Market Change

This too shall pass… an expression that now applies to the real estate market. Earlier in the year we experienced some intense bidding wars for homes, sometimes with over 20 offers and 100 showings in a week. The prices were jumping up quickly as buyers snatched up houses. 4 months later this scenario is no longer the case. We are still seeing multiple offers but not always and sometimes there are no offers that come in.

Interest rates are up, inflation is up. Buyers are not jumping as high and sellers are often disappointed with results. Interestingly the change in market is starting at the bottom. Usually it starts at the top. With the change in market will come a change in pricing strategy. We are a market in transition.

The jury is still out for condos. Condos did not experience the same recent activity and surge in prices as homes. With the end of the pandemic condos may get a good bump up this year.

Lack of Inventory

Lack of inventory sparks big bidding wars on homes. A couple of weeks ago we listed a house for $998,000 which was in keeping with sales in the area. The house was very nicely renovated with an addition. There was significant  attention paid to detail and renos were very tasteful. In general the house showed 10 plus. 23 buyers wanted to buy it. In the end the home ended selling for over $420,000 over list and there was a fight for it with the top bidders. We believe that a few factors came into play:
1. Pent-up demand by first time home buyers many of whom have lost in bidding
2. Renos are now very costly and time consuming. Pandemic has doubled cost of renovating and lack of supplies have made it a very frustrating process.
3. it’ s not that easy to find a nice house.
We believe that the market will continue to reflect these factors.

Young Buyers

How will young people be able to afford to stay in Toronto.  With real estate prices increasing at such a fast pace and price of commodities increasing so quickly, salaries are not keeping up. Businesses like restaurants and retail stores can’t afford to hire at such high salaries. We already have a shortage of labour. What will become of Toronto. Well, there is help coming from parents who own real estate in the city and are giving their kids money to put down. That will keep some here. However is that enough. We need more supply and we need immigration. We need a new post Covid strategy.

Co-ownerships

Co-ownership perhaps an option for those not wanting and being able to spend on owning a home in Toronto’s highly priced real estate market. A client called me the other day and wanted to discuss the option of buying a house with 2 apartments and sharing with a friend. The idea sounded good but the realty of co-owning is not simple. So many what happens when… We see co-ownership arrangements happening more and more. Not only is it financially easier but also good for sharing responsibility in looking after a home, perhaps good for company. If all goes well this could work. But what if it doesn’t – lawyers could be busy.

Staying in Toronto?

Toronto is getting busy again. Traffic is getting bad and slowly people are returning to work and play. In many ways the pandemic has given people some peace and quiet and those that really don’t need to live in the city are reconsidering staying. They still want the luxuries of a nice place but it no longer has to be in Toronto itself. Hence areas out of Toronto remain hot real estate wise and we are seeing luxury places being built where there were few. We are still waiting on the impact that accelerated immigration will have. There is currently a big shortage of staff in the service industry and immigration has always played a large role in this sector. All these people will need a place to live. Governments will need to accelerate processes to allow for more supply to be built. It sounds like everyone agrees that this is necessary. Now to do it.

Housing Hot Election Topic

Housing is a hot topic for this upcoming election – a key election issue. Toronto and surrounding areas just don’t have enough houses for the demand. This includes many parts of Canada. The Government is trying to make housing more accessible by putting more money in buyers hands. However this does not address the need for more rentals and more ownership of housing. Perhaps it may be helpful if there is incentive and less bureaucracy to create rental and homes for purchase – a better plan to create density in certain areas. Understanding that density has to be strategic and neighbourhoods have to be preserved, we just need more. Maybe more effort and money to reassess what we currently have and what we need.

Rental Market Heating Up

Rental market in the city is heating up. It’s back to bidding wars for city condos as people start heading back to in person work. The young employees who were working remotely and moved home now need a place to live in the city as employers are calling them back. The subway is not the best option as some companies actually do not want their employees going on the subway due to Covid risks. I can’t imagine the traffic if everyone starts driving downtown. We haven’t even started with a lift on immigration which would also bring an influx into the city.

Pricing and Strategy

Market appears to fluctuate – demand is there and sometimes with a bit of luck sellers are still getting premium prices. We are not always expecting multiple offers on an offer date, so many times we are pricing closer to market with even a bit of room to negotiate. Surprisingly we are getting the multiple offers weeks into a listing. We had a condo listed for almost 3 weeks – a number of showings but no offers. On our third week we ended up receiving what we thought was a fair offer and were prepared to take it when a second substantially better offer came in at the 11th hour. One never knows how things will go. Pricing and strategy are key.

Offer Dates Come & Go

Offer dates come and go with no offers. There are a number of homes in the city who expected multiple offers and didn’t get any on offer day. This started a few weeks ago and has continued through spring and into the summer. A couple of weeks ago we listed a house with an offer date and didn’t get any. The seller then raised the price to reflect more of what they wanted and then ended up with multiple offers, selling for list price. It will probably be simpler and less stressful for everyone involved when we go back to a more balanced market with list prices reflecting more of what market value is. The problem is that we weren’t sure what market value actually was. Prices were all over the place. As supply and demand balance out – hopefully that will become clearer.