Week 175: Real Estate Market Reacts to Interest Rate Hike, Presenting Buyer Opportunities and Seller Challenges

As expected, sales activity is way down from houses to condos, basically top to bottom and all the neighbourhoods we’ve been tracking.

Again, much of that is attributable to the typical slowdown in the summertime. Still, the added layer of tomorrow’s inevitable interest rate hike has definitely freaked out some buyers and moved them to the sidelines.

A lot more people will be hitting their trigger rate with this increase which will dramatically increase some people’s mortgage payments, and we’re not just talking about a small amount. For example, I just noticed that my mortgage is increasing by a whopping 67% to maintain my principal and interest payments.

That’s not a tiny amount, and a lot of people are going to be struggling with that, so all the stuff we’ve been talking about is very real, and it’s not one of those things to just brush under the rug as some people are going to have to sell because of this.

However, as we said before, people will always find a way, but unfortunately, some won’t.

So what does that mean to you? That means that if you’re a buyer with some cash in the bank, there might be some opportunities coming, or most people will figure it out. It won’t change much in the market except for slowly depleting listing and setting up for a pretty aggressive full market.

So what would set up an aggressive fall market?

A couple of things need to happen number one, they would need to be certainty around no more rate hikes, just like there was back in January, which fuelled the previous buyer frenzy

Number two, inflation numbers would need to be getting very close to the target of 2%.

If those two things happen, it will create a ton of certainty in the air. The conversation around when rates will start coming down will probably start happening as we approach the winter, so there should be some increased fire activity this fall if these things, lineup or things can be relatively flat, honestly, like I assumed this entire year would be.

A few months ago, I asked, is this increased activity simply what you would call a dead cat, bounce in the trading world, or is the market back?

Some would say it was a dead cat bounce and some serious darkness ahead. Others would say it was definitely aggressive. But they still feel the bottom of the market is behind us.

How do I feel? I genuinely believe that the absolute bottom of the market is behind us, but that’s not to say there won’t be any opportunities going forward for some people that absolutely need to sell.

So you can celebrate that and laugh and mock and rejoice that the market isn’t performing well for some and causing them to have to Sell, or you can be a civilized human being and understand that these things happen. Some people are over-leveraged. Is it because an agent forced them to? Or is it because they made their own decision? Is it because everybody was talking about real estate during Covid, and people just couldn’t help it jump on? You can blame agents. You can blame banks; you can blame mortgage brokers; you can blame the Prime Minister. You can blame the Premier. You can even blame your mayor, but alternately these things happen, so you can either find a way to power through it or celebrate other people’s misery.

I don’t need to tell you where I stand here, but I certainly know where other “professionals“ stand.

Anyway, most of what’s happening right now is going to affect your pocketbook if it has already, but the main point here is to do whatever you can to hold onto your property because there are better days ahead; of course, we’re not going to see a free money environment that we did during the meet of Covid but as inflation comes down, so will rates will that be sooner than later who knows but it is in our future.

I know that Toronto is where people from all over the world will continue to want to be, so long-term, I’m very comfortable as an investor here and as a resident.

What should you do now? If you’re happy where you live, love your neighbourhood, and your kids are in a good school, you enjoy it. You do nothing but keep enjoying and ensure you build up a reserve fund. If not, manage your expenses going forward.

But if you’re somebody who really can’t afford to hang onto their asset, then obviously you have to sell not an ideal market to selling, but some things are still moving very well. If you read last week’s report, you can see many options of things selling well and also a great list of opportunities.

So I’ll keep this week’s relatively short happy reading. Don’t forget to take in the stats below, and please comment and message whatever you see so we can continue to talk about it. Have an awesome week, and I will see you next week when we discuss the quarter-point rate hike. Maybe the Bank of Canada will fool us all, and they won’t be hiking at all. Who knows, but we’ll see you online next week, and until then, stay positive and reach out if any of your questions are left answered.

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!

(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: $1,651,316
House Median Price: $1,500,000
519 Active Listings
43 Firm Sales This Week
Months of Inventory (MoI) 2.27 (down from 2.37 last month)
Average Days on Market 15.51

Condo Average Price: $836,005
Condo Median Price: $728,000
2044 Active Listings
95 Firm Sales This Week
MoI 3.77  (up from  3.16 last month)
Average Days on Market (DOM)  21.03

Urban North: Rosedale, Deer Park, Moore Park, Forest Hill, & Lawrence Park
House Average Price: $2,689,613
House Median Price: $2,350,000
144 Active Listings
7 Firm Sales This Week
MoI ~3.15 (down from 3.47 last month)
Average Days on Market ~ 25

Condo Average Price: $992,000
Condo Median Price: $850,000
243 Active Listings
9 Firm Sales This Week
MoI 4.01 (up from  3.99 last month)
Average Days on Market ~ 26

Leaside, Davisville, Yonge & Eglinton
House Average Price: $1,962,500
House Median Price: $1,962,500
45 Active Listings
2 Firm Sales This Week
MoI ~ 1.45 (down from 1.57)
Average Days on Market  17

Condo Average Price: $855,600
Condo Median Price: $730,000
130 Active Listings
5 Firm Sales This Week
MoI 2.48 (up from  2.32 last mth)
Average Days on Market ~ 26

Birch Cliff
House Average Price: $1,387,333
House Median Price: $1,230,000
31 Active Listings
3 Firm Sales This Week
MoI 1.88 (up from 1.63)
Average Days on Market ~ 3.67

Kingston Rd Corridor to Highland Creek
House Average Price: $1,257,667
House Median Price: $1,1,050,000
87 Active Listings
9 Firm Sales This Week
MoI 2.30 (up from 2.14)
Average Days on Market ~ 11.33

Condo Average Price: $602,500
Condo Median Price: $585,000
51 Active Listings
2 Firm Sales This Week
MoI 2.36 (down from 2.46)
Average Days on Market ~ 21.5

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