Patrick Rocca – Spring 2020 Toronto Real Estate Market- Return to Normal?
In this call Patrick Rocca talks about his insights as a real estate agent into the Spring 2020 Toronto Real Estate Market. With all the price swings from the past few years behind us is this a return to a more “normal” market for buyers and sellers?
Jeffrey: I’m here again with Patrick Rocca and we’re going to be talking about the Toronto real estate market here in the spring of 2020. Now I know it’s still the winter, but we’re looking ahead to spring as well as a bit of a look back to what happened in the rest of 2019. Patrick, I wonder if you could tell everybody a little bit about yourself and what you do.
Patrick: Sure. good morning. Patrick Rocca with Bosley real estate office is situated here in the Davisville Leaside area. One of the top producers in the neighborhood. And yeah, we’re into a spring market even though it’s the first week of February. The spring market. Believe it or not, it starts around the last week of January, first week of February. So we’re looking forward to a very active market. Yeah.
Jeffrey: Yeah. And I know that I based on some of the stats I saw things sort of stabilized in the latter half of 2019. I think that a sales were up about 4%. So would you say the market is finally normalizing after the 2016 stress tests came in?
Patrick: Yeah, I would say since we had that big blip in 17 and then we tanked you know, we were up 30 and then down 20 in a matter of you know, six months and we sort of net at the year at 10, sort of up 10% the last two years, 18 and 19 we’ve had a good steady 5% increase across the GTA. And that’s a normal market, like you said. I mean, and that’s a healthy market. The real driving factor right now in the market is the lack of inventory. It’s just, there is no supply. That’s how we ended the year. I think that’s how we started the year. It’s a, you know, it’s the chicken or the egg, you know, which comes first. I mean, people want to buy stuff, but there’s nothing to buy and they can’t sell until they buy. And it’s just, it’s a vicious circle. But yeah, so I mean we’re, we’re sitting on very, very tight inventory right now and I was hoping to see more product come out in the last week or two. There has been a little bit of a trickle, but not enough to feed the demand.
Jeffrey: Yeah. And we’ve talked about that in the past and for a number of years it was related to the price increases and we heard that sellers were sitting on their houses because even when the prices decreased, they thought that they were come back quickly and then it could get top dollar for the houses. Now that, that is sort of in the past, it’s not necessarily that the sellers are sitting on houses. Is it a question of just structurally in the, in the housing market, there’s just not enough inventory, not enough movement to accompany people that want to buy?
Patrick: That’s pretty much it. There’s just not, the inventory is not there. I mean, it’s very, very low properties are coming on the market. I mean, there was one in East York last week with over 20 offers. I heard of a condo last night with over 30 offers. There, you know, if you have a good product and if you are priced right you should sell fairly quickly. And that’s just the reality of the market. I mean, and I’m talking to more people, you know, people try to time the market and they’re always thinking that, you know, the timing will be better when, you know, when the flowers are in bloom or when the trees have leaves and not necessarily true. I mean, I see it time and time again. The earlier part of, you know, historically have been doing this 26, 27 years. Historically, the earlier part of the spring market is always better because there is a lack of inventory and there are buyers chomping at the bit. And now that’s not to say that, you know, all of a sudden in March, April, there’ll be a flood of houses. There will be more cause that’s natural. But I think if you’re an astute seller, you’re probably thinking of going to market like yesterday.
Jeffrey: Yeah. And, I think that that’s a key thing to keep in mind is that now that the Christmas season is over, people are actually looking into the spring. They’re looking into the summer, they’re thinking that, you know, given their, their closing dates and everything that’s required, they want to be settled before the summer. And it, like you said, if you’re smart, you’re thinking about now is when you get your, your product onto the market. So that, you know, you are not unique, but you kind of stand out among the crowd.
Patrick: Yup. 100%. Yup. And that’s a, I totally agree with by then it’s hard. It’s hard to instill that into some people and they, they, they think that, you know, it’s, you know, it’s winter, so naturally people aren’t out looking. But I mean, you know, open houses this weekend and, you know, we had double digit visitors each day. So there, there’s people out there looking and they’re, you know, they’re chomping at the bed and there’s just, there’s not a lot of supply.
Jeffrey: Yeah. And, and one of the questions that I’ve gotten in the past is someone is on the fence and they’re thinking, should I sell or should I not? They’ve been their house for say, 15 or 20 years. It’s an older house. They’re thinking, you know, do I do the repairs that that need to get done? Do I, for instance, put in that new kitchen, maybe delay selling until the fall? Or do I list now? And I know that there are a lot of determinants there, but what would be some of the considerations that you would suggest?
Patrick: Well, I mean, you know what, I am seeing that a bit, that people are staying in their properties because of the cost of moving. I mean, I did a global mail article about three, four weeks ago, you know, where that came up. You know, one of the roadblocks right now and in, in, in moving is the cost of moving, you know, the, the land transfer, the cost of commissions. So people, you know, they’re, they’re, they’re thinking, you know, and I’m sure you’re seeing it on your end. They’re, they’re, they’re staying in their house a little longer. So that feeds into the lack of, of inventory as well. I mean, you know, I get people that they, they come to me and they look for advice in terms of what they should do to get the home ready. Normally if it’s a short term, like for example, if someone says to me they’re going to be listing in April or may or, or maybe even September, I tell them not to go to town and redo kitchens and redo bathrooms because you know, it’s typically, you know, you may do it in the style that the new buyer does not want.
But I say to people if your, if your timeframe is to stay two, three, four years, definitely do it. Enjoy it because it’s an upgrade to your house. But short term, I, it’s a fine line. I usually don’t get people, you know, blowing their brains out on, on, on renovations to go to market. It’s more, it’s more like that, you know, that old saying, putting lipstick on a pig. You’re, you’re, you’re just refreshing it up and you’re making it look more presentable as opposed to, you know, going to town on kitchens and bathrooms.
Jeffrey: Yeah, that’s right. But you, you can accomplish a lot with that “lipstick.” In fact, I’ve seen several houses that were original paint, or the paint was, 20 something years old and the decor looked a little bit tired. But there were other ones which were staged. They had a new neutral coat of paint and some UpToDate furniture, and you could hear the buyer’s comments saying that they could see themselves living in that property. And yet the difference in cost was not that extreme. It required a bit of planning, of course to do the stage and to do the painting, but really not that much of an investment. And yet the price was significantly different.
Patrick: Oh yeah. I mean, I’m a, I’m a big fan of staging and staging. I mean, listen, let’s keep it to the professionals. There’s, there’s agents out there who say, Oh yeah, I’ll do the staging for you. You know, we’re agents, we’re not designers. I mean let the professionals handle it. And I believe in staging and for the, you know, for the cost of painting staging the, honestly, if it’s, if it’s $10,000 invested, your home is going to look a whole heck of a lot better. You know, I, I’m talking to a gentleman now, he’s got a $3 million house. Doesn’t want to stage really like $1,000. You don’t want to stage, I mean, that’s very short-sighted, right? Because staging makes a difference. People walk in and they go, wow, is that why it’s that house and home magazine cover? You know what I mean? It’s, I have, I had a client call me just before Christmas and I had staged her house and she called me the evening before we were going to MLS and she goes, Patrick, I’m sitting here having a glass of wine with my friend and we feel like we’re in the Royal York because it looks so different and so good. And that’s what you wanna achieve. Yeah,
Jeffrey: Absolutely. And, you know, I heard anecdotally in this, you know, it doesn’t apply to all sales where someone staged a place, you know, five, seven grand in staging for drew rental, everything like that. And they estimated that it increased their sale price by between 40 to $50,000 just because that that unique appeal, that, that sense that when the buyers did come in, they really could see themselves living in it. They really didn’t have to, they realize they didn’t have to do anything. So it, they didn’t have that barrier to overcome in terms of thinking, what do we have to do before we can move in? It was very much that people said, this is where I can see myself spending the next five, 10, 15 years.
Patrick: Yeah, 100%. I mean, and that’s what staging does and it’s a, it’s literally, it makes a huge difference. I don’t know what the return is. I think if you talked to different industry experts, they’ll tell you what the percentages are. But I can tell you unequivocally a staged home will sell quicker and quicker means you’ll get more money. So ultimately it’s, you know, for the investment well worth it. I mean, honestly, if, if by not doing it is very short-sighted. Now there’s some houses, I mean, I had a couple of houses just before Christmas, late November, that were state houses and you know, Hey, listen, you can’t, you can’t fix those up and make them look any better. Right. And you just have to go with, you know, the sold as is and, you know, do you do your own work type thing on, on, on this house. And you know, staging doesn’t necessarily help those. But in general, yeah, you gotta you had a house and it staging it is critical.
Jeffrey: Yeah. And I know in, in this area, in Davisville side when I was checking inventory a couple of weeks ago, there were a lot of newer builds and they, you know, the price differential between those and, and, you know, the semis for the, you know, the first time home buyers is significant. We’re talking, you know in the two to $3 million range. And from an affordability point of view, I’m really starting to hear that there’s people that are saying, you know, even if I live in a condo, I can’t stretch to get into a single family home. Is that some of the things you’re hearing from your buyers?
Patrick: Ah, yeah. But condos or condos are getting out of control as well. I mean, it’s there, there’s a, you know, you’re, you’re looking at some, I’m hearing of, of some new stuff that’s selling at 1500 bucks a foot. I mean, when we were talking 1,000 or 1100 last year in some cases, and that was, you know, high. But you’re right, I mean, if you look at some of the, the newer inventory or the newer style houses, I mean, you know, 2 million seems to be that Mark right now. I mean, I have one in North Leaside right now that’s listed a two to five to lovely home. But if you look, there’s, there’s right now in Leaside, in Davisville, there are only 30 listings. It’s, it’s bizarre. Only third and of the newer stuff. Yeah. There, there’s a, you know, there’s, if you look between right now, I’m just looking at the statistics, 20 of them are over 2 million. Yeah. So there you go. Right? Yeah. And the, the other, the other 10 are, you know, between one point, you know that while there’s a, there’s a semi for 1,000,080 but it’s all Mount pleasant, then you’re getting into the million 4 million, five to 2 million. So there’s, yeah, 2 million. I hate to say it doesn’t, not, not that it doesn’t get you a lot, but 2 million, you know, you’re, it’s, it’s a big jump to, and you’re right, I mean it’s, people sometimes struggle to get into that price point, right?
Jeffrey: Yeah. So in terms of the outlook for the spring market, I know we predict anything and you’ve said previously that it’s very, very hard to predict, but are you seeing any signs of any changes in the spring market in this year?
Patrick: You know what? No. I mean, honestly, I still think that we are going to have a active spring. I still think that inventory or lack thereof will be an issue. I have some concerns over you know, the economy in general. I mean, and I’ve been quoted as saying this before, the, the, the, the consumer debt, the bet that people are under the pressures that they’re under is, is, is, is a little concerning. And you know, I, you know, if you look at our federal debt or provincial debt, you look at, you know, dad in general, I mean, we’re, we’re a debt ridden country, right? And it trickles down to the household. And if you look at, you know, I think retail sales were down at Christmas, and there’s just factors. There’s job losses. I mean, there’s things that, you know, I’m, I’m leery about but what trickled down effect that’ll have into the housing market.
Patrick: Again, we don’t have supply. So the housing market continues to chug along. And I think we’re still gonna have that same sort of five, 5% increase in prices this year. I think, you know, that the days of the double digit increases, I think they’re, they’re gone. But certain segments of the market are, are very, very, very good. Like you look at, you know, the East York market, anything sort of in a million range. I mean, there was one, like I said last week with over 20 offers. You look at the condo market. I mean, you know, those things are flying off the shelf as well. So I mean there’s certain segments of the market that are still, you know, crazy crazy on fire. So I, I still continue to see that, you know, going into the rest of the year.
Jeffrey: Yeah. And, and like we said at the beginning, maybe a return to more normal prices and hopefully not a return to the multiple offer scenarios being the dominant force driving the market.
Patrick: Yeah. I think until we see more supply, you’re going to see probably a few more multiples. And you know what in the reality is, if you look at the market right now too, there are homes that are sitting that are overpriced people, you don’t have listed their homes. Some, we talked about 2017 earlier and about how things went crazy and then they come, there’s still people that are, you know, reaching and hoping for that 2017 number. Well, it’s, it’s, we have not come back to two 17 figures yet. You know, we’re getting closer, but you know, semis in 2017 where we, you know, selling for one five, I mean, there’s still around one for, you know you know, bungalows were selling for, you know, 1,000,008, they’re around 1,000,005. So it’s, it’s, it’s, there’s, you know, we haven’t come back to 17 yet and there’s people that are out there that are listed high and that are being unrealistic that that’s a problem.
Jeffrey: Yeah. Yeah. And I think that hopefully, you know, we’ll see more realistic over the next six to 12 months. People kind of realize, what the current situation is. And then you’re, like you said earlier, we see a little bit more inventory because the, a, there’s pressures here, there’s people moving to the city. There’s a lot of economic activity and clustering around the GTA. And I think lot of those people do want to have homes and you know, the core of the city is still a very desirable place. And you know, the, the best way to approach the market I think is to, you know, contact someone like yourself that really is a, is a specialist in the area and can advise people on, on what’s normal be. Especially if you’re coming from outside the city, you’re looking at the market, you’re saying, I don’t know, is this normal pricing? You know, is this too much? What should I be paying?
Patrick: Yeah, that’s, that’s critical as is dealing with someone who’s local and someone who has knowledge of what’s going on and the developments and the impact on the developments. And, and I hear nightmares all the time about people that have bought houses and didn’t know that there was going to be a condominium proposed in their backyard. I mean, I hear that all the time. I mean, and as an agent, that’s our responsibility to tell people what’s going on in the marketplace. And you know, the pros and the cons. Right. So,
Jeffrey: Yeah, pretty important. I agree. And, and you know your, your industry, they have a pretty good handle on, on what’s coming up. You know, you hear about things, you know, the city is densifying and condos are, are moving in areas where, you know, you may not have thought they’d move in before and you know, for better, for worse, that can impact the sale price, not only when you buy, but also, you know, when you sell. And so it’s buyer beware in terms of the amount of information that you have.
Patrick: Yeah, 100%. And then, you know, w you know, that living in this area, I mean, the LRT is a, is a constant topic that comes up. People are always, you know, wondering, I mean, I still get asked to this day, I mean, I, people ask me on the weekend at my open house about the effect of the LRT on pricing. Well, I mean, I, I think personally, I think some of the pricing is already built in. It’s not like people are gonna wake up one morning when the, you know, the, the Bayview station opens up and say, Oh, I’ve got to buy and all of a sudden prices go up. I think people have already figured out a few years ago that, Hey, this is, this is long term feature is going to be, it’s going to be good. But and, but it’s just the traffic. I mean, you’ve, like you said, condominium development. I mean, you look at Bayview and Eglinton three towers, you look at the Canadian tire side, that layered and Eglinton and other three towers, bread clip. It’s just, it’s density. And that’s like you said, the city’s mandate is to intensify the density and eight, they’re going to do it come hell or high water.
Jeffrey: Yeah. You’re, you’re absolutely right. And you know, it’s, it’s not a question of, of how it’s a question of when it’s going to happen. And you know, like you’ve seen in over your 26, 27 years. If you invested, you know, 20 years ago in Leaside and you want to sell now, I think you’re going to be sitting on a pretty good investment.
Patrick: Yeah. I wish I would have bought a few more bungalows, both. I remember when they were 195,000
Jeffrey: I know. It’s pretty crazy and I thought that that was crazy amount of money back then, so I know exactly. All right, Patrick, always a pleasure. If folks want to reach out, what’s the best way to get a hold of you?
Patrick: Yeah, likewise, the best way to get hold of me is either through my office at (416) 322-8000 or email is also great. mail@PatrickRocca.com. I definitely like getting back to people right away, so feel free to reach out anytime.
Jeffrey: All right, Patrick, again, it’s a pleasure and we will definitely talk soon.