Is Hope A Valid Strategy in This Market?

For all those condo sellers out there right now, hoping for the best is a recipe for failure.

Soooo...how about this Toronto condo market, eh? I've been officially selling real estate for 10 years now, and I was an investor (or more accurately, I purchased my first condo that I intended to hold "forever") several years prior to that. So I've seen the condo market go from a very small part of the Toronto real estate landscape that nobody paid that much attention to, into this beast of a market that is basically used as a barometer for the economic health of the entire country. I've literally heard people say "why would you ever buy a box in the sky for $300,000?!" back in 2010 to "you'd better buy that condo by any means necessary otherwise you'll never be able to own real estate in Toronto again" in early 2022, and everything in between.

I remember buying my first condo in 2011 when everything was priced at $299k with an offer date, and $350k was the number it took to get into the market. I remember when that first "nothing special" condo downtown sold for over $500k in early 2017 (my clients lost out on that one), and every single unit started seeing 10+ offers. I remember when $1000/sq ft become the norm quicker than anyone expected. I remember when the Foreign Buyer Tax was instituted in April 2017 by the Liberal provincial government that took the steam out right out of the condo market, only to have it start heating up again less than a year later. I remember when condo prices were jumping 10% per year, like clockwork, between 2018 and early 2020. I remember the pandemic when you couldn't give condos away. I remember early 2022, which was the absolute hottest (and most ridiculous) condo market I've ever seen (and probably will ever see). And I remember seeing condo prices start dropping in mid-2022 thinking "things will bounce back. They always do."

We're now three years into what some are calling the long predicted Toronto condo crash. There was a glimmer of hope in early 2023 when demand seemed to rise again and prices bounced. But that was short lived and it's been a slow and steady drop in sales, prices, and overall market sentiment since.

When will things get better?

If you know me at all, you know I'm the eternal optimist. When I invest in anything, I'm in it for the long haul. You don't make money by panic selling. You make money by buying and holding "forever".

But what if you have/need/want to sell? What's the right strategy to get your condo sold today?

Well, I can tell you this - "hope" is not a strategy. If your agent shows you hard data that says your condo is worth $550,000 today at best, the days of "trying" to get $600k are over. Listing this condo at $599k and "hoping" to get lucky or "hoping" to find the right buyer is a recipe for failure. Buyers have wayyyyy too many options. As a buyer, if you've got a budget of $550k today for a 1-bedroom condo downtown, you will be overwhelmed by choice. For years I used to complain (in my head, of course) that buyers were too picky. Well, now you can be picky. If you don't like the view, no problem. If you don't like the layout, no problem. If you don't like the building, no problem. I'll show you ten more options tomorrow. Feel like lowballing an offer? Go for it! As a seller, you have to take any offer seriously. Even if it makes you mad. Even if you think it's insulting. If you're on the market to sell your condo, buyers are in control. So buckle up.

I've been saying this for the past year or so - it's easier to sell a $1.5-$2.5 million condo than it is to sell a $550k 1-bedroom condo in Toronto right now. The high-end of the condo market is faring much better than the low-end, which probably seems backwards to most folks. But those buyers looking at $2 million condos are one of only two likely demographics - downsizers who aren't as focused on price as they are the right space, building, location, and vibe. Or high-income professionals for whom convenience, space, and luxury are paramount, and affordability isn't the issue.

So what's the demographic buying $500k-$550k condos right now? First-time buyers. That's it. Investors have all but disappeared and downsizers or high-income executives aren't looking at 500 sq ft 1-bedroom condos. The only buyers out there at the low-end of the market are the most price sensitive - and also the most afraid of making a mistake. And they're being oh-so-very patient.

So what do you do if you need to sell your condo in this market? It absolutely has to shine. All those little things that you could avoid doing in a hot market (like painting, staging, repairs, small updates, decluttering, etc) are now an absolute must. If your place doesn't shine, it won't sell. Plain and simple.

But above all else - price it right. Price it perfectly. There's no room for error. If your place could maybe possibly be worth $550k if everything went your way, don't take any chances. Price it at $535k and get out in front of the competition. Imagine yourself as a buyer, looking for his/her first downtown condo. You run a search on realtor.ca for 1-bedrooms or 1+dens up to $550k and you know what happens? Your screen is literally filled with "dots" on the map full of listings. So what do you do next? You lower the price filter. It's human nature. You keep lowering the price until the number of dots on the screen becomes manageable. And then you start looking for the best ones. That's what buyers are doing. So if you aren't realistic with your price, you won't even show up in their search. That's why price matters more than ever as a seller. If you're hoping to find a buyer for your $550k condo by pricing it at $599k to leave lots of room to negotiate, and "hoping for the best" or "waiting to see what happens", you won't even be seen. Because "hope" is not a strategy. What I find most challenging in this market is that in order to get attention, you have to be priced attractively (that's the easy part). But even still, buyers will negotiate. Because they know they can. So if you decide to price a little high in order to leave room to negotiate and ultimately land at your desired sale price, you may end up shooting yourself in the foot because buyers may end up passing on your listing all together as being overpriced. It's a conundrum all condo sellers are faced with.

As my dad always says, when markets recover, they recover fast. And by the time you're able to spot the bottom, it's always too late. Then, buyers will be afraid of missing out on the recovery, and you'll see market sentiment flip positive again. It will happen. It always happens. Markets don't stay negative forever. I just don't know when or how bad it will get in the meantime. So if you're a buyer, this is what you've been waiting for. This is what you've literally been asking for, for years. Lower prices, lower interest rates, zero pressure, ample choice, and room to negotiate. What more could you ask for? It won't last forever. It never does.

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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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