Has the Toronto real estate market bottomed out? A lot of people have been waiting for the “bottom” to buy, but the problem with trying to time the market is that it’s a losing strategy: you don’t actually know you’ve seen the lowest prices until they’ve started going up again.
If you’re holding off buying something in the expectation of getting a really great deal, you’ve missed the boat. Here’s why:
1. People are getting more comfortable with higher interest rates.
The rates we were seeing before the rate hike started were incredibly LOW. Like “never seen before” low. And even before the pandemic, borrowing was cheaper than it’s been in years. Just ask anyone who bought a house 20 years ago, when rates were similar to what we’re seeing now. Or 30 years ago, when interest rates were way up there at 18% and 19%. Can you imagine? That’s like buying a house with your credit card!
Low borrowing rates were a gift – they simply weren’t sustainable and added fuel to the fire. So while today’s rates are higher than what we’re used to, buyers are starting to realize that they’re probably going to be around for a while. So as you can imagine, they’re jumping back into the market, competition is on the rise and prices are starting to slowly creep up.
2. The Bank of Canada has paused hikes – for now.
When they didn’t hike the interest rate in the March announcement, buyer confidence went up further. While we don’t know exactly what the BoC plans to do next, having a little stability and clarity made people more comfortable with the idea of entering into a mortgage and moving ahead.
3. Inventory is still super-low.
While buyer demand is slowly increasing, we aren’t really seeing a lot more listings come on the market just yet. And when competition heats up, so do prices. Of course, with a large number of mortgages up for renewal this year, I’m predicting there will be more inventory that comes to market as people sell homes they, unfortunately, may no longer be able to afford or remove properties from their investment portfolios. So this particular factor may change. So sellers: listen up! This may be an opportune moment to get your house properly staged and ready to sell if that's what you decide to do.
4. Bidding wars and offer dates are on the rise.
Right now, with so little inventory and increasing demand, properties are sometimes significantly underpriced to encourage multiple offers. Bidding wars are happening. Not as crazy as what we were seeing at the height of the market, but things are definitely getting more competitive out there.
5. Those looking for a “deal” aren’t finding anything.
Getting a fantastic property for a song just isn’t happening. A special property in a great building or neighbourhood simply comes at a price, and it’s important to be realistic about your expectations. Getting a 2-bed, 2-bath, 1,000 sqft condo with unobstructed lake views for under a million simply won’t happen.
However, that doesn’t mean you shouldn’t buy: an “all or nothing” mentality will hurt you in the long run. We can find you a “for now” place that might not check all your boxes, but will give you a great return and help you level up into the next one when the time is right.
My advice is to get into something you CAN afford – a property that will give you the best return. Then, in a few years, you can sell and move up.
7. Property prices may have dropped, but they’re still high.
The dramatic price jumps that were happening at the height of the market were NOT NORMAL. It was the market on steroids. Prices were bound to correct sooner or later. But they’ve still appreciated a lot faster than usual. If you look at the chart below, you can see a comparison of the time before the Feb 2021 peak and the time after. Even with the price drops we saw in the last year, values have almost gone right back to where they were just before that peak.
One thing I sometimes need to remind my clients of is that you can’t day trade real estate. The market in Toronto constantly moves up and down – but is always on an upwards trajectory. While Investors are looking for great buying opportunities, the average homeowner isn’t buying specifically as an investment. They’re buying a home and making a lifestyle decision that’s a great long-term investment. If you keep that in mind, everything will be fine!
There are so many factors and micro markets within all of this general data that you need a great real estate agent to help you navigate the sometimes-very-confusing information you read. Be careful with those headlines!
Got questions about the market – or about where you can buy to get the best value right now? Get in touch, I’m always happy to help.
About Sean Miller
Recognized as one of the most dynamic, high-performing agents in the Toronto market, Sean is the #1 performer at Property.ca Inc. Brokerage and is in the top 1% of Toronto realtors for sales volume.*
Over the last decade, Sean has built a strong real estate career based on his uncompromising professionalism, relentless work ethic, and tenacious drive. He strives to provide the best possible outcome and to make the process seamless and transparent. Sean has proven that his exceptional service and attention to all of his clients are the recipes for his success. His deep understanding of the market makes him an ideal advisor for buyers, sellers, and investors alike. Sean’s tough negotiating skills, coupled with his “no-nonsense” approach to closing deals, put him in a league of his own.