I want you to remember this blog post, and where you first heard what I’m about to say.
Because if I’m right, I want to take at least a little credit for this.
And if I’m wrong, I want you to hold me accountable.
It took less than one full week in this 2021 real estate market for me to look at a sparse number of sales and a tiny level of market activity to conclude that 2021 is going to see massive appreciation in the single-family freehold market.
Same old, same old, right?
Many of you are so tired of hearing this by now.
Some, because these sentiments don’t jive with your goals for the market moving forward.
Others, because you’re just tired of the cheerleading and perennial bullishness.
But I can’t help draw attention to what I see out there, and then there’s always that “feeling” as well. I’ve often mused that an experienced agent doesn’t need statistics but rather can gauge the market by his or her “feel” for what’s going on. I stand by that, and in speaking to other agents this week, not only are they using their gut-feeling to guide them as well, but our collective feels are aligned.
There was a sale last week that gave me that “feeling” all over again. It was the same feeling I had in early 2017 when I said, “Something is up.”
This property was on the market for $1,270,000 with offers any time.
It sat for 15 days before the listing was terminated.
What do you think this house could have sold for?
Let’s say you went in there on day-number fifteen, an offered $1,200,000. Maybe you get a sign-back of $1,260,000 which says, “We don’t like your offer, but we’re willing to play ball.” Then the dance begins, and after multiple sign-backs, where you end up?
$1,230,000? I doubt it, but you never know.
But let’s agree that a house listed for $1,270,000, with no offer date, on the market for fifteen days, almost certainly would have, could have sold for under the list price?
So when the property was re-listed last week at $999,900, with an offer date, slightly different feature photo on MLS, but everything else the same, I was quite surprised to see the property sell for this:
Quite frankly, this is absurd.
This house sold for $60,000 more in January than it would have, could have, in December.
And no, there isn’t magically a fourth bedroom this time around – they’re counting one on the main floor which has always been there.
Different listing, different agent, different year – and very different result!
But this is exactly what was happening in early-2017 and again in early-2020 before the pandemic, and it’s why I have that “feeling” all over again.
Over the holidays, a client emailed me about an expired listing that he had been watching, asking if it would come back onto the market in 2021. I called the listing agent and she said that it would be out on January 4th.
The property had been listed for sixty days at $1,525,000, and didn’t sell.
Again, can we assume that, after SIXTY days, there’s bound to be some flexibility on the price?
When the property came back out on January 4th, it was listed at $1,499,900.
“I”m not sure if that’s enough to move the needle,” I told my client, since the price drop was so modest that it probably wasn’t going to impress the market.
Later in the week, the listing suddenly had a note that read: “Offers To Be Considered On Tuesday, January 12th, 2021 at 7:00pm.”
They couldn’t sell at $1,525,000, but now they’re holding back offers at $1,499,900?
I called the listing agent who I know quite well, and she anticipated exactly what I was going to ask.
“Weird, I know,” she said. “But we kinda had no choice! We had eight showings booked in the first forty-eight hours after it was all ‘crickets’ through December.”
If that doesn’t tell you how the 2021 market has started, I don’t know what will.
Again, it just gives me that “feeling” again, and I trust my gut as much, or more than the statistics available to us on a regular basis.
Now about those statistics and what they may tell us, looking into the future…
The December TRREB statistics were released last week, and while I was curious about how far the average home price would drop, I was more curious about sales.
In my December eNewsletter, I wrote the following:
“December is going to be a very slow month, in my opinion. Market fatigue is real, and the buyer pool has whittled down.”
I was dead wrong.
In fact, we witnessed the biggest December in the history of Toronto.
I predicted that the TRREB average home price would drop from November’s $955,615 down to “around” $930,000, and I was spot on, as the average price checked in at $932,222.
But that’s an easy prediction, and honestly, I take no credit.
The prediction that did matter was with respect to sales volume, and I just never saw it coming.
There were a whopping 7,180 sales in Toronto in December of 2020, and in case you’re wondering what we’re accustomed to seeing in this time period, have a look:
I usually don’t go back fifteen years, but I was curious. And thankfully I did because the second-highest total in the month of December came way back in 2009.
Over the last fifteen years, we’ve seen an average of 4,600 sales in the month of December. If you take out 2020, just to compare, the average for the previous fourteen years is 4,415. That means the 7,180 sales record in December is 63% higher than the average of the preceding fourteen years.
How in the world can we make sense of this?
And how did the average home price decline, month-over-month, with this type of sales activity?
Well, first we need to consider that the average home price declines every November to December.
Have a look:
We see this every year, it’s nothing new.
As to why we see this, well, I would probably start with the fact that far more of the sales in December are condos, compared to November. I mean, if you owned a single-family home in Toronto, would you look to list in December?
I also feel as though we had so many condos sitting on the market in December that there were both buyers out there, looking to secure deals, as well as sellers out there who finally just said, “Screw it, I’m selling. It’s almost Christmas.” Having sold a condo to an investor on Christmas Eve, I can personally attest to that!
If my anecdotes aren’t sufficient, then here’s some tangible evidence:
That data shows us that more condos, as a percentage of overall sales, sell in December than November, and thus the decline in TRREB average home price doesn’t actually mean your home is worth less in December than November.
But again, why were there so many sales in December? December wasn’t just a record, and it wasn’t just the first December to ever surpass 6,000 sales; it was the first month to ever surpass 7,000 sales! I simply can’t understate this.
I suppose I’ve already provided my first reason: that there were a lot of willing condo buyers out there, and a lot of willing condo sellers.
But just how willing?
Of all the charts, and all the stats that you see in today’s blog, surely this one is the most impressive:
They often mean nothing, but in this case, I simply can’t ignore it.
TRREB condo sales decline every December, and not by a little – we’re talking an average decline from 2011 through 2019 of 28.9%. So how in the world can sales increase by almost 8%?
The condo market is showing signs of life, folks. I didn’t think I’d say that today, but then I dove into the data, and look what I found?
Any way you slice it, December was just nuts!
The sales-to-new-listings ratio was off the charts.
5,865 New Listings
How in the world can you have more sales than new properties listed?
Well, it means we’re seeing September, October, and November new listings finally selling in the month of December.
How does this stack up against previous Decembers?
Well, it’s not the highest SNLR, but it’s close!
And if you choose to look at the highest in the list, you’ll find it was in 2016.
What happened in early-2017?
The market went nuts.
A sky-high SLNR in the month of December always leads to scarcity in January. Maybe not to the same extent, but the numbers show you how tight the market is in January:
Again, I remember that January of 2017 like it was yesterday. The “feeling” out there was something different.
And while 2020 wasn’t exactly the same, it was enough for me to write this:
I wrote that in February of 2020 after the January TRREB stats were released, and prices were through the roof. The anecdotes about 25-offer melees on cookie-cutter 1-bedroom condos may have also contributed to that comparison, but the relative tightness of the market backed it up.
If December’s TRREB stats tell us anything, it’s that January is going to be a really tough, really tight market.
And if you’re looking at those two properties I described at the onset of this post as any indication, I won’t be saying “I was wrong” in this same space next month…Back To Top Back To Comments