BRIAN'S BLOG
A Tale of Two Februaries
February 13, 2023
With apologies to Charles Dickens, it was the best of markets, it was the worst of markets.
Picture it, Toronto: February 2022.
The real estate market was frenzied. Buyers seemed desperate and after losing out on offer after offer, many got to the point where they were willing to throw a lot of money at a property (sometimes more than it was worth) just to get into the market. Sellers knew this and were cocky and confident, willing to hold off for more money.
Fast forward to February, 2023.
I’m not going to say that we’re hearing crickets, because in January, over 3,000 properties sold, but it’s a marked difference from January 2022, when over 5,600 homes sold. Sales and prices are down from historical averages, though prices are at about 2020 levels. The real estate market moves in cycles, and right now, it’s down.
To be clear, we are in a down-market and not a crash. The last “crash” was in the early 90s when interest rates hit a high of 16% in February 1991. For people who stayed in their homes until 2010, the value of their home had doubled. For those who bought in January 2010, the prices doubled again in the next decade. The market always comes back and rewards those who live in their home for a long time.
One thing I’m noticing in the market right now? Inconsistency.
While many properties linger on the market, I’ve been taking clients to properties that are getting multiple offers and selling quickly. One example: A home in High Park was recently listed for $2.289M. There was an offer date set and it went for $2.3M. It didn’t sell for much over the asking price but it still sold quickly and for more. Now if we were in 2022, it may have sold 10-20% over the asking price.
No matter what kind of market we’re in, there are always opportunities. For instance, this is the perfect market to upsize in. Stick with me here. If you’re in a condo that was worth $800,000 a year ago and the value has gone down by 10%, you’ll be selling for $80K less. But if the home you’re looking at was valued at $1.5M but has lost 15% in value, it’s selling for $200K less. You’re still spending more money, but your mortgage is $120K lower than it would have been. And, if you can swing it, the value of your new property will go up by even more.
One of the reasons I believe we’re still in a somewhat healthy market is that the number of listings is quite low, which indicates to me that homeowners are still able to afford their monthly payments. We’re only a year into increased mortgage rates, so we’ll have to see what happens over the next several years when people have to renew their mortgages at the new rates.
Toronto is Toronto, the largest city in Canada, on a global scale, real estate-wise it’s not going to crash. Everyone sitting around waiting will miss the bottom, because we won’t know where the bottom is until we’ve past it.
If you want to chat about the real estate market or are curious about what your home is currently worth, please get in touch!