What To Expect in the Real Estate Market in the Fall of 2015

The Fall market is different than the Spring market. The Spring market has a roaming starting point. Some years it can start as early as early February. Other years, it will hold off until well into March. The Fall Market is different. It goes off like a shotgun. Once we clear Labour Day, the number of new listings coming to market explode out of the starting gates. It`s not like there are no sales any other time of year. I have completed transactions in the laziest days of August and over the Christmas Holidays. During the busier times of Spring and Fall, however,  there just seems to be more choice, more buyers, more sellers and more activity.

So, let`s look at what we should expect this Fall once Labour Day clears, nights become cooler and teachers return from their cottages to go back to school. To understand the Fall, I think we need to look back at the summer.

As I mentioned, the summer is usually slow, especially August. There are times when the Spring market can trail off well into July. This August was a little bit more active than usual despite the PanAm Games and the fears of traffic chaos.This may have to do with the Bank of Canada lowering it's overnight lending rate from 0.75 to 0.5 per cent. Because the major banks followed suit, the buyers were stimulated out of their lazy August haze to come out and keep the sales activity fairly strong for an August across the GTA.

In August, there were still some buyers out there. More listings than the usual August, but the buyers did outnumber the sellers by my estimations. In competitive neighbourghoods and condo buildings, August proved pretty good from a seller`s perspective and pretty competitive from a buyer`s one.

For the Fall, we should expect that pent up demand of the buyers in August to carry over to the Fall.  Rates are still very low, and the demand is still there. Bidding wars will be common in high demand neighbourhoods. I think we`ll see a similar performance this Fall to the Spring despite some instability with the Chinese markets and a few recession news stories.

I`m going to sound a like a broken record here because I keep saying the same thing, but here I go again: Houses will perform better than condos. Emerging neighbourhoods will be the best place from an investment perspective. For houses, analysts like to say that the housing, as opposed to the condo market, is `runaway`. So, if you buy into that kind of wording. Then the prices will continue to run away as far as house are concerned, especailly of the detached variety.

For condos, it will be more like a leisurely stroll. The average condo downtown was $460,000 last month. It was $440,000 this time last year. It's not an outrageous burst of an appreciation, but its respectable and moving in the right direction as far as condo owners are concerned.

So, this is basically a brief report to say that we will be having the Spring Part II, at least for the first part of the Fall.  I may be right. I may be crazy.

The Fall Market Coming: What To Expect This Year

If you are anything like me, you may be wondering what happened to summer this year. Nights were cool, temperatures over 30 degrees were rare, and the humidity haters were one happy lot.  Still, even though it may feel like summer has barely started this year, there is no denying that it's exiting soon. Already, I hear the sing along jingles of back to school commercials. I wait longer in the traffic on Lake Shore because of the CNE. And I notice the nights this week coming a little bit earlier than last week.

Though the temperatures and the early evening may come gradually, the real estate market in Toronto more closely matches the beginning of the school year when summer ends abruptly. You wake up and poof! It's packed up and gone. Unlike the Spring market that may start as early as late January or as late and early March, the Fall market is predictable. Once you clear Labour Day, the new listing start rolling out, the buyers and sellers return to the market, and we see a busy period in September and October that slows down a little in November before really slowing down during the December Holidays.

Even though there are a collection of quality condos and houses that go up for sale in the summer, there does tend to be less activity during this season. The passion of the Spring market can trail off into July, but August is often very slow. Next to the festivities of December, August often has some of the fewest transactions of the year.

But what will the Fall market be like this year?  What will happen as the engines restart on Toronto properties? I suspect it will be like the Spring market of 2014. Condos will continue to have one of the best years they have seen in the 2010s. I don't think we'll see outrageous bidding wars or wild price appreciations here, but I think prices, for the most part, will be healthy, and we'll continue to see many condos sell in large numbers, generally better than last year. Of course, as I've said many times before, make sure you pick the right condo in the right neighbourhood. Not all condos are created equal.

For houses, the chronic low inventory will keep them in high demand. I don't think we'll see the number of bidding wars we saw in the early part of the Spring in most Toronto neighbourhoods. In some in-demand neighbourhoods, we saw houses go for $100K to even $200K over asking. I think the Fall market, however, will be more reflective of the late Spring, where a quality house would likely go into a bidding war, but not the scrappy shack in a lacklustre neighbourhood. First time buyers hungry for houses will likely cause emerging neighbourhoods like the Danforth Village and the Junction Triangle to continue to have significant price appreciations. Bargain hunters may look further afield in Caledonia/ Fairbanks, parts of the Danforth Village or Scarborough. Detached will still be king. For condos, the shift will continue to be to the downtown core away from the activity in midtown.

In terms of inventory, this will vary widely between the condo and the house. Certainly condos will have a steady stream of supply. No worries there. The trick is to pick the right one. Resale is still king though new condos are now offering much better incentive than in the past. It's hard to see how many houses will come up for sale. Still, it's easy to predict that buyers will outnumber sellers. Not all houses will go to bidding wars, but if you have a house in an established or emerging neighbourhood, you will do well with the right marketing plan.

So, whether your selling or buying or  already planning your next winter trip to Costa Rica, summer is fading fast and Fall is coming. There's simply no denying it any more! Hello cooler temps, a  light jacket at night, and a Toronto real estate market that is waking up from a short summer nap.

The Fall Market: My Two Cents

Like me, the media outlets have always had their opinions on the real estate market, but unlike me, the opinions of the media really seem to have ramped up  a lot of this summer. I think this has to do with the cooling market in Vancouver and the Federal government's focus on household debt, but mostly, it has to do with selling papers, regardless of the opinion. Toronto Life, for example. declared the crash of the Toronto market last year (oops). This September they claim that you should expect bidding wars and rising prices. It doesn't really matter what they say, but if they say some thing extreme about the housing market, then it will certainly get the attention of every one who owns a house or ever plans to own one. That's a lot of readers. 

It's not just Toronto Life, it's all of the Toronto media, who often fall into two camps. No one paper or magazine ever declares one view, but they usually have an article that says one of the following views:

THE SKY IS FALLING

This Chicken Little opinion usually declares that the Toronto housing market will crash U.S. style right about now.  It usually states one or more of the following points:

1. A lot of condos are being built in Toronto. More than New York, Mexico City and LA combined.

2. Household debt is out of control.

3. Interest rates are low creating artificially higher priced homes.

All very valid points, but not necessarily leading to a crash. 

JUST RELAX

The other opinion usually occurs after the "Sky is Falling" prediction has not panned out. It often has:

1. Examples of a couple or a buyer who had to fight like wild dog to get the home they wanted after losing out in several bidding wars. They get what they want, but only after great pain, blood, tears and a lot of money.

2. Stats - stating that the prices have gone up and are still going up. 

3. Comparisons - comparing Toronto to other big cities around the world like London, New York, Sydney, Tokoyo, Hong Kong or Amsterdam leading to the conclusion that Toronto isn't really near the price of these cities. So, just relax.

Now that's a pretty simple breakdown. And I guess it's easy for me to be critical of these articles, which do make some good points from time to time. So, I'm gonna give my 2 cents on the Fall market because I do see transactions every day, and I learn a thing or two from being in the trenches of real estate. It's no guarantee. What opinion is? But I think it's an informed opinion that is not trying to sell you papers. 

So, here are my thoughts on the Fall Market:

1.  MORE INVENTORY, BUT DON'T PANIC

There is more inventory entering the market right now, particularly with condos. Does that mean there's a bubble for the Fall? No. Does that mean there will be an end to bidding wars? No. Bidding wars will stick around for great properties in good locations, even though there will be fewer of them. A salesperson listing a box of a condo in North York in a giant building done with cheap finishes and black paint should probably not hold back offers.  Personally, I think a little extra  inventory is a good thing. Hopefully, it will balance out the market a little. 

2. HOUSES STILL A GOOD BET

There are only so many houses left in this city. Because there are very few being added to the Toronto housing pool, that means this type of inventory is not really gettting any bigger. So, houses will likely stay in high demand. It's the holy grail of property in Toronto. A detatched house being the super holy grail. It is the type of home most likely to have the greatest price appreciation. If you're well-located and have a house that isn't too weird, even more super.  

3. NOT ALL PROPERTY IS CREATED EQUAL

This Fall there will be condos in certain building that will sit on the market forever. This is because these condos are poorly designed with a very large number of units in them, or they have some thing special going on about them like there fees are much higher than the rest of the bunch or they are poorly run with a terrible reserve fund. A few even have some messy legal things going on. So, when you see stats that say some thing sweeping about all condos, just make sure you know that some condos are better than others.  Think boutique, smaller, emerging neighbourhood or if you can afford it, a townhouse for condos with best chance of appreciation.