Andre Smit's Real Estate Round-up

Monday Jan 17th, 2022

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Hi Folks,

Another record year for my real estate business! I would like to take this opportunity, to thank my clients for their support and referrals. Without these, I would not be able to continue to grow year on year! My commitment to my clients, is that I will ensure that you receive my personalized, professional world class service, all the time. In my business, you will never just be a statistic!

According to the Toronto Real Estate Board, (the largest in Canada), compared to December last year, total new listings were down by 12%, while total actual physical sales were down by 16%. However, this decreased activity, still resulted in the average price for all homes, increasing by 24% from the same month, the year before! The average days that listings spent on the market, before selling, has decreased from 24 days to 14 days, or 42%, for the same period.Average detached house prices have increased by 29%, compared to December, 2020. The number of total new listings, however decreased by 9% for the same period, while physical sales dropped by 19%. The average days that listings spent on the market, before selling, has decreased from 24 days to 13 days, or 46%, for the same period.

Condominium apartment average prices increased by 19% over the same month, with physical sales being down 6% and new listings down by 18%. The average days that listings spent on the market, before selling, has decreased from 32 days to 19 days, or 41%, for the same period.

The Toronto Real Estate Board, (TREB), have just released their real estate statistics for 2021. TREB is the biggest real estate board in the GTA, and therefore, their results normally mirror those of the other smaller boards. This month, I will take some time to analyze their annual statistics.

In 2021, the total number of transactions increased by 28% from the previous year. However, new listings were only up by 6% for the same period, which resulted in the average price for all transactions increasing by 18% for the year. This resulted in the average days on market, before selling, decreasing by 22%, from 23 days to 18 days, last year, compared to the year before.

The average property price increase %s, 2021 vs 2020, for each housing category, were as follows:

Single Family Detached Homes – 25%

Single Family Semi-Detached Homes – 19%

Single Family Townhouses – 22%

Apartments - 8%

With the Bank of Canada under pressure to try to control the current rampant inflation rate, we can expect to see a steady stream of interest rate increases, starting as early as the first quarter. It is expected that rates will increase by a full % point by the end of 2022.

It is interesting to note, that the average family donations to first time home buyers, for them to make down payments, (also commonly known as the Bank of Mom and Dad), increased on average to $170k, this last year from an average of $75k, two years ago!

Private real estate funding has also increased over the last year, due to the restrictive stress tests that the government forces the traditional banks to use for all mortgage applications.

So, what are we expecting for 2022? The real estate market will continue to be a solid sellers' market for most of the year, meaning that demand will still outstrip supply. However, total units sold in 2022, are expected to be less than in 2021.

With most companies now planning to recall their employees back into the physical corporate offices, even on a limited basis to begin with, the exodus from the major metropolitan areas to more rural areas within a 1-2 hours' drive, will drastically slow down, and we can even expect movement back to the bigger cities. These rural areas had experienced unprecedented growth over the last 2 years, with property values increasing by 50-70% over this period. However, the differential in price between selling a home in a metropolitan area and buying a smaller more rural home has drastically decreased over the last two years. This is now no longer as appealing, as it once was.

How will the interest rate increases affect home prices? Initially for the first 2-3 months, there will be more demand as potential buyers try to lock in mortgages before the increases take effect. In the medium term, fixed mortgage rates will definitely increase. Variable mortgage rates are likely to stay fairly low in comparison, in an effort to tempt consumers to stay away from the fixed rate products.

We are not expecting a major increase in home repossessions, as the stress test rules would have prepared consumers for higher interest rates.

My suggestion to potential sellers, is to list as early in the Spring as possible, and sell with as late a closing date as possible, in order to try and benefit from the potential change in the market supply situation later in the year.

If you are contemplating selling your home this year, now is the time to ensure that it is ready for the robust market expected in early Spring. Contractors are normally not very busy at this time of the year, so, now is the ideal time to negotiate great prices on any refurbishing work required. I am also available to do a walk through your home, in order to advise you regarding any work which needs to be done, in order to maximize your return on your investment, when your home is placed on the market.

I am currently compiling my portfolio of great homes to market in the next 2-3 months, and would be privileged to include yours. Remember the old adage: “The early bird catches the worm.” I just want to ensure that, as my clients, you get the best, juicy worm possible!

SMIT'S TIP OF THE MONTH:

Check your roof for spots, where snow has melted faster than on the rest of the roof. This would indicate areas of possible heat loss. You may then have to add insulation in the area between the roof and the ceiling, where these spots occur. Adding insulation and sealing around vents, will also help minimize heat and energy loss.

If you, your friends or family have any questions regarding real estate, or indeed, require the services of a great realtor, please do not hesitate to call me at 416-898-2852, at anytime! Please remember, that I run a cash referral system, for any referrals to me, that result in a buy or sell transaction.

Until next month,

Stay warm and safe!

Kind regards,

André

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