The Bibby Group | August 2022 Newsletter
Over the past few weeks, there has been much discussion about real estate transaction volumes in the GTA and how they were down 47% in July 2022 compared to July 2021. This development isn’t surprising, as aggressive rate hikes, negative media attention on a declining marketplace, and lower consumer confidence have conspired with market uncertainty among buyers to stall Toronto’s summer market.
That said, an interesting shift is emerging in Central Toronto. Although June and July saw numerous listings shift into a rental scenario, cancel their respective contracts, or postpone selling due to a slower marketplace, the last week was quite different for us, with a flurry of sales.
As the city is now more or less fully open and back to business, the population continues to grow, and we must track inventory levels this fall. Homeowners will eventually have to account for higher borrowing costs when buying, and if supply is insufficient, conditions will tighten up again.
While purchasing a home right now might feel very expensive, renting one is even costlier, as we have now surpassed our pre-pandemic rental highs. Rental demand evaporated when interest rates were low, and as the work-anywhere narrative led people away from the city, demand and pricing declined. But rents have skyrocketed as rising interest rates push potential homebuyers to the sidelines and people return to the city for work and school. The interesting point here? If it’s not a suitable time to sell, renting is now a great option. If we have less supply for sale, guess what will happen next?
Another issue at hand is increasing construction costs. Rising interest rates and unattractive financing is leading some developers to delay projects—which will mean less supply coming to market in the future.
As housing prices have come down, the pressures that drove them up in the first place are re-emerging. The last three weeks of July were particularly slow (seasonality and travel); however, we have sold five properties over the last ten days. In my view, this can only be the result of attractive rates/pre-approvals expiring and low inventory. The next few weeks will be interesting to monitor, as will post–Labour Day inventory levels. I see the early fall market as a great time to list if you are a committed seller.
Have a fantastic long weekend! I am looking forward to reporting back to you in September.