Toronto's Real Estate Magazine
First time Home Buyers:
Your opportunity is now - we may be a the bottom of the market!
WHY are we not seeing an increase in condo inventory for sale in the downtown core? In fact, for the past 5 weeks the number of condos for sale in the downtown core has been decreasing. Interest rates are up, consumer confidence is down and property is sitting on the market for longer so what gives? The answer is surprisingly simple.
Property owners are choosing not to sell and there are several reasons for it. First, the rental market is extremely
hot. Rents were depressed by Covid lockdowns and the evacuation of many people out of the downtown core
including post-secondary students. With lockdowns over, the city being back open and students flocking
into Toronto to secure a place to live for the upcoming academic year, the rental inventory is extremely low and
rents are on the rise. A 452 square foot one bedroom which would have rented for $1800 at the start of 2022 is
now $2400 and property investors who would have listed their property for sale in this softening market are deciding otherwise and opting to list their properties for lease.
In addition, there are 500,000 newcomers entering Canada this year and they need a place to live. Many have money and they are purchasing property while the rest are renting and adding fire to an already overheated rental market. The reality is, we are very much undersupplied for housing and we have been for the past 20 years. Demand, whether it be to buy or to rent, is keeping the combined sale/rental inventory number low and that is what is keeping the real estate market insulated from a further price correction.
Keeping track of inventory is the key to understanding the direction in which the market is moving. It is clear from the data shown here that there are more condos for sale downtown right now than there was pre-pandemic but with days on market increasing and the number of sale transactions down you would expect to see a steady rise in inventory numbers week over week.
But this is not the case.
A very strong rental market resulting from the re-
occupation of the city is driving more and more would be sellers into the rental business. Instead of panic selling, which would have resulted in a flood of property entering the market for sale, we are seeing a very rational approach from property owners taking advantage of a hot rental market. If this continues then we could very well be at the
bottom of the market right now.
Why is it a good time to buy?
There are less buyers in the marketplace as many enjoy the
summer holiday season and focus their energy elsewhere
and not in the housing market, inventory has peaked and is
now falling back in favour of sellers. Waiting until September
may result in less property for sale and more buyers entering
the market as the summer holidays end, which will be a
disadvantage to buyers.
Mortgage rates are expected to increase as well without the benefit of lower prices. Waiting to buy only to find yourself with less choice, a higher mortgage rate and all of this without a decrease in prices will not be of any benefit to you as a buyer.