Week 164: When will the Toronto market finally crash?

A day late for the first time in 163 weeks. Oh well! I’m travelling around Italy and enjoying every second of it, hence the late report. But here we are.

So what’s happening in the Toronto Real Estate market?

Everything I thought would happen, just a lot sooner.

At the end of 2022, I predicted an extremely slow 2023.

Why?

I mean, it’s pretty obvious.

Inflation was not budging; if it was, the costs to run your home daily were increasing, so it was hard to see any light in marginally dropping inflation rates.

Any seasoned professional would have assumed a pretty slow 2023 as rates continued to increase (for a portion of the year) and inflation slowly came back to the target rate of 2% sometime in 2024.

We’re now seeing in real-time just how much faster economies move.

I wonder if those fearmongers will continue to compare today to the big bad ’80s, ’90s and 2000s.

They love to do that, so I doubt it’ll stop. Just beware of who you’re listening to.

Anyway, those same Realtors are perpetuating bad news stories and, for some reason, trying to paint the entire market with that same negative brush. I can see right through their nonsense and hope you can too!

The most recent round of bad news that some are perpetuating without understanding the actual situation was that a prominent developer with hundreds of pre-sold units was about to go bankrupt, and some fraud was involved.

But the real story was less dramatic. I won’t get into it now as I still need to confirm some details. Still, I’m becoming increasingly frustrated with uninformed, knee-jerk reactions to rumours perpetuating unnecessary fear in the market.

By posting unconfirmed screenshots of rumours and saying things like “buying real estate was safe, they said,” like all of a sudden you’re breaking open a big hole in the massive real estate industry.

But I digress.

What could cause the Toronto Real Estate market to halt again?

It’ll have to be something unprecedented. Another event that shocks and awes me.

Another massive spike in rates beyond where they are today.

A colossal miss in regulating inflation causes runaway prices.

An escalation of war around the world. This is something to consider seriously. This could happen.

It could happen in Ukraine. It could happen in Taiwan. It would happen in North America. Regardless of where it happens, it won’t be good.

The only thing that will halt the Toronto real estate market is a major global event that scares people into paralysis again.

So far, unemployment hasn’t been the problem that even I thought it might be. Jobs seem strong across the board, and people with those jobs aren’t showing signs of slowed spending.

You constantly hear about Canadians struggling with their debt load, and another study shows XXX% of Canadians would have to sell their home if rates went up another 50 basis points.

One year ago today, after just one interest rate hike in March, Manlike thought it would be a brilliant idea (and it was for them) to conduct a survey asking a sample of Canadians what would happen if rates continued to rise.

Their results?

That one in four homeowners would have to sell their home if rates “continue to rise further.”

What an absolute pile of pure trash surveying and reporting.

What did this study accomplish? It created fear when we needed calm. The opinions of a sample of Canadians became “fact,” and every single news outlet ran with the headline “Nearly 1 in 4 homeowners say they’d have to sell home if interest rates rise more, according to survey.”

Well, what happened? Rates went up six more times since that report. Where are all of those listings?

Do you know where they are? Off the market, where they belong.

Do you know why?

People will do their best to keep their homes, especially in major cities like Toronto. Have you got a piece of the pie here? You beg, borrow and steal to make sure you hang onto it.

Banks don’t want to have to force these sales either, so as rates went up, they worked with borrowers to ensure they didn’t lose their homes.

They extended amortization periods; they deferred payment early in the pandemic (hey, remember the deferral cliff?) Just more fear-mongering that didn’t go anywhere.

So I hope you realize that 100% of surveys are entirely useless. Survey responses on this topic are generally highly emotional and different from what would happen in the Real World when faced with rising rates.

We’re in a robust market here in Toronto once again. Will it last? No. They never do.

So you won’t hear me discuss whether these market movements are sustainable.

Because they’re not.

They boom, they calm, then boom, they calm, sometimes they tank, but they always boom again.

I don’t think you ever will if you don’t believe that by now.

Today, my clients that bought real estate at the market’s peak are seeing their assets return to their purchased value.

But again, what does that really mean? It’s just a value on paper. Nobody is selling; nobody is panicking.

The amazing homeowners of Toronto are just chilling and are comfortable with their decisions. Whether at the peak of the market or during the dip.

Listing supply has increased over the last week; however, not anywhere near the level to meet the current demand.

Demand is so high in some communities that we’re seeing over 20 offers very regularly out there.

Even condos are starting to pop off. Take a look at average pricing and number of sales.

Both are through the roof and beyond peak market pricing.

Again, I suspect a lull this Summer as buyer fatigue sets in and then another run in the Fall.

Of course, keeping an eye on the global economy to see what may affect things out there. But for now, Buyers need to be armed with big money and strong offers, and Sellers can breathe a momentary sigh of relief.

But this won’t last, so get your home to market now if you need to sell. Buyers, if you’re waiting for a dip, we may experience one this Summer, but more of a dip in activity rather than price.

Prices will only pull back in the short term if we have another interest rate event or economic event.

Now I’m off to the Chianti region in Tuscany for a couple of days to enjoy some amazing wines and to see all-star and  OG Spring Team agent Matthew Gravina get hitched!

Ciao and Grazzi ,Mille for your attention!

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!

(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: $1,748,024
House Median Price: $1,575,000
426 Active Listings
71 Firm Sales This Week
Months of Inventory (MoI) ~ 1.69 (up from 1.38 last month)
Average Days on Market ~ 8.32

Condo Average Price: $912,478
Condo Median Price: $771,900
1430 Active Listings
128 Firm Sales This Week
MoI ~ 2.67 (up from 2.41 last month)
Average Days on Market (DOM) ~ 18

Urban North: Rosedale, Deer Park, Moore Park, Forest Hill, & Lawrence Park
House Average Price: $2,665,427
House Median Price: $2,165,000
135 Active Listings
24 Firm Sales This Week
MoI ~ 2.40 (up from 2.20 last month)
Average Days on Market ~ 13

Condo Average Price: $1,315,399
Condo Median Price: $1,241,500
226 Active Listings
13 Firm Sales This Week
MoI ~ 3.76 (up from 3.17 last month)
Average Days on Market ~ 19.5

Leaside, Davisville, Yonge & Eglinton
House Average Price: $2,054,500
House Median Price: $1,750,000
39 Active Listings
10 Firm Sales This Week
MoI ~ 1.14 (up from 1.05)
Average Days on Market  10

Condo Average Price: $754,028
Condo Median Price: $665,000
134 Active Listings
18 Firm Sales This Week
MoI ~ 2.56 (up from 2.43 last mth)
Average Days on Market ~ 14.22

Birch Cliff
House Average Price: $1,430,833
House Median Price: $1,247,000
14 Active Listings
9 Firm Sales This Week
Months of Inventory (MoI) ~ 1.05 (up from 1.02)
Average Days on Market ~ 18

Kingston Rd Corridor to Highland Creek
House Average Price: $1,135,000
House Median Price: $1,110,000
58 Active Listings
9 Firm Sales This Week
Months of Inventory (MoI) ~ 1.66 (up from 1.16)
Average Days on Market ~ 9

Condo Average Price: $632,900
Condo Median Price: $629,500
50 Active Listings
3 Firm Sales This Week
MoI ~ 2.76 (up from 2.29)
Average Days on Market ~ 14

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