I spend a lot of time thinking about Toronto real estate, talking about Toronto real estate, and reading all of the things and scrolling all of the tweets to see what others are saying about Toronto real estate.
And that’s when I am not actively selling it.
Opinions are everywhere and consensus is surely limited, but there are a few things that almost everyone seems to agree with: in the span of three decades, Toronto real estate has gone from mostly accessible to increasingly aspirational to broadly inaccessible.
We know that we have insufficient supply of both resale and rental housing.
We know that we have endless demand — thanks to bold immigration targets, job-seekers coalescing around the country’s business, financial and tech centre, not to mention historically low interest rates that have inarguably driven speculation, the ratio of available properties to active buyers is woefully inadequate.
And while it feels like there may be an ever so slight cool settling into the market in the past few weeks, if two years of forward momentum is any indication, it’s hard to believe this will be anything larger than a blip. But there are some signs. Houses that just weeks ago would have sold in a frenzy of over ten offers are now welcoming just a handful on offer night.
LACKIE: Real estate demand seemingly endless
LACKIE: Real estate buyers happy to pay tomorrow’s price today but they’re not dummies
LACKIE: More transparency would improve trust in real estate industry
From there it seems to go one of two ways — the house still hits a strong number, likely motivated by two buyers battling it out between themselves, or it fails to sell and so is relisted the next day.
I sold a house this past week where we had over 50 showings. Respectfully declined a bully offer on day one, asking instead that they wait until offer night. This was one of those houses in one of those neighborhoods that was sure to do well as it was the perfect starter home and a way of getting in. The house was adorable. It was staged perfectly. We were priced slightly below market value in order to ensure that we were driving activity and not confusing people about what our expectations were. I answered every phone call, followed up with every agent for feedback, sent out the home inspection report more times than I can count.
The morning of our offer day I started to make my calls to get a sense of who might be coming forward. And I couldn’t believe it — agents who had shown the property two, three and four times were telling me some variation of the refrain that their clients loved the house but were worried it was going to go too high and didn’t want to compete. They were going to sit it out.
In the end we had three offers. And all of them were strong. The buyers who showed up came to play. Gone were the buyers who were simply taking their shot. With all of the discussion about the perils of blind bidding, this was fascinating to me. It wasn’t a frenzy, no one lost their heads, the house sold for exactly what I expected it would.
But I do think the stars aligned for us. I think if my sellers had unrealistic expectations or the house had some challenges, or there had been a blizzard that made the parking situation difficult, we could have had a very different result.
And based on conversations with my colleagues, my experience this week was not unique. A friend had a similar scenario play out on her listing of her in the west end. In the end she got a record-setting price, but it was a small handful of offers that got her there. Another did n’t hit her number from her and they relisted the next day.
What could this mean? Well, for those who have made a full-time gig out of predicting the great crash, they will likely say that this is the sign that a seismic shift is underway. I think it’s a little simpler than that. People are uncertain and unsettled by what’s happening in the world. We are all exhausted. We are coming off two years of a global pandemic while a hideous and horrifying war in Europe is now unfolding in real time on cable news and social media.
Buyers have been spooked by a lot less. The bump to interest rates was nominal relatively-speaking. Could people be alarmed by an economy grappling with elements we barely understand? Inflation that is clearly not transitory, an energy crisis, and gas prices that seem like typos? Absolutely.
Investors who actually know what they are doing are likely taking a good hard look at what’s driving current inflation and I’ll bet that many are now taking a pause. And I would also bet that there is a solid group of buyers who are now wondering if this is the moment some sanity starts to return to our real estate market. And for their sake I hope that’s exactly what’s happening.
But if recent history is any indication, this is just as likely to be one of those little blips that could actually represent a rare sliver of opportunity before the train powers up once again.