Sales Commentary June marked the third month in a row where sales declined from the previous month. TREB sales at 7974 units were down a whopping 37% from June of 2016. They were also down 21% from May. Last year was a record year with 113,000 sales. Our own forecast for this year was for 105,000 sales. Year to date, we are at 55,000 sales. Historically, the midpoint of the year represents about 52-54% of the year’s sales. That would translate into a final number of 102,000. In 2016, the June yearly sales were 60,000 which was 53% of the final number. So why are we looking at the market this way? Everyone talks about the speculator and foreign investor components of our market. The reality is that most sales are a result of changing needs. People change jobs, they marry or divorce, they have kids, and they die. All ...
Toronto Market Report July-August 2017
July 21, 2017
Toronto's Rocky Rental Market
July 13, 2017
Most of our blogs deal with Real Estate sales. That's our primary business. Today I want to talk about the rental market. Currently for every sale, there are 1.5 rentals being done downtown market. While the market is 50% bigger, I feel sorry for tenants. They need to get used to multiple offers. Rent controls won't help, they will only make the market worse. Landlords will even be more selective when choosing tenants. It's not just your income, but your lifestyle that will be scrutinized as well. In a sale, the one that offers the highest price is usually the winner. With tenants, you can offer the highest rent and still not get selected. So if you think the market is tight now, it will get even tighter down the road. Less new construction of condos and less condo buyers who want to rent their units out. So tenants, if ...
Toronto's Changing Real Estate Market
July 6, 2017
Everyone knows that our real estate market has changed, except for Buyers and Sellers. Sellers think the prices of March and April are still happening today, wrong. Buyers think that prices are still going to drop by another $100,000, wrong again! So, what happens when Buyers and Sellers can't agree on a price? No sales. In fact, in June Sales have dropped by over 50%. In most markets, prices drop until demand and supply, (Buyers and Sellers) come into line. That is what economists forecast in every market, but not real estate. Sellers are speaking by not lowering their price, but canceling their listing and saying that they will come back next year. Buyers can wait and hope for further price drops, or they have an opportunity without multiple offers, to negotiate hard for their preferred property, today. So, even today some properties will sit on the market for months ...
Toronto Market Report June-July 2017
June 26, 2017
Sales Commentary The big or new story with this market is the shrinking sales numbers – lower sales have been recorded every month since March. Starting in the first two weeks of April, sales on TREB averaged 435 per day. The last half of April the daily number was 345. In May we averaged 329 sales per day and with the mid-month report for June, we are at 214 sales per day. Historically, May and June are the biggest sales months of the year. For 2017, our biggest month has been March. So why have sales dropped? It began with prices skyrocketing by 30% at the start of the year. Buyers couldn’t wait to throw money at average properties because there was little to choose from. Everyone knew this price explosion would not last long. It was just a matter of time, and that time came at the end of ...
Should You Walk Away from a Real Estate Deal?
June 13, 2017
With the sudden change in the market, some buyers who bought at the end of March and early April are thinking they might have paid too much. Should they just walk away from the deal and lose their deposits? Bad Idea! Walking away is the most expensive thing you can do. A Seller will then resell the property, probably for less money because you the Buyer will cover the losses. The Buyer will also pay for the extra legal fees, carrying costs of the property, extra costs for where the Seller is moving to, and so on. You get the picture, big bucks! Close now. We don't care what it costs you. The market will bounce back in September and prices will be back to March and April prices by this time next year. Remember, real estate is a long-term investment, think short-term and you can loose. Think long term ...
The Problem with 'Double Ending' Part Two
June 6, 2017
Welcome to Part Two of Double Ending, or Dual Agency. In Part One we concluded that problems only arrive with Dual Agency when we have multiple offers on a property. This is a Toronto problem. In smaller communities all across Ontario, most top agents double end over 50% of their sales, without any problem. Banning Dual Agency is a bad idea. The solution, as I've said before is to change the act. Listen to me RECO, on all multiple offers, let all buyers and their agents see all offers. Right now, all we can disclose is how many offers and who the buyer agents are. Make everyone see all the offers. Right now, only the listing agents see them, and what an advantage that is if they have their own offer. That's where all the complaints come from too. Simply change that section of the act and the problem is solved ...
The Problem with 'Double Ending'
May 31, 2017
'Double ending' seems to be a bad term in the real estate industry today. Do you know there is no legal term for 'double ending', but rather it is called Dual Agency? That occurs when both the buyer and the seller are given agency service and represented by the same agent. The problem is the agent is defined as the brokerage company, and not a salesperson. Consider a brokerage/company with 1000 sales people. If one salesperson represents a seller and a second sales person, in the same company, represents the buyer (he may not even know the second salesperson), you then have Dual Agency. Most people think that 'double ending' is the same salesperson working both ends of the same transaction. Funny, people only object when the same salesperson is involved on both sides when there are multiple offers. In many parts of Ontario a salesperson working both ends is ...
Toronto Market Report May-June 2017
May 23, 2017
Sales Commentary We have delayed this Report to wait for mid-month May sale numbers from TREB. It confirms what we said previously. The market peaked in terms of prices, and it looks like it peaked in terms of sales as well in March! While April sales were 3.2% lower than for April of 2016 at 11,630 units, they were also down 3.5% from March of this year! Peak sales months are usually May and June each year. For the first half of April, we averaged 435 sales per day. Over the last half of April, it was 345. For the first half of May, the sales number was 359 per day. Based on seasonality, this number should be higher but it also supports the view that we are not in a market correction but rather a temporary slowdown. We have always maintained that our market, in terms of prices, is ...
The Real Story Behind Rent Controls in Ontario
May 18, 2017
The Ontario Government has introduced new rent controls effective April 20th, expanding rent controls to include units built after 1991. So why the rush? A CBC reporter published a story on how her landlord had doubled her rent overnight from $1,600 to $3,200 per month and she was now forced to live on a friend's living room couch. Now I know you can rent a studio for just $1,600, so I contacted her to ask why the landlord would do that to her. There are only two reasons, 1. The Tenant isn't paying rent, or 2. The Landlord wants to sell the unit vacant. She said that she always paid her rent, but her landlord still wanted to sell. If you know anything about tenants, when a landlord wants to sell, they do two things to thwart the sale. They refuse showings on a regular basis and they keep the ...
Underpricing Properties to Fuel Bidding Wars
May 4, 2017
One of our biggest complaints is the list price set by real estate agents in today's market. We understand that given the rapid rise in real estate prices, properties can sell for $50,000 or $100,000 over the listing price, but some real estate agents have taken the practice to an extreme. It seems to be a badge of honor to go $300,000 or $500,000 over asking. These agents start by taking the market value of the property and then they list it at $200,000 or $300,000 below the market price. This attracts the attention of buyers who see the property as a great deal but then drives a bidding war frenzy. Underpricing a property does nothing for buyers and sellers. How would the same agent feel if they walked into a clothing store and saw a designer jacket for $99? They would jump on it! But then, the store manager ...