Making Sense of the Market & Headlines
There have been many articles about the state of real estate in Canada and in other cities across our nation, like Toronto. I wanted to take a moment to help make sense of what the headlines and body copy of many of these articles suggest and how misleading many of them are.
First:
The Canadian Real Estate Market does not really give much insight into local real estate. It’s too big and vague a geographic and demographic region of the world to be accurate. Perhaps some macro trends but that doesn’t help you in your local market. What happens in Calgary has no bearing on Toronto. In fact, London, Ontario real estate does not affect Toronto. Hold Canadian real estate “insights” loosely.
Second:
Toronto real estate matters to us, as well as the surrounding areas of the city and cottage and rural areas where Torontonians recreate. Keep in mind that Toronto is made up of many neighbourhoods; some perform well, others less so. A business closing in Junction has zero effect on Summerhill. For instance, a new business downtown has no immediate impact on Bedford Park. Real estate sales and values are hyper-local and change daily as buyers absorb listings and new buyers come to market in any given area and price point.
Toronto Reality:
The Toronto real estate market is not in as bad of shape as the media would have you believe; neither is the “condo market.” Let me take a moment to explain myself. This market has a stuck element, but we need to tease this apart to give context and understanding.
Houses:
The housing (freehold) market is performing relatively well. The values are approximately the same as a year ago. There are fewer sales, but the values have held up well. That said, if pricing is off or there is a perceived hurdle in the buyer’s mind about the house, it will struggle to sell.
➤ Every good investment needs a well-planned strategy. Start preparing with the following:
- Are Condos A Good Investment?
- How To Submit A Winning Offer On A Home
- The Most Undervalued Condos In Toronto
- Condo vs House Investment
- Why Parents Should Invest In Toronto Condos For Their Children
- Millennial Home Buying Trends
Resale Condos:
Resale condos are struggling to sell. However, there is a record-setting glut of listings on TRREB for resale condos because the “investor” condo owners struggle to manage the variable mortgage investor rates. The generic one-bedroom dry-walled condo downtown has been hit pretty hard. However, the end-user-desirable neighbourhood condos have performed similarly to houses. The reason is that there is something unique about them (whether that be neighbourhood, design, demographics, etc.), whereas the condos that were built in recent years in the downtown core are struggling.
Pre-Construction Condos:
Pre-construction condos this is a biggie to tease out. Pre-cono has stalled out. Why? The reason is that buying pre-con condos at $1500-2000 a square foot is substantially higher than buying resale at $1000-1200/sq ft. Not to mention that a pre-con development could tie up one’s money for five years, whereas a resale condo can be moved into in a matter of weeks, and that money can get to work, and your life can be enjoyed in a great space. Note that there will be another spike in demand in 2-3 years’ time as there are not enough new housing starts to house Toronnot’s growing population. Once the overnight interest rate drops another 1%, we expect the pre-con world to pick up and for new projects to come back online.
It’s important to pick apart the headlines and the media’s articles. In our city, there is a lot of conjecture without a great deal of understanding of the basics.
Key Takeaway:
This is an excellent opportunity for buyers who have the courage to snap our lowering interest rates and take advantage of the lack of understanding in this marketplace. The fact is that most agents don’t dive into the realities of the market and don’t have the experience to explain the opportunities and pick apart the misunderstandings that are proliferating the media and cocktail conversations.
We expect that the house bidding wars will return in the next eight months; this Fall will be a time when some buyers who didn’t act will look back and wish they had snapped up what was available. That being said, it takes courage and trust to get there. Resale condos will take longer to return to a seller’s market,
