Sales are up, inventory is WAY down – and prices don’t show any signs of slowing down. If you’re thinking of buying, now’s the time.

Apologies for sounding like a broken record, but this is a fact that bears repeating: the GTA market has come roaring back to 2016/17 levels. It’s HOT, and will only get hotter over the coming months. Those of you who have been buying and selling in neighbourhoods like Leslieville, the Junction and High Park are already pretty familiar with these active market conditions, but now folks in the rest of the GTA are joining the party.

As of the end of October, sales are up for all property types, GTA-wide. That’s pretty important, considering what the market looked like in some areas just a year and a half ago. Today, the average price of a home in the GTA is $852K – up 5.5% from this time last year. Available inventory is dropping dramatically, however. In August, active listings were down 11.2% over August 2018. In September, that number went down to 14.1%. And this month, it’s even lower, at 18.8% less than last year.

It’s a trend that’s deepening with each passing month, and it’s feeling eerily like the end of 2016/early 2017, when the market went nuts. Clearly, government intervention in the market just put a pause on things, but the market is responding in its own way. This is our new normal: the reality is that we a have supply issue. People aren’t moving because there’s nowhere to go. Older people are handcuffed to their homes because of increasingly restrictive mortgage rules. And immigration is only adding to demand.

Prices, as high as they are right now, only have one way to go: up. I predict they’ll keep increasing over the next year, but without the dramatic double-digit jumps we saw in 2016/17. The reason behind that? People learned from the last hot market, and even in multiple offer situations, most are taking a much more cautious approach. Offers higher than a property is actually worth aren’t happening nearly as  often. There’s less irrational behaviour this time around.

For example, I was recently involved in a multiple offer situation. With three offers on the table, the property sold for only 12K over asking, which is totally reasonable. In the past, homes were selling for completely unjustifiable numbers, and that’s not happening at the moment.

In 2019, Toronto properties are selling for an average of 101% of the asking price. At the height of the market, that number was 107%. That may not sound like a big difference, but remember – the average represents sales across the entire city.

Show me the value!
In the face of these prices, how do you find value? Where does it make sense to invest? Well, if you can afford it, freehold homes still offer the greatest value. And now’s the time to make the move – despite all the new construction sites you’re seeing around the 905, our population is growing fast, and supply isn’t even coming close to meeting demand. If you can get into a house, get into a house. If that’s out of reach, exhaust all the options before giving up – buy something with an apartment you can rent out, sell off some investments, or use whatever tricks you might have up your sleeve to finance a purchase. It will be a solid investment in the long run – guaranteed.

If you can’t swing a house, consider a semi. If that’s too much, get into a town. And if you still need to go lower, look at a condo. And don’t just focus on the hot neighbourhoods – the greater value is in the less popular areas, in both the 416 and the 905. Be open.

Condos: focus on resale
If you’re looking at a condo, the better value is definitely in resale; pre-construction prices have gone through the roof. The average price per square foot for a pre-con is $1,247 downtown, with other markets just shy of $1,000. Resale numbers are much lower. The reason for that is that new build pricing isn’t based on the current market: it’s a forecast of how much it will be worth in two or three years, when the building is done. Basically, they’re building appreciation into their pricing strategies – which helps the builders, but doesn’t do buyers any favours.

But there’s a reason behind that strategy: the cost to build has skyrocketed. If you recall, a few months ago there was a lot of buzz around developers cancelling and re-launching projects. They were doing that since the original developments were no longer feasible because of rising costs.

I’m not saying pre-construction is bad – in fact, sometimes it’s the only way to get into a specific neighbourhood, especially if you want to be downtown. If you’re considering pre-con, I recommend that you really educate yourself about the risks and drawbacks.

Want to talk about high-value neighbourhoods, the pros and cons of new builds or what kind of property would be right for you? I’m happy to answer any of your questions – let’s talk.