While the market is seeing some price dips April - May (and onward into the first week of June) it's important to note that prices are UP year over year in Toronto. The sky is not falling and we are not having a crash. We are having buyer resistance to the obscene and crazy market of almost yesterday coupled with some interest rate hikes that may take some buying power out of the pockets of some. And, as is typical, buyers react to this news before sellers catch up!
So is the Toronto Real Estate market crashing?
The media has a great deal of influence on consumers - remember markets can be hyper local while it's my job to look at what's going on in many area, It's important to understand what's going on in your specific area of interest, because different segments can behave differently. And when I say segments, I mean:
- price point
- type of property
- features of property
As you can see, the Real Estate market can have many segments & even micro segments that all react differently to market changes
Here is some learning from the last market downturn (2017):
- not all types of housing are impacted the same
- some neighbourhoods go to sleep, meaning prices do not drop, they just do not rise and demand remains good
- lowest price range in any type of property drop the least as this is the most affordable housing
- with more inventory, buyers are pickier
- beautifully renovated or properties with special features sell fastest and highest while average properties will linger
- in Toronto, the Central core out performs the other areas (with exceptions to pockets) overall and in Central from the Allen to Leslie and north
- the suburbs take the greatest hits - and 905 even more
- condos, those that are true filing-cabinets-in-the-sky such as 400-700 square feet, have problems
- condo buildings that are predominately owner occupied, upscale, fair well
- condo buildings with a dominant tenant base - hit hard
- despite all negatives, no matter how bad the economy, no matter how high interest rates - houses sell. Every day, houses sell. That simple from condos to mansions, priced right everything sells.
- the bottom rarely drops out - in Toronto a "good deal" is if you get a properly priced property for 95-99% of list price
- lowball offers insult sellers and rarely work in a buyer's favour
- Find listings that have been on MLS for a bit with, with motivated sellers and be realistic - but a good deal can be had with a skilled negotiator.
- While it's virtually imp0ssible to time the market, there was a 5 month cycle last time we saw a market dip from when prices fell to when they started to rise
Here's my Video update of what's going on at the end of May & beginning of June:
Some sellers continue to test the market: as a consequence, you will see homes staying for sale longer, as some sellers want to hold out for peak prices (we call these 'unmotivated sellers' - they are willing to wait out this cycle.
Offers anytime may still mean sellers want over asking price: It used to be that there were 2 strategies used to sell a property: 1. List at a price that left room for negotiation and 2. List low to stimulate a bidding war. Now there seems to be a 3rd strategy - if the property did not sell in a bidding war, the seller keeps the price low to encourage showings but still wants over the asking price.