Is This The Hottest Condo Market Toronto Has Ever Seen?
This could very well be the best seller's market Toronto has ever seen.
Do you remember what the market was like around this time in 2017? Feels like an eternity ago but I remember it vividly. It was chaos. There was no inventory. Everything was selling within days of hitting the market (houses and condos) and oftentimes if you weren't in to see a place within 24 hours of it hitting MLS, it very well could have been sold by the time you got there. It was common to see 10, 20, even 30 offers on every single property. I still remember that 1-bedroom condo that was listed in March 2017 near St Lawrence Market that really solidified how bonkers that market was. I think everyone saw that unit because it felt like it was the only 1-bedroom unit available in the whole city! 30+ offers later, it sold for just over $500k. I had clients who bid on it. And we weren't even close. At the time it was insane to think that a 1-bed unit, in that building, at that time, would sell for over $500k. Everyone was blown away. (Side note - as ridiculous as that sale felt at the time, that same unit would probably sell for very close to $700k today. But I digress).
Over the span of three months in early 2017, the condo market rose an astonishing 20-25%. I could literally see the prices changing week to week. I was having to reset my buyers' expectations on price every time I saw them. I was writing up offers for condos before we even visited in person, just so I could save that extra time in case they wanted to make an offer on the spot, because even saving that hour or two could mean we get our offer in and accepted before anyone else. I'd bring my laptop everywhere, with offers pre-drafted, ready to e-sign and submit within minutes of visiting a unit.
And I'm not gonna lie, I hated it.
The constant running around. The feeling like both myself and my clients were always on call. A unit would hit the market, and we'd run to see it within hours. Agents hated it. Buyers hated it. Sellers couldn't keep up.
All that craziness took a breather in April 2017 when the provincial government put forward the (mostly useless) foreign buyer tax in the GTA and surrounding regions, and while the tax itself wasn't the reason for the slowdown that immediately followed, the idea that the government was willing to get involved to do something to try and stop a runaway market was enough to take the frenzy out of the air and caused buyers to take a step back. The government announcement of the tax was really just a psychological gesture, but finally everyone could breath again. At least for a little while. Things in the market picked up again rather quickly (condos in Toronto actually recovered faster than freeholds, and the suburban freehold market never actually recovered until the market upswing of 2020) and while it was never quite as hectic again at those few months in early 2017, it has certainly come close from time to time in the years that followed. It's Toronto after all. When have we ever really had a "slow" market?
But enter 2022 and I'm getting serious flashbacks of 2017 all over again. The same frenzy. The same torrid pace. The same rapid price increases. The same sense of urgency. Could it actually be worse this time around? I honestly think so.
Here's a quick stat - condo prices in the core of Toronto are up anywhere from 8-10% from November/December 2021. Yup, you read that correctly. Condo prices in the core of Toronto are up 8-10% in the past three months. Freeholds? Add 10% to any sale you saw in December 2021 and that's where the market is today.
Two weeks ago I sold a studio unit to an investor client for $500k. His original budget was $475k and on our initial phone call to discuss his plans just the week prior, I said "$475k will get you a studio without any issues. Let's go shopping". I was wrong. $500k might get you a studio today, even though the identical studio may have sold for $465k in November 2021. Which is exactly what this client and I discovered as we started hunting. Fortunately he adapted very quickly and said "well, that's the market. I guess we're spending $500k". These are the buyers that succeed in Toronto's real estate market.
The same night I sold that studio, I was taking offers on a listing I had in a very popular King West building. This was not a starter condo. It was a nearly 800 sq ft 1+den with parking+locker that would attract the usual banker, lawyer, tech crowd who wanted to be in the center of everything and who were willing to pay for that privilege. I had discussed expectations with the seller beforehand and every possible scenario saw us selling this unit for somewhere between $925k and maybe, just maybe, $950k. That would be a big number. I remember ending that conversation with the words "but the market is on fire. So you never know".
50+ showings over 6 days, 5 offers on offer night, and we sold for $1,005,000. Mind. Blown.
It's very easy to measure the supply in any given market by simply looking at how many listings are available. And while just looking at that number can never truly give you a real sense of how tight the market actually is, it's a really useful figure to start the conversation. January had the fewest number of active listings on record in Toronto. That alone is enough to see why the market has started the year like a bat out of hell. And while there's no way to accurately measure buyer demand in any reliable, quantifiable way, I can tell you that I've personally never had as many active buyer clients as I do right now. These are all fully pre-qualified, active buyers who have either made offers on places already and lost (but are still out there every day with me looking at places), or who are ready to make offers today when the right place comes along (and who have been out there with me every day looking - or at least whenever there's finally something to actually look at).
Inventory is staggeringly low. Demand is staggeringly high. And there's not a whole lot that is going to really change that in the near-term. We're used to seeing that in the freehold market. But it's now spilled over into condos. Inventory started drying up in December 2021 and it never increased into January 2022. So we've got a huge supply issue that doesn't seem to be going away. Nobody wants to sell. But buyers want to buy. So prices will keep going up. It's that simple.
If you're a buyer right now (and some of you reading this are probably working with me as we speak), strap on your seatbelt, put on a helmet, and get ready for a few bumps and bruises along the way. Stay aggressive, stay positive, but most importantly, stay in the game. Don't throw in the towel just because it's a tough market. That attitude could cost you in the long run if you end up getting pushed out of the market forever. I've said it before and I'll say it again - getting lucky is not a strategy to be successful. If your offer is mediocre, it won't have a chance. So you have to take luck out of the equation. But don't fret - more inventory is just around the corner. Watch.
If you're a seller and you thought about selling at some point in the very near future, now could be your window. I can honestly say that I've never seen a better seller's market in my career. You will sell for more than you thought, that's almost a guarantee. But who knows how long this window will last...
Have you checked out my previous blog posts?
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Your Toronto condo lover,
iPro Realty Ltd, Brokerage
Direct: 647-223-1679 (call/text)