Trish Bongard Godfrey

Toronto's Record Breaking Year-End Sales Summary

18 January 2017
Trish Bongard Godfrey

Happy New Year. I hope you have had a good start to 2017. It would be folly for me to make any big predictions about President-elect Trump and his impact on real estate or anything else. I think we can agree that uncertain, unpredictable, and unconventional are terms to describe this man. And while businesses (and many ordinary humans) tend to want predictability and stability, there is certainly a big part of the world that is unhappy with the status quo. The stock markets seem happy with him so far, but we have a divided world.

On real estate. I didn’t go to Trump’s "real estate" university, but I do know that they aren’t making any more of it – at least here in Toronto. My current observations:

THIS MARKET WON'T LAST: In Toronto, we currently have about 50% less inventory than we had a year ago. Average "days on market" (time to sell) year over year has dropped 31% to 20 days. The average price is up by 20%, year over year (2015 | 2016.) Unless there is more inventory, this market - at least for single family homes - is going to become very, very tight and grind to a halt. Obviously, If you are thinking of selling this year, now is a good time.

SHARING IS CARING: Young buyers are often relying on the "Bank of Mom and Dad", and so Mom and Dad may be downsizing earlier than their parents did - in their 50, 60's and 70's in order to secure gains made in their housing portfolio and help their kids with their home purchases. Empty-nesters will downsize from the family home into a smaller home or condo, and provide large down payments for their children's homes.

MOST TORONTO CONDOS ARE NO GOOD FOR DOWN-SIZERS: Condo builders have been too focussed on building the wrong size condos. It is hard to move from a 3 or 4 bedroom home with a fully loaded basement, parking, garage and outdoor space to a 1,200 sf, 2 bedroom condo with a 4 x 6 locker for granny's china and all the kids report cards. Are these folks are staying put or buying a country home? Both. And they also plan to rent.

BUSINESS IS WORRIED: Anecdotally, I have had this conversation a few times. Last weekend it was with a seasoned, wise, senior partner of a boutique law firm. It went like this: "We had a meeting of our partners this week. For the first time ever, we discussed Toronto home prices. We said: What are we going to do for them (referring to staff and junior associates)? We can't pay them more. We're worried we can't attract people to Toronto because they can't afford a home". And if law firms are worried, what about the trades and service industries?

LOOKING GOOD MATTERS: Buyers are no less eager than they were. Houses cost a lot, and buyers still want to know that they are getting good relative value. So for sellers, you need to know that buyers still want"sizzle and steak". Thus, despite the fact that most homes sell in record time, the real estate sales fundamentals still matter. Accurate pricing, targeted marketing, sound home preparations, home inspections, staging, feature sheets, advertising and marketing, floor plans, professional photographs, agent (and public open houses). Both buyers and sellers need representation by a good realtor who has strong negotiation skill - just as much now as they would in a slow market - if not more.

Here are the stats that matter: