With many of our clients and colleagues escaping to cottage country to enjoy the last stretch of summer, we offer our insights on the first half of the year, along with forecasts for the upcoming fall real estate market:
While the spring market found its footing, many watched from the sidelines in anticipation of a recovery and renewed growth. Buyers and sellers in Toronto were inundated with media rhetoric about deteriorating Vancouver property values, a volatile stock market, a shaky global economy, and an unstable relationship with the United States. With uncertainty at an all time high, it’s not surprising that real estate activity was muted as we all took time to adjust.
It seems, as we wade through the last weeks of summer, that the market has strengthened in the face of uncertainty. Both buyers and sellers are pushing forward. There are deals to be had for the active investor, and a well-positioned property will still generate competitive offers, while ill advised sellers are having to re-strategize and re-adjust. As always, an experienced advisor is invaluable.
Markets are stabilizing across the country, and confidence is building that we have passed our cyclical bottom, and are in the midst of a slow, stable recovery: all eyes are on the upcoming fall market.
July sales in the city of Toronto were up 24% over 2018, with the average selling price increasing by 3.2%. Sales growth has outpaced the supply of new inventory – and with no real strategy in place to add to the city’s housing supply, market conditions are expected to continue to tighten.
Concerns surrounding the economy, both here and abroad, coupled with record high consumer debt are worth monitoring and could have an impact on investor enthusiasm, but for now we are anticipating a strong fall market as many seek to lock in a good deal, while others take advantage of a moment of stability to sell an underperforming asset.
With condos, semis and townhomes experiencing price growth across the GTA, detached homes saw a decline in average sale price of 9% year over year. The smaller properties – particularly condos- are often more affordable, offering less in terms of customized features and extravagances. There’s also more of them trading on the market, allowing for a clearer understanding of valuation. The larger, detached properties, particularly in the luxury segment tend to be more subjective in terms of their value, almost as if buying a piece of artwork. Valuations can deflate rather quickly – especially in markets propped up by psychological drivers vs. economic ones.
The upcoming fall market will be an opportunity to trade in a relatively stable environment, assuming investments are well positioned and handled effectively.
If you’re pursuing an acquisition in this market: research is incredibly important. There are various developments across the city that are offering sub-standard floorplans, finishes and building materials – these will drag down a portfolio and will not cash-flow well, nor will they provide strong value appreciation over time. There are also over-priced, underperforming multi-res and single-family properties in over-inflated neighbourhoods.
It’s important to work with an experienced team. Shifting markets present opportunities for well-advised investors. Contact your Landlord team today, and we’ll help you strategize for tomorrow and beyond.