Whenever we talk Toronto Real Estate, always the same question seems to come up: are we in a bubble? And where is the market going to go from here? After steep increases in house prices, not only in North Toronto, but in the rest of the greater Toronto area, the provincial government stepped in with some recommendations and some new legislation.
Patrick Rocca talks about how this Toronto Spring Real Estate Market has not only sellers but buyers concerned.
Jeffrey: I have with me Patrick Rocca, who’s with Bosley Real Estate here in North Toronto. And Patrick, I know we’ve chatted just about six weeks ago in May about the market and we’re finding that a lot has happened in six weeks. So I think it’s a great opportunity to give our listeners an update on the market. So, perhaps you could introduce yourself and what you do with Bosley.
Patrick: Thanks, Jeffrey. Patrick Rocca with Bosley Real Estate here in the Leaside / Davisville Market, we’re located on Merton St. I am the top agent in the area, in this great community. And, yes, you are very correct, it’s amazing what six weeks difference can make.
Jeffrey: Yeah, and we chatted a little bit about the lack of supply six weeks ago. That there wasn’t much product on the market and some of the speculation at the time was the recently introduced changes that the provincial government was tabling had something to do with that. So, sellers were looking at what that was going to do to the market. What have you seen in the interim has changed in the market?
Patrick: Well, I mean there’s no doubt we have now a lot more supply than we did six, eight weeks ago and, I think that was all fueled by a little bit of panic and anxiety. Excuse me. By sellers who saw what was coming down the pipe with the liberal 15-point plan for the foreign tax and the rent controls and that sort of stuff. So, what I found happening and, I think the last time we talked it was just sort of at the beginning of, not the end, I hate to say that, but the change was all the sudden people started calling, people started listing properties, there was more supply.
The demand actually, I think, in a sense there’s no doubt about it, it didn’t dry up but it’s changed. Obviously, the foreign market again, at least down in Davisville, we had quite a…quite a big foreign market. I mean it bothered me when I would read in the papers that they would say that, “Oh, it’s only 5% of the market in Toronto is foreign.” Well, I mean that might be the GTA but neighborhood specific it’s greater, and in East Side and Davisville specifically it was greater.
So, I mean, case in point, I had property that I sold in March, 11 offers, all 11 were foreign buyers so if I had to sell that property today let’s say I lose 50-60% of those buyers. It makes a difference and that’s what’s happened is we’ve lost our foreign market so there’s less offers. Stuff that, you know, now there’s more product so there’s more to choose from and, you know, what’s happening is that offer no. I mean, I sold one yesterday, one offer. You know? Now it’s just like throwing a dart against the dart board, you don’t know what you’re gonna hit and you list a property it may sell on offering that night, it may take you know, four or five weeks.
Because, again, buyers are more cautious, you lost the foreign market, and there’s more supply to choose from. And the real big thing is sellers are still thinking March, April and they can’t do that because prices have come off. I mean, you know, I think last month they were saying six percent we were off again. Again, this is more neighborhood specific, I’ve seen it as high as 10% in certain products, in certain homes like the property I sold yesterday sold for asking. February, March that would have sold for $100,000 over asking.
Patrick: So yeah, it’s definitely a different market so buyers are cautious now as well because I mean, not only is there more supply and there’s some deals to be had. I mean, I have buyers that are getting some good deals but they’re also thinking, “Okay, come off in the last…” I mean, I think I read somewhere the other day, we’ve had eight straight weeks of down in terms of, you know, sales and price. So buyers are thinking “Hey, this might not be the end, so, you know what? We’re gonna wait.” And you’re seeing that. You’re seeing apprehensive buyers. But on the other hand you’re seeing the unrealistic seller. I had one the other evening, condo downtown, four offers, you know my buyer had the best offer, significantly over asking, seller turned it down because he was thinking, “You know, I should get X because in April…” You know what I mean? And, I mean, well, “Hey, we’re not April. We’re June.”
Jeffrey: Yeah. Definitely.
Patrick: And, yeah. So you get people saying, you know, “I’m gonna list in the fall.” Well, I mean that’s…You’re gonna list in the fall, you know, take your house off the market, you’re gonna list in the fall there’s going to be more product in the fall that’s coming out and plus you’re gonna be relisting with all the people that think if they list in the fall things are gonna change. So, you know, it’s really, really an interesting time.
Jeffrey: Yeah, and I’ve seen some local examples of that, too. This is a very interesting physiological experiment if anyone would be doing this for a study. But even one of my neighbors is looking in the neighborhood and they said that they were interested in a house which was larger than their current house, they didn’t wanna pay the prices that the sellers were asking, and so they were actually saying “Okay, I’m just going to wait because I think…I thought for a while that things have been overpriced so what I’m going to do now is wait until things kind of go back to what I see as a more normal valuation.”
And so there’s this mismatch that you’ve been talking about even the sellers… I had one in the neighborhood which was listed for just under 1.3 they didn’t get any offers, then they took it off the market and they listed it back at 1.6 and it’s been there for three or four weeks now.
Patrick: Seen that happen. Seen that happen a lot and that’s just quite frankly in my opinion that’s just greed and agents who can’t control their clients and aren’t advising their clients appropriately because it’s not a good road to go. Now, I can’t say I’ve never done that before, I did actually do that back in April when things started going a little sideways and, you know, it was at the very beginning and since then I’ve never done it. It just, it doesn’t work. And I’ve seen it. I had an example a couple weeks ago, property listed for 1.3, seller didn’t get what they wanted, put it back just like you said, 1.6. We went in and offered them $11,000 under what they were asking, $11,000. They wouldn’t bite and the thing sat. They just pulled it off the market.
Patrick: Yeah. So I mean it’s bad advice from agents quite frankly and sellers that aren’t…and you know, you can only advise your sellers so much so sometimes it’s just your seller doesn’t get it, right? I had one where I had to tell my client, “Let’s take it off the market, you’re not being realistic.” And I don’t think…you mentioned a good point there about buyers thinking, “Well, you know, wait and things may come off a little more.” I don’t know how much more they’re gonna come off. There’s no doubt we’ve got 10 days left of a solid spring market and it’s still a good market.
We still have stuff selling over asking and we still have stuff selling but we also have stuff sitting whereas, you know, six weeks ago everything sold, now half the stuff sells and then the other half takes an extra few weeks. But if we’re gonna hit July, August hard to say what our summer market’s gonna be like I mean, I think it might be traditional you know, slower. Then you know, everybody thinks it’s going to pop back in September and even if it does pop back,
I mean, let’s say it does, you’re not gonna have…you’re not gonna get back that 10% that we’ve lost already. You’re not gonna get that back. You’re just gonna have a market. And I think that, you know, the 30% gains that we were having, and I think we’ve talked about this, were so unrealistic that eventually, you know, something had to come off. And I think if you’re buying now’s a great time, summer’s a great time, I think fall will be a good time. You know, one of my sellers put it sort of succinctly two weeks ago when I sold her house, she can get what she wanted but she said “You know what, Patrick? My house was up 30% over last year, now it’s down 10%. You know what? I’m still up 20%.” So, it’s all relative right?
Jeffrey: Yeah, yeah. And I think that people have to be very realistic and look at this in long term perspective as you mentioned because, you know, houses that were selling for, I don’t know, half a million five years ago are now a million. But like you said, to basically refuse that, an offer for $11,000 under what you were hoping to get, you know, you need to be realistic about the pitfalls of keeping something on the market and then perhaps losing other offers because of that.
Patrick: Yeah, and people think that just by relisting it in the fall everything going to…you know, everything’s going to be honky dory in the fall. Well, that’s not necessarily the case. I mean, you know. I said this to my client that I had to take their house off the market, “You know if you relist in the fall you can’t relist at necessarily the same price you had in the spring because you’re going to be history in the system and the market came off in the spring so…you know, bite the bullet, reduce it now, and, you know, take advantage of what we know is always the best market and that’s the spring market.”
Jeffrey: Uh-huh, yeah. I know it’s interesting because in this neighborhood there are various agents that I don’t think are specialized in Davisville East Side and I noticed that their houses tend to sit longer but the agents that specialize in this area, you and a couple others, the houses turn over more quickly. They don’t sit for weeks and weeks and weeks and that’s really what sellers want, is they don’t want their products sitting because then they can’t get on with their lives and they’re kind of stuck in limbo until the house actually sells.
Patrick: Yeah, you’re absolutely right. Yeah. Yeah. No. I’ve noticed that, actually, in the last couple of years there’s an influx but, I mean, when you get turn over…and a lot of that has to do with the foreign market, as well, I mean, there’s been a lot of foreign market activity in the neighborhood in the last couple of years. So now when you’re seeing those homes flip over it’s usually an out of area, foreign agent that’s dealing with it and you’re right. I mean, they can’t sit. But that doesn’t…needless to say some of mine sit a little bit sometimes, too.
Jeffrey: Mm-hm yeah. And no one can be a perfect predictor of the market and of what buyers are going to do and what sellers are going to do but in the end you have to be realistic about what the market…the market’s the market, the house is priced fairly, you’re just going to have to agree with what the market says is the value for your home. I think the days of you know, 11, 12 offers on an offer date, I think those are largely gone. And maybe they’ll return in the fall. I’m not sure but I think now buyers are starting to step away from that mentality.
Patrick: Yeah. I tend to agree with you and you know what? We’re back to normal. So, I mean it’s…the other interesting thing…and you mentioned one agent specializing in an area or knowing the area. The problem we have in the market right now is that you’ve got…You know, we’ve got 46, 48,000 real estate agents in the GTA. A lot of them have only been in business three or four years so they don’t know what a down market is. So all of a sudden they’re looking like a deer in the headlights and they’re saying, “Oh, I didn’t get an offer?” Or, “Oh, I’ve gotta negotiate?” Like it’s interesting, it’s very interesting.
Jeffrey: Yeah. Yeah. And that’s why…I think we talked about this last…If you’re buying or selling it’s more crucial than ever these days, probably in the last sort of six weeks, eight weeks, to have somebody with you who’s got experience not only in pricing but can really tell you the value because it’s not as sure as it was that you’re going to get multiple offers, list under some benchmark price. So you really need to know what the features are worth, location, and the area you’re buying in.
Patrick: Yep. Correct. You must notice, too, a bit more of an up-kick in people doing renovations. I’m seeing that in my…Like, personally. I’m seeing in the neighborhood people renovating and I’m reading that people are renovating as opposed to selling because of prices and I’m not sure what you’re seeing there but…
Jeffrey: Yeah. Absolutely. We’re seeing a lot more of that activity because the challenges in specific neighborhoods if you wanna move up you might get a little bit of a bigger home but depending on when you bought you will probably end up with a much, much larger mortgage. And, so, instead of going out and spending the money and transaction costs people are actually investing in making that house what they want and there’s kind of the devil you know and the devil you don’t know in house buying. And if you buy a place which is an older home and you’re hoping to get something that’s totally move-in ready you’re going to pay a premium for it versus fixing up what you have and potentially living with that instead.
Patrick: Yep. No. Agreed. Yeah. For sure.
Jeffrey: Fantastic. So it’s been great to catch up and find out a little bit more about the recent developments in the market. It’s always interesting chatting with you. Let’s touch base in the fall and see what’s happened over the summer market, whether it’s traditional or something a little bit different. And I look forward to our next chat.
Patrick: All right. I’d like that. And you have a great summer and let’s keep in touch.