PATRICK ROCCA Broker

PATRICK ROCCA Broker

News: Incite.ca Interview - Is the Toronto Real Estate Market on the Edge?

 

Jeffrey       

I’m here with Patrick Rocca. And today we’re going to talk about, is there light at the end of the COVID tunnel? We’ve been talking regularly over the past couple of years and every time we talk, there’s something a bit different in the Davisville and Leaside, real estate market here in Toronto. Now, Patrick, I wonder if you could quickly introduce yourself.

Patrick       

Sure. Good morning. Jeff Patrick Rocca with Bosley real estate here in Leaside and Davisville. One of the top agents in the area. And with regards to light at the end of the tunnel, I’m not sure the lights ever went off in the tunnel.

Jeffrey       

Yeah, I understand. It seemed like at least in 2020, when it first started, there were a couple of weeks where there was a, a huge downturn as both buyers and sellers really didn’t know what to expect, but then, you saw, and a lot of the other agents saw a rebound in, in the market as people started to get with it and understand, that maybe this wasn’t going away anytime soon, but still, if you need to move, you’re going to have to find a place to live.

Patrick       

Yeah. It’s been a very, very interesting run for the last 18-20 months. I mean, it continues to defy all odds. The prices can continue to increase. I mean, it’s just when, when will it end? I mean, and I don’t see it ending anytime soon. I mean, this is strictly a supply issue always has been and the supply is even tighter as we speak today. I mean, I’ve never seen it this tight in my 28 years in the business.

Jeffrey       

Yeah. And we’re seeing a lot of that driven by a bunch of different factors. we, we talked at the beginning of pandemic about people kind of moving out of the city, realizing that they could work from anywhere. And then we saw some folks coming back into the city. But as you, you, as you say, this supply is the definitely limited, I mean, the amount of, of new homes getting constructed in the GTA is, is never a, a large amount. And especially in this core of the city, there is very few things except condos, which are in construction.

Patrick       

Correct. And the government talks in their infinite wisdom about how they’ll fuel the market and, and whatnot, and they talk about taxes, and they talk…. Well, none of that’s going to help until they start building more product. And yes, condos are being built and they’re on the rise, but I mean, we need single family houses as well. It’s not a good situation.

Jeffrey       

And the, the interest rates, the government bank of Canada has signaled that they’re going to be looking to increase rates to cope with rapid rise in inflation. And I think we talked about this back in the summer, you mentioned it’s never a bad idea to go out and get pre-approved just in case something happens with the rates. Do you see anything happening sort of in the short to midterm in terms of rate rise?

Patrick       

I would be actually shocked quite frankly, if we don’t see a rate hike in the next 30 days I think we’re due for it in March or April and, and quite frankly, again, I don’t know what impact that’ll have on the market. So I mean, , just to give you, I mean, they’re talking about two or three or four rate hikes in a row. So let’s say the quarter point or, half a point, let’s say they add up to three quarters of a point. I mean, honestly, is it going to knock some people out of the markets? It, it, it may, it’s going to fuel people to get into the market. And, and again, there is nothing on the market, but I, I’ve been talking to a few people in, in the past couple of weeks because there is concern, about rates going up and what should people do? And I mean, our price is going to drop, should people wait? I absolutely don’t see that happening and I’ll just, I’ll use one of my recent listings on, on Millwood Road. About two weeks ago semidetached unfinished basement. We listed at a 1.399M. We had 97 showings in a week

Patrick       

We sold it for 1.8, a record for a semi without an addition in Davisville. So, let’s hypothetically say that rates jump a point and you lose half of those buyers. You still got 45 buyers in the market that are looking something that doesn’t exist. and there’s just, and again, it all goes back to supply. I mean, right now in Leaside seven listings, Davisville 14, and a lot of those listings are retreads. When I say retreads, they’ve been on and off the market for the last several months. Right. Anything that’s good that comes out priced well sells immediately. So again, I don’t know if the, the, the rate thing is going to do anything. ultimately it, it always, it always does knock some people out of the market, but I just don’t see that happening.

Patrick       

And I mean, I’ve been always known to be the eternal optimist, but I, again, I just don’t see it. I mean’s fundamentals aren’t there. So, I think if you’re selling, it’s a great time to sell if you’re buying. Yeah. You, you, you want to buy, I mean, you want to try and get in now, because I just don’t see it changing. I mean, if you wait, it, let’s say you waited from like November to now to buy, we’re already up 10% in the first six weeks of this year. I mean, so, I mean, you waited for what you waited for prices to rise and, it’s, it’s kind of a, a double-edged sword, right?

Jeffrey       

Yeah. And, and I’ve been noticing there’s still a lot of renovation activity, construction activity within Davisville and Leaside. And I’m wondering, if given what’s happened, the people who’ve, moved out of the GTA are kind of moved out now and people are really staying put, and they’re saying, “Do I want to move if I don’t have to?” But yet there is still that demand. So, like you said, the supply is dwindling for, for these resale houses. And, people are thinking, well, I want the city and I know that this thing is going to end at a certain point in time, but I’ve been looking and I’ve got shutout of, you know a bidding, four or five times. So how am I going to be able to get the house that I want in the neighborhood that I want? So, people are really starting to ask that question. And are you seeing that people’s expectations are changing about really what they can buy in terms of buying a real fixer upper or just anything they get their foot into?

Patrick       

Well, I am seeing that I’m having that conversation more. So, over the past couple weeks, I had a conversation with a client of mine last week and same sort of thing. They got a budget, 2.2 to 2.4 M. And right now, for that, you can’t get anything- it needs work. And, before Christmas, that might have been 2.0 or 2.1M. So, what I’m saying to people now is, try to tone down your expectation and get in the market, get in the location, find the house that is in a good location, and that you can work with over time and, and do the work. Because if you’re looking for the perfect house you’re going to pay. And I mean, even the non-perfect house, I mean, we’re seeing fixer uppers, like I said, selling for 2.3, 2.4M.

Jeffrey       

And that’s really an interesting development. And I know that, it’s been kind of I don’t want to say the tradition, it’s been common for buyers to forego home inspections, or if you’re dealing with a, a reputable seller, maybe they’ll have a home inspection done before. So, it’s not an impact, when, when you’re advising a buyer how important is a home inspection, especially if the, the word on the street is that you’ll have to do some work on this house.

Patrick       

Well, the home inspection is very important. There’s no doubt about it. And, and I think you touched on the point that most reputable agents supply a home inspection. I mean, all my listings, I pay for a home inspection. That’s just the way it is, because I don’t want to have to go through number one, it takes two, three hours to do an inspection when you’ve only got a five or six day window to market a property. I can, as a listing agent afford to block off three hours for one agent, I’m doing 30-minute appointments now, no double bookings because of COVID. So, I mean, I’m supplying the inspection, interestingly enough, as you go outside of the 416. For example, my, my buyer agent was showing some property 905 yesterday. Those agents they’re either too cheap or lazy. And I hate to say that, but they’re not supplying home inspections. I mean, I was looking I was down in Niagara region last week. And I looked at a couple houses, not one of them had home inspection, so I would’ve had to do my own, which I, I find rather bizarre. So, I mean, in the 416 the good agents are, are supplying the home inspection. And I think it’s critical. And if you have, if they don’t and you have to do one, you’ve got to do it.

Jeffrey       

And that highlights an interesting situation that I see sometimes you see a real estate listing and the agent is not from the area. And I’m a little bit perplexed. I understand maybe that somebody has a friend or relative that’s maybe a operates another area, but I still think that local knowledge is, is very important because even if you’re a real estate agent, you’re licensed to sell a house, if you’re a seller or buyer, you may not be getting all the information you need about the market. Even if you do look at the comps on MLS.

Patrick       

Oh, a hundred percent. I’ve always been a big proponent of being a local and hiring someone local. I mean, case in point, like I said, I was looking at some houses in Niagara region. I mean, I’m not representing myself. I’m going to hire someone who’s local, who, who, who can assist me and talk to me about values and about, what’s going on in the community. And I see a time and time again, where they hire the friend of or the cousin of the friend of the next-door neighbor. And they’re not even from the area. And you see that you see a lot of 905 agents coming into the 416 and vice versa doing listings. And I just don’t agree with that.

Patrick       

And I mean, the agents that are coming into the 416 that are doing them, that aren’t from the area, and they’re not even doing home inspections. I mean, it’s just, it’s not good. It’s really not good. I mean, and I personally run into this all the time. It’s not a new phenomena. I mean, I’ve just recently in the last couple of weeks, lost a few listings because of this, because of, a friend of a friend or, it’s just bizarre are. And, and I watched the houses and I watched ’em come to market. And one in particular was in the market a few weeks ago in Davisville. And it was just not marketed properly. And it sold in my opinion for a hundred grand, less than what it should have. So, I mean, but people make decisions for a reason, right? It,

Jeffrey   :   

Yeah. And, and even, you’re, you’re mentioning the seller side, that may be a significant price hit, but also on the buyer side, when you’re going up against, like you said, you had 90 showings, how many offers did you get? You, you really need someone to say, is this enough? And also, how much is too much, if you go in with your best and final offer, you need someone who really has a sense of not only the, the property, the neighborhood, but also the other agent, like, what is, what is their strategy, if you you’ve ever kind of been on the other side of a deal from them?

Patrick   :   

Yeah, no, that’s, it’s really important. I mean, and on the buy side, I have a, an agent that works with me. She’s my buyer rep. And she’s very knowledgeable. She’s very good. She advises clients accordingly. You need that knowledge as a buyer agent. I mean, I do primarily listings, but I, like I said, I have a buyer agent. I mean, as a agent, you need to know the area. I’ve heard nightmare stories about buyers who have bought houses and their agent didn’t even know that there was a condominium going in the backyard.

You hear these nightmare stories all the time. And I mean, it, it’s one thing to, to, to try and think you’re going to make a quick buck. If you, if you go to Hamilton to show a house, but you, if you don’t know Hamilton, or if you don’t know the market, why would you,

Jeffrey   :   

Yeah. And, and that is another great point is that there’s a lot of intensification going on. we see it in Davisville close to the, the main streets. The city is really promoting densification because really there’s nowhere to go, but up. And so you see that the, the condos and the, the multi-families are starting to, I don’t say encroach, but they’re starting to get more common in these traditional single family house areas. And you’re absolutely right. If you don’t know the development a calendar what’s going on, your, your view may blocked by a shadow of a condo, and you may not have any recourse because that was approved under the previous owner.

Patrick   :   

Yep. A hundred percent. And then again, I see that quite frequently and it’s yeah. It’s not good. I do want to sort of backtrack for a second touch on one of your other points about people staying put and people doing renovations. I mean, obviously you probably see that at a bit more from your field, but I mean, personally, interestingly enough, I’m seeing a lot of renovations on, I don’t know who these people are. I don’t have clients calling me saying, “Patrick, I’m staying, I’m not, I’m not doing this. I’m not looking for something else.” I still have people that are wanting to move, but they can. Cause there is nothing. I mean, I’ve had clients in the past year, literally that had to wait for more than a year to find what they wanted because there was nothing available. Now I have heard of a few people that are doing renovations, but it’s not, I’m not seeing that right now. I don’t know if you are, but it’s not becoming a, the hell with this. I’m not getting involved in this market. I’m staying, I’m going to add on, I haven’t seen that as much yet. 

Jeffrey   :   

I would say about 50 / 50. There’s a couple of homeowners in this area that are doing that, long term. And I think like, you, you, you mentioned they kind of are looking around and for them to get into a move up home where they’re going from like a three to four bedroom, they’re going to tack on an additional $1 million over the already, inflated sale price they’re going to get for, for their home if they want to stay in the neighborhood. So, they’re thinking, do I spend that on a new home where I know I’m going to have to do some work or do I put that money into an addition and, and kind of, re refinish or re remodel the space that I have. So, a bit of, a bit of half and half and the other half, obviously someone buys and they know they’re going to have to do work.

Patrick       

I’m seeing that. I’m seeing that people that are buying and then they want to do work right away. And as you know costs of construction and cost of materials have risen drastically in the last year or two. So, it’s what used to be, you know a $500,000 renovation is now a 7 to 750 thousand dollar renovation. You know what I mean? Because of costs. So, it’s yeah, it’s interesting.

Jeffrey       

And, and I think that people are, I don’t want to say becoming a little bit numb to that fact, but they’re saying, okay, I’m going, and I’m basing my addition on, spending a million dollars extra to get into a move up house. So, if I spend 800 grand, I’m doing okay, I’m like 200 less than I thought I’d have to spend, however, that is still a ton of money. And I find that when you invest so much into, with these original houses, depending on the street location, you may price yourself at the top of the market. What if you finish the renovation and you have to move, you really don’t want to be at the top of the market for a specific product.

Patrick       

Yeah, exactly. Specifically at the market, collapses a bit. Right.

Patrick       

But I mean, honestly, I just, I don’t know if that’s going to happen or when that’s going to happen. Interestingly enough, I was reading the Miami paper this morning Miami, Florida, and for the first time, and I don’t know how many years they actually had price drops in real estate which hasn’t happened. So, I don’t know when that’ll happen here, if that’ll happen different, obviously economics, different everything. But it’s interesting to see that it’s the first time I’ve heard of a market, that’s actually had a drop in prices, the Florida market. I follow because I have I’m invested there has been like crazy, like everywhere else. I mean, and it’s not just, like I said, many times when we’ve talked, it’s this isn’t a Toronto thing. This is a Canadian north American. I mean, prices are crazy everywhere. Right?

Jeffrey       

Yeah. And there’s different strategies for getting into the market. So, you’re seeing all sorts of people tapping different ways to get in. But I think we’ve been talking for, four or five years. And I think I ask every time, do you think the prices are going to go down and you say your crystal ball is broken and fell on the floor rolled under the couch. And we honestly, on average, we have seen it in this area, in the core of the city. It just hasn’t gone down. So you, you, this is exactly what you mentioned. If you want to buy don’t hold off thinking, you’ll be able to time some sort of price decrease.

Patrick       

Yeah, no, a hundred percent. I mean, I’ve, I’ve always been of the opinion. And like I said, I’ve been saying this to several of my clients recently get in the market. Once you’re in, it’s good. You can always move around or try to move around but get in because you know what you’re paying today for 1.2 is likely going to be 1.3, 1.4 in a year. So, you’re better to be in than to chase the market or wait for it to drop. Cause I, who knows when that’ll happen? Yeah. I mean the old crystal ball’s broken thing is still sort of true.

Jeffrey       

Yeah. Fantastic. So, Patrick, it’s always a pleasure. If any of our listeners want to get a hold of you, what’s the best way to find you?

Patrick       

Yeah. They can call me directly through my office at 416-322-8000. Ultimately the best way to get hold of me is by email. I’m always on my phone and I have my email rate connected to me. So, it’s mail@patrickrocca.com.

Jeffrey       

All right, Patrick fantastic chatting about where we are, and I know we’ll chat again soon and good luck with the rest of the spring market.

Patrick       

Thank you, Jeff. 

© Bosley Real Estate, Brokerage **Independently Owned & Operated416-322-8000103 Vanderhoof Ave, Toronto, Ontario, M4G 2H5
Toronto real estate leads by InCom Real Estate