Better Than It Looks
It’s difficult to discuss economics or real estate without bringing geopolitics into the fray, especially given the uncertainty and seeming chaos south of the border. While we still believe Toronto’s real estate market will improve throughout the year, the ongoing conflict in the Middle East has further complicated confidence regarding the pace of recovery. While condos continue to struggle—a trend we expect to persist for at least a couple more years—higher-end units are moving more easily by comparison. Conversely, ground-level housing, which we refer to as freehold, is performing quite well.
In fact, we are seeing numerous bidding wars in the east end (E1, E2, E3), the west end (W1, W2, W3), and the central core, particularly for semi-detached housing.
I would argue that if we had more competitively priced listings, the freehold market would be moving even more briskly. It may seem contradictory to suggest that more listings would increase sales and values; however, there are many buyers ready and waiting for quality inventory. We haven’t seen the volume of new listings necessary to quench that thirst.
In our office, we are tracking a growing number of sales on MLS and exclusively within the office. It’s integral to remember that freehold housing values are far stickier than condo pricing. We have tracked, week over week, an increase in showings booked and, the following week, in subsequent offers made. There has been an increase month over month at the start of this year. We argue and stand by that there is an improvement happening in this market despite some headwinds globally and locally.
The Inflation & Interest Rate Outlook
There is significant talk of stagflation as oil prices have risen over the last three weeks. The expectation is that prices could climb further depending on the duration of the conflict and the resulting ancillary fallout. If we do see a spike in inflation, we could enter a challenging period where lowering interest rates becomes impossible. We originally anticipated that interest rates would remain at their current levels for the next 12 to 18 months. However, given the economic fallout from Middle Eastern developments, we now expect that if inflation rises, rates will stay exactly where they are. If rates remain elevated, a swift recovery in the housing market will be more difficult to achieve.
Thinking about buying a home? Click here to browse my featured listings.
Looking for more insights into Toronto real estate? Check out these related posts from my blog!
- Where to Buy A Toronto Condo If You Don’t Want To Live Downtown
- What Are Must-Make Repairs Before You Sell Your Toronto Home?
- Is Rosedale A Family Neighbourhood?
Opportunity Amidst Uncertainty
Despite these factors, great opportunities remain for those looking to buy or sell. At the end of the day, economics and affordability matter, but what is right for you and your family matters most. Whether you need to sell or buy, the opportunity exists. Success depends on being prepared and exercising great discernment.
Any real estate decision made right now should not be made in a vacuum. You must consider what makes sense for your next move and how to best allocate capital—whether that is investing, staying on the sidelines, or acquiring additional properties. Often, headlines and social media opinion pieces focus on a singular transaction rather than the long-term opportunity. If you are moving up the property ladder, the overall dollar savings must be considered.
Toronto vs. The Suburbs
As we analyze sales statistics for Toronto and the GTA, it becomes clear how resilient Toronto is compared to surrounding suburbs like Newmarket, Vaughan, Richmond Hill, Mississauga, and Pickering.
Pickering, Whitby, and Oshawa have struggled significantly, particularly in the condo sector. In fact, a recent Toronto Star article documented that some condos in Pickering are down 57% in value since the market peak. When we balance this out, those of us in Toronto can be grateful for a much “stickier” value proposition than the surrounding suburbs.
A New Leasing Trend
A growing number of consumers are choosing rentals over buying (20 rentals were completed in the office last week alone), indicating many potential buyers are temporarily leaving the purchase market for 8–12 months.
Have questions about buying or selling in today’s market? I have answers! Reach me by email at ryan@ryanroberts.ca or call 416-925-9191.
