Is Real Estate in 2018 looking like 2017?
If you were tuning into the Toronto Real Estate Market in spring 2017, you probably remember the multi-digit price increases month over month. Now that its cooled down somewhat, have more balanced conditions returned? Patrick Rocca of Bosley Real Estate gives us an overview of the beginnings of the 2018 Toronto Real Estate Market including specifics for Leaside and Davisville.
Jeff: If you’ve been in the Toronto real estate market over the past couple of years, you’ve seen ups and downs especially over the past year. If you’ve been a buyer, the last year has been, let’s say, tumultuous with multi-digit price increases over the last spring, and then a bit of a slowdown over the fall as new regulations came into place. Now, as the federal government has introduced some more regulations intended to protect house buyers, the market has gotten off to, let’s say, a slow start. And I’m here with Patrick Rocca who’s going to tell us a little bit about this year’s spring market as it’s been developing and the end of the 2017 market. Patrick, can you tell our listeners if they’re not familiar what you do it Bosley and how long you’ve been in the market?
Patrick: Sure. Thanks, Jeff. I’m Patrick Rocca with Bosley Real Estate here in Midtown Toronto. I specialize in the Midtown area, specifically Leaside and Davisville. I’m the top agent in that area. Been doing this for 26 years and yeah, I’ve seen lots of ups and downs and tumultuous is a good word, Jeff, that you used about last year because it was an interesting one, probably, one of the more interesting years in my 26 years of being a realtor.
Jeff: Yeah. Definitely, and I know that a lot of sellers were enjoying the market, which was absolutely crazy in the spring, and let’s just say it wasn’t a balanced market with prices even rising week to week. People were not really knowing what the price step their property at, and for buyers, it was really discouraging. I know that I talked to a couple of folks who were priced out of the market, and then some more balanced conditions came in towards the end of the year. Now, starting off in January, I’ve seen some studies, which just came out in the last day or so, which says that the home sales for everything, but semi-detached houses, were actually down in the first half of the month, but what those numbers don’t really tell us are the prices from year to year. And I was wondering if you could talk a little about that from what you’ve seen in your experience?
Patrick: Well, honestly, I mean I think we have this conversation every January and it’s actually… I mean, for those who are new in the business and these new realtors that I’ve heard talking about the market, that they don’t have the experience or the knowledge. But, I mean, listen, it’s January. Let’s be honest. January is always a bit slower especially in the first half. And, I mean… and I’m not using the exact numbers, but I think as a firm maybe we had 15 sales in the first half of last year and this year we have 10. You know, but things change. January, like I said, is normally not a bread and butter month in terms of selling as a realtor or as a seller. Great time to buy if there’s something on the market, but the reality is, is we had… Let’s be honest, we’ve had a pretty, pretty crappy January and December weather-wise. I mean, it’s been cold, it’s been snow. That all has an impact on the market. You know, we had the stress stats that came in which personally, I think a little overrated. When I say a little overrated, I think the stats or whoever brings out these stats were saying that, you know, it’s gonna affect 5% to 10% of the market. I mean, quite frankly, 5% to 10% of the market probably shouldn’t have been in the market. This is strictly a supply and demand issue.
We have no supply… I mean, there has not been a listing in Davisville or Leaside of any sort of good for the last two weeks. I’m bringing mine out tomorrow, I haven’t looked yet this morning, but there hasn’t been anything. And that’s not untypical for this time of the year. Then you’ve got the interest rate hike. Again, rates are still low. You know, everybody starts blowing that up. Yeah, it’s gone up a quarter of a point, but hey, listen, it’s gonna probably go up one or two more times. So, if you’re a buyer, you probably should get into the market now. But yeah, I think the January stats are gonna be down over last year, but let’s be honest, last year was unprecedented. It was outrageous, it was unsustainable, and you gotta throw last year out the window, and you gotta look at, you know, this year as being a normal market. We’re back to normal, you’re not gonna see 30% increases in the first three months. I mean, I think we’re gonna be at that 4% to 6% increase for the year, which is healthy.
Jeff: Yeah. That’s definitely healthy, and it helps both buyers and sellers know a little bit more about the product that they’re looking at, and as well as being able to get a realistic idea of where they’re going to be, and to, you know, think about the actual house as a place to live not just as an investment or something to flip. I know that a lot of folks were talking about, you know, “Wow, if get in and, you know, I see a 30% price increase ,then I just have to sit on this for a year, and then I can unload it.” And that’s really not healthy for the market. It’s not healthy for the city.
Patrick: Yeah, and I know many, many people who thought they were gonna get into the flipping business, very much like the stock market, right? Everybody thinks they can make money when things are hot, but then the things cool down. I mean, you have people that bought houses in March of last year, and they’re trying to sell them now or resell them. And, you know what? Hey, listen, you paid and you’re gonna hold onto it now. Because, you know, real estate in general, in my opinion, is a buy and hold. You will always do well, but, you know, these people who try to get in, and are trying to flip. Yeah, it’s not a good time for that.
Jeff: So, some more of the stats came out towards the end of the last year, and they’re saying it’s more of a buyer’s market now in terms of what’s available throughout the Toronto market. In terms of Leaside, Davisville, would you say that’s the case?
Patrick: Too early to tell. If I had to guess and if I had to bet, which I’m not a gambling man, I would say like number one, too early to tell, and number two, I don’t think it’s quite turned that way yet. Again, I mean, again, without repeating myself and sounding like a broken record, it’s all about supply and demand. There is no supply, you know, there is a ton of demand, there are buyers out there that want to buy. I think what’s gonna be really the telltale is in the next 14 to 30 days, when products start to come out, what will it sell for? I mean, I have a couple of properties in particular that will come out in the next 10 days and, you know, I have an idea where they should sell. And if they sell for less, yeah, you know what? Maybe things have changed a bit. If they sell for what I expect or more, you know what? We’re good, from a seller’s standpoint. But I mean, I think, you know, it has cooled a little bit, and there are some buyers that are a bit more apprehensive, but I think we’re gonna be in a good market. But like I said, too early to tell. It’s literally, you know, third week of January. I think if we look at the market sort of after Easter, after March break, it’ll be a better indicator of what’s happening. But I suspect we’re gonna be fine.
Jeff: Yeah, and it seems like things are starting off a little slower this year, like you said, only three weeks in. It’s too early to tell. In some years, the spring market starts, you know, very much second, third week of January where we are now. But as I’m driving around, I hardly see any houses for sale. There’s a couple left over from 2017, but in terms of new things, I’ve seen maybe one or two in this neighborhood particularly.
Patrick: Yeah. Very, very little…the stuff that’s been left over from 2017 is a lot of those people that got caught paying too much, and developing and they were trying to flip, and they’re just overpriced. And, yeah. I mean, I think…and I was interviewed for a “Globe and Mail” article a week and a half or two weeks ago, and I commented on this at that point. I mean, I think sellers too are, you know, they’re cautious. I have a couple myself that are saying, “Well, let’s see what happens with the stress stats.” I think what’s gonna happen is, is that you’ve got these sellers who are waiting, and seeing, and they’re gonna see that, “Okay, you know what? Really, there hasn’t been really that much of an impact.”
And then they’re gonna throw their houses on the market, and we might end up with a few extra houses on the market, and more competition for the sellers, and maybe a little bit more to choose from, from the buyers. But I think at the end of the day, again, supply and demand. I don’t see it being a glut of houses coming on because people have figured out that really, all this stuff has had little impact. I just think that there’s a little bit of caution in the air, but I think people are realizing that if we’re gonna do it, let’s go ahead. And there’s buyers out there. Trust me, there’s buyers out there. We’re seeing multiple offers in some cities, very few situations because there’s been very little on the market, but, you know, condos are still rolling. It’s crazy. I mean, I’m listing a condo this week, you know, in early fall, we were talking literally $75,000 to $100,000 less in list price, and now, we’re up because of where the condo market has gone.
Jeff: Yeah. And even if you take a long-term view of it, if you look back, say, to January 2015, just three years ago, you know, you’ve seen prices increase 30%, maybe 40%. I don’t have the exact figures, but that seems about right. So, you know, we did see a bit of a correction from the highs in the spring market. But, you know, in terms of January to January, we’re still up, you know, double digits, and that’s something to look at when you’re spending over a million dollars on a property as you do in this neighborhood. That’s a significant amount.
Patrick: Oh, totally. I mean and these people are like, “Wow! Well, the market’s down 15%.” Well, it’s not. It was up 30%, and it’s down 15%, so you’re really net 15%. And it’s… You know, tell me where you can get 15%? I mean, and that’s not gonna happen again. I just don’t see it. And if it does, great, but, you know, we’re still up. And I mean, I think the stats for the city for the greater Toronto Real Estate Board was like eleven point something percent. I think if you look at the neighborhood, I mean Leaside, Davisville. It’s closer to 15% increase year over year. But you will see January stats, you likely will see February stats that will be lower than January, February of last year, and, you know, of course, the media will put a negative twist on that, you know, that the sky is falling. But the reality is, is that last year was unprecedented. And again, values went through the roof and unsustainable.
Jeff: Yeah. In terms of people who are getting into the market the first time, you said that the condo market is up. Do you see that as a reflection of people saying, “Well, I definitely can’t afford that single detached home right now, so maybe I will go into a condo, and I’ll do the property ladder a couple times before I actually can get into a house.” Do you think those people are taking a good approach or do you think that the market for houses is moving too far that those people will be stuck in a condo considerably for the foreseeable future?
Patrick: I think there are some people that will be stuck in a condo. I mean, quite frankly, if I look at my buyers, my buyers that I have are not saying, “Okay. Houses have gone up 30% so I’m going to buy a condo.” I mean, that’s not my market. I mean, the reality is, is if you’re a family of four and you wanna buy a $3 million house, you’re not going to a $2 million condo because the house has gone out of reach. You’re going to a $2.5 million house. I think that the condo market, in my opinion, is driven by the millennials, the people who couldn’t get into the housing market, aAnyways, but you know what? They can afford a condo. And if you look at that sweet spot for the condos, it’s five, six, seven, you know, those condos are moving because you can’t really find anything from a housing standpoint for under a million. I mean, you can, but you have to move to like various areas…like areas outside of the core. And there’s good value. I mean, if you look at East York, and if you look at some of these other areas east and west, there’s still some good value there. And that’s what some people are doing.
Jeff: Yeah. And, I think that, you know, in terms of a lot of other folks moving farther out past the G.T.A., that sort of thing. It’s still a factor although those houses aren’t the bargains that they used to be, you know. I’ve heard from people that moved to Hamilton, and prices are rising in Hamilton definitely, Oshawa, Whitby, that sort of thing. So, there’s obviously the trade-off that you do in terms of, if you work in the city and you live outside of that. But I do think that a lot of people are saying, “Well, Toronto is definitely getting to be a very high-priced house market, and not dissimilar to other markets around the world.” So, is there a way that either we could live with less space or change our view of what living is like, so that we could maybe offset some of that by living closer to where we work in the city?”
Patrick: Yeah. Exactly. And I’m seeing that as well. I mean, the reality is people that wanna live in the city and they’re not all sort of saying like, “I can’t afford this. I’m moving out to Brooklin, or Whitby, or wherever, or Hamilton for that matter.” Although those markets are very, very high as you said. I mean, they’re staying in the core and they’re just sacrificing. They’re buying something a little less. And like I said, in my market, they’re not going to a condo. I mean, the people in my market that are going to a condo are the people that are selling their big houses and downsizing. And a lot of those people sometimes aren’t even going to a condo, they’re going to Niagara on the lake, and they’re going to Prince Edward County, they’re getting out of the city.
Jeff: Yeah. And, you know, one of the things that we wanna see in a healthy market is a good amount of supply and definitely balanced activity. So, if you had to give a forecast for the next few months, what would it be?
Patrick: If I had to give a forecast, I mean, personally, I mean, like I said, I’ve been doing this for 26 years. I think it’s going to be a healthy spring. I don’t think we’re gonna see crazy, crazy bidding wars. Are we gonna see bidding wars? Yeah. We’re gonna see them. I don’t think they’ve ever gone away for the past few years. I think it will be healthy, I think it’s a great time to buy if you look at this time last year. And if you’re a seller, you gotta be realistic. Listen, I mean, your standing point was 1.5 last year. Well, guess what? It’s not this year. It’s 1.2, 1.3. So, you gotta be realistic. And buyers, they have to be a little bit realistic too. Like I said, in the fall, I think when we talked, there were some buyers out there that were seeing blood in the water, right? I think we’ve had that correction and I think that the buyers that are realistic, there’s gonna be some good opportunities.
Jeff: Fantastic. Well, Patrick, as always, it’s been a pleasure chatting. And if people need to contact you, what’s the best way to get a hold of you?
Patrick: They can call me at my office, 416-322-8000 or email email@example.com.
Jeff: Fantastic. Thanks. And I know we’ll chat again soon.
Patrick: Absolutely. Thanks, Jeff. Happy New Year.