Why Didn't I Buy When Nobody Else Was?
Is it possible to actually snag a deal in this market?
I've lost count how many times someone has called, emailed, or texted me over the past two weeks asking what I thought was going to happen in the TO condo market with all the craziness that's gone on so far this year. I've been asked by clients (past, present, and hopefully future) as well as some agents who aren't as focused on the condo market. Everyone has been wondering if things have changed in the mood of the market, and if prices have been, or will be affected. I obviously don't know what will happen over the next few months (nobody does) but I can say, with absolute confidence...It depends. And yes, I know you hate that answer, but hear me out.
"If you misprice a unit today, you won't get a bidding war. Period."
The past two weeks have been very interesting. There are many buyers out there (my clients included) who heard Kathleen Wynn's attempt to control the market on April 20th and have said to me "Adil, I guess this means we can start low-balling offers, right?" and "Do you think we can get a deal in this market now?" and "If prices drop back to 2016 prices, let's start buying!". But truth be told, the government didn't actually do anything other than make buyers take a short breather. The policies haven't changed the fundamentals of the market but I can see the psychology behind people looking for any glimmer of hope that prices will somehow magically drop overnight. I mean, it's kinda like the stock market. I'm sure nobody feels great about buying Google at $900/share* when it was $800/share not too long ago. But back when it actually was $800/share, why weren't these same people buying then? Once people saw the potential of what the share price could be, only then did $800/share look like a deal. But those days are gone. And realistically ask yourself, if Google does drop back down to $800/share, will you buy? Or will you wait for it to drop to $750/share? Or $700/share. What if it never drops? Will you never invest in one of the greatest companies in history because you don't want to pay today's prices?
Real estate is no different.
Of course you'd like to buy a 2-bed/2-bath, 900+ sq ft condo at The Berczy (where I live) for $750k today, but when it was actually selling for that price last year, do you know how many people told me it was overpriced?? Today, that same unit will easily cost you over $900k. And realistically, do you think the owner of that unit, who is without a doubt aware of the most recent sales and the market in general, would even consider anything less? I've had at least two clients this week try to convince me that the "market has changed" and that we should be putting in low ball offers on units. Units that are already under priced. And units that have offer days. I'm in this market every day and I have to remind clients that just because a unit is asking $699k, doesn't mean they will take $699k. Or even $750k. And it doesn't even mean they will even sell the unit at all if they don't get the price they think they should. And most importantly, we aren't the only buyers out there. Not even close. I mentioned in my previous blog that bidding wars for condos may soon be coming to an end but as of today, at least not yet, bidding wars are still prominent.
Yes, there are a lot more listings than there were a month ago, which is great. And yes, not every unit is selling on offer night. And thankfully, those days of 34 offers on a cookie-cutter unit are definitely gone. But there is still way too much demand, and way too many buyers, even without the ones who are taking a breather. If you see a deal out there, in this market, chances are so has someone else and seeing 3-4 offers on units is still very common. However, if a seller needs to sell, you can actually get lucky and pick up a deal or two in this market. Just don't be fooled into thinking you're the only one thinking this way. Yes, some units are finally selling below asking (what a concept, eh?) but the reality is those units were probably priced too high to begin with or there were finally other similar units for buyers to choose from. Just because a unit is holding back offers, doesn't mean it should/will sell for more than the list price. As a seller, if you misprice a unit today, you won't get a bidding war. Period. And you might actually be leaving money on the table if you deter potential buyers with a high list price. Timing is also crucial. If the unit below you lists the same day as you, there goes your competitive advantage and chance for a bidding war. So in these instances, yes, it is possible to actually buy units below asking, even if they are holding back offers. Below asking, yes, but probably still not below yesterday's prices! We have yet to see if the market overall will give up any of the incredible price gains we've seen since January.
"With more inventory, comes more balance, which is a healthy thing for any market."
Buyers finally have some choice in the market but even still, prices are holding steady, and in most instances, in quality buildings, prices are continuing to climb. With more inventory, comes more balance, which is a healthy thing for any market. But don't be fooled into thinking this means prices are falling. Unless we see a fundamental shift in the economy, interest rates, or policy that actually has a major effect on supply or local demand, there's no reason to think we will see "deals" anytime soon. At least with this new level of inventory, buyers seem to have a little more choice and a little more time. And hey, if someone really needs to sell, you might get lucky.
* - Google just hit $934/share today. What are you waiting for?
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