Patrick Rocca -Is the Toronto Real Estate Market Upside down?
In these two charts you can see the comparison with prior years
Jeffrey:
I’m here again with Patrick Rocca who’s with Bosley real estate. And at this point in the market, it’s at June, 2022, there have been some really interesting developments that Patrick and I are going to talk about. So Patrick, maybe you could introduce yourself and what you do with Bosley real estate.
Patrick:
Sure. Good morning, Jeff. Patrick Rocca with Bosley real estate here in Leaside and Davisville. I’m a broker 30 years in the business and yeah, very interesting times for sure.
Jeffrey:
Yeah, you reached out to me last week and we usually schedule these calls about, you know, once a quarter, every six months or so, but there’s been some interesting things that have happened recently. So why don’t you catch us up on what’s been happening?
Patrick:
Yeah, I think the last time we talked was back in I wanna say February, March, but and, and things were chugging along and, you know, and the market was crazy and stuff was selling, you know, in days multiple offers crazy overing. It, it it’s changed. The shift happened, I wanna say about 30 days ago in, in, in our neighborhood anyways. I mean the outside of the city has been noticing it since April even late March. But the activity has really waned. You know, we’re still, we still are lacking inventory and there there’s a bit more than there was before. I mean, there was very, very limited inventory. But right now what’s happened is the, the activity on listings has dropped dramatically. And just to put it into perspective, I, I had a semi-detached in Davisville in late February, early March had about 97 showings over seven days.
Patrick:
A couple of weeks later I had one in Leaside and I had 51 showings in seven days. And just in May, beginning of May, I had one in Leaside as well, where I was down to 31 showings a day. So you, you can see where the activity went from, you know, 97 showings to 31 showings literally within 30 days. And but the prices were still good. I mean, those semis, all three of those semis at that time sold for record prices, but what’s happened now and I it’s almost like someone hit the light switch last week. The activities is, is I mean, I have a listing in north Leaside offers where last Monday I haven’t had a showing since wow, I never got offers. And I have, I had one last night in Cabbagetown we had 9, 8, 9 offers or sorry, eight, nine showings. And we got one offer. And you know, I have one this evening in, in Leaside, I think I’ve had six showings in a week. Huh. So it’s, it’s really changed. It’s really, really changed.
Jeffrey:
Yeah. And I’ve seen a few charts on market activity year over year change. So from May, 2021 to 22 in this one for Toronto resales, it’s down 40% with barely any new listings. So I think there’s probably a, a few factors which are interconnected, not the least of which is the inflation and interest rate hikes by the bank. But what, what are you hearing on the ground? Are you hearing from buyers that now they’re thinking that it’s a buyer’s market and they can wait it out?
Patrick:
Well, I mean, just before we address that, I mean, you’re right. I mean, you know, inflation interest rates. I mean, honestly, you know, we knew interest rates were going to go up. So I, I, I personally think that that was kind of built in and yes, inflation is real and what I think is, and, and, and I, I, I truly believe this. And what I think has really been hurting the market is the fear that the media has been putting into buyers. I mean, I just read an article last week and I actually posted it on my social media. It was just so ridiculous. It, it, it, it was from I think, better homes and garden or something talking about how, you know, we’re going back to the nineties. I mean, it’s, I’m like, wow, where, where are you getting this stuff? I mean, the fear that the media’s printing about the market, I mean, we’re still up from last year.
Patrick:
Yes, we’re down from last month, but I mean, and yes, things have slowed down and yes, the market has changed, but we’re not talking a crash here. You know, not yet anyways <laugh>, but I mean, honestly, and I, and I think that it it’s that, you know, it’s that perception that, you know, people read stuff and then they get scared and they say, okay, yeah. I mean, and buyers are saying, yeah, it’s, is it a buyer’s market? It’s not quite a buyer’s market yet. It’s, it’s, it’s a, I I’d still say it’s a seller’s market, but it’s getting pretty even. But there are great opportunities. I mean you know, you look at my, my, the listing that I had last week in, in, in Leaside and I, and I had an agent, you know, I listed that at a million, 4 29, and that would’ve sold for 1,000,007, you know, four, six weeks ago.
Patrick:
And we got no offers and I had an agent come to me, and this is the other problem, too. It’s a lot of agents haven’t been through this market before, so they don’t know what to do. So I have an agent that came to me and was talking about bringing an offer. And she was telling me that the market’s changed. Well, yeah, no kidding. And then she starts saying, she’s going to low ball because prices have dropped. And I’m like, you know, you can get this house for a better price and you could have got it for a month ago. And, you know, it’s, you know, I don’t come to me and say, you’re going to gimme a hundred thousand less, cuz the market’s changed. You’re getting this already for probably a hundred thousand less; not 200 less. So there there’s this just perception of there driven by the media and driven by inexperienced agents who, who don’t have control over their clients. And that’s unfortunate. But there are some, there are some good deals out there to be had for buyers.
Jeffrey:
Absolutely. And I think keeping in mind what you said about prices, if you look at the past three years, as you said, even in a, you know, February, March, they were high points for the, the average resale home price. But if you look even at may, like you said, we’re still up over last year, 2021. And so if people think it’s going to be returned to, you know, 2019 or, or 10 90, 90, I don’t think that’s going to happen even because there’s always going to be a gap between, you know, what you say in, in terms of what people think a house is worth and what the market actually does say it’s worth. And you know, I think we saw this a couple of years ago, you and I were talking and then there was a, a slowdown after a, a seller’s market. And people were saying that the world was ending and, you know, sellers are all going to be, you know, wishing that they hadn’t put their houses on the market and we didn’t see it. And then prices have been up 20, 30, 40% since then. So over the long term, like you said, you know, it, it really pays if you’re a buyer to think long term and not try to, you know, look at this as a fire sale trying to get a deal. Because I think that that sellers over the past couple of years, hopefully have realized that there is still a lot of value and, and people aren’t going to take 20, 30% haircut on, on what their house was worth just back in March and April.
Patrick:
Yeah. I mean, if you’re, if you’re a flipper, if you’re an investor in, in, in, in, in wanting to sell something in a year. Yeah. You, you could, you could take a bit of a hit, but if you’re in this long term, which most people are you know, you’re fine. I mean, like you said, our dips are short lived. You know, you go back to seven, 2017 when they put in the foreign tax, we had a dip and guess what came back within a few months, look at COVID. I mean, COVID, we had a complete dip and look what happened during, you know, for six weeks, eight weeks. And then all of a sudden in the midst of a pandemic, we came roared back. And, you know, if we have another little dip, it’s, it’s a great little opportunity now for, for buyers. I mean, if, if you’re selling, you have to be realistic. You have to understand that, you know, listen, you might not get you. You’re still going to get more than what you got last year than you would’ve got last year, but you’re not likely going to get this two, three, 400,000 over that you may have gotten in, in February, March
Jeffrey:
And you know, if we can see that listings come back up and there’s more product, I think that, you know, both buyers and sellers will be happy for a, a more balanced market. I, I think from a buyer’s point of view, what’s really still a bit daunting is going into a multiple offer situation or a seller that’s priced very low to start a bidding war. And if your agent isn’t experienced at dealing with this, you know, they may be advising their sellers on the complete wrong strategy for getting a house.
Patrick:
Yeah. A hundred percent. And then, and we’re seeing that now. I mean, it’s, it’s, again, you know, there’s agents that have been in the business 3, 4, 5 years, and they really don’t know what a downturn is and, and they, they, they’re not advising their clients properly. And, you know, if, if you’re on the buy side right now, you should be telling your clients that there, there is opportunity here. And you know, if you’re working on the sell side, you have to be, you know, realistic with your sellers and say, listen, you know the market’s changed a bit. And I had one on the weekend where I, you know, I got a bully offer and I said to my sellers, you know what, this is a good offer. You should take this. And they did. So I think that’s, that’s really key.
Jeffrey:
And I think that from a, from a buyer’s point of view, I was just looking at something in, in the Davisville area. And it’s admittedly one of the, the smaller properties in the market, but it’s priced significantly lower than anything that I’ve seen for months. So, I mean, is there is their agent trying to start a bidding war? Is that going to be a successful strategy? What I’ve heard is that if you can’t start a bidding war, they’ll take it off the market and put it back on and what they think they should get. But really, I mean, again from agent experience is the bidding war scenario still viable these days, if it’s looking like there’s, there’s less and less demand sorry, less and less increase in prices month over month.
Patrick:
Well, I think that that’s a strategy that has changed. And when I say it has changed, I mean, I, I, I pivoted just in the last seven days, 10 days, I mean, where I was having offer dates up until about a week or so ago. I’m actually, I’m doing one this evening and it was it’s, it’s, you know, it’s a different scenario. So that I can’t get into, but if I’m pricing now, I’m not, I’m pricing to market. I’m not pricing low. And I’m not doing an offer date, a hard offer date I’m doing offers at any time. I think that that’s the strategy that you have to go with. I mean, if you would’ve asked me this two weeks ago, I would’ve said you know, no, we’re still good with offer dates, but now I’m, I’m saying, you know, bring it
Jeffrey:
Yeah. And, and it’s not such a, a nail biter, even for the sellers, you know, in this market, not getting an offer on offer. Date is a little bit of a confidence hit. If you think your product is priced well, and you still don’t get an offer, you know, there’s, some definite some head scratching that’s going to go on in that date.
Patrick:
Yeah. I mean, and it’s yeah. It’s, it’s, it’s, it’s frustrating. I mean, I, like I said, I’ve got one on Leaside right now that I haven’t had a showing in a week and, you know, we never got an offer. Excuse me, on offer date. It was shocking. I was actually quite surprised
Jeffrey:
I mean, that, like you said, through the pandemic, we saw that sort of 10% dip in prices, but six, eight weeks later, they started to come back and there’s still the demand. And I think we’ve talked about this a number of times is that there’s just in, in this area Leaside and Davisville, there’s just not a lot of supply desirable area and not a lot of products that are coming onto the market. And so, you know, when, when buyers get frustrated 1, 2, 3, 4 times that they don’t get the, the, the right house that they’ve been looking at and kind of, you know, they’re getting close to their timelines. Things are going to move and, and people are getting a bit anxious. And so, you know, whether now buyers are saying, we’ve got the revenge on sellers, or they’re thinking that this is more of a long term trend. I, I, I don’t know what the next couple of months are going to be, whether we’ll see a return to, to more balance or not.
Patrick:
Yeah. Well, I, I think that that’s, what’s, what’s going to happen. I mean I, I don’t think it’s buyers revenge yet. But I can tell you it’s getting quite even, I mean, let’s be honest. I mean, yearly, I mean, I always say to people the best time to sell your house is, you know, February, March, early April we are into June now. I mean you know, the market does start to slow down around mid-June end of June because, you know, summer’s here people and especially more so this year people are traveling. So it it’s really hard to say what’s going to happen. I mean, it normally slows down around now anyways. So we’re not going to really know the, the real impact or effect in the market. I don’t think until fall. I mean, normally you can say, oh yeah, fall, everything comes back. It’s, it’s all good, you know, week or two after labor day and kids are back in school and the market picks up again and roars through until November, I don’t know this year. I can’t predict that that’s the problem, because like you said, the next couple of months, I mean, aside from the fact that, you know, rates are going to probably go up again and all the negativity in the press, but I mean, we’ve got summer holidays and, and people are, I know lots of people, including myself that are traveling.
Jeffrey:
Yeah. And, and I think that’s that pent up demand for getting out the city and, and not having to think about things like, you know, buying a house and moving is very, very attractive after the past couple of years. And so I, I agree, I think maybe in the fall it could be something where, it’s one or the other people are slow to get back into it, or they look at it and they said, okay, I think now in the fall, we’ve seen what’s happened over the past couple of months with, you know, inflation or, or other you know, you know international factors. And they may be, they may be ready to actually bite the bullet, so to speak and go ahead and, and purchase. So it’s, it’s very difficult, but I guess the same question back to, for, for a seller, if you’re looking to distinguish yourself to stand out in a market, so obviously fair pricing, but are there anything that they could do in terms of the, the fabric of the house of, of the yard to really help that listing stand out about above others?
Patrick:
Well, presentation is always one of the key factors when you’re selling a house interior and exterior. I mean, you know, curb appeal very, very important this time of year with you know, landscaping, good landscaping you know, it’s, I think it’s critical in interior wise. Again, it depends on the property if you know, I’ve in the past month, I’ve sold stunning houses and I sold, you know, what I would call the train wreck, so something’s going to be torn down. So something’s going to be torn down. You don’t normally do anything to it other than, you know, clean it out and, and, and do your photos and your, and your whatnot. But you know, I, I have one coming out next week in Leaside, it’s $3 million house. And, you know, we’re doing some, some landscaping, we’re doing some painting and touchups, and there’s not, there’s not a whole lot that needs to be done to this house.
Patrick:
It’s, it’s going to be beautiful. And we’re professionally staging it. I mean, when I say professionally staging, it’s not, you know, bringing in a few pieces of furniture from your garage and, and whatnot. It’s, it’s, I work with a, you know, arguably the best designer and stager in the city. And she stages all my homes that required, I mean, some homes you can’t stage, or you shouldn’t stage because it’s just not worth it. I mean, if it’s going to be torn down, it’s, it’s, it’s going to be a, a complete Reno, there’s no point in staging it, but I think that those things are really important. You know, and, and, and as you know, I mean, the things kitchens and bathrooms sell houses. So I mean, you know, I’m not talking about kitchen and bathroom rentals to go to market, but I mean, they must shine and they must sparkle
Jeffrey:
That’s, that’s good advice at, at any time. And you know, just making sure that you stand out. I, I think at least now, hopefully from the, the market point of view, you don’t just have to put a house on the market and say it’s within a certain area and you’re guaranteed to get offers. Because, you know, I, I, we always talk about this, the, the speculation of, you know, I will be in a house and I know that in three years, four years I’ll be able to sell it for more than I bought it for. You know, that’s sort of been the mantra for years now. You can almost count on yearly price increases year over year. So if you bought a property in say 2018, you know, you could sell it for more in 20, 22, that’s almost been the case, but like, we’ve talked about you, everyone needs a place to live and, you know, you, you kind of have to factor in that, along with the investment opportunity for a house.
Patrick:
Yeah. Long term, you’re always going to be ahead of the game. I mean, it’s just, it’s, it’s, there’s nothing to be concerned about. I mean, you know, yeah. It’s down from last month and if you bought, you know, six, eight weeks ago, is it down a bit maybe but are you selling next year? I mean, it doesn’t matter. I mean, the Mar I mean, we’re up, we’re still up, I think, 9% over last year. I mean, month over month, month to month, right? Like if you look at May of last year compared to May of this year, we’re up, I still think 10%. I mean, so are we going togo back to more realistic, you know, increases and, and year over year, like three, four, 5% probably. I mean, the numbers that were were happening were sort of unsustainable in my opinion, but I mean, you’re fine if you’re in this, you know, longer term and I mean, all these buyers that are worried about, you know, did I, did I pay too much? Well, no, you didn’t pay too much. You know, and, and, you know, having conversations with clients who have, you know, that have bought and sold, and, you know, I say to them, ask yourself, did the person who bought your house pay too much so it’s all relative, right? Yeah.
Jeffrey:
Yeah. And, and like you said, if you take a long term view in two years, three years, will you be asking yourself, did I pay too much? Well, history is, has said that, you know, as we’ve seen these downturns things have come back. And so I, I do think like we’ve talked about the longer term view is one which, you know, over time, like the stock market you’re, you’re going to do. Okay.
Patrick:
Yeah. I mean, honestly, I was talking to a client last week and I, and I jokingly said, listen, I bought, like, I bought several houses, but my last house that I’ve bought in the house that I’m living in now, I bought it like 12, 15 years ago. And at the time I, I was the idiot that paid the most on the street and I knew that, and my neighbor kindly reminded me of that. because I think two weeks before he paid more but anyways, long story short, my house is worth triple what I paid for it. Right. So it’s, it’s, it doesn’t matter. I mean, you, you know, if you’re there and you, and you’re, you’re not one of these builders, that’s buying a bungalow for 2 million. Yeah. The bungalow might go to 1.7, but, you know, if you have to flip it and I mean, that, those are the people that maybe could, could be, or, or will get caught but yeah, year over year, you’re always going to be fine.
Jeffrey:
Yeah. Yeah. I, I agree. Long term view, especially in these types of markets will, will be kind of the, the, the equalizer, I hope at least. And, and we’ll definitely talk about this on, on our next call. So Patrick, if people want to get ahold of you, what’s the best way to reach you?
Patrick:
Best way to reach me is through my office here at Bosley at 416-322-8000 or subsequently you can email me, I’m always on my phone mail@patrickrocca.com
Jeffrey:
All right, perfect. Patrick, it’s always a pleasure to chat and thank you for, for sharing what you’re seeing on the ground. Always interesting. And looking forward to our next chat.
Patrick:
Absolutely. Take care, Jeff, nice talking to you as well.