If I Had A Crystal Ball

That is what I think and sometimes say to the question, “How is the Real Estate Market going to be this fall?” There is definitely uncertainty and the high end of the market has not been immune either. Buyers have become more trepidatious and less willing to be impulsive when their financial portfolios have taken such a hit lately.

We all love a good story, so the media likes to fuel this fire and present the public with stats that often aren’t relevant or need to be taken in context. When we hear figures quoted nationally and neck-snapping headlines that follow they are good to note and follow along with, but how relevant are the sales in Saskatchewan to those in Davisville? We need to take a more focused approach and be concerned more with what’s happening on a micro-scale rather than take the macro-outlook. When discussing home prices, Toronto really needs to be looked at as a collection of communities where pricing and market characteristics can differ greatly, even if you just cross the street into a new neighbourhood.

This fall we expect buyers and sellers to have a wait and see attitude for Toronto real estate. This is natural as Canadians are generally a “wait-and-see” group anyways, but especially after the extremely frothy market we experienced calms down for the first time in recent history.

Concerns over interest rates and higher borrowing costs are of course weighing on people’s minds as well, with at least one more hike expected before the end of the year. This is why in conversations with clients I try and put into context that although rates are rising, historically speaking they are still comparably low. As shown above, it wasn’t until the 2008 Financial Crisis that rates dropped below 2% and since then central banks have been steadily raising them. When the pandemic started rates were once again slashed to near 0% to buoy the economy and financial markets. Now they are being raised, albeit it rather sharply, back to more sustainable levels.

This fall we expect to see a more reasonable market in which there will be bidding wars and also some homes listed with “offers anytime”. The market is not in freefall but we are going through a period of adjustment where buyers and sellers will be on a more even playing field and investors may have to temper expectations for the time being.

Commentary by Joseph Robert, Broker of Record