How's The Toronto Condo Market?
There are certainly signs of life in the Toronto condo market. Will it last?
How about this weather, eh? I can't remember a longer stretch of near-perfect fall weather! One rainy day in two weeks? I'll take it. 20+ degrees in October? Yup, that's just fine. It's so Canadian to complain about the weather but this is one Fall where there is absolutely nothing to complain about!
While the weather has been heating up, so too has the Toronto condo market. But let's not get crazy. The condo market has basically sucked for the past 18 months. Showings have been down, sales have been way down, and prices have been on a slow and steady decline. But something happened about 3 weeks ago. Buyers started getting out there again and looking at condos. Showing activity spiked, seemingly out of nowhere. Properties that had been sitting for 30 days, 60 days, getting relisted over and over started to sell. I track literally hundreds of condos at any given time (if you think I'm joking, I'm not) and I noticed something unusual not long after the Thanksgiving weekend - more condos were selling than were being listed. Not everyday. But often enough that it's something that can't be ignored. There's s this metric in real estate called the "absorption rate". It basically gives you an indication of how many properties are selling versus being listed over a given time period. The higher the absorption rate, the faster properties are selling. And while I don't have an accurate number on what that figure is right now versus what it's been for the past several months, I can tell you that from my own analysis, in real time, things are moving again. And it's about time.
I have a bunch of condos listed for sale in the downtown core at the moment, and I can tell you first hand that I'm seeing more showing activity than I did a month ago. By a lot. And it started before that jumbo rate cut from the Bank of Canada on Oct 23rd. Buyers were already hitting the streets and checking out condos again, perhaps to get a jump on things before everyone else.
What I've also noticed is that a lot of these buyers are first-timers. The low-end of the condo market (call it sub $600k) was really struggling over the past year, as first-time buyers got squeezed with impossible-to-afford interest rates and stubbornly high prices, all while investors basically disappeared. But as prices started to fall, and as interest rates started to fall, the condo market started to look more attractive again. At least for folks looking to get into the market for themselves, versus as a pure investment.
I've seen 1-bedroom condos sell for under $500k lately. I haven't seen that since like 2017. And not every seller will let it happen. But these drastic drops usually happen when desperate sellers say "I want out at any price", and you find a capitulation point where the panic peaks, desperate sellers get washed out, and a bottom forms. There are enough encouraging signs that make me feel like this is what's happening right now (or what has already happened), and astute buyers are taking advantage.
Another encouraging sign? Condo inventory in the downtown core has not increased since the summer. In fact, since July 2024, condo inventory for sale has dropped about 12%. That's hugely important. To me it says that there is no (more) panic selling, investors are riding out this period while interest rates drop, and a lot of sellers are not willing to dump their investments if the market won't give them a fair price. I fully expected condos inventory to jump as we headed into the Fall market this past September. It didn't happen. And that's actually a good thing for price stability and a recovery. (Note: I don't include assignments in this inventory calculation because that's a market we will never have true visibility into. Assignments, for the most part, are not allowed on MLS. But if you're shopping for an assignment right now and not a resale, my only question to you is - why?)
Now I'm not saying we're back to "normal" times in the condo market. You remember those days, don't you? When you could know, within a few thousand dollars, what your condo would sell for, and you knew it would sell in under two weeks with near certainty so you could plan your next move. We're actually nowhere near that right now. But what I am seeing is more cautious optimism from buyers, especially first time buyers, who are slowly starting to realize that we may be at a point where condo prices stop falling while interest rates keep dropping. And at some point, you just have to take the plunge, take a stand, and ride the wave.
What will make me more confident that we've hit a bottom? When I see investors starting to shop for condos again. I've had a couple investor clients this Fall say "Adil, now's the time to buy downtown condos". And they have. I mean, the era of risk-free 5% GICs is over and very soon if you want to get more than a 3% return on your money, you'll have to start putting your money back to work somewhere other than your savings account. And I'm quite sure some of that money will flow to condos again. It always does. And when investors start doing the math, calculating their risk-reward ratios, and start nibbling at Toronto condos again, then I'll know the bottom is behind us.
I have a feeling we might be close.
Let's see if I'm right.
Have you checked out my previous blog posts?
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Your Toronto condo lover,
Adil Dharssi
Sales Representative
iPro Realty Ltd, Brokerage
Direct: 647-223-1679 (call/text)
Email: Adil@AdilKnowsCondos.com
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