I want to tell you something a little embarrassing, so here goes.
I’ve always liked the song, “The Heat Is On,” by Glenn Frey, as it reminds me of my childhood. Whether it’s the association with Beverly Hills Cop, or whether it’s that unmistakable saxophone in the song’s opening, I”ve always liked this song.
My favourite part was always the chorus:
Caught up in the action I’ve been looking out for you
When we were kids, my sister and I listened to this song on the radio and “oh-wo-ho” really, truly sounded like “Hold the waffle” to us. We were positive this song was about Eggo’s.
That might not make sense now, but trust me, it did when I was five-years-old…
That’s not the embarrassing part.
What’s embarrassing is that I had no idea Glenn Frey was one of the founding members of The Eagles.
And upon learning this last week, I fell deep into a Wiki-hole that had me comparing and contrasting the solo careers of Glenn Frey and Don Henley after The Eagles broke up in 1980. It’s amazing that they both found the level of success that they did.
So humour me (only those over 40 will do this…) and tell me which was a better song:
1) Don Henley, “Boys of Summer,” 1984
2) Glenn Frey, “The Heat Is On,” 1984
Not easy, right?
“Boys of Summer” evokes more nostalgia. It makes you more emotional for the 80’s.
But “The Heat Is On” makes you smile, bop to the sax, and sing along with the waffle-like chorus.
We need a voting feature on TRB. It’s time…
Well, folks, in any event, the heat is on the Toronto real estate market.
It’s Hell’s Kitchen in here.
The market is red-hot. It’s on fire.
“The floor is lava,” your child shouts as he or she plays that never-ending game, but you can’t help but think they’re talking about the lobby-floor of that condo you were in last week; that condo that had twenty offers and sold for 35% over list.
The market is scorching. It’s searing. It’s roasting. It’s torrid. It’s sweltering.
Broiling. Boiling. Burning. Baking. Blistering. Blazing.
If you can think of an adjective (and avoid the ice-cream headache that comes with it…), that word probably applies to the Toronto real estate market right now.
Simply put, I can’t wait until the end of the month to give you market statistics. You simply need to know now.
Ask anybody who has been active in the market this year, “How’s it going?” You’ll likely receive a response that begins with a pause, which leads to a deep inhale, followed by an indistinct facial expression, then either a widening of the eyes or a puffing of the cheeks, which culminates in a furious and exasperated exhale.
That’s how it’s going.
And it’s not easy for anybody right now, whether you’re a buyer, seller, or agent. Everybody’s feeling it, and perhaps the toughest part of this market to wrap your head around is that it’s not going to change any time soon. Maybe in April, maybe in March if we’re lucky. But maybe not until June, who knows.
I’ve lost in multiple offers on behalf of buyers several times already this year, with the fewest number of competing offers being one and the highest being twenty-nine.
I’ve submitted bully offers on behalf of buyers and both won and lost.
I’ve had multiple offers on every property I’ve listed.
And the members of my team are out there every single night showing properties, many of which have offers already registered, or people lined up on the sidewalk or down the condo hallway. We’re losing three or four times as many offers as we’re winning, which sounds bad, but it’s actually not. That is how crazy our market is.
Coming into 2022, I figured that blog topics on TRB would start with the obvious “predictions” or “discussion points,” then look at some early trends or “stories from the trenches,” but I thought it would take a while for us to talk about prices and have data to back up opinions on where the market is.
Well, I was wrong!
Because through only three weeks in the 2022 market, the data is impossible to ignore.
And while I would prefer to wait until we have the January TRREB statistics to put hard data to my opinion on the market, that would simply be too late.
This is the hottest market I have seen since 2017, and by that I’m referring to the low inventory combined with high demand which is leading to an absurd number of offers on properties and a massive escalation in house prices since Christmas.
Today, I want to look at the freehold market and I’ll come back on Wednesday to look at condos.
I have to draw a line in the sand somewhere, so I’m going to look at the market from January 1st through Friday, January 21st.
Let’s first look at some big-picture numbers then we’ll delve into some more specific data points.
From January 1st through January 21st, there have been 342 freehold sales.
Now, not all of these sales were for properties listed in 2022. That’s our first distinction here, and I find the breakdown to be rather interesting:
Of the 342 freehold sales in 2022, only 252 of those were listed this year, meaning that 90 were listed last year.
In theory, we could have seen a property listed on December 30th with an “offer date” of January 6th, but I believe that in practice, a generalization that “most of these properties were stale listings” is fair, given the average days on market, which comes in at a whopping 38.4, compared to a paltry 4.8 thus far for the properties listed and sold in 2022.
Think about that for a moment: the average days on market for freehold properties listed and sold in 2022 is 4.8. That’s how busy our market is, folks! A typical “holdback” on offers is at least six days and typically no more than eight or nine (some stupid agents hold back for two weeks but this actually works against them). So if we should see an average of seven days on the market for properties with a holdback on offers, and yet the average days on market is 4.8, that means many properties are selling after a day or two.
Actually, why not break it down? It’ll only take me a moment…
That’s the breakdown for 252 freehold properties listed and sold in 2022.
The fact that 30.7% of properties have sold between 0 – 2 days tells you how quickly buyers need to act in this market, and let’s not forget that some agents take a day to update MLS!
Notice how the DOM decreases at 3, 4, and 5 days, then increases again at 6-7 days. This is because most “offer dates” are set 6-7 days after listing.
It’s also important to note that the average sale-to-list ratio for the 90 properties listed in 2021 and sold in 2022 was 101% compared to 122% for the 252 properties listed in 2022 and sold in 2022.
Lastly, note the average price is drastically higher for the 2021-listed properties. This is because more of the larger, detached, “luxury” houses listed in 2021 that sat on the market for a while ended up selling this year. I know of one such listing that was listed for $5M in 2021 and sat on the market for three months only to end up with five offers in the first week of January.
As for the proportion of detached, semi-detached, and rownhouses, this is exactly what I expected to find:
Looking at properties listed in 2021 and selling in 2022, versus those listed and sold in 2022, we see a far higher proportion of semi-detached than detached.
This was noted in the section above, with respect to average sale price and days on market, but it’s backed up with the data here.
Now, what about sale-to-list ratios?
Not to beat a dead horse, but obviously, properties that were listed in 2021 and sold in 2022 likely aren’t going to sell over the list price, or at least not as regularly as those listed this year:
This will be our last comparison between the 2021 and 2022 list dates, since it’s really only relevant to help explain why we’re stripping down the 342 total sales to 252 for further analysis.
However, the takeaway here is that 85% of freehold properties listed in 2022 have sold above the list price, and we know the sale-to-list ratio is 122%.
Let’s now focus on those 252 sales and break the data down further:
This is absolutely fascinating!
We see almost no difference in sale-to-list ratio among the rowhouses, semi-detached, and detached. To be fair, “rowhouses” are typically thrown in the bucket with semi-detached houses, so this isn’t really it’s own category for the most part. But either way, the average sale-to-list ratios for all freehold properties are almost identical.
Then when it comes to days on market, we see the same trend! We’re averaging 4.8 DOM overall and 4.8 DOM between the three categories.
Talk about an efficient market!
It might be frustrating, it might be frenetic, and it might be fast, but it’s not like detached houses are on the market twice as long as semi’s, or the sale-to-list ratio for semi’s is 20% higher than detached. This market is moving very quickly but it’s doing so across the board for all property types.
Now, let’s re-run the sale-to-list ratios for each segment and count how many sold for below-list, at-list, and above-list as we did comparing 2021 listings to 2022 listings above, and see if there’s any one segment that’s doing better than the others:
Maybe, maybe we see that semi-detached are in their own category, with a whopping 90% of properties listed in 2022 selling over the list price.
I know this isn’t much to brag about, since most houses are listed artificially low and sell in competition, but it’s still a data point worth monitoring as we compare to other segments.
So what’s the difference between various price segments?
Well, before I ran the data, I surmised that the sale-to-list ratio would decline, the higher the price range. I also figured that the days on market would increase along with the list price.
It seems I went 1/2 in those predictions…
Again, I’m so fascinated by the days on market remaining relatively unchanged.
What does it say about our market that the average days on market for houses listed below $1,000,000 is 4.7 but houses over $2,000,000 is only 5.0?
I might call this the fastest-moving market I’ve ever seen.
As for the sale-to-list ratio, note that it declines as we move through the four price segments above.
For those looking at houses listed at $799,900, $899,900, or $999,900, you’ll want to take note of the 133% average sale-to-list ratio. So when you see that $799,900 listing and you ask your agent, “Do you think we can get this for $999,999, qualifying us for our 7.5% down payment?” you have to realize that there are a dozen other bidders out there thinking the same thing.
Our last chart will look at the same four price segments we analyzed above, only this time we’ll want to know whether properties are selling under list, at list, or above list, in each category:
No surprise here.
I mean, it’s surprising to see that 94/95 properties listed below $1,000,000 sold for above the list price, but is it surprising because “so many” sold over list, or because “not all of them” did? That’s seeing the market through two different sets of eyes.
I might also add that for 53.6% of properties listed above $2,000,000 is surprising.
Either way, the percentage of properties selling over list declines as the price segments rise, just as we saw with respect to sale-to-list ratio in the chart above.
So which properties sold for mind-boggling prices?
Well, there were a lot of them!
But if we’re going to use sale-to-list as our metric, here are the top three:
(Apologies for having to black-out the addresses, but TRREB still has their archaic rules about real estate agents disseminating “sales data,” even though this is all available to you through other apps….)
This “house” was basically four walls and a roof.
Well, to be fair, I suppose it’s a little more than that, but it was a complete “gut.”
The crazy thing is: a brand-new house on this lot, in this location, built in a super sleek, modern style that resonates with the younger demographic who is flush with cash, might sell for $2.3M today. But to build that house would cost at least $800,000. Factor in land transfer tax, carrying costs, financing, et al, and you can’t build that house and break even, let alone flip.
If you were looking to renovate, I think the numbers are even worse. This house needs a $400,000 renovation but even then, I don’t think it’s a $1,800,000 house. The basement needs to be underpinned and that’s $100,000, not to mention finishing the basement thereafter.
There were twenty-two offers on this house.
It was the first house listed in 2022. Literally listed on the morning of Tuesday, January 4th, and everybody in the city looked at it. I submitted a bully offer on this property two hours after it was listed, and that went nowhere.
If you had told me this would sell for $1,412,000, I’d have quit my job…
How about this one:
The last sale in this pocket was for $1,060,000 in 2020 and it was only a 40-foot lot, so I don’t know how good a comparison that is.
However, this house wasn’t in great shape, advertised as “First time on the market in 34 years,” and it was listed by an agent from Peterborough.
Was this a case of mistaken underlisting, or did somebody just happen to pay $400,000 more than it’s worth?
Last, but not least, the sale that had us all talking:
This is a corner lot and in an area dominated by development, I don’t think building a new 2-storey house on this lot is as easy as it looks. There are serious limitations and the lot is only 25 x 90.
Based on comparable sales from the fall, this “should” have been worth around $1,100,000, and while none of us thought it would sell for that, nobody predicted $1,405,000.
I mean, it’s livable, but it’s far from luxury…
Well, that’s it for freehold!
Let’s take a look at condominium on Wednesday.
But our blog isn’t finished, folks. Not even close.
You all owe me and The Eagles the duty of watching these two music videos and voting below.
Come on, it’s Monday morning, you’re reading this at 9:15am as you drink coffee at your desk and look to kill another fifteen or twenty minutes before your first actual meeting/call/assignment of the day, so have some fun…
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