Patrick Rocca – What’s changed in this Fall’s Midtown Toronto Real Estate Market
Is the current Midtown Toronto real estate market changing or are we in for more multiple offer situations? Patrick Rocca gives us an up to date impression of the fall 2017 Midtown Toronto real estate market and how to plan for 2018.
Jeffrey: This is Jeffrey Veffer from Incite Design, and today I have with me Patrick Rocca who’s real estate knowledge, especially in the mid town market, is certainly unparalleled with over 20 years of experience. So, Patrick, I wonder if you could introduce yourself a little bit and tell the listeners what you do.
Patrick: Sure, yeah. Good morning, Jeffrey. Patrick Rocca with Bosley Real estate here in Davisville, Midtown Toronto, I specialize in and am the top agent on the Leaside and Davisville markets. I’ve actually been doing this for over 25 years.
Jeffrey: Yeah. Time really does fly.
Patrick: Time flies, yup, exactly.
Jeffrey: When we last chatted, there were some real significant shifts in the market. For the last number of years we’ve seen, especially the Mid Town market, is very much a sellers market, and there were some changes that have come in from the government as well as some structural changes that have happened in the economy that were really starting to change that. Now, we had talked at the massive price increases that we’d seen year on year were definitely slowing and I just took a look at some of the current real estate board indicators for September, and they say, you know, while listings are up, prices are up fractionally over a year ago. But maybe you could tell us a bit more specifically what’s happening in the mid town area.
Patrick: Yeah, sure happy to do that. I think when we last talked, as we discussed, it was late spring, maybe even early summer, so we had just sort of headed into, actually we were well into the drop. You know, March/April we were sort of up 30% in the first four months, believe it or not. It was unprecedented and unsustainable, in my opinion. We started from April, right through until August, we dropped off 20%, so we had lost 20% of that 30, but we were still up a net 10. The summer was quiet.
Personally, for me, I was very busy even though I traveled quite a bit. I had a great July, great August, selling a lot of stuff. Now, you have to understand, I was selling stuff for several percentages less that what it was selling for in March and April. I mean, I was selling stuff, you know, I sold a detatched two story that actually sold in March for 1.8, didn’t close and I ended up selling it for a little over 1.4 in August. So that just gives you an idea of where the market went, and how quickly it went.
And interestingly enough, I was interviewed for the Globe and Mail in August and they were asking me my thoughts and what I saw happening in the fall market, and with my crystal ball, which is usually very good, I projected that, you know, listen, I think we’re going to have obviously a little bit more listings, more activity. I don’t see us getting backwards, you know, that 15, 20 percent that we lost since April. And lo and behold, the September stats just came out last week and, you know, I think if you look at it area by area, I think we gained back about three to five percent of the losses.
We’ve had a great start to the fall markets. We still are lacking inventory, especially in the Leaside/Davisville area. But stuff is moving, we’re seeing multiple offers, again, which we were not seeing. They literally disappeared in June. Just to give you an example, I had a property that I had listed all summer, like literally listed in June for a million six ninety-nine, and it sat, and it wasn’t moving. It was getting some activity, not a lot of activity. I tried to get my clients to reduce it to a million five ninety-nine and they dug in and wanted to wait until after Labor Day because, you know, we talked about it we thought that you know what, we may have a bump, and lo and behold, we did reduce it after Labor Day to a million five ninety-nine, excuse me, and strangely enough, you know, this is how crazy the market is, and this is where i started to see a sign, we ended up getting multiple offers and we sold it for more than what we had it listed for in June. So, interesting.
Jeffrey: Yeah. And we weren’t seeing any of that late spring. I know that some of the agents potentially, I would say those that weren’t really familiar with the area were leaving prices very, very high and in the anticipation, of course, that they would get an offer, and those sat, and sat, and sat and I think that there were some agents with more local knowledge that reduced the price to what the market would pay at that point, and then those ones sold. So you saw real difference because you could tell the agents who were familiar with the area you know, you see their signs pop up over and over again. Those properties have moved, the other ones would sit for weeks, and weeks. So, it was very, very strange to see that.
Patrick: You’re still seeing some properties, excuse me, I got a little bit of a cold. You’re still seeing some properties that are sitting that were sitting there in June and they’re not moving on their price. And yeah, you’re right, it has to do a bit with the agent and their expertise and their knowledge and their ability to advise their client. It also has to do with the client, too. Sometimes clients will dig in and they’re not in the position where they can reduce, or maybe they don’t want to reduce, and those are the people that are usually the unmotivated people or the people, like I said, that are in a position where they really can’t reduce. So they are hoping and praying.
Jeffrey: Yeah, and I think now there is a bit more balanced market conditions. I think the market’s really absorbed the shocks, basically, of the two interest rate hikes as well as what’s happened from the provincial government. So, I think people now have more of an understanding of potentially where the market’s going and a sense of what the down side was. I think that everyone’s just looking and fearing that there was going to be a bubble that was going to pop and things were going to drop 30, 40 percent and so buyers are waiting and sellers were not really willing to put their properties on the market for fear that they would get locked in at that lower price.
Patrick: You know, it’s funny, I told [inaudible 00:06:28] Miller that I was going to before I said in August that I thought we had bought them. From what I could see, and lo and behold, we did. Now you’re starting to see the upward tick. You know, last week I had four deals including two condo’s and they all had multiple offers. And believe it or not, still, two detached homes that I sold in Leaside, multiple offers, still the prices that we were getting in March but still substantially more than what they would have got in August or July. The condo market still continues to tick and defy all odds. The condo market is still very strong.
Jeffrey: Yeah, which is a surprise because a lot of people are saying that the condo market was definitely more volatile and was going to drop because of the interest rate hike, so it’s interesting to see what the turn of the market was.
Patrick: Yeah, definitely. You know, the condo market still sort of makes sense if you look at it economically. I mean, what can you get for under a million dollars now in the area? Nothing. So, I mean, you have a first time buyer, they’re looking at a 5 or $600,000 condo, it makes a bit more sense, right? So that’s why the condo market, I think, continues to chug along, right?
Jeffrey: Yeah. And I know that we always ask this question for sellers, you know, should they wait, if they have the flexibility to wait until the spring market which is sort of like a January February, or put their property on the market now? What’s the indicator saying?
Patrick: Well, I have to tell you it’s interesting you ask that because the people I was talking to in July and August are saying ‘if you don’t have to sell, wait until September.’ So those people came on the market in September or they are coming on the market in the next month or so. We’ve only got about four to six weeks left of a good market, then things start to slow down for the holiday season. But the other side of that is just what you said, which is if you don’t have to sell now and you have that flexibility, I’ve got a list of up to ten, twelve clients that were going to list this fall, they don’t have to.
So I said ‘in my 26 years in this business, touch wood, I have never had a bad spring. Spring historically has always been the best time to sell your home. Some people think spring and they think April, May but believe it or not it starts around the third week of January. The early bird gets the worm, even though it’s minus 20 outside and snow, you know, if you look at this past year, just to give an example, I mean, January, February, March, early April, that was the peak, and then we start to tail off.
So I always say to people, get it out early in the spring, and that’s you’re best time. So, like I said I got some people that have the flexibility and they’re going to wait until spring, which I think is not a bad move. With that being said, we’re in a great market right now, stuff is selling, so if you need to sell now, it’s not a bad time what-so-ever. There is not much product whatsoever. I thought that there might be more product this fall, but there hasn’t been.
Jeffrey: Yeah and I was very, very surprised at that because I was looking, you know, September and stuff starts to come on and I really looked around and I said ‘Wow there’s really not a lot of product and I don’t know if people are still wait-and-see and in that type of mode and it’s going to return to more supply in the spring market but, you know, again, it’s one of those things where usually lack of supply means that prices are climbing significantly but we really haven’t seen that right now so I think that there is a bit of a balancing still going on in people’s minds about where the market’s going to go.
Patrick: Yeah, and I think the other thing, too, is I spent with some clients the other evening and they’re about a two million dollar list and their looking to buy into the 2.6 list, but they’re worried that…right now, anything under 2 million is very hot, it’s moving. Anything above six, so the concern is is you buy that 2.5, 2.6 house, what are you going to get for your house, because there is no guarantees. You list your house at a million nine and you get a million 875, or you get a million 950, you don’t know. And then it’s, you know, which do you do first? Do you sell first? Do you buy first? So there is some buyers out there, too, that are sort of in an awkward situation where they want to move but they’re scared to move. But you buy and sell in the same market. If you can move up the market, you’re usually okay because the higher end is, like I said, the higher end right now is very quiet, in my area anyway. I’ve read in other areas it stops at selling at 7, 5, 6, 7 million.
Patrick: Inside Davisville, you’re seeing the 2.5, 2.8, 2.9, I mean, it’s sitting. They’re not selling. The other thing in our market right now, and obviously you’re a resident and you live in the area, you’ve probably noticed rental signs, there is a ton of them. The rental market is literally gone flat. And it actually started going flat after late in spring, early summer. I had properties that I listed last year in four days that it took me four weeks this summer. I have stuff that I have listed right now, rentals, for less than what people got last year.
Patrick: Yeah, so the rental market is… And what’s attributed to that is, in my opinion, is you had such a crazy spring market, people buying, foreign buyers, investors, so they bought, they closed late spring, early summer then all of a sudden they stick their house on the market to rent. And if you look at my rentals right now, out of the four rentals I have, three of them are foreign investors. So those are people, when you throw on that much product, I mean, I’m looking at Leaside in general right now, I haven’t run the numbers in Davisville in about three or four days, but if you look at Leaside in general, I just ran the numbers last night, there is 23 listing’s for rent. That’s a lot.
Jeffrey: That’s a lot. In that market. And you consider that historically the rental market has been very, very tight. We hear it all the time, and there is not enough properties for rent. So when you hear that that’s an interesting option. Even potentially for somebody who’s maybe waiting to get into the market and looking to rent for a certain amount of time before they finally make the move.
Patrick: Yes, the condo market, again, the condo market is still hot if you’re looking at it from a rental perspective. You have a condo, you rent it, 1800, 2100, 2200, it’s gone. Houses, up to 25, 27 in the little bungalow’s, they sell. They go. Anything above 32, 33. You know, I have one right now at 43, I have one at 53, I have one at 65. They’re lying there. I have one listing, I listed it literally two weeks ago today, I have not had one jump.
Jeffrey: Wow. That is incredible, and when you consider market for high end rentals, some of them are you’re stuck between a rock and a hard place. When you get into one of these properties, you know 2.1, 2.2 and you’re looking to rent, you really can’t go much below that number.
Patrick: Yup, exactly.
Jeffrey: Fantastic. Well, Patrick, thank you as always. If people want to reach you, what’s the best way for them to contact you?
Patrick: They can either call me directly at my office at Bosley at 416-322-8000. Email is always the best, I have my phone attached at my hip, it’s firstname.lastname@example.org.
Jeffrey: Fantastic, and we will put those in the notes below this. Again, it’s been a pleasure and I really enjoyed our talk today. And we’ll chat soon and see how the fall market went.
Patrick: Thanks so much Jeffrey, take care, have a great day.
Jeffrey: You, too, Patrick, bye-bye.