July 2022 Real Estate Market Update
Overall, in Toronto and GTA sales were down 47% from same time last year. Market had the lowest sales volume in 20 years for the fourth consecutive month.
What is causing this?
Many buyers are sitting on the sideline as Bank of Canada is continuing on raising interest rate. This upward trend on interest rate is not an ideal environment for buyers as their budget and monthly carrying cost is changing rapidly. I expect once Bank of Canada stabilize their interest rate hike and reach neutral rate, buyers will have to re-baseline their budget and start searching for properties at that time. This could be sometimes in late fall to early winter.
Average Selling Price
For the first time this year, average selling price is down in some areas compare to last year this time. Most notably the historically resilient Toronto detached properties average selling price is down 7% compared to last year. You can also see in the graph below the average selling price comparison on a monthly and yearly basis.
We saw new listings went down compared to last year which is interesting in this market. Usually when housing market crash, inventory goes up and new listings flood the market, we haven’t seen this yet. what we are seeing is that properties take a lot longer to sell and its not because buyers have tons of options to choose, its because majority of buyers are sitting on the sideline and waiting to see what will happen with overall economy and inflation .
What to expect in the coming months?
As a seller, your expectations need to be adjusted based on the market condition. Days on the market will be much higher than what we are used to for the past 5,6 years. There are still buyers out there but as a seller you need to be more patient until the right buyer come across your property. It’s a lot more important than before to prepare your house well for selling, such as up keeping of the property, cleaning, and staging. Be prepare to adjust your price accordingly and don’t expect that you would get many offers and bidding wars.
As a buyer, market is in your favor, you have more room for negotiation and more selection of homes. We are seeing a lot of conditional sales so as a buyer you may not need to go firm on all properties. You have to make sure you can afford the purchase price based on the higher interest rates and it’s a lot more important than before to think long term when you purchase your property because market will be volatile for the next little while so it’s important to have a longer term outlook to avoid any loss in the short term.
If you are planning to upsize or downsize or relocate, strategies have completely changed from 4,5 months ago. Before, you would buy your property first and then decide to sell but in today’s market you have to sell first and then buy. I’ve seen a lot of people ending up with two properties on their hand and have to let one go with by either selling their current property at a loss or losing their deposit on their new purchase.
It’s important more than ever to work with someone who can navigate the volatile time head.
I hope you enjoy the rest of your summer,
P.S If you are thinking of buying or selling a property or thinking of investing in real estate, get in touch with me or book a 15 minute consultation with me by reply book to this email and I ll be glad to take you in depth of the market condition and plan out a strategy that best suites you.