July 2022 toronto real estate

Real Estate Market Updates

The July 2022 Toronto real estate numbers are in so it’s time to take a deep dive into what they really mean. But before I get into it, I want you to know that I don’t send these emails out to my clients the moment the numbers are reported. And the reason I don’t is because I take a good amount of time to analyze them and then provide my point of view. That’s the value I offer.

With over 13 years of experience in the industry and over $350 Million dollars of represented transactions, combined with my background in Finance (I was a Corporate Controller at a big ad firm before real estate), I’m able to give you the real picture of what’s behind the numbers and driving the trends. Let’s take a look.

The Overall Toronto Market in July

Let’s start with the obvious and something many realtors don’t want to admit. Month over month, prices are still coming down. I’m not going to lie to you and say they’re not – that would be foolish and unrealistic. I’m going to be honest with you and that’s that.

We are seeing a correction from the unprecedented times the pandemic brought on. The recovery from that time is affecting all areas of our life and real estate is no exception.

My mission is to always be honest and transparent with my clients about what’s really happening in the market, so we need to acknowledge that the market is in fact declining.

Now, how we interpret that decline comes down to your overall sentiment on real estate.

As I’ve said before, real estate buyers know that homes and condos are not traded month over month. So, while the month-over-month numbers help us examine the trends and better understand what’s happening now, no one is really losing loads of money by buying one month and selling the same property the next month.

I’m an optimist so I’m always looking for the benefit behind the numbers. And right now, buyers can rejoice. Buyers have been taking it as it has been served to them for a long time – not being in control, and not being in the driver’s seat. So, let’s let them have their time NOW!!!

But one thing to note about a buyer’s market, is that they tend not to last very long. Once all of the buyers out there realize how much control they have, they’re going to be flooding the market, and the tide will start to shift back to sellers. The real estate cycle continues to churn.

Before I dive into the market segments, I wanted to make one note to the sellers out there. Look at the glass as half full, not half empty. I hear so many sellers saying “I would have…could have…should have…” and even more about how much money they’ve “lost”.

But did you really lose it? I’m willing to bet the answer is no. You likely didn’t sell at the peak of the most recent market swing for one reason or another. Timing, the pandemic, work, vacation, kids – all these factors come into play when you consider selling. So STOP already!

Instead, I recommend you get a good home valuation now to see what your house or condo is worth. I bet you’re up from when you purchased it, right? Now that’s a better outlook – don’t get caught up in what could have been. Look at what you’re dealing with at this moment.

July 2022 Toronto Real Estate Numbers: Detached Homes

July 2022 Toronto Real EstateSo, this is the big headline we’re all seeing in real estate news this month. Every blog, newspaper and news broadcast has talked about this at some point or another.

A $400k price drop in year over year numbers. This one had me scratching my head, just like it did earlier this year when the numbers went UP by that much, month over month.

Earlier this year, the numbers skyrocketed in the detached market because of the number of luxury homes that were bought and sold month over month. It had everything to do with the volume of homes over let’s say $4 Million sold during that peak time.

Well, guess what has happened this time? The luxury homes market has come to a screeching halt! No one is buying ultra-high-end homes this summer and I’ve seen this firsthand.

Prices are dropping and the huge number of listings that were being traded at that luxury price point have essentially stopped. So, when looking at the detached market, we really need to take this into account.

Is there a decline? Absolutely. But it’s not as severe as the headlines are making it seem. Here’s why.

In July 2021, there were 32 sales over $4 Million.

In July 2022, there were 7 sales over $4 Million.

When you back out sales over $4 Million from both years, the average price for a detached home in Toronto in 2021 was $1,922,928.00.

And in July 2022, the average price for a detached home in Toronto is $1,843,304.00.

This means the actual year over year decline is only 4.14%, not 16% as the headlines are screaming.

So, when you go beyond the headlines, you get the real picture that impacts the majority of detached homeowners. There is still a decline, but it’s more in line with the other market segments and the general Toronto real estate market as a whole. Not just a massive drop in the value of detached homes.

This should really make you think about all those other blogs and media outlets that screamed the headline DETACHED HOMES DOWN OVER $400K! It is true? Technically yes. But let’s not be foolish here.

My advice for buyers: this segment of the market is still showing stability through this decline. Getting into the detached market isn’t the worst thing you can do. In fact, it’s actually the opposite. Get in now while prices are slightly down – it might be your greatest chance ever.

My advice for sellers: the sky isn’t falling. Don’t believe the headlines without looking at what’s really happening. The value of your home DID NOT fall by $400k. Breathe. Dig deep into the numbers and look at what’s happening in your neighbourhood, with comparable homes to yours.

July 2022 Toronto Real Estate Numbers: Semi-Detached & Row Homes

July 2022 Toronto Real EstateAs I’ve said before, the semi-detached and row home market is one that is impacted the fastest during interest rate hikes. Because of budget sensitivity, the rates impact buyers buying power the most here.

Month over month, prices are down 7%. The previous month they were down 4%, proving a faster decline within this segment.

But, year over year, prices are actually up 3%.

One of the big numbers to look at within this segment is the demand – year over year demand has dropped 22%, and month over month by 27%. This is a huge indicator of what’s fuelling the semi and row home market.

The expiration of pre-approvals is having a major impact here – either those buyers have already purchased and are now out of the market, or they’ve put a pause in buying due to their pre-approval at the lower interest rate expiring.

The number of new listings on the market is down a whopping 43% month over month, which is a huge indicator that sellers are willing to wait. They aren’t willing to get caught up in this temporary slowdown, and many have the foresight to see that once buyers realize now is the time to buy, they’ll be flooding the market again searching for inventory.

To further show how cautious buyers are being, the number of days on the market is up by 6 days month over month. Buying is still happening, but this is a good indication of buyer sentiment, and that they know they can take longer because time is on their side with sellers. The longer a home sits, the more likely a buyer will be to negotiate.

My advice for buyers: wait a little longer. There will be new listings coming to the market in the fall from sellers who are waiting. But if you see something you like, jump. Test out how motivated the seller is, and you might be surprised what you can get.

My advice for sellers: if you can wait to sell, wait. Wait even until early 2023 when the market will shift once again back to a seller’s market. Higher pricing, normalized interest rates and an influx of buyers will all be on your side.

Toronto Condo Market: June 2022

July 2022 Toronto Real EstateThe Toronto condo market is a bit of a mixed bag this month with both good news and bad news. The bad news is this segment is showing a steady decline in pricing month over month. But year over year, the condo segment is showing an increase in pricing of about 4%.

This month-over-month trend will likely continue over the next few months – the number of sold transactions year over year has dropped by 45% – that’s a huge number, proving that buyers are definitely pulling off of the market.

What’s the reason behind this? Interest rate hikes – this pushed people into a wait-and-see holding pattern. And those that had a pre-rate-hike approval in hand are now out of time. They’ve either purchased already or those pre-approvals expired.

Month over month, we saw a 20% drop in transactions. But it’s summer, rates are up, it’s really our first full post-pandemic summer without restrictions and people are LIVING! Is this expected? Kind of, yes. But this much? Not really.

Listings month over month are also down by 27% proving that those looking to sell to make a maximum ROI and not because they “have to” sell, are either pulling their homes off of the market and waiting or turning their properties into rentals due to the skyrocketing rental market.

My advice for buyers: rates are likely going to go up again, so buy now. The wait and see model might bite you in the ass so it’s time to get looking. Sellers may be motivated so it’s definitely worth the shot.

My advice for sellers: seriously think about ways to keep your condo and turn it into a rental. The historic demand for rentals is happening right now, so here is your chance to grow your real estate portfolio by becoming a landlord for the first time.

A Note About the Rental Market

The Toronto rental market is on fire and I’m sure you’ve been hearing this from all sources. Multiple offers, rentals going for well over ask, and listings being rented in less than a day are currently the norm in this market segment.

The average GTA Condo rents are up 8% or $200/month in the past two months and are up 19% year over year.

A 42% share of units leased in July went for over asking rent and the average days on the market fell to a record low of just 9 days.

Considering getting into the condo investment world? NOW is your time.

If you’re thinking about buying, selling, or investing and want to discuss strategies, pricing, timing, or anything else, simply complete my form on this page so I can get in touch with you right away. I’d be happy to answer any questions about the June 2022 Toronto real estate numbers you have or about the Toronto market in general and share my insights on what’s to come later this year.

~Romey Halabi
Founder & Lead Broker, Toronto Realty Boutique
416-999-1240