Week 151: Supply Continues to Surge as Buyers Fear Continued Rate Hikes

Condo supply adds on 200 new listings over two weeks in a surge that hasn’t been seen since the beginning of Covid.

When people were scared of the future and had no idea what to do, some decided to panic and put their real estate on the market in the early days of Covid. Most came to their senses and pulled their properties off the market, while others followed through and sold.

Of course, in hindsight, not the wisest decision to panic sell! However, weeks 149 and 150 have added a similar amount of supply (nearly 200 units) in just those two weeks as we did in the early panic days. (continued after chart)

Urban Markets: Downtown & Surrounding Areas
House Average Price: $1,387,301
House Median Price: $1,241,000
320 Active Listings
32 Firm Sales This Week
Months of Inventory (MoI) ~ 0.94 (down from 1.60 last month)
Average Days on Market ~ 21.86

Condo Average Price: $826,791
Condo Median Price: $707,500
1353 Active Listings
46 Firm Sales This Week
MoI ~ 1.81 (down from 2.24 last month)
Average Days on Market (DOM) ~ 27.47

Are the across-the-board job losses finally affecting homeowners to the point where they need to liquidate their real estate?

Or is this a typical seasonal listing surge typically happening in early January?

I believe in the latter, with a side of the former. I’ll reuse my chart from last week below.

You can see that the transition from January to February typically sees a surge in new listing supply in the Toronto area, with the end of August seeing the lowest supply next to December.

 

 

 

 

 

 

 

 

So what we’ve seen over the past few months is quite normal still. What’s not normal is the lack of Buyers in the market to get our weekly sales figures up the 50-70% needed to swing the market back into the Seller’s favour.
(continued after chart)

Urban North: Rosedale, Deer Park, Moore Park, Forest Hill, & Lawrence Park
House Average Price: $3,012,800
House Median Price: $2,425,000
92 Active Listings
5 Firm Sales This Week
MoI ~ 1.65 (down from 2.62 last month)
Average Days on Market ~ 41.6

Condo Average Price: $1,055,786
Condo Median Price: $830,000
175 Active Listings
7 Firm Sales This Week
MoI ~ 2.14 (down from 2.84 last month)
Average Days on Market ~ 36.43

How are Buyers going to feel comfortable getting back into the market? They need certainly. The certainty that those rates aren’t going to continue to go nuts. Unfortunately, that’s how most people are wired. But when there is certainty, the majority returns to the market, competition comes back, prices start to edge up again, and the cycle continues.

That’s why I’ve been encouraging Buyers to consider remaining in the market now or starting the search while nobody else is.

Speaking of buyers returning to market, after weeks of dismal freehold sales, it was nice to see 32 houses sell in the urban communities. We’ve been below 15 for a few weeks now, and it was worrisome; even having only a five-sale week in week 148, it was low even for the Holidays.

But the actual topic of the Quarter is unemployment. I’ve been talking about this for months now. Before the Holiday season, towards the end of Q3 last year, I warned that interest rates wouldn’t be the day’s main topic, but unemployment will.  (continued after chart)

Leaside, Davisville, Yonge & Eglinton
House Average Price: $2,386,000
House Median Price: $1,840,000
24 Active Listings
5 Firm Sales This Week
MoI ~ 0.75 (down from 0.91)
Average Days on Market ~11.4

Condo Average Price: $654,000
Condo Median Price: $648,000
106 Active Listings
4 Firm Sales This Week
MoI ~ 1.61 (down from 2.52 last mth)
Average Days on Market ~ 12.75

We’re not just talking about normal, over-funded start-up companies like Properly as an example in the real estate industry. Those job losses were almost predictable. We’re talking about massive institutions like Microsoft, Meta, Spotify and Google (Alphabet).

I think there’s some comfort in this context, though. Look at this image I snapped while watching Bloomberg yesterday. Amazon cutting $18K jobs is a huge, shocking number but a drop in the bucket considering how many jobs they’ve created since 2019.

 

 

 

 

 

 

 

 

 

 

 

Now, thousands of real people who may or may not own homes in communities you live in now may need to sell because of this. That’s very real and something I’m not glossing over. (continued after chart)

Birch Cliff
House Average Price: $849,000
House Median Price: $849,000
14 Active Listings
1 Firm Sales This Week
Months of Inventory (MoI) ~ 0.89 (down from 1.01)
Average Days on Market ~ \77

Kingston Rd Corridor to Highland Creek
House Average Price: $924,500
House Median Price: $924,500
33 Active Listings
2 Firm Sales This Week
Months of Inventory (MoI) ~ 0.54 (down from 1.21)
Average Days on Market ~ 41.5

Condo Average Price: $542,500
Condo Median Price: $470,000
41 Active Listings
4 Firm Sales This Week
MoI ~ 1.63 (down from 2.30)
Average Days on Market ~ 41.33

But when I put my long-term lens on, as any good business person should, I can see that these jobs will be picked up as quickly as they were created. I see small businesses making a lot of hires right now, and I feel an air of optimism in the universe (or perhaps that is just my high after a good day in the markets with mostly green showing across the board).

Tomorrow, I’m hoping for a lower-than-expected or as-expected 25bps increase at the BoC announcement. I really am. If there’s anything higher than that, I feel like the Toronto market will enter a new ice age we haven’t seen since October, when things came to a screeching halt.

What are your thoughts about the Toronto Real Estate market right now? If you see any interesting articles or scenarios, don’t be afraid to send them to me/us. We’d be happy to review and provide feedback and opinions.

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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