The Toronto real estate market has significantly shifted over the last few months. In the freehold, condo, and lease market. We’ve seen prices drop by 15%-30% depending on the pocket and type of home and total sales drop by about 50%, therefore, increasing months of inventory since march of this year. The good news is that in most areas and home types, we are still around 10% higher average price than July 2020. Yes, if you bought sometime between September 2021, and March 2022, there is a chance that your home has decreased in value. Don’t panic. Every client, friend, family member, or random person on the street that I talk to about housing is that it’s not a short game. You aren’t day-trading real estate. As long as you don’t sell while your home price is below what you bought it at, you aren’t losing. Remember why you bought that home in the first place, and hold on until you’re in the clear!
The number one question that’s getting asked right now is, where is the bottom? The truth is, no one knows. If someone tells you they know EXACTLY when the bottom is going to happen, run, as fast as you can! The truth is, we are all figuring it out as we go. Some sellers are more willing to take a lower number for their home than others, which then leaves the homeowners that were holding out in a tricky situation. Do they sell at what the ‘market’ is telling them their house is worth, or hold off? No one can answer that question, except for them.
We are passed the panic selling point where home sellers who bought before they sold either had to sell at a massive discount to close on their purchase in time or risk defaulting on their purchase and losing the deposits. But, as interest rates continue to rise, we will most definitely, continue to see a slight decline in prices. We have reached a balanced market level of inventory in most of the Toronto and Greater Toronto areas.
We are seeing a significant drop in the total amount of showings. Which could seem like a bad thing, but the reality is that the people who are out viewing properties right now are serious buyers. There are far fewer ‘window shoppers’ on the market. So, even if a property is only getting 2, 3, 4 showings, those could potentially be up to 4 serious buyers whereas before properties would be seeing 20-60 showings in the span of a few days, but only because there was next to no inventory in such hot markets people were just seeing anything and everything that came up.
We saw the least amount of sales in July than we’ve seen in about 5 years, and about 50% less than the average number of July sales. The positive point to that is we are still moving forward. The real estate market in Toronto hasn’t stopped. It’s just slowed. When you look at the bigger picture over the next 5 to 10 years you’ll realize that a positive turnaround will happen. With Canada’s outlandishly large immigration targets and an incredible lack of supply, once everyone gets used to our interest rates in the normal range of 3%-5% I strongly believe we will go back to our 5%-8% appreciation per year.
If you sat out of purchasing a home when things were getting hot over the last two years, NOW is the time to get back in. There’s the least amount of competition and the most amount of opportunities we’ve seen in a long time. Yes, there is a chance that home prices drop a little bit more, but when you look at your total monthly payments as interest rises, there’s always a chance you’re still paying a higher monthly payment & more of that payment is going to interest.
If you are interested in seeing the week-over-week stats or have questions about what’s happening in the market don’t hesitate to reach out at any time!
Brad McRae
McRae Realty – 613-503-0213 – [email protected]
