Patrick Rocca talks about why this Fall’s Toronto Real Estate Market is confusing both clients and realtors.
Jeffrey Veffer: 00:00 I’m here again with Patrick Rocca of Bosley real estate and we’ll talk about some of the things that he seen in the market, up til now. We’re recording this in November of 2018 and some maybe predictions for the next couple of months next quarter. So, Patrick, can you, uh, introduce yourself and talk about your role at Bosley?
Patrick Rocca: 00:21 Sure. Yeah. Patrick. Good Morning Jeffrey. Patrick Rocca with Bosley real estate here in Davisville, top agent Davisville markets and yeah, that’s pretty much it
Jeffrey Veffer: 00:35 now, Patrick, you’ve had many, many years of experience. I think last time we talked, you said it was over 25 years of experience in this area, but what I’m hearing from both buyers and sellers is that at this point, this is the most confused about the market that they felt in probably the past five to 10 years. They, they are looking for signs that the market is going to be up a for sellers for buyers, but the, the signs aren’t pointing in a clear direction, especially in the last few months. I wonder if you could address what you’ve seen over the past couple of months.
Patrick Rocca: 01:10 Absolutely. Yeah. And you’re, you’re 100 percent right. I mean 26 years in this business. It is a confused market. I’ve never used that term, but you’re right, it is confused. Uh, I’ve used unexplainable. I’ve used a few other analogies, but it is a confused market. I mean, just when you think if anything for starters, I mean we’ve been fairly flat all year. We’ve had little blips, you know, when we’ve had one or two percent increase and then we’ve had a flat or decrease. It’s just inconsistent and there’s no rationale behind it. Um, the last couple of months, obviously you’ve got a spring market that was kind of flat because of the stress test in the mortgage lending rules and whatnot. Summer was quiet as typical fall. We had some really positive signs end of August, beginning of September, that things maybe turning around and as soon as we were having positive signs and getting our hopes built up, October just died.
Patrick Rocca: 02:09 It just went flat and I was like, oh my God, this is this, this is unbelievable. But here we are second week of November and it’s almost like it’s the, the pre Christmas sale. I mean, things are starting to move again. It’s been really, really busy the last 10 days or so. I mean, myself personally, I’ve done six or seven deals in the last week, um, stuff that has been sitting. But that being said, you know, the, the inconsistencies are still there. I mean, stuff is selling stuff has been selling all year, but there’s also stuff that’s sitting that you sit there and you scratch your head and there’s, there’s no rationale behind why it’s sitting. I mean, case in point. I have a lovely semi detached home right now in north east side. It has a private drive, a big lot. Um, and right now we’re at a $1,249,000.
Patrick Rocca: 02:59 We were at a $1,299,000. We’re at a 1,249,000. We just reduced it. We do have an offer on it right now, but the house three doors over from it sold this summer for a 1,255,000 and it had a mutual drive and a smaller lot, you know. Sure. It was a little nicer inside. But you can make nice, you can’t make it private drive and you can’t make a bigger lot. So not even an offer at a $1,299,000. So just a head scratcher, you know, and, and I’ve had a few of those. So as much as some stuff is selling, some stuff isn’t.
Jeffrey Veffer: 03:31 Yeah. And that’s one of the things where I know people are perplexed. They’re looking around, at least for the bulk of 2018, there wasn’t a ton of product on the market. And what’s interesting is I saw a report that was just released this week that said over the entire GTA, which obviously beyond, uh, the area you specialize in, uh, almost uh, a quarter of homes were actually vacant because sellers, we’re, you know, moving on. Uh, but they were still stubbornly sticking to the high prices that we saw in the spring of 2017. And so I’ve, I’ve remarked in us before that there is at least, uh, in, in some sellers might I gap where they think their house is valued at x, maybe they got in and late 2016, early 2017 and they realized that, you know, they need to get a certain amount of money out of the house. Have you seen that in the market?
Patrick Rocca: 04:26 I’ve been seeing that since literally June, July of last year. Um, and although it’s not as predominant as it once was, I mean, I, I, I think there still is for sure sellers out there who think their property is worth more than it really is. But there’s also buyers out there. And I think we discussed this the last time we talked that I’m still think the sky is falling and it’s not. If anything now is the time when you should be buying. And I’ve said that before and I mean that wholeheartedly. Um, but, but it’s, it’s, it’s a smaller market now in terms of that thought, that thought process. Most people get it, that the market’s down, that prices have come down and that they have been flat. But like I said, I mean some buyers are still in denial, some sellers are still in denial, but it’s a smaller number.
Jeffrey Veffer: 05:18 That’s good I think for eventually coming to some sort of equilibrium, although you do see these news stories all the time about how Toronto is in a bubble. And again, just doing some research for our talk. I saw an economist saying that there’s a 20 percent price decrease that’s a forecast in the market and he’s looking at fundamentals and that sort of thing. I have a problem with those bubble forecast because we’ve been hearing them for, you know, 10 to 15 years and yet the market has continued to increase. So if you’ve been on the sidelines over the past 10 years, you have been waiting for the market to come down. You’re actually in a worse place now than where you were 10 years ago. So I guess there’s a, there’s a problem with, uh, with those forecasts depending on who you listened to.
Patrick Rocca: 06:08 Yeah. I don’t listen to those forecasts. It’s just mind boggling. I mean, I cannot see. I mean, listen, I’m an eternal optimist, but I cannot see another 20 percent drop. I mean we dropped 20 percent last year grant that we were up 30 percent. Was that a bubble when you look back at it? Yeah, that was, that was irrational exuberance. I mean, that was crazy. I knew it was gonna pop. I knew it was going to drop. We were up 30, we dropped 20, we’ve had our 20 percent drop. We’ve now been flat in my opinion, if anything we will remain flat or we will be back to two, three, four, five, six percent potential gains. That’s a normal market. Um, and you’re right in terms of these economists are these experts who, you know, Garth Turner’s of the world who had been predicting the, you know, the crush of everything for, for years.
Patrick Rocca: 06:57 Um, you know, there’s just no supply. I want to say there’s no supply. There’s a lack of supply there still is demand. Is there some, you know, hesitation still. Yeah. But we’re not seeing decreases. We’re just seeing a flat market chugging along. We’re still seeing, I mean, I sold to last week, multiple offers over asking. We’re still seeing that but not as common, but we’re still seeing it. Um, so it’s not like, you know, the market’s going to die if anything it’s going to chug along and be normal. And like I said, I’ve been in this 26 years I’ve been through ups and downs, um, the people that are really sort of, you know, not suffering but you know, scratching their heads and figuring out what to do or these people who have been in the business for three, four or five years and they don’t know what to do now. I mean it’s, it’s, they have to work, right? They have to hit the market, they have to negotiate, they have to do things differently. It’s not like just list something in sales in two days.
Jeffrey Veffer: 07:56 Yeah. And that can be a challenge for a seller who’s looking for someone to represent them and give them really great advice on, you know, where they should price, how they should list and you know, like you said, multiple situations, they aren’t the norm anymore. But uh, then again, you know, the, the type of work that’s required to market a property so it doesn’t sit on the market that comes down to experience connections and uh, you know, the amount of knowledge you have about the business.
Patrick Rocca: 08:26 Yeah. One hundred percent. I mean, I can’t tell you this year alone how many homes I have taken over from either agents who were trying to show their own home sellers who had family member trying to sell their home, not from the area and, and all of these homes. I know I say all of them. I’m going to say seven. And there has been several. I, you know, I’m talking double digit. I’d say 90 percent of these homes all ended up selling for less because they weren’t marketed properly, they weren’t priced properly, etc. From day one. And it really hurt them. I have one property in particular, I won’t mention any addresses, but probably was listed 4 or $500,000 and what it should have been, um, uh, probably sold for 150, let’s say maybe 200 less than what it should have once I took it over because they started off really badly. So it just got stale
Jeffrey Veffer: 09:25 Its like the stock market. It’s very, very difficult to time the real estate market. And as a seller, you know, if you can afford to sit on a property for awhile, you know, that’s, you know, maybe your prerogative, but if you’ve bought in another location and you have to leave your previous a whole empty, you know, that’s a significant cost to carry two homes just because stubbornly you, you think that the market is going to rise to whatever price. So lIke you said, it’s a, it’s incumbent upon sellers to understand, you know, what the value of the market is and what buyers want. But on the other side, I’ve had buyers coming to me and saying, you know, how do I assess value in this market when things are, are selling for, you know, seven figures, how do I assess if that’s the right price to pay?
Patrick Rocca: 10:15 Right, right. I mean, nine times out of 10, that’s quite easily done. I mean in case in point is telling you about the northwest side. I mean the one three doors over sold for million to 55 the summer. So I mean this thing is worth give or take a million to 50 and logically should be more because it has a private drive. But values, I mean if you have a good agent and you have someone representing you, they should be able to show you comparables and, and, and whatnot.
Jeffrey Veffer: 10:50 Definitely. I think part of the, uh, the outlook is trying to understand that, you know, if, if you’re saying, “God, I’m paying so much for this place,” but if you see it over a 10, 20 year horizon, then it’s not like, well, I’m depending on a six to 10 percent gain every year to make sure that, that I can be made whole when I sell this place in 18 months. Have you seen a drop in the number of people with that short term thinking?
Patrick Rocca: 11:19 Absolutely. I mean, I’ve always said to people, if you’re in real estate, you should be in. If you’re buying a house to live in it, it’s a lifestyle and over time, absolutely it’s been proven time and time again that you will make money. but if that’s your goal is to make money, that shouldn’t be your role. But the short-term speculators, a lot of them got, like massacred last year. I mean, I know people who overnight a loss five slash $600,000 in equity when things tank. Um, you’re not seeing those speculators out there as I can tell you one thing right now. The good builders are not buying because they know the margins aren’t there. Speculators are more specific and there are fewer of them. There’s no doubt because it’s just too unpredictable. Right. The gains aren’t there. I mean they know the gains aren’t there. Right?
Jeffrey Veffer: 12:13 Yeah. Like you said, those professionals are kind of in another category is if they’re doing it for their business, uh, the families, you know, the, the folks that are trying to get into the Toronto real estate market, those folks I know are kind of scratching their heads and saying, you know, if, if we need to get into the market, can we borrowed money from our parents for down payment, you know, is there a way that we could maybe have other family members live with us? So a lot of alternative living arrangements, you know, those are now starting to become more common.
Patrick Rocca: 12:49 Yep. We’re starting to see that whole thing around, you know, the younger ones and what they can afford is it’s. Yeah, it’s going to be problematic I would think. I mean, I’m, you know, I’ve got to shoulder myself and obviously myself and my wife, I’ve even talked about this now. I mean, we’re, we’re gonna, we’re gonna have to help our kids and we’re fortunate enough that we probably will be able to, but not everybody is. Um, so I mean, read an interesting article on millennials. Um, uh, yesterday actually when I was at the gym on the bike talking about, you know, they’re, they’re coming out of school, they’ve got debt. um, you know, the cost of housing. I mean they, they, they just can’t afford to buy and they’re renting and even rents now are getting sort of astronomical, right?
Jeffrey Veffer: 13:33 Yeah, yeah. And that’s a challenge because there’s always a rent versus buy a consideration that people do and if you’re spending, you know, $2,400 a month in rent for a condo in a certain location, then you’re thinking, oh, you know, what can I actually afford if I start to put that money into equity? And so there’s always been a gap between renting and buying. And if you, again, look at the right property in the right location, there’s probably opportunities for you to kind of, you know, move into the, uh, uh, the market, but, you know, maybe it’ll take a few moves before you get into the dream home you’ve always wanted.
Patrick Rocca: 14:12 Yeah. And, and the problem now to free, especially for younger people who’ve got prices have risen so much now with the banks and their lending practices in their rules, what you have to put down. I mean, you know, what? Twenty to 24 year old coming out of university with, with debt likely from school loans has, you know, an extra 100, $200,000 lying around to put down on a house. It’s so, it’s, it’s, they’re playing catch up. It’s unfortunate. Um, so, you know, it’s a sad reality.
Jeffrey Veffer: 14:42 Yeah. Agreed. And I know you touched on it briefly, but in terms of the rest of the fall market, which is probably like another two weeks in and into the spring, do you have any, any indication which way the market’s going to go?
Patrick Rocca: 14:56 It’s interesting because I’m 26 years I’ve been doing this and I’ve been able to fairly well predict what I think, uh, you know, like I’ve always said 26 years. Touch wood. I’ve never had a bad spring market. well, I didn’t have a bad spring this year, but I had a, an unusual spring. It wasn’t as normal as it was. Um, I can tell you that, you know, the next I suspect, you know, like you said, two, three weeks left of a good market before things shut down sort of first week of December. Um, I think we will. I think there’s some activity there. I mean, based on what I’m seeing the last two weeks, I think we’re going to have a good last couple of weeks moving forward. things will quiet down as they always do sort of a second week of December through till second week of January.
Patrick Rocca: 15:38 I’m already starting to talk to people about listing and spraying and spraying as you may or may not know or as people may or may not know, is the third week of January, first week of February, people start to roll things out. So I’m already starting to talk to people about that. I’m hoping that it will be good if anything, it’ll be, um, it’ll chug along like it has this year. Um, the one thing we have to be cognisant of next year as we were heading into an election in the fall, uh, and historically and traditionally election years tend to, you know, and maybe we can look back on that in October of why we had that little blip of a slowdown. Historically we have slowdowns in election years just prior to the election because of the uncertainty. Um, so I mean, you know, if you’re selling hay springs the time to do it because you don’t know it. Fall’s going to be like with the election if you’re buying, I just don’t see double digit increases. I think it’s a good time to buy. And I’ve been saying that for over a year.
Jeffrey Veffer: 16:39 Well fantastic. That’s a wrap up. And if people want to get a hold of you, what’s the best way for them to reach you?
Patrick Rocca: 16:48 Email is always the best. It’s a firstname.lastname@example.org. Or through my office at 416-322-8000.
Jeffrey Veffer: 17:00 Alright Patrick. It’s always a pleasure to chat and I’m really looking forward to catching up with you in the spring again, which is only a few months away and seeing what the spring mark is like.
Patrick Rocca: 17:12 Thanks very much Jeff. Have a great day. Nice talking to you. Yep.