As anyone who watches the news would know, TRREB’s July Real Estate Market Report has come out, because of course, the media is all over it! So, let’s start by running through the Toronto housing market highlights, and then I’ll give you my thoughts on what’s really going on.
The Toronto housing market highlights are, supply drops along with consumer confidence while average days on the market climb. The price of a Toronto detached home is actually down over this time last year (more on that later). While the semis, towns and condos hold strong at 5.1%, 7.6% and 4.3%.
To summarize below, yes sales are down 47% over this time last year, but what is a good sign is that homeowners who aren’t selling are taking their inventory off of the market. Low inventory is actually showing that sellers aren’t going to rush sell and that they can afford their properties. I credit the stress test for a lot of this stability.
TORONTO HOUSING MARKET SUPPLY DROPS
I’ve said this many times before, Toronto homeowners are well-funded. One of the things which I credit the implementation of the Stress Test for. Toronto home sellers who don’t have to sell, simply aren’t they are choosing to pull their properties from the market. Those investors looking to offload their assets are taking advantage of sky-high rents and are instead just choosing to lease their property out.
For those sellers who do get an offer and do need to sell, they’d be pressed not to work with that buyer. That first offer might very well be the best offer.
TORONTO HOME BUYERS SIT ON THE SIDELINES
Consumer confidence in the Toronto Real Estate market continues to erode and the buyer pool continues to shrink as imminent future rate hikes loom. Toronto home buyers, even those that can afford to purchase now have officially moved to the sidelines with the fewest record sales in the market. Showings are down and bidding wars are nearly non-existent. All of the above has led to properties sitting for sale longer, and increasing average days on market.
We’re actually nearing the slow of the early Covid days. This is I guess less surprising when you consider the context that that whole mess is what got us into this situation in the first place.
TORONTO DETACHED HOMES
Yes, Toronto prices are down year-over-year for the month of August. However, let’s add some context. This month there has been a record low of house sales. Remember what I said above, buyers are scared and sellers are well funded which equals a ton of terminated listings. With that few sales, data can be easily skewed. So take it for whatever it’s worth to you.
TORONTO CONDOS HOLD STRONG
When it comes to the Toronto housing market, the average price of a Toronto condo seems to be holding strong up 4% over last year. We’re accrediting this one to those investors as Toronto rentals just might be the saviours of the Toronto condo market.
RECORD LOW RENTAL AVAILABILITY & SKY HIGH RENTS
There’s not much more to add here other than rentals are going to continue to increase in demand. Toronto is just not able to add enough inventory to the market to make a large enough dent in demand.
YOUR TORONTO NEIGHBOURHOOD STATS
Real Estate is all about location, which means even when looking at “Toronto” your neighbourhood, or the one you’re thinking about moving to matters more than the overall stats I’m sharing today. It’s important to me that my clients are well educated on the market – but more specifically, their local market. So, if you’re more interested in your neighbourhood’s stats than how Toronto is fairing as a whole, we should talk. You can book a call to chat with me here.
THINKING ABOUT SELLING?
If you are considering selling in a changing market and selling this year, sooner is likely better than later. It’s also critical that you have the right team behind you so that your home is perfectly positioned for success. We mentioned this topic just the other day over on our Instagram page. It must show impeccably and everything from styling to strategy and negotiation must be just right.
If you want to discuss when the best time for you to sell might be, you can always book a call with me here.
THINKING ABOUT BUYING?
If you’re thinking about buying in the Toronto housing market, whether that be for personal use or as an investment, inventory is dwindling in the re-sale market and increasing in the assignment market. This means depending on the deal you’re after there may be more or less choice in the market. Below I break down some of my favourite market opportunities.
If you are thinking about timing the market check out this article I wrote the other week titled, “Do Falling Toronto Housing Prices Really Improve Affordability Today?” We discuss whether you can really time the market. Is there a Toronto housing bubble? When will housing prices drop, and should you wait to buy? We did the math and the answer might just surprise you.
INVESTMENT OPPORTUNITIES IN THE TORONTO REAL ESTATE MARKET
Market opportunities like this happen once or twice in a lifetime and there are some large opportunities on the horizon for anyone who’s been sitting on the sidelines waiting for the right one to present itself. While I like to customize my investment strategy for each client based on their goals, here are a few of my favourite options.
PORTFOLIO OWNERS: SELL AND REINVEST
Sell? In this market? Yes, you heard me right! Investors, especially those with a Portfolio, there is money to be made in this changing market. For those investors who purchased and have already made a great return on that asset, it might be time to consider liquidating and re-investing those funds into two new assets.
PRE-CONSTRUCTION ASSIGNMENT SALES
There are a ton of assignments on the market right now, many are close to occupancy and you can pick them up for nearly what the buyer paid four years ago. Plus, since they are close to occupancy you’ll be able to take advantage of Toronto’s rising rental rates.
We talk all about why you shouldn’t sell your pre-construction condo at occupancy and what you need to know about flipping condos in Toronto on our blog.
RELATED: What is an assignment?
TRREB ADDRESSED TWO POTENTIAL SOLUTIONS
Along with this month’s report, TRREB offered commentary on two possible solutions that they believe should be considered to help improve buyer affordability.
REMOVING THE STRESS TEST
Getting rid of the stress test, while improving immediate affordability is not helpful long term. Toronto is a stable, conservative market and had the stress test not been in place before these current rate hikes, many people would have been in the position of not being able to afford them. This would have caused them to default and that would have affected property values similar to that of the 2008 global financial crisis.
I actually give the Stress Test a lot of credit for the stability in our Downtown Toronto Real Estate market and I don’t think that it should be removed. Especially with climbing rates, I think that we need that level of certainty, that people can afford higher rates, regardless of the level of sales in today’s market.
INTRODUCING 40-YEAR AMORTIZATIONS
Since what we are really struggling with is monthly affordability, offering buyers alternatives that actually lower their month-to-month costs seems more reasonable. In my opinion, this is what buyers actually want and need. 40-year amortizations would actually lower monthly payments and provide some sort of relief which is what I think Toronto homeowners would appreciate.
FOOD FOR THOUGHT
In some American states, they offer 15 and 30-year mortgage rates. To me, this seems like a much more logical solution to ensuring that someone can afford their home and that they wouldn’t be at risk of having to sell simply because of rising interest rates. I personally believe that this is another avenue that should be considered here in Ontario as it actually improves monthly affordability and that’s what Toronto homebuyers need.