History repeats itself
The real estate buffs among us are feeling a sense of déja vu right now. The real estate market in the City of Toronto—and beyond—is experiencing nearly exactly the same market shift that we saw in 2017. More specifically, after a period of rapid market growth, the government has decided to intervene to force the market to cool.
In 2017, that government intervention took the form of Ontario’s Fair Housing Plan. In 2022, it comes as a two year pause on foreign buying, proposed changes to blind bidding and a push to drastically increase production of new homes.
We’re skeptical that these changes will create any lasting downward pressure on pricing. But, in the short-term, they’re certainly having the desired effect.
But, it’s not just government intervention that has prompted a cooling. Interest rates, which were artificially low during the pandemic, have started to climb again. And, as a result, purchasing power is waning.
Buyers are overwhelmingly opting to take a “wait and see” approach and many of them are turning to the rental market in the meantime. This is turning up the heat on competition and prices are skyrocketing as a result. Not a great time to be a renter—but, if you can swing it, it’s a GREAT time to be a buyer. You may even avoid a bidding war.
Deal hunters take note: pricing is still resilient in the core and choice properties will continue to garner attention. Just a couple weeks ago, a colleague listed a great little home in Mimico without an offer date and still received 7 offers!
Conversely, the outskirts of the city are experiencing a more dramatic correction. For those areas, where appreciation rose significantly above the mean, prices have further to fall to return to their historical averages. This is where more deals are likely to be found.
We anticipate at least one more rate increase by the end of the year, which means that pricing should remain soft for at least another couple of months. Our advice is to be patient and wait for the right opportunity. When the right place does come along, be ready to pounce. As Vanessa Copeland likes to advise her clients, being the first person to view a home gives you the opportunity to make an offer before anyone else is ready.
Whether you are a potential buyer hoping to capitalize on the current market conditions or a seller looking to find out how all this might affect you, let’s talk. We’re always happy to sit down for a coffee and a chat.
