The July 2018 Market Recap
It’s been a year since last summer’s market correction, and confidence is definitely starting to come back. People who have been sitting on the sidelines with a “let’s wait and see” mentality are finally reentering the market. As of June, we saw six straight months of price increases. July saw a bit of a dip (dropping from $808K in June to $782K in July), but that’s a normal summer slowdown that happens every year – nothing to worry about.
Last month, the CMHC made a move that indicates their confidence in the market is high – they’re making it easier for self-employed individuals to qualify for a mortgage, which indicates their risk tolerance is higher.
So what’s next? I expect we will see flat pricing in the coming months. No decreases, but no double-digit increases, either. Just a modest 2-4% increase from this year to next. For the most part, there’s no pressure to buy before the next price spike – or hold off selling until prices balloon again. Things are stable. That said, conditions vary neighbourhood to neighbourhood.
What this Month’s Stats Really Mean
If you look July’s numbers and compare them to the stats from this time last year, you’ll see a dramatic 19% jump – the media has really latched on to that. But it’s important to put that number in context. In April 2017, the average house price was $918K. By July 2017, it had dropped to $745K. So when you’re looking at year-over-year stats for July, yes, it looks like a huge increase, but keep in mind there was a huge decline this time last year. What you’re seeing isn’t a miraculous recovery – it’s been coming back steadily, and remains steady.
What the Market looks like from our Perspective
Treb Marketwatch is saying there’s a lack of quality inventory on the market – and we’re definitely seeing that. Supply continues to be the greatest challenge. For example, we have a client looking for a one-bedroom condo in the city with parking for under $500K – these days, that’s the unicorn of condos, almost impossible to find. Foiled by low supply.
Another client is looking for a house in Riverdale or High Park, and there aren’t many listings coming up in those areas, either. And the ones that are reasonably priced and show well are generating multiple bids and bully offers.
But that’s the scene in the more popular neighbourhoods – I don’t see it changing anytime soon, especially with supply so low and demand so high.
But there are still opportunities out there, if you’re a bit more flexible about where you live. For example, detached houses in Leaside are selling for an average of 99% of asking, and they aren’t always generating bidding wars. Elsewhere in the city and suburbs, properties are sitting on the market for much longer than the 25-day average. And we’re seeing that buyers aren’t getting caught up in the frenzy as much anymore – logic is coming back into the market.
A Look Into the Future of Real Estate
Last month, we attended a Real Estate Tech conference in San Francisco – it was a great opportunity to see where things are headed, collaborate with colleagues, and stay at the top of our game. The biggest eye-opener was how much money is being poured into the real estate industry by the venture capital community.
In 5-10 years, we’ll be looking at a completely different landscape. It’s good news for buyers and sellers, because technology will take the stress out of the process, and dramatically reduce fees and costs. There is tech underway to help schedule appointments, to automate the sales process, enable instant purchases, etc. It will be interesting to see how our market adjusts.
Our role in the industry has already transformed from “sales” to more of an “advisor/ consultant” role. We guide our clients through the buying process avoiding pitfalls along the way and help out seller clients prepare, stage and sell their homes. And, we love what we do.
Questions about the market? Let’s talk.
