(F)actual Market Update - Part 2
Monday Dec 19th, 2022
Still reading those headlines? I understand. I am reading them as well. Especially the ones my clients share with me and ask me for my opinion on.
It is important for me to know what people are hearing (and reading) about the market so that I can help each one of you understand the facts and the objective reality instead of the subjective picture being painted by the media.
According to the Toronto Regional Real Estate Board (TREBB), home sales were down in September 2022. This fact has been widely shared as supposed evidence of a market meltdown. Too bad very few people mentioned that inventory for September was at its lowest point in 20 years. You know you can’t buy what isn’t available, right?
Speaking of what is and isn’t available, let’s examine that a little more closely, shall we?
Not only is there a tremendous lack of inventory but even more so, there is a lack of GOOD inventory.
What is good inventory? In this current market, good inventory is:
- Homes that are priced at current market value
- Homes that have been newly listed and not simply re-listed*
- Homes that are in good condition and/or move-in ready
- Homes that are well located -
- Areas that are in high demand
- Well located within the area of interest (i.e., not on a busy street)
- In a desirable school catchment area
*Included in “new listing” inventory are homes that have been sitting on the market for a long time but did not sell for various reasons. Homeowners took their properties off the market and re-listed in September hoping that the fall market would bring more buyers and that home prices would go up again.
With very little for buyers to buy coupled with the fact that buyers have less buying power with interest rates being higher than they were a year ago, it is no wonder sales are down. But WHY is this a headline?
Real estate is a hot topic that affects everyone from the homeless to renters, to first time homebuyers to downsizers and everyone in between. We are in a housing crisis and people want to know the latest news and how it affects them. Unfortunately, the headlines and very often the articles themselves don’t tell the whole story but rather focus on the information that supports the author’s belief or narrative. In some cases, the information provided doesn’t even match the message of the headline. If we look back a year ago we can see that the headlines were very similar to current ones, only with different data.
Let’s look at an example:
In September of 2021 when the average price of a home in the GTA was only 4% more than it is today, we were bombarded with messages from the media about unsustainable prices, incredibly low inventory levels and captions such as this one from a local news media outlet on September 3rd, 2021; “August home sales down in Toronto, prices up as supply fell 43%.”
Comparing the extreme and unsustainable highs of 2021 and early 2022 and using those numbers as a benchmark to compare to today’s figures in order to “inform” the public is not helpful as it does not tell the whole story.
So let’s get to the facts.
Listings and sales are down; fewer listings = fewer sales.
The last two months have shown very small increases in the average selling price of a home.
This could be the beginning of a trend or not. In any case, it is a far less sexy statement than the newspaper headlines. So, while prices are down year over year, there is some hope for sellers who do need to sell right now.
We still have a major supply issue and while rising interest rates are making it more difficult for people to buy property, there is still so much pent-up demand. For this reason, I expect that this “price correction” will be a short lived one. That is not to say that I expect a big spike in home prices. In spite of the lack of inventory, we have buyers who are taking their time, being cautious and waiting to see what happens.
Selling in this market requires patience and knowledge. The listing price needs to be right, the marketing needs to be top notch, and the home needs to stand out amongst the competition (even when there is little competition out there).
Many of the homes that I have been selling these last few weeks have brought multiple offers (without an offer date) and when listed at the price I recommend tend to sell not only quickly but for 99% of asking price. That tells me that buyers know what they are looking for and will jump at the right property, albeit more cautiously.
Unfortunately, buyers are struggling to find properties that meet their criteria and revised budgets.
Buying and selling in the same market rather than trying to time the market is the best solution. Know what you want as both a seller and a buyer. Make sure you are well informed and be ready to sign on the dotted line if you are looking to move. Forget about the sensationalism and don’t compare pricing to last year. Focus on today because we don’t know what tomorrow will bring.
The only real solution to dealing with the housing crisis is to actually create more housing. That is something that only the government can do. Let’s hope they make a commitment that makes sense and that they follow through.
Each individual is different just as every home is different. Given that, you each need information and advice based on your specifics. If you would like to discuss your immediate real estate questions and needs, please reach out to me directly at firstname.lastname@example.org or call me (or text) at 416 820 3006.