What do we call this market? It’s not a seller’s market, and in some cases, it’s not even a buyer’s market. It’s a “stuck” market. Buyers are staring down most sellers, and point at interest rates.
Real estate is relatively illiquid – it takes time to have an agreement of purchase and sale in place, then another 45-90 days before the property closes and the lawyers transfer the funds. And what we know beyond a shadow of a doubt is that this is certainly not like the “stock” market, a market where, for the most part, can be traded in and out in an instant – there is liquidity. A lot of recent condo investors thought that it was like the stock market, expecting year-over-year gains without value corrections. Well, the condo value corrections are in effect.
We are in a “stuck” market because some sellers cannot sell their properties (predominantly referring to one-bedroom and studio condos) – especially those who purchased after 2019 – today’s condo market values are more in line with 2019 cost per square foot. That’s right, pre-pandemic levels. Those condo sellers who purchased before that time have more equity in their condo and can afford to sell for less than their neighbourhood, which may be in a cash-negative situation.
It’s also worth noting that the predominantly owner-occupied condo buildings in the city are performing quite well. Especially 2+ bedroom condos that have very few investor-owned bachelors spaces that are being rented out. We argue that if you could segment this out in the stats, we would see this specific condo market performing more like the freehold housing market.
➤ 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
To shed light on the freehold housing market, it remains relatively strong; it’s relatively flat in value over the last year. Areas like the east end continue to perform well, in fact there are a number of building warts happening this Summer. If the pricing is accurate then the house will sell. That being said it is Summer time which means far less demand.
We expect to see an increase in the number of condos coming to market this summer and a lot of relsits come September.
This is arguably the toughest market that we have seen when it comes to evaluating properties. Pricing may be great, logical, insightful, and experienced based and few to no showings are happening. This is a market where great trust and communication is essential between clients and their real estate representative. Without this a lot of stress and money will be mismanaged.
