When we say there is no such thing as the real estate market, we mean there is no such thing as THE real estate market.
- There is the “detached homes over $1.5M in the Leslieville neighbourhood of Toronto” market.
- There is the “condo loft of over 1,200 sf close to a retail strip” market.
- There is the “townhouse of up to $850K in Markham” market.
- And countless more.
Location, housing type and price range all impact what’s going on in a specific real estate market.
At the exact same time we can significant differences in “the” market when we adjust just one of the attributes in question.
When we get into the specifics of any market, we start to see differences emerge, so let’s do a little exercise in looking deeper.
We will begin with “the” Toronto market and look at how busy it is these days. Here’s the last two months on a weekly basis for both freehold and condo listings.
This is “the” market that people talk about for Toronto as a whole.
It’s definitely picking up in Toronto as a whole. From about 150 listings near the start of May, we’re now up to about 1,500 listings in the third week of June. That’s about a ten-fold increase!
That’s one story. What about when we separate the Toronto market into the Toronto Freehold market and the Toronto Condo market?
Here’s the Toronto Freehold market.
The number of Freeholds in Toronto went from 45 at the start of May to 620 by the third week of June. That’s almost a 14x increase! By just focusing on Freehold properties, we’ve seen a significant difference from “the” Toronto market.
What’s the story with new listings for Condos in Toronto?
We had 104 condo listings come on the market at the start of May and in the 3rd week of June, we had 911 new listings for condos in Toronto. That’s a significant improvement, but it is a different story than freehold listings. We saw a bit less than a 9-fold increase in the number of new listings for condos, compared to almost 14-fold for freehold homes.
If you talked to two buyers in Toronto, one of whom was looking for a condo and one of whom was looking for a freehold home, they’d have different experiences about “the” market. Picture that conversation, where the freehold buyer is talking about there’s been a huge increase in the number of options on the market and the condo buyer is saying there’s a lot more, but they don’t think they’d call it a huge increase. Both are right, but they would likely disagree because they’re actually talking about different markets.
How hot is “the” market?
Let’s look at it from one other perspective, namely how much buyers are paying relative to the list price. This ratio tells us how heated a market is and also how common it is for sellers to under price their home and hold back reviewing offers in the hopes of a bidding war. Here’s what the average sale to list price ratio in Toronto has looked like recently. Remember, 100% (or 1 in the chart below) means it sold for exactly the same price as it was listed.
We started at 98.9% back at the beginning of May, which means buyers were negotiating about 1% off the list price across Toronto as a whole. By the third week of June that had changed to 102.3%, meaning sellers were now seeing bidding wars and average sale price of more than 2% over their list price.
Let’s look at the average sale to list price for just Freehold properties.
At the start of May, it was 99.75%, which means that buyers were buying freeholds for a bit less than asking price. By the 3rd week of June, that had shifted to 103.5% of list price. That’s a huge change in the freehold market, with bidding wars now the average.
How did the condo market in Toronto change over the same time period?
The condo market started at 98.2% of asking price and went up to 101.2% by the third week of June. That’s a decent increase, but not as strong as the change we saw in the freehold market in Toronto.
The same two buyers in Toronto would have a different sense of “the” market over the past little while. The freehold buyer would talk about how everything is holding back offers and selling for considerably over asking now and the condo buyer would shake their head and say that’s somewhat true but there are still lots of properties that are listed at the price they want to get. Again, both would be right, because they’re talking about different markets.
This review of “the” Toronto market compared against what the freehold and condo market are doing showed some differences and someone buying or selling a condo has a different experience compared to the person buying and selling a freehold home. The more focused we are on “the” market, the more those differences can become pronounced.
Let’s show a good example of differences within “the” market by showing the differences between a high end condo in Toronto versus a mid-level townhouse in Markham.
Here’s how long it took to sell a $2M+ condo in Toronto recently.
Lots of fluctuation over the past couple of months, with it taking up to 111 days or as little as 8 days. Obviously, if you were selling a high end condo in Toronto recently, your experience of “the” market might have changed dramatically from week to week.
What about townhouses in Markham?
While a newspaper article may talk about “the” market, it’s clear that if you were selling a townhouse in Markham around the $800K level in the past couple of months, there were three different markets. The start of May had no sales, hence the 0 days on market, but by the middle of May, we started to see sales pick up. Old inventory finally sold but new listings that came on the market were flying off the market.
If you had two sellers of townhouses in Markham chatting about their experience, the one that listed in early June would have had an entirely different (and much more enjoyable!) experience than the seller who saw their property sit on the market for months in April and May.
The above datasets showcase some of the different markets that exist out there, but they likely aren’t exactly what is going on in YOUR market. If you are thinking about buying and what to understand what “the” market is like for different options you’re consider, get in touch with us. Similarly, if you are considering selling and want to understand what’s happening in your market, we’re happy to do the work to show you exactly what’s happening these days.
In either case, we invite you to contact us to start the conversation!