What’s worse: cheerleading or gaslighting?
I suppose the latter.
But the latter also implies some sort of wrongdoing, does it not?
So far this year, we’ve talked a lot about bullishness in the Toronto real estate market and optimistic outlooks through multiple segments of the housing market, and with that always comes arguments to the contrary.
But in recent years, it seems those arguments have become more accepting of the upward trajectory of the market, but provide reasons why the trajectory is somehow artificial.
The arguments today range from low-interest rates, to the government’s propping up the market, to some form of “This happened because of COVID.”
In the end, I think most home-owners, whether investors or end-users, could care less about why the market is increasing, so long as it continues to do so. And trust me when I say that most of us believe it will continue to do so.
Here’s a headline from Monday’s Financial Post:
From the article:
Canadians are the most bullish on real estate in at least a decade, weekly telephone polling shows, helping to stoke consumer confidence.
About 52 per cent of respondents see home prices rising over the next six months, according to a survey by Nanos Research Group for Bloomberg News. That’s the highest level for this question since regular polling began in 2008.
Rosy views on the housing market have helped drive overall household sentiment back to pre-pandemic levels even with the country dealing with a second wave of COVID-19 cases and new lockdowns. That bodes well for a quick rebound once restrictions are finally lifted.
Let’s say, for argument’s sake, that properties in Toronto do increase in value this year. And perhaps they increase in value the following year too.
What good then would be the counter-argument of “This is only happening because of low interest rates?”
For what it’s worth, I plan on purchasing a property as soon as possible. I’m looking at one now that’s coming onto the market on Thursday as well as one that was on the market last year and did not sell. I currently have a five-year, fixed-rate mortgage approved at 1.30%.
That’s not a typo: that says 1.30%.
That is a little more than one-quarter of my first mortgage rate back in 2005.
I believe in the long-term appreciation of Toronto homes and when you combine that with five-year rates of 1.30%, I simply can’t sit back and watch all this unfold.
I do believe that we are heading into 2017-territory again, and it’s situations like the following that explain why…
As mentioned on Monday, I received a call over the holidays about an expired listing, previously up for $1,525,000:
I made this point on Monday too, but here goes: how much could you have had this property for on, say, December 10th?
It was on the market for 60 days at $1,525,000, unsold, collecting dust.
Fast-forward to 2021, and all of a sudden, the real estate market changes in an instant.
This property was listed at $1,495,000 but a swarm of buyers forced the listing agent to set an offer date.
And what happened?
Five offers materialized, and it sold…
“A property is worth what somebody is willing to pay for it.”
And because there was nobody willing to pay for it in December, and five people willing to pay for it in January, the property sold for $1,565,000.
This is merely one sale in the city of Toronto, but it’s telling the tale of a market that is ready to explode.
For those of you who think that a market can’t stop on a dime and turn the other way, this is all you need to see.
More to the point, it’s happening in areas and market segments where you wouldn’t expect it.
How’s the condo market doing?
Well, whether you’re reading every post on Toronto Realty Blog or simply browsing newspaper headlines, I think you’d conclude that 2020 wasn’t kind to the condo sector.
But so far in 2021, it’s been different.
A property was listed last week in a building that proved to be a difficult sell in the fall of 2020. The last two units to sell in this building, both last fall, were on the market six times for 91 days and three times for 60 days, respectively, before they finally sold.
This time around would be quite different.
Here are two edits in the back-end of MLS that illustrate what happened:
On January 6th, the listing was entered into MLS with “offers any time.”
By 7:49am the next morning, on January 7th, they edited the listing to say “Offers Registered” and that they would review those offers at 6pm that evening.
A lot can happen overnight, right?
So the listing goes into the system at 4:59pm on Wednesday, and multiple offers ensue that evening. Who knows how many showings took place, but at least two offers were submitted that evening.
The result, as you might expect, was an unconditional sale over the list price:
That’s $1,016 per square foot in a building that averaged $879 per square foot last year.
This sale most certainly tells a tale!
It’s not so much the price that astounds me as much as the process.
Good for the listing agent for noticing what was happening and immediately springing into action! Two offers on a listing that’s brand-new on the market? In a “depressed” condo market? Wow!
Now, I’m not going to suggest that the condo market is really this hot. In fact, I don’t believe the condo market is hot at all. I wouldn’t even call it luke-warm, but time will tell…
As I write this on Tuesday evening, there have been 95 condo sales in C01 & C08 so far this year.
These 95 listings average 42.9 days on market, so while these 95 sales did take place in 2021, an overwhelming majority were listed in 2020.
Actually, I can pull that data. Only 11 of the 95 sales were for properties that were listed on January 1st, 2021, or later.
The average sale-to-list ratio is 98.2%, so properties aren’t seeing much of a discount from the list price, although we must remember, these properties could have been listed previously at higher prices.
The worst sale-to-list ratio was for a unit at Aura which was listed at $659,900 and sold for $586,800. That’s 89%, and we don’t see sales like that very often!
The best sale-to-list ratio was for a King West unit, listed at $550,000, which sold for $660,000. That’s 120%.
All told, only 8 of 95 listings sold over the list price, so call me guilty of cherry-picking that one sale above for $690,000 if you want to, and I might not disagree. But while some changes – like the one in the freehold market with regards to that $1,565,000 sale, are seemingly immediate, others are gradual. To see a $639,000 listing attract two offers within hours and then sell for $690,000 could be an outlier, or it could be a sign of things to come.
But the rumour mill is churning, and the “did you hear…” conversations are ramping up.
For example, did you hear about that Roncesvalles house that got twenty-five offers on Monday night?
This sale tells a tale, no doubt.
Twenty-five people were willing to take on this project which, was not for the faint of heart.
Whether these were builders, speculators/investors, or end-users, it doesn’t matter.
Twenty-five people submitted an offer, and while the property was priced ridiculously-low, it doesn’t change the fact that twenty-five offers on a house less than two weeks into January is a sign of a hyper-market. That’s where I truly believe we are.
We’re also here too:
We’re seeing 150% of list price again, as buyers think nothing of offering $400,000 over list on $799,900 listing.
This sale tells a tale.
Then again, so does this one:
This is a 22.58-foot frontage in a desirable downtown location, but it’s also an ugly bungalow.
This reminds me of all the buzz created when that house at 300 Euclid Avenue sold last year for $800,000 above asking. Remember that?
The online commenters were running amock with their “real estate shouldn’t cost that much” laments and their “the bubble is going to pop” insights, and I don’t think it will be long before that $2,108,000 sale attracts a similar flood of opinions.
While I might no pay $2,018,000 for that house, and while I might not advise my buyer-clients to do so, this sale still tells a tale.
I currently have close to twenty buyers looking to make a move this spring, but only about four are what I would call “highly active.” Simply put, you can’t be active if you have no properties to go out and see. Inventory is very scarce right now, and although it will start to increase as we creep toward February, so too will the number of buyers. The market also isn’t absorbing many buyers right now, so for every ten would-be buyers that are successful in their search and are able to purchase, I think there are fifteen buyers lined up to replace them.
I shudder to think what the January TRREB stats will show, but I’m betting it’s a dearth of inventory not seen since 2016 and 2017, and the sales-to-new-listings ratio will be off the charts.
So is this cheerleading or gaslighting?
Unless you can find a different tale to tell from these sales, I’m going to assume that it’s neither…
Quick post-script here…
I’m going to rejuvenate the video interview series that we did last April, and this week I’ll start by talking to my stager, Lucie Brand, from Toronto Staging & Design.
Any questions you have for Lucie, about the process of staging, or how we stage in a state of emergency, email me or post a comment below.