Sean's Market insight Volume 2
Sean Zahedi
Executive Sales & Marketing Strategist - New Developments/ Philanthropist / Columnist/ Speaker
Market sentiment: We're bottomed out
"From sales of stale condo listings in the Toronto core to a comeback with multiple offers in the low-rise sector, from a preconstruction resurgence to anticipating the first interest rate cut in Q2, the January market tells us that a robust market is very much on the horizon in the next quarter to come."
Upon the bank's rate cut, Canada's "fundamental shortage" of supply is poised to exert upward pressure on prices, drawing sidelined buyers back to the market in large numbers. A mere 25 basis-point cut could ignite a surge of activity, reminiscent of the bustling spring rush observed in 2023.
Industry experts anticipate that the national aggregate home price will experience "modest" quarterly gains in the first half of the year, followed by "more significant" increases in the latter half once rate cuts commence.
Rental Market, Real issue
For six consecutive months, Canadians have been facing new peaks in rental unit costs, with the average asking price reaching $2,178 per month in October. This upward trend reflects a 9.9% year-over-year increase. Additionally, for renters in Toronto, Vancouver, and Ottawa, the availability of affordable rental units for the bottom 20% of earners in Canada is essentially nonexistent, statistically speaking.
Reputable developers are the real winners:
As capital markets tighten for lower-tier developers, larger institutions with cash in hand are winning the battle, finding historic low land deals to mezzanine financing with lucrative returns.
The rush to build has left developers with the most unsold new condo inventory ever. This problem is raised even further for those who launched their condo projects in the Fall of 2023. Reportedly, with few exceptions, most recent launches have failed to hit their presales target, with some settling on single-digit sales.
New condo sales experienced one of the most challenging years on record, with developers selling only 12,716 units throughout 2023. This marked a 41% decline from the previous year and a significant 58% decrease from two years prior. The rapidly expanding Greater Toronto region has not witnessed such a low number of new condo sales since 2008.
The resilient suburbs outperformed Toronto’s core
The demand in Toronto's 905 suburbs has shown a bit more resilience, thanks to the city's ongoing trend of moving towards suburban areas. The shift to the suburbs has mitigated the impact on the 905 region. The City of Toronto accounted for 6,498 units out of the total sales last year, reflecting a 48% decline for the region. Meanwhile, the 905 region's 6,218 remaining sales marked a 34% drop from the previous year.
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Conclusion: Understanding these trends will be instrumental in successfully navigating the dynamic real estate market.
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?? "Optimism is the faith that leads to achievement. Nothing can be done without hope and confidence." - Helen Keller. ?? Your insights into the Toronto real estate market showcase a positive outlook that's truly inspiring! By the way, for those in the development sector looking to branch out and make a mark, there's an exciting sponsorship opportunity with the Guinness World Record of Tree Planting initiative. ?? Check it out and see how you can grow with us! https://bit.ly/TreeGuinnessWorldRecord #RealEstateGrowth #Sustainability #NewBeginnings
It's fascinating to see the ebbs and flows of the market, and your insights are invaluable ??. As Winston Churchill once said, "Success is not final, failure is not fatal: It is the courage to continue that counts." Here's to navigating the fluctuations with courage and anticipation for what's ahead! ???? #perseverance #realestatemarket #inspiration