February 18, 2021 | Hot Market
Let’s face it: The Toronto real estate market of the last 20 years has overwhelmingly been a seller’s market. Not always. There were times when buyers stepped back. Recessions in our economy or the new government rules around real estate shifted the market, and caused prices to come down for a time. In the start of 2021, there is no confusion about the direction of the market right now – up. In most of the Toronto properties out there, the market has been hot. Very hot, in fact. Though condo apartments downtown had a rough go in 2020, they even seem to be showing some bounce back. Houses, condo townhomes – they are certainly showing us some sizzle so far this year.
But just how competitive has 2021 been? Well, let’s recap my past week or two: I have competed for a condo townhouse with 10 other offers, and a house off Queen West with 29 other offers. One house with 4 offers, and another townhouse with 6 offers. On another note, I had planned to show properties that had just come out on the market. I planned to see at least six listings that didn’t even make it to offer night because there were bully offers on the property within days, even hours of listing.
Needless to say, speed and competitiveness has been a hallmark of the 2021 Toronto real estate market. It’s not consistent. It’s not every property type in every neighbourhood, but if you want a house or a townhouse or even a great condo, you will be competing right now. So, I though I would offer up some advice for this kind of market.
Here’s my thoughts on how to slay the competition, if you choose to buy in fast moving market:
YOU DON’T HAVE TO
First of all, you don’t have to participate if you don’t want to. I know there are buyers out there who feel very uncomfortable competing for properties. They worry they are in a moment where the run-up in prices may go over a cliff and fall. They don’t want to buy at what looks like a peak. And they may be right. There could be a correction around the corner. Still, experience does tell me that it’s hard to spot a peak. You may be right by guessing a correction is around the corner, but I have been around long enough to know more buyers are burned by waiting for a better time than by having wisely or luckily spotting the peak.
BE BATTLE READY
Even if you are new to this market, don’t be rushed to buy before you’re ready. Educate yourself on the market first, and then be battle ready once you understand what’s available to you in your price range. You need to know how to spot what you are able to buy. Once you have that experience of seeing properties and finding out their sold price, then you’ll know first hand what the market is like. The MLS and House Sigma can only educate you so far. You need to physically see properties. Once you are educated, be ready to pounce! That means having your deposit ready at a major bank. That’s usually around 5% minimum in Toronto. Note that PC or ING can’t turn around a bank draft in 24 hours if needed. So don’t have your deposit parked there. Have your financing and home inspection and/or Status Certificate from a condo reviewed in advance of offer night. DO NOT jump at something that has not been properly vetted. If there’s a bully offer and you don’t have the time to have your finances figured out or the home inspection done, don’t jump in to buy it. If you are ready on all fronts, then you need to be strategic with your offer. This may be different for each property.
OLD SOLDS ARE NOT HELPFUL
In a fast moving market, looking at solds from 6 to 8 months ago may not give you an accurate picture of the CURRENT market. Sometimes it is wiser to go back just a mere month or two when things are changing quickly. Otherwise your offer may not be competitive or reflect the current state of affairs. In a fast moving market, you need to be aware of what’s happening now. Even some of the statistics and news blogs or articles on real estate are based on statistics from a month or two ago. Look at similar property types in the neighbourhood and see how things are performing recently.
BE AWARE OF YOUR CHANGING LIMIT
If you are looking for a property for awhile, then be aware that what you were looking at 6 months ago may be different from what is available to you now. The market might move, and you need to move with it. Don’t get stuck on what you think you deserve for your money or the amazing property you could have bought 6 months ago. The market does not care. It will only tell you what you can afford now.
PIVOT IF YOU NEED TO
If you’re not having much luck landing a property, you may need to pivot to a different neighbourhood, building, type of property. In a fast changing market, the worst thing you can do is lock on to a certain expectation and keep hoping for the best. That will only become an exercise in disappointment. Look at the solds and focus on the properties you can land. This is where you may have to be honest with yourself about your must-have and would-like-to-have lists.
Now before some of you start to worry that this kind of pace will be part of the market forever, let me assure you that it won’t. Markets shift and move around and react to everything around us: Interest rates, pandemics, recessions, new technologies. Markets rise and fall. According to the last 20 years in Toronto, the market does not fall for very long or for very much. Just note that every time the market becomes “hot” there is no guarantee this will be followed by a correction. Maybe. But according the last 20 yrs, probably not.