Navigating Toronto’s Real Estate Landscape: Is Now the Time to Buy or Wait?
October 24, 2023
We are experiencing a buyer’s market in Toronto right now, especially in the downtown condo sector. On the day I am writing this, in C08, there were 19 new condo listings that came on the market, and zero sales were registered.
With so few sales happening, you might expect a dramatic price drop, but the recent news from the Toronto Real Estate Board shows that the average price of a condo dropped by only 5% compared to 2022, which is still $60,000 higher than the average price paid in the fall of 2020.
I suspect that sales might remain flat throughout the winter with the list to sale ratio in the 30 to 40% range. Sellers can expect to see their property on the market for about 30 days. If the Bank of Canada lowers rates in 2024, we may see a little more action.
That said, activity is always property dependent. The week of October 8, I listed a condo in Kensington Market and it sold the next day, while another listing I have has yet to receive an offer, despite a number of showings.
One of the reasons sales are taking longer is that there’s no sense of urgency. There’s so much choice that buyers have the luxury of taking their time. I actually think this is a good thing because then buyers don’t feel rushed and are more confident in their choice.
Predictions vary about whether the Bank of Canada is going to raise interest rates later this week, but with the recent news of inflation falling to 3.8%, it’s entirely possible that the interest rate will remain at 5% until at least December 6th.
The big question is: Where are prices going to go? In short, with so many condos on the market, I think we could see condo prices continue to soften.
Compared to September 2022, prices for detached, semi-detached homes and townhomes are up year-over-year, but only about 25% of the new listings are selling. As with any market, there are people who really need or really want to sell. Those sellers won’t just let their property sit on the market, they’ll lower the asking price. I think it’s just a matter of time.
And of course, it depends on the building and the neighbourhood. For example, The Canary District and Corktown Common are pretty key areas in high demand so I would expect to see properties move more quickly.
All that said – I believe that now is an excellent time to be buying (I know, you’d expect nothing less from a realtor, but hear me out!). With interest rates predicted to fall in the fourth quarter of 2024 or perhaps early 2025, don’t lock yourself in to a 5 year mortgage. Take a shorter term and take advantage of the downward pressure on prices.
In a softened market, you’re dealing more often with sellers making emotional decisions based on financial stresses and you have more buying power. Nobody wants to take advantage of someone who’s in a tight spot, but a seller is going to sell to someone.
Also keep in mind that as a buyer, you’re always trying to time the market so you’re hitting the bottom before it goes up… spoiler alert, chances are you’ll miss the mark. But if you’re buying with a long-term plan in mind, it doesn’t matter what price you buy at because prices will always grow over time if you hold on long enough. Although Toronto has seen price corrections – some more dramatic than others – you’ll always come out ahead if you’re in your home for a decade.
In the fall of 2013, the average price for a one bedroom condo was a little over $316K and the average price for a three bedroom detached home was $599K. Compare that to $724K for the average one bedroom condo today and $1.285M for a three bedroom home*.
If you’re curious about what your home is worth or just want to talk about what’s happening in the market, please get in touch!
*Statistics from listing.ca
Photo courtesy @the_zeelenberg