Andre Smit's Real Estate Round-up

Tuesday Feb 13th, 2024

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Hi Folks,

We have had an active sales month in January compared to the norm. The milder weather made a contribution, as well as the expectation of lower interest rates later this year.

Some mortgage financing companies have taken advantage of this anomaly, by inventively offering 6 month convertible mortgages at around 4.4% interest. At the end of the initial period, the client would then be able to convert the mortgage to a 3-5 year term, utilizing the market rate at that time. Currently interest rates on a fixed rate basis for 5 years are around 5.5%. The expectation in 6 months is that the rate may be down to below 5%!

There is definitely pent up demand, and buyers may now be moving back into the market, so as to avoid the buying crowd in the Spring when we expect home prices to start rising again. The inventory of new listings is still low at the moment, but judging by the amount of for sale signs now starting to pop up, we are in for a hectic sales period starting in late March!

The actual sales to new listings ratio has moved down drastically from 88% in December, 2023 to 51% in January, 2024, putting us into balanced market territory. This is mainly due to total new listings increasing by a whopping 114% compared to December last year, while sales increased by 23%.

According to the Toronto Real Estate Board, (the largest in Canada), compared to January last year, total new listings were up by 6%, while total actual physical sales were up by a whopping 37%. Yet the average price for all homes, decreased by 1% from the same month, the year before. The average days that listings spent on the market, before selling, has increased from 29 days to 37 days, or 28%, for the same period.

Average detached house prices have decreased by 0.8%, compared to January, 2023. The number of total new listings, decreased by 4% for the same period, while physical sales increased by 27%. The average days that listings spent on the market, before selling, has increased from 27 days to 36 days, or 33%, for the same period.

Condominium apartment average prices decreased by 0.6% over the same month, with physical sales being up 41% and new listings up by 17%. The average days that listings spent on the market, before selling, has increased from 34 days to 41 days, or 21%, for the same period.

The Toronto Real Estate Board, (TREB), have just released their real estate statistics for 2023. 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 2023, the total number of transactions decreased by 12% from the previous year and new listings were down by 8.6% for the same period, which resulted in the average price for all transactions decreasing by 5.4% for the year. This resulted in the average days on market, before selling, increasing by 27%, from 15 days to 19 days, last year, compared to the year before. This can directly be attributed to affordability, linked to the Bank of Canada keeping the interest rates high.

The average property price decrease %s, 2023 vs 2022, for each housing category, were as follows:

Detached Homes – 5.4%

Semi-Detached Homes – 5.7%

Freehold Townhouses – 4.2%

Apartments – 5.3%

However, on average, 2023 was a balanced market, with the ratio of sales to new listings being 53%.

So, what are we expecting for 2024?

The Bank of Canada is expected to start decreasing the overnight lending interest rate in the third quarter.

A major issue facing us this year will continue to be lack of supply. Coupled with increased immigration into the GTA, total home sales are expected to reach 77,000 or an increase of 16% over 2023. It is interesting to note that new immigrants are twice as likely to buy homes than Canadian born citizens. New listings are expected to increase to 150,000 or by 6%.This is expected to drive the average home price to $1,170,000 or a 4% increase from 2023.

Inflation is expected to remain in the 2.5 – 3.5% range. The economy is not expected to recover fully this year.

The rental market is expected to remain tight with rental prices remaining high.

However, with a federal election planned for the third quarter of 2025, we can expect mortgage interest rates to continue to decrease into the 3 – 3.5% range. By then, inflation should also, hopefully, be well controlled. What impeccable timing!

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:

Inspect your roof for winter damage. Try using binoculars to look for loose, broken or missing shingles. Pay special attention to valleys, as these areas normally deteriorate at an accelerated rate. In some instances, patching badly worn areas, may extend your roof life.

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!

Until next month,

Stay warm and safe!

Kind regards,

André

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