the under list to attract multiple bids strategy (it’ll most likely backfire)

So where are all those listings the real estate bears promised us? Weren’t they to flood the market by now and tank prices even further?

Were we supposed to be in some real estate market spiral flushing the net worth of millions of Canadians down the toilet?

Weren’t we supposed to be inundated with power-of-sale properties?  (continued after chart)

Urban North: Rosedale, Deer Park, Moore Park, Forest Hill, & Lawrence Park
House Average Price: $1,440,000
House Median Price: $1,440,000
85 Active Listings
1 Firm Sales This Week
MoI ~ 1.65 (down from 2.62 last month)
Average Days on Market ~ 109

Condo Average Price: $1,792,150
Condo Median Price: $1,215,000
136 Active Listings
0 Firm Sales This Week
MoI ~ 2.14 (down from 2.84 last month)
Average Days on Market ~ 46.83

Some say it’s too soon to call, and I agree. There is some blood in the water, and the sharks are circling. People are looking for deals, and there don’t seem to be many buyers in the market.

People that I know. Agents, clients, and family are losing their jobs, and the implications are real. Houses will need to be sold, and prices will slip a little bit more in 2023.

Anyone employed in the tech sector needs to be very careful and not over-leverage themselves at the moment.

History is repeating itself, in a way, with tech companies. The overvalued, over-staffed, over-promised tech firms are contracting much as they did in the early 2000s. Investors are losing their money and going into hiding for a while.

So let’s talk about jobs, wages, and real estate for a moment.

Wages and real estate prices have been disconnected for a long time, but with all due respect, discussing Toronto real estate and wages doesn’t make much sense. When demand for a city’s real estate comes from all over the world and uses for properties are varied, you can’t necessarily predict what will happen to the market in any major city by comparing it to wages.

Leaside, Davisville, Yonge & Eglinton
House Average Price: $1,732,300
House Median Price: $1,555,000
25 Active Listings
0 Firm Sales This Week
MoI ~ 0.75 (down from 0.91)
Average Days on Market ~40

Condo Average Price: $830,000
Condo Median Price: $830,000
98 Active Listings
2 Firm Sales This Week
MoI ~ 1.61 (down from 2.52 last mth)
Average Days on Market ~ 71.5

I’m happy to be proven wrong, but past cases of recessions and crashes cannot be compared to the Toronto of today. Today’s Toronto is more globally accepted as a home for many people from all over the world.

That simply wasn’t the case in the 80s and 90s and only started to become a thing when Toronto landed on the map in the early 2000s.

We have the attention that we didn’t have before, and that’s a variable everyone’s refusing to include in their work.

How do you measure attention? I don’t think you can; that will always be a problem.

Going back to last year. Here’s a snap of the same period last year compared to this year. 32% fewer sales this year with 56% MORE supply.

(continued after chart)

Birch Cliff
House Average Price: $1,285,000
House Median Price: $1,285,000
16 Active Listings
0 Firm Sales This Week
Months of Inventory (MoI) ~ 0.89 (down from 1.01)
Average Days on Market ~ 39

So you see why paying attention to supply is so important. If we start to add listings, the slow weekly sales volume won’t be able to absorb the required number of homes to balance the market, and we’ll swing fully into a blood-bath type environment.

So far, Toronto has avoided this, but the next couple of months will be crucial to the future of Toronto Real Estate.

January 25th remains an essential day for 2023 as that marks the first rate announcement of 2023.

I saw a few content creators in the real estate space talking about “it’s confirmed, there will be an increase in the 25th” as if it’s some news. That was a given when the Feds announced the continuation of their tightening measures, which mainly includes hiking rates.

The only unknown is how much the rates will go up. Some say 25bps, and some say 50bps. What do I say? I’ll lean towards the higher amount and hope to be surprised. But we haven’t had a standard increase of 25bps since the first one back in March of 2022.

Kingston Rd Corridor to Highland Creek
House Average Price: $725,000
House Median Price: $725,000
31 Active Listings
1 Firm Sales This Week
Months of Inventory (MoI) ~ 0.54 (down from 1.21)
Average Days on Market ~ 7

Condo Average Price: $499,500
Condo Median Price: $499,500
40 Active Listings
1 Firm Sales This Week
MoI ~ 1.63 (down from 2.30)
Average Days on Market ~ 43

My hope is they’ll announce a halt to the hikes for the March announcement but based on the stronger-than-expected employment numbers from December, they may use that as a sign to continue the hikes on the back of a stronger-than-expected economy.

But are we taking December jobs seriously? Aren’t a lot of those seasonal jobs? I suspect January numbers will be much lower than expected. I fully expect March to either be the last kike of 2023 or no hike at all.

Time will tell. What do you think?

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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