What’s really happening in the mid town Toronto Spring Real Estate Market

Patrick helps us dig deeper, beneath the headlines to understand what’s really driving the real estate market in mid town Toronto.

Jeffrey: I’m here today with Patrick Rocca from Bosley Real Estate. And given that it’s now spring, 2019, we’re gonna talk to Patrick about what he sees in the market for this year’s spring market and get underneath some of the headlines in statistics that you’ve probably seen throughout the last couple of months. Patrick, can you give yourself a quick introduction for our listeners?

Patrick: Sure. Good morning, Jeffrey. I’m Patrick Rocca, Bosley Real Estate here on Merton Street in the Davisville. The top agent in the Leaside, Davisville area. That’s about it.

Jeffrey: Fantastic. And Patrick, I know you’ve been doing this for over 26 years now, so you’ve had a lot of time to see trends come and go and understand, you know, the midtown market here in Toronto. So if we get underneath some of the statistics, basically, year on year, we’ve seen kind of flat in terms of price appreciation, up and down in terms of the number of listings, but really not reaching the highs of the spring 2017 market. Have you seen this play out in the midtown market here for this spring?

Patrick: Absolutely. Yeah, we have not. We’re nowhere near the high of the 2017 market. As a matter of fact, and I think we’ve discussed this before, we’ve been fairly flat since about June, July of 2017, you know, up 1%, down 1%, up 2%, down. We might be up maybe 1% since flat. Interesting stuff selling that you think will sell, some stuff that you think will sell doesn’t sell, takes a little bit longer. It’s just it’s all over the map. Although I’ve seen a bit of a bump in the past 7 to 10 days, interestingly enough. But I think I sent you a copy, “The Globe and Mail” article I was interviewed for last week that was done before Easter. And even since then, I’m starting to see more positive signs, not necessarily leading to price increases, but activity increases.

Jeffrey: Yeah. I’ve been seeing that just anecdotally as I drive around midtown neighborhood. I’ve seen a few more houses come on the market in a variety of different neighborhoods. And I think that the challenge for at least the sellers is that some of them still have those memories of 2017 and what they probably might have got in a split second for their property back then during that high time. And the other side is the buyers are thinking, “Well, it’s been two years. So surely prices have dropped and I’ve seen, you know, statistics that told me in certain areas, prices dropped 15%.” So are you seeing if there is a disconnect between what sellers are thinking their properties are worth and what the buyers are offering?

Patrick: Yes, totally. And I’ve been seeing that for quite some time, you know, interestingly enough, you know, not all sellers and not all buyers. I think buyers are, in general, may be coming back a bit because I think they may be and I use that term loosely. I realized that, you know, listen, we’re at the bottom and things aren’t going to really change much. Sellers, there still are some unrealistic sellers and, you know, I’m dealing with one right now quite frankly and it’s frustrating. But you are seeing, you know, realistic sellers, you are seeing realistic buyers. So, I mean, I think it’s getting a little better. Every time I think it’s getting better, it goes flat again. So I am very cautious when I make that prediction.

Jeffrey: Yeah. And are you seeing at the edges of the market a little bit more of a disconnect? So I’m thinking the top end of the market, so sellers and buyers are coming [inaudible 00:03:55] as well as the lower end of the market where, you know, folks that were kind of priced out of that entry home level are still thinking, you know, “I can get into this market because prices have dropped quite a bit.” Are you seeing that or is it more across the board that you’re seeing, you know, that there’s this disconnect?

Patrick: More so in the upper-end, sort of above…in our neighborhood anyways, above the $2.5 range. Like, I have the listing right now for, you know, $2.9 and we got an offer of $2.3 this week. I mean, that’s a total disconnect. You know, a $2.9 is a little high, yes. Is it worth $2.7? Absolutely, but, you know, don’t come in at $2.3, right? So yeah, we are seeing that disconnect.

The lower end of the market, you know, the stuff under a million dollars is flying off the shelf in East York, in markets like that. Even in, you know, Leaside, Davisville, we’re starting to see some good movement now on the semi-detached homes that are, you know, 1 1, 1 2, 1 3, so, you know, positive signs there, which is good.

So, I mean, the disconnect is more and I would think in the upper end. You do look at some of the upper-end stuff and it’s selling… I mean, I sold one for $3.4 million 10 days ago. So, you know, there’s movement.

Jeffrey: Yeah, the challenge with those upper-end properties is they are more exclusive and you have to find the right buyer for that property and they can sit a little longer while you’re waiting for that. And I know it depends on the sellers’ motivation, obviously, if they have bought during a period, you know, two years ago, when they paid top dollar and, you know, they have a builder and they’re doing a flip or they’re doing a new build, obviously, they wanna get top dollar for that property. Being two years on, I guess a lot of that is coming out of the market because the build cycle being what it is, two years to get a property from when you’ve purchased to sell is kind of long, but are you finding that most of those top-end properties are builder properties that they’re trying to put back on the market?

Patrick: Yes. Yeah, absolutely. And there is a disconnect there for sure. It’s unfortunate that some of these speculators paid big dollars two years ago, and obviously, from start to finish in terms of completion of a new product and then values dropped and then there’s definitely a disconnect there and I feel bad for these guys, but at the end of the day, it doesn’t change the value of a property.

So, you know, it is what it is. I mean, I have another example of a property that I had last May of 2018. And when I listed it, the seller wanted $2.7. It was a very unique house and he’s not making any money at $2.5. Like, at $2.5, I think he’s losing. So he wanted $2.7. I said to him, “You’re not worth $2.5.” I said, “We can try the $2.7, but if we don’t sell, you know, we have to reduce.” And anyway, the battle went on for a few months finally to a point where I just couldn’t work with the guy anymore because he wasn’t being realistic and he listed with another agent and it’s sad and it just came out yesterday at $2.499, the price that I told him last year. And it’s in Davisville and interestingly enough, I don’t know if it will sell at $2.499 now because of the history, because of, you know, a few factors, it’s a unique property. So those are the challenges we face.

Jeffrey: That’s interesting. And quickly to talk about some of the challenges selling projects which potentially have been listed before. Do you think that’s an issue for a buyer where if they see a property that’s been listed, it’s come off the market then dropped, is that something which plays into the buyer and the seller psychology?

Patrick: Yes, absolutely. You know, buyer sees it and, you know, they’re like, “Okay, didn’t sell at this price before and, you know, it’s on the market now, so the market really hasn’t changed and…” You know, I’m having this conversation with a client of mine right now where the listing is up for renewal and, you know, he’s still $150 to $200 high and I’m telling him… You know, he’s questioning whether he should extend or go with someone else. And I’m like, “You go with someone else but it’s not gonna help you because you’re still $200 high. You know, if you’re gonna go with someone else, you have to adjust your price, but I’ve been telling you to adjust your price for months.”

So, yeah. I mean, and then buyers see that and then it’s like, you know, they’re there for the kill, right? That’s why you start getting these $500, $600 under asking offers because, you know, buyers are looking for blood, right?

Jeffrey: Yeah. So the moral of the story is, understand the market, what people are paying for, similar properties, and price accordingly so that you can minimize time on the market and really just, you know, in terms of getting the right type of buyer in who’s going to wanna pay that price.

Patrick: Absolutely. And, I mean, there is more competition now too as you had mentioned. You know, since Easter, we’re starting to see more product. Right now, in Leaside, there’s 34 active listings. In Davisville, there is around 32. So, you know, if we went sort of 6 weeks ago, that would have been below 20. So there’s more to choose from and, we’re starting to see more buyers come out now too.

I mean, you know, everybody’s been saying, “Oh, we had a rough winter.” But you know, I don’t buy into that. I was selling stuff in February and March and, you know, doing quite well selling stuff and I don’t think the values have increased, but the one thing we are seeing now is we’re starting to see a few more, not a lot more, but more than two to four weeks ago, multiple offers.

I was involved in one the other evening. There was, you know, seven offers. It sold pretty much where I thought it was gonna sell. We’re starting to see some listings now that started off the year very slow and were selling under, we’re starting to see multiple offers on those. So I mean, again, as I said previously, you know, this is a good sign, but every time I get too optimistic, you know, things sometimes backfire.

Jeffrey: Yeah. And going back to that multiple offer situation, I guess, was that a property that was priced, you figure under what it was worth and so the multiple offers kind of brought it up to where you think it would have sold? Is that something which you’re now starting to see a bit more?

Patrick: It wasn’t under-priced, I don’t think. It was obviously attractive. Was it worth what it sold for? I hope a builder didn’t buy it because I heard there were some builders sniffing around it. My people were users. So, you know, they went to a certain point but they were just shy. I mean, was it worth the number?

I mean, you probably could have got that same house, you know, a month ago for $50-plus less. So, you know, it’s just because the multiple offers weren’t there as much. So it wasn’t under-priced to my opinion.

Jeffrey: Okay. That’s great, because I know from a buyer point of view, they look back to those days where, you know, folks would list properties, you know, 10%, 15% under what they thought it would be worth so they could generate interest get, you know, multiple bidders and bid the price up and kind of a feeding frenzy. We haven’t really seen that, you know, in the past couple of years, but, you know, it’s coming back to a certain extent, again, like you said for properties which are right in the ballpark.

Patrick: Yeah. I mean, and there are instances where properties are grossly under-priced. I mean, I haven’t seen anything really in the Leaside, Davisville market recently anyways. Actually, though, I did see one in Davisville last week where I thought it was a couple hundred thousand under-priced and it did sell for… You know, it was listed, you know, significantly under $2 million and it sold for, you know, significantly over $2 million, but it should have been…it was worth what they ended up selling for.

But I’ve heard stories, there was one downtown and I can’t remember exactly where it was that sold for, you know, it was listed for $800 sold for $1.6 last week, 20 offers. But I mean, you look at that and that’s got to be under-priced. It wasn’t done intentionally. I don’t know. Is that a faulty way to do things? It could backfire on you. But in this case, it didn’t, obviously, right?

Jeffrey: Yes.

Patrick: And again, that million-dollar mark, if you price something under a million and it’s a good product, I mean, you’re gonna do well and you should get multiples because that’s real sensitive hot price point.

Jeffrey: Yeah. And, you know, a lot of folks will see that figure and say, “Oh my God, the markets going crazy,” but, you know, that’s I think really an outlier from what you’re seeing in general. And so that’s, you know, getting beneath the headlines really says that, you know, that it’s not a multiple offer situation in the majority of cases. You know, and someone may say, “Oh, well. The top line is that house sold for double what it was listed for.” Well, you know, not really in terms of value. If the market kind of determines that’s value, it’s what it is.

Patrick: Yeah, exactly. And I mean, again going back to the sort of the headlines, I mean, I had this conversation with a reporter last week and a lot of the headlines again. This is not a new phenomenon that you listen to or you read these headlines and, you know, they’re not really a true picture of what’s going on in the market. You know, you’ve been hearing the recession word, you’ve been hearing…

I mean, I just don’t see that when it comes to, you know, our place in the market. I mean, are we heading into a fall election? Yes. Is there going to be, you know, some uncertainty? Absolutely. So, I mean, I’m telling people if you’re gonna sell, try to sell in the earlier part of the year because, you know, it’s gonna be an interesting fall election, I’m sure.

Jeffrey: Yeah, that’s exactly right. And again, it shows the value of having a realtor with experience in the specific area, because, whether you’re buying or selling…especially selling these days pricing correctly, understanding what buyers in that area are looking for is really key to avoid having your house languish on the market for months while thinking it’s back in March 2017, and it really isn’t any more. You have to have someone who’s in touch with the market and really knows the area.

Patrick: Yeah, exactly.

Jeffrey: So Patrick, if people wanna get in touch with you, what’s the best way for them to contact you?

Patrick: The best way is either by telephone at 416-322-8000 or always the best is email because I’m attached to my phone, mail@patrickrocca.com.

Jeffrey: Perfect. And Patrick, I’ll link that up in the description below this interview. Once again, thank you for helping us understand really what’s going on in the market from really in the trenches and below the headlines of what people read every day.

Patrick: All right. Thank you, Jeff, and you have a great day.

Jeffrey: All right. You too. Thanks.