Navigating the Toronto Real Estate Market

It has been well over a year now since the City of Toronto and the Greater Toronto Area (GTA) witnessed a tremendous frenzy in the real estate market. It felt like a Boxing Day sale where the lineups to buy were massive, except no one got a deal.

Since then, as you know, there has been government intervention in both the real estate and mortgage markets. The result is a more balanced market presently. There are still multiple offers on some properties and in some areas, especially in the City of Toronto, but that aggressive price growth has subsided.

If you have read some of my blog posts in the past, or follow me on social media such as Twitter (@stefanospops), Instagram (soldbystefanos) or Facebook (www.facebook.com/soldbystefanos) then you know I don’t believe in market timing. Trying to time a market is risky. I know countless people who told me 10 years ago (or longer) that the Toronto real estate market is overpriced. Those people are still waiting for a major correction. Could you imagine buying today a 4 bedroom, semi-detached house walking distance to the subway that was recently renovated for just $400,000? This was the going rate for such a home back in 2006. In order for prices to fall back to that level in the City of Toronto there would need to be a mass exodus of people leaving this city or losing their jobs.

Instead of trying to time the market, I suggest to all 1^st time buyers that when you are able to enter the market, you should. Of course, it helps to have a guide, such as myself, to assist with the right neighbourhood, the right property, but most importantly, the negotiation. It is during the negotiation that you set the stage for home ownership and where the most expertise is required, in my opinion. There must still be some market timing discussion for 1^st time home buyers, but I do not believe that should be the main factor. Speaking to a rep such as myself will help you understand why.

If you are already in the market and own your home, then you can practice market timing to a lesser degree. When you MUST do something, you have no choice. Moving from a 1 bedroom condo after the birth of a child is a MUST. If your job moves to another city then moving is a MUST. When it is not a must but a nice to have, then you can follow my general principle: Upsize in down markets and downsize in up markets.

To this end, on February 24, 2017 I made a blog post advising Empty Nesters that then was a good time to downsize. BLOG POST LINK. I believed that this was the best course of action for people looking to downsize since prices were escalating. Assuming all property values increased by 10%, and they sold their place for $1.1mil and bought a place for $550,000, then conceivably those places were worth $1mil and $500,000 before. That is a net advantage of $50,000.

Today, the market has flipped. We are in a balanced market which means properties are taking longer to sell and there is more choice for the buyer. This inevitably means that some prices are coming down. Sellers expecting their home to sell after 1 week become disappointed and anxious. If they waiting too long, they may be pressured to reduce their price to get a quick sale.

The GTA has seen values decreased on average by 6% but some areas have been hit harder than others. There are still areas in the City of Toronto that have seen price appreciation in the last year. The old saying with respect to location, location, location always applies.

As I alluded to in my previous blog post, one of the measures real estate representatives use when describing a buyer’s or seller’s market is to talk about the months of available inventory. The higher the months of inventory, the more likely we are to be in a Buyer’s market. This number is determined by calculating the number of listed properties divided by the number of sales.

For example, in May 2018 the City of Toronto reported sales of 3,357 properties. At one point on June 27, 2018, there were 5,744 available properties. This gives us a value of 1.711 months of inventory. In other words, if no new listings are added to inventory then the City of Toronto will be sold out in about 7 weeks.

This number can be deceiving though because we also know that in the City of Toronto about 38%-40% of listings do not sell. There are many reasons for this. Sometimes one single property may be listed and relisted multiple times. Or a property is listed and then the owner changes their mind and takes it off the market.

What are some months inventory numbers around the GTA? See the chart below ordered by least months inventory to most months inventory based on available listings at some point on June 27, 2018:

As you can see, even within the GTA there are some huge differences with respect to where to live. I think I can leave you to come up with your own conclusions as to which parts of the city are doing well and which are suffering. Many of the ones suffering today are the same ones that saw truly excessive bidding wars last year.

If you are thinking about a move this year, take the above table into consideration. If you and your reps don’t understand this when commencing your real estate journey, then you risk sitting on the market too long or paying too much on that purchase.

So where does this leave you? It depends on whether you are a Buyer or Seller. I’m happy to have a conversation by email, text or voice to discuss your needs. 

Liked this post? Take some time to visit my Facebook business page at www.facebook.com/soldbystefanos and hit the Like or Follow button or follow me on Instagram (soldbystefanos) or Twitter (@stefanospops). Every day I post to all my social media the changes in the Toronto Real Estate market.

Posted on June 27, 2018 by:

Stefanos Papadopoulos - Real Estate Broker – Royal LePage Terrequity Realty, Brokerage*

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Photo courtesy of Wonderland Photography

© 2018 Stefanos Papadopoulos