Appraiser was right, I really do need to get out of the downtown core to paint a bigger picture of the overall Toronto real estate market and how it’s doing.
But just as I’m wearing the same “REPUBLIC OF IRELAND” t-shirt today that I’ve worn, at the very least, every other day for the past two weeks, we all have our “go-to.”
I examine the east side a lot when I talk about houses, because I find a lot of consistency in the housing stock, and the market in a combined look at E01, E02, and E03 will always be among the least volatile, with the fewest outliers.
When it comes to an overall snapshot of “the market,” I like to look at the downtown core.
I feel that when looking at any world-class city, you want to look at the downtown core as one of, if not the first, measure of the market.
So I’ll continue to monitor C01 and C08 as the weeks progress, for comparison purposes, but if I find time I will go back and look at the east and west sides.
Last week, I showed you how the market was faring in the downtown core, post-COVID.
We looked at all the listings that came onto MLS between Monday, March 16th and Sunday, March 23rd, and looked at the percentage of listings in each price bracket, the number of listings with offer dates, those that were re-listed, those that were terminated, and those that were sold.
We looked at a variety of metrics as a sort of “snapshot” of the market.
Today, we can look at the week of Monday, March 23rd to Sunday, March 29th, and compare this to the previous week.
This will allow us to see how the market is evolving as COVID evolves as well.
First and foremost, let’s look at activity:
It should come as no surprise that listings are down 26.5%.
Now this wasn’t in last week’s blog, but I wanted to look at the first week pre-COVID, which was the 9th to the 15th, to compare to the first week of COVID. There were 291 listings that week, which means that listings dropped by 13.1% from the second week of March to the third week, then a further 26.5% in the fourth week.
To be fair, our world didn’t change until Tuesday, March 17th when the Ford government announced a shutdown, so I think it was “business as usual” for a lot of people looking to list real estate on Mon/Tues/Wed of that week.
But bottom line: listings have dropped substantially as fewer sellers see a point in listing during a pandemic.
What about sales?
Firm sales are down modestly by 3.5%, which is a lot less than I would have expected!
Perhaps more interesting is the following:
Conditional sales aren’t down at all.
As more and more properties are being listed with “showings upon receipt of conditional offer,” I would have expected this number to shoot up! But then again, if a property is sold conditionally for one day, then firms up, it will appear in the “Sold Firm” when I pull the data at the end of the week.
Total sales show the following:
This is on par with the decline in firm sales, so overall, we’re not seeing much of an effect yet.
Listings are down huge, but sales as a percentage of listings haven’t changed much.
As for those listings that are coming off the market within seven days:
This is shocking to me.
Considering that more properties were listed with “holdbacks” on offers during the week of the 16th to 23rd (more on that in a moment), I would have expected a much larger percentage of properties being terminated/suspended during that week, as the strategy failed. And yet here we see the number of listings coming off the market is almost identical.
I honestly don’t know how to look at this.
Perhaps this is an outlier, and next week, we’ll see far fewer properties.
Or, perhaps more sellers are merely “trying” their listings on the market? But would that make sense, to just try it for a week?
Because far, far fewer properties are being listed with “offer dates,” as mentioned. Here’s how that looks:
Recall that I suggested to list a property with an “offer date,” during a pandemic, was ridiculous.
76 listings with offer dates out of 253, although, again, some agents and some sellers already had their strategies carved in stone, so you can’t quite blame them all.
But to “under-list, hold-back” offers during the week of the 23rd to 29th, with offers reviewed in the first week of April? That’s nuts.
And yet 23 people still did it, with 9 of those properties selling, highlighted by this one:
Sorry, I know you all want to know the address. But maybe TRRRREB is still monitoring their archaic “do not give out sold data” policy during this pandemic?
This property, with offers reviewed on March 30th, received eleven offers.
And now the same model unit is up for sale, with offers on Tuesday night. It will, presumably, be sold by the time you read this on Wednesday, so I’ll update you.
Sales like the one above are rare, and I believe this will become an outlier as we move forward in April.
As listings with offer dates go down, so too should properties that are increased in price:
This is why I can’t quite understand the surge in listings that were terminated/suspended.
If the #1 reason why a listing would be either terminated/suspended in the same week in which it was listed, or, increased in price, is because the property was listed low with an “offer date,” but didn’t sell, then shouldn’t these numbers move in tandem?
In any event, nobody should be increasing a price right now, because nobody should be listing-low, holding-back. But 7 poor souls suffered this fate in the last week of March.
Last, but not least, how are the sales looking as a percentage of the list price?
That looks like a rounding error, but it’s not.
Two percent does have meaning in this market, and I think this points to the fact that fewer sales are going over list, and the ones that do, aren’t going quite as crazy.
So now let me give you a quick look at the volume of listings in more typical “family neighbourhoods,” and while these numbers include both houses and condos, I would estimate that almost all of these are, in fact, freehold.
On the east side, we actually saw a spike in listings during the second week of COVID, followed by a drop:
I can’t quite explain the spike, but again, this is a little more than 10%, so perhaps an outlier, whereas the drop was 24% so maybe that’s a sign of things to come.
However, the same spike occurred in the Leaside/Rosedale/Bennington/Mount Pleasant area:
Again, maybe an outlier.
But interesting nonetheless is that 12 new listings in the first week of April essentially matches the 13 new listings in the first week of COVID.
As for the west side:
More listings in Week #2, albeit only two.
But a 46% drop in listings from Week #1 to Week #3 is what I would have expected for just about every area in the city.
So the overall drops from Week #1 to Week #3
Not to stir the pot here, but a conversation about when all this “ends” is going to ultimately impact all of our views of the market.
A friend of mine works in a lab, and his job is to literally analyze slides with COVID-19 on them.
“Bet you would have loved to pick a different major in university, eh?” I asked him the other day. But he said he thrives on this. He loves it. Just as I’m fascinated by all things real estate, my friend is enamoured with the virus, the pathology, the biology, and everything else in between.
He said something the other day that really stuck with me: “This is never going to be ‘over.’ Change is incremental. Our lives going ‘back to normal’ doesn’t happen on a single date, or with a single announcement. When will people start going to movies again? Or even open-roof baseball stadiums? There is no one moment when we can say that this is behind us. It’s going to get better, slowly, and we will incrementally gain back our pre-COVID lives.”
What does that mean for the real estate market?
It means that, yes, eventually we will have in-person showings on properties again without restrictions, but even when that happens, some buyers will be hesitant.
It means that when prices recover, they will not do so overnight. Sellers can’t be thinking, “When COVID is over, I’ll get February’s price back,” because COVID will never be ‘over.’ It will fade away slowly over time, as fewer people are infected, vaccines are used with increasing levels of success, and fear, irrational or otherwise, subsides, and real estate prices will recover little by little.
I’ve maintained for several years now that, “Nothing can stop this real estate market. Nothing. Short of an act of God, nothing is going to stop it.”
Well, be careful what you wish for.
This market will recover, I have no doubt. Just as the DOW will be back above 29,000. But when? The DOW, I mean. September? January?
I will happily predict that the real estate market recovers first, and let’s acknowledge that the stock market has lost, what, triple that of the real estate market here in Toronto?
But for the time being, real estate listings will plummet, and so too will sales. We’re passed the “if” prices will drop, at this point. Many agents are saying otherwise, but they’re too busy chasing ambulances to give a truthful take on the market…
I think we have another month of tough market conditions ahead, but I do think things will revert to some semblance of “normal” sooner than most.
Am I being realistic? Or optimistic?