Should You Buy A House in 2023?
2022 was a wild ride for Toronto real estate. Let's see what 2023 brings.
Well it's that time of year where every agent, economist, media outlet, and anyone who has ever had an opinion about real estate will come out and give their predictions of what 2023 will look like for the Toronto real estate market. There will be the bears, who have been calling for a crash for literally 20 years, and there will be the bulls who will say that the worst is over and prices will resume their two-decade long march upwards. And there will be the fence-sitters who will say "well, the market could go up if x, y, and z happens but prices could drop further if a, b, and c happens". Between you and me, those folks drive me crazy!
To be perfectly honest, it's really all just useless conjecture. I don't know why real estate agents are so afraid to admit that they have no idea what the market will do. Nobody can predict a market. And nobody has ever correctly predicted the Toronto real estate market, especially those who have been calling for prices to drop every single year for the past two decades. And yes, Toronto real estate prices dropped throughout 2022 (and in some areas outside the GTA, they've full-out crashed) but these perma-bears can't say they predicted this. You can't say "it's going to rain tomorrow" every single day for a year until it finally rains and then say "see, I told you so".
I'm not afraid to say it - I have absolutely no idea what the Toronto real estate market will do in 2023. Maybe I'm just too honest? There are some brave folks out there who are making pretty precise predictions about where prices will end up by the end of the year but to be perfectly clear, they're just guessing. Maybe they have to make predictions out of fear that people will think all that education, research, and experience is worthless if they can't foresee where the market will go. But I'd rather be honest and admit that markets will do the opposite of what logically makes sense. So why fight it?
Nobody (and I mean nobody) could have predicted the wild ride that 2022 gave us. From an unprecedented jump in prices in the first three months of the year, to an all out decline in prices the likes of which most of us have never seen. The narrative that resulted after all those Covid-19 lockdowns stating that cities were effectively dead and that suburban life would reign supreme for the foreseeable future has actually resulted in the exact opposite and caused an absolute crash in real estate prices in the suburbs in the latter half of 2022. I've seen 25% to 30% drops in the price of homes in many areas outside the Toronto core in places like Brampton, Mississauga, Oshawa, and Ajax. The Toronto core has more or less been spared from the most dramatic drops, with prices down around 10-15% from the peak depending on where you look. The downtown condo market has probably experienced the least pain, with prices hovering around 10%-12% below their all-time 2022 highs. Nobody was spared, but those predictions about everyone moving away from city centers and that suburban real estate would keep rising to the moon proved to be dead wrong. And those predictions have cost a lot of people a lot of money.
So why are we so obsessed with these predictions? If the media says prices will fall in 2023, will people actually not buy? When was the last time the media was right about the real estate market? And yet clients will quote headlines and say to me "did you read that article that said house prices will fall by X% in 2023?". If you've ever worked with me, you know that I don't read real estate articles. I purposely don't click on those headlines and make it a rule that clients who work with me are not allowed to read, send, quote, or refer to any real estate related articles while we are buying or selling together. We will focus on the information we have on the ground in real-time, in the sub-market we are working in, and will rely on this live, researched data while we buy or sell, and not fall prey to misleading click-bait media headlines that are driven by fear.
So back to the point of this post - Should you buy real estate in 2023? My answer will always be the same - if life tells you it's time to buy a house or a condo, and you can afford it, then that's the time to buy, regardless of what the market looks like. Buy whenever your life circumstances tell you it's time to buy. And sell when it makes sense in your life. Did you get a great new job? Or a promotion? A big raise? Or an inheritance? Are you getting married? Having kids? Have you been saving up for a down payment for years and finally have enough? Are you tired of paying rent? If life says it's time to buy, then we deal with whatever market we're in at that moment and we'll proceed accordingly. But don't wait to buy just because the market doesn't seem right. There is no "right" time to buy real estate. There will always be a hundred reasons why you shouldn't buy. Interest rates, bidding wars, falling prices, rising prices, elections, taxes, stock market crashes, recessions... No matter when you look in the past, there was always a reason why it was not the right time to buy. But anyone who has been waiting for that "right" time is still waiting. And they'll keep waiting while the market passes them by. I've bought several properties in the past decade or so and I never waited for the market to tell me it was time to buy. I bought when my life circumstances made sense to buy. If I had waited for the market to tell me it was the right time to buy, I'd own zero real estate today. Because the market will never be ideal. You just have to jump in.
2023 will probably be the most anticipated year for the Toronto real estate market in recent memory. Most of us (Realtors, buyers, sellers, appraisers, and mortgage brokers) have never been through a market like the one we're heading into. Is it a buyer's market, or a balanced market? Why are there bidding wars on some properties but not others? If interest rates finally stop going up, will that bring buyers back? Are buyers already planning to step into the market now that prices are down? Will sellers hold out on their price and simply not sell if they don't get their number? How will appraisals work in 2023? And mortgage renewals? Will the stress test finally change? There are so many questions that nobody can answer.
But here's what I do know - by the time the market bottoms (and it will eventually bottom) it will be too late for anyone waiting to get a deal or looking for that "right" time to buy. You can only see a market bottom in your rearview mirror. By then, the opportunities are gone. So maybe 2023 will turn out to be that opportunity buyers have been waiting for, and who knows how long that opportunity will last. Warren Buffet said it best - Be greedy when others are fearful. Will 2023 actually provide that "perfect" window so many buyers have been waiting for? Only time will tell. But you'll never know that it was "perfect" until it's passed. So what are you waiting for?
Have you checked out my previous blog posts?
Your Toronto condo lover,
iPro Realty Ltd, Brokerage
Direct: 647-223-1679 (call/text)