Predictions For The Fall Market

It was a long, hot Toronto summer!  Not to be confused with the TV show, “Wet, Hot, American Summer” which is currently playing on Netflix, and not bad, if you’re like me, and have a childish sense of humour…

But Tuesday, September 8th marks the first day “back” in the Toronto real estate market after a slow August, and I expect the market to absolutely explode as we start this week.

Let’s look at a few topics, trends, and hot-button issues that we should keep in mind for the Fall of 2015…


How’s this for depressing: remember back when your significant other came home one day after work and said, “Oh my gosh, it was so nice out today!  It was like 18-degrees and sunny!  Summer is just around the corner!”

Well, that was April.

And now it’s September.

And the only drawback about summer in Toronto, at least from what I can tell, is that it ends.  Every year, the result is the same.

So here we sit, on September 8th, the first day “back” for everybody, whether you’re a kid lamenting the end of 24/7 freedom and heading back to class, or an adult realizing that the next major break you’re going to get is Christmas.

For me, the end of summer and beginning of Fall is always bittersweet.

The end of summer means NFL football is only days away, and with that comes the most exciting and most frustrating past-time since golf was invented, and that is namely, fantasy football.  I haven’t won my league since 2008, and now that my wife has formed an 8-woman fantasy football league of her own, I’m trying to win my league, AND win within my household…

I’m not really a “summer equals time off” type of person, although I will admit that the summer is a slower time for real estate than the spring or the fall.  Having said that, as a person that doesn’t know how to relax, doesn’t take time off, and doesn’t benefit from idle hands, I welcome the fall rush that is upon us.

Do I welcome sitting in my car until midnight, waiting for offer presentations and negotiations to conclude, at least twice a week?  Not particularly, but I do welcome the busy fall market as it gives us some balance, and structure.

In the summer, some houses sell for a lot less than they woulda/coulda/shoulda, and some less.  Some sellers play pricing games, and some know they don’t “have” to sell, because they can re-list in the fall.  Some weeks give us a plethora of new listings, and some are a barren wasteland.

The busier the market, the more structure there is.  And that’s one of the things I welcome the most as the busy fall market is set to begin.

I’ve never been a fan of these “prediction” blog posts, but they seem to rank well, and people like to read them and comment on them (the January, 2015 post had 70’ish comments, I believe).

Not only that, it’s a good way to give a point-form, snapshot-like idea of what I believe lays ahead.

So in no particular order….

Properties Will Sell Faster

When working with a buyer who does not reside in Toronto, one of the toughest things for them to wrap their heads around – even tougher than the multiple offers and over-asking prices, is how quickly properties sell.

A hedge fund manager who lives in Texas told me two months ago that his house “only” took three months to sell.  I asked him if it was outside the major city in which he lived, or if it was in an area that wasn’t popular, and he basically told me it was the equivalent of a North Toronto home: 15-minute drive to downtown, affluent, established, good schools, and very sought-after.

Three months, in Toronto, is an eternity.

For a house?  Not a condo, but an actual freehold property?  That’s probably about 6-8 times longer than we would expect, provided the house is priced accurately (which means under-priced in Toronto).

So what do you think the average “days on market” is in Toronto these days?

Guess, before you continue reading.

Any idea?

This past August, it was 23 days.

Keep in mind, that’s ALL of Toronto, including 416 and 905, houses and condos, near and far.

We know that if we’re talking residential freehold in the core, it’s more like 6-10 days.

But what’s amazing about that 23-day statistic from August of 2015 is that in August of 2014, the number was 28 days.  And in August of 2013, it was 29 days.

That might not sound like much, but relatively speaking, it is.  From 29 days to 23 days – houses are selling a whopping 21% faster than they did two years ago.

So apply that statistic across the board, or on a micro level to, say, 1-bedroom condos, and you can see how hyper the market has become.

I honestly believe that in the Fall of 2015, properties are going to sell faster than ever before.

Which leads into my next point…

Bully Offers Will Be The New Normal

Why would any seller wait until “offer night” these days?

The crazy, crazy price often comes after 12 hours on the market, from a hyped-up buyer who doesn’t want to be in competition 6-8 days later.

I don’t have statistics on this, and I wouldn’t trust any hand-made stats either, but it would be quite interesting to see if sellers fare better by taking a bully offer, or waiting until offer night.

Personally, I would wait until offer night in most cases.  There’s always a time when the bully offer price is just so crazy that you have to take it, for fear that they’ll come to their senses over the next week.  But most of the time, I’d rather have five, ten, or fifteen buyers and agents to play off one-another on offer night, than to have one overly-emotional buyer with a bully offer.

Having said that, bully offers are taking the market by storm.  Many buyers think it’s the only way to buy a house, and I’m almost inclined to agree.  Hypocritical?  Contradictory?  No.  If I’m representing a seller, I want to wait until offer night.  If I’m representing a buyer, I want to bully.  Make sense?

Perhaps part of the reason why properties are selling faster than ever before in 2015 is because of the prevalence of bully offers.

If you’re a buyer in September, October, and November – get ready to have no life.

You’re a slave to the market.  You don’t have “free time” anymore.

When your Realtor emails you on Tuesday morning with that hot new 3-bed, 2-bath semi on Heward in Leslieville, priced at $729,900, with offers to be reviewed the following Monday – go and see it ASAP!  Tell your Realtor, “I have dinner with a friend tonight, let’s try for Thursday night,” and risk losing the house.

It’s not fun.  It’s reality.

And don’t blame me, because I didn’t create this system, and I can’t change it on my own.

But whether you’re my buyer-client or not, please, please take my advice: if you’re looking for a freehold house this fall, leave every night of the week open.

Inventory Will Be Lacking


Really, it’s boring.

Enough about the “lack of inventory” already, because I’m sure you’ve heard it before a dozen times, right?

Well, it would be irresponsible for me to write a post about the upcoming Fall 2015 market without just briefly touching on supply and demand.

“Billy, what happens when demand is greater than supply?”

“Why, prices increase, don’t they, professor?”

It’s not exactly ground-breaking stuff, is it?

This past August saw 7,998 sales, which was a 5.7% increase over the 7,568 sales in August of 2014.

But new listings this past August were only 15,997, which is down 10.5% from the 17,882 in August of 2014.

Is it any surprise that the average home price in Toronto was up 10.3% to $602,607 in August of 2015, from $546,482 in August of 2014?

Forget prices, for a moment.

Focus on supply and demand, and you’ll see the truth in Toronto’s market.

The real estate bears can’t argue with the lack of supply, and the unsatisfied demand.

Go back to June of 2015, which is usually the culmination of a busy spring market, and the numbers are even more daunting:

Sales were up 18.4% from 10,132 in 2014 to 11,992 in 2015.

New listings were down 13.1% from 20,686 in 2014 to 17,972 in 2015.

There are more buyers than sellers.

There are more people who want to own a home than people who want to sell a home.

Phrase it any way you like, but simplify it to the most basic level, and you see not only the root cause of the pricing conundrum in Toronto, but also, in my opinion, a problem that’s impossible to solve.

What will create more sellers, and fewer buyers?

Interest Rates Will Confuse The Market

Housing bears have been predicting the decline in home prices as long as they’ve been predicting an increase in interest rates, but they’ve been wrong on both fronts.

Wait……is it possible that there’s an inverse relationship between the two?

Before you answer that seemingly-simple question, make sure you specify whether your answer is theoretical, or actual.

It would seem that in our market, an increase in interest rates hasn’t, or isn’t going to, plunge the market into decline.

Having said that, when was the last time interest rates went up?

On Wednesday, September 9th at 10:00am (or 9:00am if you’re an accredited journalist with a pass…), the Bank of Canada will announce its decision on a target for the overnight lending rate.

This will happen again on Wednesday, October 21st, and Wednesday, December 2nd.

Does anybody have any insight into what the BOC will announce?

Me?  Well, I’m gonna go out on a limb here and predict they’ll hold the rate on Wednesday, and likely do the same in October.  Come December, after our Federal election, and after the conclusion of the busy fall real estate market, maybe, just maybe, they’ll raise the rate 25 basis points.

Or fifty BPs.

Or maybe 100?

No, that was a joke.

But if they did raise the rate 100 BP’s, and if the 5-year, fixed-rate mortgage went from around 2.59% to 3.59%, would it really have an affect on the Toronto real estate market?

3.59%.  Fixed.  For five years.

Here’s an idea – call your parents or grandparents right now, and complain to them about a five-year rate of 3.59%.  See what kind of sympathy you get…

I’m of the opinion that until rates pass 4%, I just don’t know if the market as a whole, in Toronto at least, will feel an affect.

And 4% is a long, long way away…

Luxury Homes Will Continue To Sell

What recession?

Didn’t you hear?

The sale of luxury homes is up 61% from 2014 to 2015.

THIS article by Tamsin McMahon in last week’s Globe & Mail put the spotlight on a segment of the market we’re not accustomed to hearing about.  Newspaper columnists and TV news reports don’t spend a lot of time talking about $3,000,000 homes, since so few readers and viewings can probably relate.

But just because the media is quiet when it comes to luxury homes, doesn’t mean the market is quiet.

As the article details, there have been 279 homes sold in Toronto so far in 2015 of $3,000,000 or more, which is up 61% from the same period last year.  And the number in Vancouver is even more staggering, as sales are up a whopping 81%.

The article, in case you’re not going to click on the link, is about “offshore buyers” who are relocating from China, Russia, the Middle East, etc., often to raise families and put their kids in Canadian schools.

I’m not a world scholar, but I will say that to some people on this planet – the price of Toronto real estate is pathetically-low.  Only $3 Million for a 5-bedroom house in prime Moore Park?  Only $5M for the same in Forest Hill?  In some major cities around the world, the same thing would be $25 Million.

And consider that the same problem exists with your typical 3-bed, 2-bath semi-detached that the buyer pool wants for $750K, as with your 5-bed, 5-bath house for $3M; there aren’t enough of them to satisfy the demand.

New homes aren’t being built like new condos.  Whether it’s the $750K semi-detached, or the $3-5 Million house in Rosedale or Moore Park, there will never be any new ones.

You might not read about it in the papers, but luxury homes are selling, and will continue to do so this fall.

More People Will Get Into Real Estate

Why not end on a happy note? 🙂

The job market is not strong out there, and whether you’re somebody that’s been looking unsuccessfully for employment for a year, or somebody who just started looking yesterday, and some point, you’ll consider going into real estate.

I mean, you could spend money to go back to school and get another degree.

You could apply for jobs in industries that are tough to get into.

Or, you could go into an industry with absolutely zero barriers to entry, where a cheque-book and an IQ of 90 can net you a real estate license!

The choice is obvious.

There are over 42,000 licensed Realtors in Toronto.

Approximately 40% of them have completed zero or one transaction in the past 12 months.

It’s very easy to get into real estate, and it’s very difficult to get into lines of work.

Real estate is “hot” and it’s been “trending” for some time.  There are literally dozens of television shows about real estate, or homes, or decks/fences/statues or some other 22-minute time-waster, and it sets off that light-bulb in just about every viewer’s head that causes them to say, “You know something?  Maybe, just maybe, I could do this instead!”

I got an email from a 17-year-old kid last week and he told me, “I want to get my real estate license when I turn 18, and I want to sell expensive luxury homes.”

Don’t worry, I did my civic duty, and told him, “That’s like saying you want to play for the Toronto Maple Leafs when you grow up,” and encouraged him to go to university, and get a degree.

But the delusion is high among many people who feel a real estate license is their ticket to a 15-hour work-week that provides a million-dollar salary, and I expect this trend to continue.

If I had to guess, I’d say we pass 50,000 Realtors by the end of 2016.


2,300 words and counting eh?

Well, it’s been a slow summer, so let’s get crazy on the first day back in fall!

I had a couple other topics I wanted to cover, one of which was “Pre Construction Condos Will Continue To Sell,” since apparently about 50% of all condo sales in Toronto this year have been for new construction (I don’t have exact stats, and/or whether that’s “new” as in “pre-construction” or “new” as in including everything from the developer).

I also thought we should the growing number of “Micro Condos” being sold in pre-construction, as I’m not sure if that’s just to appease investors, if people really want to live in 350 square feet.

So many topics, so little time!

Feel free to have your say below.



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  1. Ben Myers says:

    Kyle and Appraiser,

    Thanks for the kind words. I really try to provide an alternative to what get’s presented in the short media pieces that most people read. I know the comments will always be “we know where he’s coming from”. But I hope people actually choose to debate the content as opposed to the author. Almost all of this report is comprised of other people’s opinions anyway.

  2. Kyle says:

    Ben Myer’s just released his Market Manuscript, which provides very well supported details about where the market is, how it got there, and where it will likely go. In it he also pretty much lays to rest many of the myths thrown around by the bears. IMO, this is an incredibly informative piece for anyone interested in real estate.

    1. Appraiser says:

      Just going through Ben Myer’s masterpiece myself. Without question the most thorough, wel-researched and logical take on the Canadian real estate market, by far.

      No doubt some will diss the report automatically (without reading it, of course) because Myer’s works for a developer. Totally baseless, but completely predictable.

      1. Fro Jo says:

        Thanks for the link. I haven’t read it all, only the bold text and pull-quotes… It’s pretty clear where he’s coming from. 😉

        1. Kyle says:

          Many people said the same thing about Copernicus and how he was clearly just trying to sell more Math text books. They too preferred to side with the “unbiased” views of the church – that the Sun revolves around the Earth.

          Seriously read it all, and then try to poke holes in the substance. Betcha can’t

          1. Fro Jo says:

            Great line about Copernicus! 🙂 Thanks again for Ben Myers’ link: I’ll read it and try to understand it.

    2. condodweller says:

      I finished reading the Toronto section and it seems pretty level headed and unbiased ASSUMING the data is correct. I learned a few new things:
      1. some developers rent out unsold units
      2. non-related singles are teaming up to rent/buy condos
      3. geographic dispersion of the 100K yearly newcomers
      4. developers will hold on to unsold units without decreasing prices for a long time
      5. developers will not lose money if they have to lower prices on unsold units
      6 people are buying condos without mortgages.

      The impression I get is that everything seems to be pretty balanced and the party can go on.

      1. Ben Myers says:

        Thanks for reading Condodweller. Much of the Altus, RealNet and Urbanation data is subscription based, but the rest is available online, I included an extensive bibliography at the end.

        If you are looking for a specific source document, I can send the link.

        1. condodweller says:

          Ben, I have no reason to doubt your data as everything passed my BS-meter and I’m not about to make a huge investment in real estate based on your report to warrant my spending time on verifying your sources. I thought it was a good report taking all factors I could think of and more into consideration.

          The only bias I detect is the lack of warning, in the section I read anyway, of how we are in the 26th year of the current cycle with record high prices and every year that passes with higher prices, further increases the risk of a potential downside regardless of cause. To be fair you have used existing data and drew your conclusions based on it. I would expect a totally unbiased person to at least acknowledge that some level of revaluation may be in the cards. Apologies if you have covered it elsewhere in the report.

          1. Ben Myers says:

            hey condo dweller,

            if you read the Canada section on Black Swans it has some interesting comments. No one really knows what is going to happen, and relying on past data can’t tell you what will happen in the future, there are so many factors that we can’t possible document them all.

            Canada, Toronto could experience price declines, and major ones. I have never said real estate unstoppable, I’ve always said invest for the long term.

            The very first chart in the Canada section delves into the top things that could disrupt the housing market both nationally and in Toronto. Toronto is not without its vulnerabilities.

            I evaluate the market currently and in long-term context, but I don’t subscribe to the notion that it’s gone up for so long, so must go down. It might be flat for 10 years. It might decline by 1% for 6 straight years, or down 5%, up 5%, down 5%. I refuse to believe that there must be a major correction.

            I’d love to hear your suggestions of topics for the next Market Manuscript.

  3. condodweller says:

    With interest rates staying low for the foreseeable future, and with extremely high cost of moving (prop. tax + realtor fees) the only cloud on the horizon is jobs and no wage increases. The wild card is the effect of the “bank of Mom and Dad” which with the size of the baby boomer population can also go on for a long time. I agree with Boris, the correction is inevitable, the question is when. They say a sign of a bubble is an irrational price increase. Given that most don’t believe we are in a bubble, the rate of the price increase needs to increase to get into a bubble. I would look to an increased rate of price appreciation as signs of a correction. In the meantime enjoy the ride!

    1. condodweller says:

      I meant to write land transfer tax not prop. tax as part of the moving costs. You need end edit function. While on the subject, I wonder what the government does with the increasingly disproportionate amount of land transfer taxes they collect. Remember that when the scale was set anything over $400k was considered luxury hence the higher applicable tax. Consider that the average house price is now more than twice that amount! It would be interesting to know in $ terms what the government collected say 10 years ago vs. today. There must be a huge increase. I’m curious if home buyers will ever demand the scale to be updated.

  4. Kyle says:

    I agree with what’s already been said:
    – Days on market will continue to shrink
    – Months of inventory will continue to shrink
    – Prices will continue to rise for all home types

    I will also add:
    – Total number of sales will continue to be constrained by the lack of inventory
    – Number of households in Toronto will continue to grow
    – Vacancy rate will tighten further
    – Rents will continue to rise
    – Interest rates will stay low for a long time
    – Low oil prices will continue to be a non-story for Toronto real estate
    – The core will outperform the inner suburbs, which will outperform the 905’s

    1. Joe Q. says:

      Do we know for sure that rents are rising and vacancy is tightening? From my reading it seems that rents are highly neighbourhood dependent.

  5. Appraiser says:

    Well it’s September 2015, which marks the beginning of the 6th year since perennial housing bear Ben Rabidoux predicted that the real estate market was going to crash. I wonder if he still thinks that he was merely early with his prophecy and not just wrong?

    And how about that newcomer Hilliard MacBeth who wrote a book released last March, entitled “When The Bubble Burst.” He predicted a 50% drop in house prices!

    Asked by Globe and Mail real estate reporter Tara Perkins when a housing correction might occur, he said that, “depending on the price of oil, depending on world economies and all that, we’ll see next spring, next summer.” (Source:

    Well, times up Mr. MacBeth. Which of course won’t deter him or any of the other perma-bears like Rabidoux, David Madani or serial fear-monger Garth Turner from repeating their predictions ad nauseum.

    My forecast mirrors yours David. Low inventory which be be supportive of further price increases. Continued low interest rates through the remainder of 2015 and all of 2016 (remember it will take two 25 basis point increases just to get rates back to where they were earlier this year).

    1. Boris says:

      You’re right appraiser, the bears have been dead wrong.

      However, as a student of capital markets, and a professional asset manager, one thing that is certain over hundreds of years is that when an asset appreciates to the extent that Canadian housing has, ANY asset, there is a correction. Timing the correction is nearly impossible. The severity is generally tied to the extent of the increase in prices.

      A correction will undoubtedly happen. When is impossible to determine.

      1. Appraiser says:

        @ Boris: There is no such thing as “Canadian Housing”. Outside of Vancouver, Toronto and surprisingly Hamilton, most markets in Canada have already had a soft landing. The only major market that is in negative territory and only slightly is Calgary, for all of the obvious reasons.

        I have a question. If the overwhelming consensus is that the future is impossible to predict, why do some people insist on doing so? Here’s a quote from an excellent article on the subject by Baryy Ritholtz:

        ” Studies show that the more precise a prediction, the more likely it will be believed, and the less likely it is to be right. These (and other) factors set up viewers to have the most faith in the people who are least likely to be right.”