Buyer Caution Rises Amid Inflation Concerns – Is This the Early Onset of Summer Lull?

Here we go!

Some relief on the supply side of things, well, relief for potential sellers anyway, as house listings actually pulled back a couple of percent after three weeks of aggressive supply increases, which had some people worried.

Now, this doesn’t mean that the market is as hot as ever because there are signs of things cooling out there. Some sellers who had hopes of generating multiple offers realized they might have overestimated the eagerness of buyers out there.

But overall, things haven’t quite slowed down yet. Still, there is a more cautious environment out there. You can tell that some buyers are slightly less enthusiastic, especially after the less-than-ideal inflation numbers came out last week, which showed an increase of .1% over the previous month.

This signals a potential rate increase on June 7, which should be a minor increase but an increase nonetheless after a couple of months of halting.

After January 25, there was a lot of good news out there, and buyers were confident that the rate hikes were all done, but anyone reading this knows that another hike was definitely on the horizon. We just didn’t know when.

On the back of some somewhat concerning inflation use, which, funny enough, was up based on dramatically increased mortgage interest costs, which are a direct result of these increases. Buyers are paying much more attention to how they spend their money.

People are buying fewer cars and fewer luxury items, but they are still spending on experiences, and I’m assuming that’s a direct result of the lockdown months/years we couldn’t do much, but that should fizzle out shortly too.

So all of this signals an earlier start to the summer lull, as we’ve been saying here for the past few weeks.

What does that mean to you?

It means if you have a place to sell, you better sell it first before buying because the market is balancing out a little bit, or it will over the next few weeks anyway, but of course, there are unique circumstances we’re buying first makes sense.

If you’re a buyer, this does not mean you’ll get any special deals or discounts out there. Still, you might have a little bit more time to decide whether you want to make an offer on a property, or you might be up against a little bit less competition when offering on a place.

After an outstanding performance over the past few months, Condos slowed down a little last week with slower-than-typical sales and new listings that continue to pile on.

This past week had a ton of condos valued under $600,000 sell more than I’ve seen in years, which was reflected in the drop in average price in the urban market, but that’s not an indicator of any price change that is simply the result of dozens of entry-level condo selling over the previous seven days.

Whether rates increase on June 7 by 25 basis points or 50 basis points, that is already priced into the market and is reflected in most buyers’ sentiment. Still, once the reality of that increase does set in, we should see a further slowdown as we head into July and August.

So anyone considering selling but doesn’t need to sell right now might want to consider holding back, enjoying the summer and revisiting the idea of selling in the fall when things will likely pick up again, assuming we have decent inflation news and some of the cracks showing in the employment numbers don’t go too crazy.

Although nobody can predict the future with 100% certainty, we do have a decent window into what is likely to happen. Still, it’s imperative to understand all the different things that affect our market here in Toronto.

If you’re a buyer right now, there’s no reason to wait with the hopes of saving hundreds of thousands of dollars over the next few months because, as we’ve seen over and over, Toronto does not have an abundance of panic sellers who instantly drop their pants on price out of desperation. Still, there could be better deals for cash, heavy buyers and investors around August.

The condo assignment market continues to move forward, with deals happening weekly, and those insane deals which were under the original purchase price are few and far between but still exist at the moment.

There seem to be several investors who are liquidating the multi-unit assets, so there’s some opportunity there to pick up some pretty decent investment properties at the moment, as rents are still incredibly high.

And that’s a beautiful thing about investing in real estate. Usually, when the market slows, rents don’t follow suit, especially here in Toronto, where demand for housing is massive and will continue to be.

The idea that, somehow, rents will be cut in half or become more affordable here in Toronto is laughable. It’s quite likely that any politician promising this sort of scenario is a liar.

No politician’s going to help housing become more affordable, and the focus should be on housing the unhoused and providing safe accommodation to struggling families. This can only be done through taxation, and I wholeheartedly agree with increasing the vacant property tax from 1 to 3%, which I believe a few of the mayoral candidates are considering as part of their platform; aside from that, Toronto property taxes are some of the lowest in the world definitely in Canada, so I bet we’re going to see some increases.

Many programs exist to help those that can buy to level up at initial purchase, but aside from those programs, I don’t believe any of those should be expanded or will be expanded.

Thanks so much for your attention this week. Have a wonderful day, and please let me know if any of your questions remain unanswered.

And if you’d like to book a call to discuss your specific real estate needs, you can do that here, and I really look forward to helping 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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Urban Markets: Downtown & Surrounding Areas
House Average Price: $1,759,033
House Median Price: $1,598,000
467 Active Listings
87 Firm Sales This Week
Months of Inventory (MoI) ~ 2.04 (up from 1.69 last month)
Average Days on Market ~ 9.60

Condo Average Price: $785,040
Condo Median Price: $700,000
1562 Active Listings
117 Firm Sales This Week
MoI ~ 2.81 (up from 2.67 last month)
Average Days on Market (DOM) ~ 17.75

Urban North: Rosedale, Deer Park, Moore Park, Forest Hill, & Lawrence Park
House Average Price: $4,133,878
House Median Price: $3,793,500
130 Active Listings
18 Firm Sales This Week
MoI ~ 3.11 (up from 2.40 last month)
Average Days on Market ~ 12

Condo Average Price: $1,434,044
Condo Median Price: $1,095,000
218 Active Listings
18 Firm Sales This Week
MoI ~ 4.05 (up from 3.76 last month)
Average Days on Market ~ 16

Leaside, Davisville, Yonge & Eglinton
House Average Price: $2,004,600
House Median Price: $1,631,500
35 Active Listings
10 Firm Sales This Week
MoI ~ 1.43 (up from 1.14)
Average Days on Market  6

Condo Average Price: $804,300
Condo Median Price: $731,000
126 Active Listings
12 Firm Sales This Week
MoI ~ 2.75 (up from 2.43 last mth)
Average Days on Market ~ 26

Birch Cliff
House Average Price: $1,754,340
House Median Price: $1,340,000
24 Active Listings
7 Firm Sales This Week
Months of Inventory (MoI) ~ 1.76 (up from 1.05)
Average Days on Market ~ 10

Kingston Rd Corridor to Highland Creek
House Average Price: $1,322,157
House Median Price: $1,315,000
73 Active Listings
12 Firm Sales This Week
Months of Inventory (MoI) ~ 1.71 (up from 1.66)
Average Days on Market ~ 12

Condo Average Price: $576,250
Condo Median Price: $547,500
41 Active Listings
4 Firm Sales This Week
MoI ~ 3.30 (up from 2.76)
Average Days on Market ~ 9

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