Understanding That There Are Two Key Real Estate Markets in Toronto
There are many buyers in the Toronto market right now looking for deals or steals when purchasing. The truth of the matter is that the market is bifurcated. While media headlines and much of the public would presume that all properties on MLS are overpriced and can be acquired at substantially lower prices, this is misleading. The bifurcation is that condos are in their own market, and separate from that are houses.
Condos throughout the GTA have been hit very hard since the correction began, which was precipitated by higher interest rates from the Bank of Canada. Another major impact on condo value in Toronto and the GTA is that pre-construction was sold by developers at anywhere from 30% to 200% more than resale pricing. As sellers came to market in the last few years, they discovered an unwillingness and an inability among purchasers to acquire condos at prices seen during the pandemic and a couple of years earlier.
It’s also important to touch on the value of freehold houses. The city of Toronto proper has held on to values in a stickier way than condo values. Sellers have been more willing to hold on to their properties and hold out for the price that they desire. Don’t get us wrong, values have come down in the last few years. But there is less wiggle room than many buyers presume.
Now that we’ve clarified the bifurcation in the Toronto real estate market, it’s important to understand that condos may be worth much less than the asking price, whereas houses are much closer in value to the asking price. In fact, there are many multiple-offer situations in the city of Toronto, in areas such as Roncesvalles, Riverdale, the Beach, Leslieville, and parts of the central core, including Little Italy, Little Portugal, and Queen West.
Some of our buyers, from time to time, think they have an opportunity to just submit low-ball offers on any product they see. We find that our role is educating and guiding our buyers to understand whether the asking price of a particular listing is reasonable, fair, appropriate, overpriced, or underpriced. There is no blanket statement that would allow an ability to say you can go below asking and succeed in acquiring that specific property. Some of the factors to consider are the following:
How long has the seller owned the property?
We ask this because if the seller has been in the property for 10, 15, 20, or 30 years, there’s likely a great deal of equity within the home and the property that would allow the seller to have more flexibility. If, on the other hand, they’ve only owned the property for a couple of years to potentially five or six years, there’s a chance that they’re losing money. In that case, they may be unwilling to accept the market reality of a lower value.
Want to learn more about Toronto’s most sought-after neighbourhoods? Check out these other posts next.
- Is The Annex, Toronto Safe?
- Riverdale, Toronto: A Neighbourhood Guide
- What’s Great About Living in Summerhill, Toronto?
What is happening in the local market?
Since real estate is location, location, location, it’s important to understand that there are micro-markets within the city of Toronto. If, for instance, you’re trying to put an offer on a home in a highly desirable neighbourhood like Summerhill, Leslieville, Riverdale, or Roncesvalles, there’s a chance that you may be in competition. The question of how low you go could very well lead to an unsuccessful bid and moving on to the next house that becomes available.
How badly do you want the property as the buyer?
It’s important to understand that most sellers are selling their property for a myriad of reasons. In many cases, they’ve loved the property they’ve lived in and have an emotional attachment to it. If, in fact, they’ve had an emotional attachment to it and they’ve priced it fairly, coming in at a low price that has no bearing on market value could be off-putting. You could lead a seller to decide they’re unwilling to sell to you. Additionally, they may dig their heels in and be unwilling to budge on a specific price, regardless of what you may wish. It’s important to factor in what matters to you in terms of lifestyle decisions today, the long-term effects, and how long you plan to hold the property.
Forest for the trees
One of our many jobs as professional realtors is to guide our clients and understand their perspective. There’s no doubt that real estate values in Toronto are high, and that money matters. How you allocate that money matters too. It’s also important to understand that at the end of the day, real estate is a lifestyle decision. Some common elements to consider:
- Where do you want to live?
- How long do you want to live there?
- What do you want to do in the local neighbourhood?
- Do you want to raise a family?
- Are you downsizing?
- Are you acquiring as an investor?
Once you are clear as to why you want to acquire a specific property, you can then understand your decision-making and how to effectively acquire a property that suits your needs both today and in the future. At the end of the day, money matters, but a minor swing in the amount paid to get what you most love—versus waiting six months, a year, two, three, or four years to see that product again—is what needs to be weighed and balanced when presenting an offer to a seller.
Want to know more about the types of homes you’ll find in Toronto? Check out these related blogs next!
- Freehold Townhouse vs Condo
- 5 Things You Didn’t Know About Toronto Lofts
- Toronto Architectural Home Styles
Working With an Agent to Find Your Dream Home
While a semi-detached house may or may not have the right amount of space, as you can see from above, many factors go into the lifestyle of the space. How many people plan to live in the house? What ages are they? What area of the city? What’s the budget? We have placed many happy clients in semis over the last two decades. We have seen all the shapes and sizes over the years. What we are committed to is asking the big question so that our clients are well served and that their real estate investment is based on solid facts, insights and a foundation built on trust.
Searching for the perfect place to call home? I’m here to help. Reach me by email at ryan@ryanroberts.ca or call 416-925-9191.
