The August 2018 Market Recap
School has started, the air is getting crisper – and the fall real estate market is heading into full swing. As people settle in after Labour Day, there’s more inventory, and more buyers starting or stepping up their searches as they come back from Summer Vacation. Many of those buyers are looking to get in before interest rates go up in October – there’s the expectation from the Bank of Canada that rates will go up a couple of more times in the next year, and people are looking to lock in mortgages at the lower rate now.
The market is healthy, especially in the 416 – any economic impact (real or perceived) of last year’s introduction of a mortgage stress test has settled, and things are pretty much back to normal. Logic has returned to the market. Last year, one of our listings – a house in Don Mills – sold for a million dollars over asking, but we aren’t seeing that type of market euphoria now. People are doing more research, looking harder at asking prices, and generally being more pragmatic. Homes in good neighbourhoods (parks, schools, transit) that show well and are well-priced will always do well. But unlike last year, those that need a lot of work or are priced too high are simply not selling as fast.
Staged homes are selling better
That’s where staging and marketing come in: the types of support full-service agents are able to provide can really make a sale. We had a condo for sale downtown recently, which was listed at the same time as another unit in the building. The other listing had poor-quality photos, wasn’t staged – and was priced at $670K, which was high for the building.
Our clients were concerned, but they needn’t have worried; we advised them to install new appliances and flooring, had it staged and professionally photographed, and priced it reasonably at $638K. And despite the building having high maintenance fees and an impending special assessment, their condo sold in eight days, just under asking. The other sellers dropped their price, then took their listing off the market altogether.
Supreme Court decision makes the market more transparent
Recently, the Supreme Court decided not to hear the Toronto Real Estate Board’s challenge that selling prices remain confidential. Now, they will be public info, and it should be interesting to see how that impacts things. I think transparency is a good thing – instead of being gatekeepers of information, agents are increasingly taking on the role of advisors and consultants; helping our clients sift through the wealth of information now available. Having that information publicly available also puts agents in a better light – opening up the data shows that there’s nothing to hide.
Where is the condo market headed?
The frenzy of the Spring 2017 housing market came to a halt after the introduction of the Fair Housing Act in April of last year. Since then, average prices have been ticking back up slowly and steadily. But there was no moderation in price for condos. In fact, we’ve seen 58 straight months of price increases in the condo market; there was no similar “pressure release valve.” The appeal of condos to entry-level buyers is affordability, but as prices get higher and higher, that buyer base will likely get smaller.
Condos and lofts in the downtown core that are unique, beautifully finished, with great locations – those will always be in demand. But as the gap closes between house and condo prices, the less unique units may see some challenges moving forward. However, from an investment perspective, they continue to be a good buy: average rental rates are way up in Toronto, with one-bedrooms going for well over $2100, and demand vastly outpaces supply. We recently listed a one-bedroom downtown for $2100, and after 10 hours, we had 20 showings, 8 offers (2 over the listed rate), and we ended up renting it for $2300.
The rental market is high-demand in Toronto – people want to live here, and with a strong economy, significant immigration, and historically low interest rates, it doesn’t show any signs of slowing down. In fact Microsoft just announced it would be moving its Canadian headquarters in to downtown Toronto. The high paying jobs that come with it is another vote of confidence for the core of the city.
What’s in store for fall?
September is a bellwether month for the fall market – the numbers will show which way things are heading. If the last six months have been any indication, I think we’ll see more small but steady price increases, buyers and sellers that continue to make more logical decisions, and some increased pressure to buy before interest rates go up.
Want to know if now is the right time for you to buy?
Questions about the market? Let’s talk.
