At the very beginning of this year, I shared with you that I could feel a very strong momentum coming from end users and 2024 would be all about getting out of the bottom.
Here comes the official market report for the first month of this year.
Let me quickly remind you of the sales graph for the past 2 years so you have a perspective of where we stand right now.
We had the peak in early 2022, then went all the way to the bottom because of the rate hikes.
During the first 5 months in 2023, we actually saw a very strong recovery before the rate hikes hit again.
So how do we compare the first month of this year with the first month of last year?
Overall sales were up a whopping 37%.
This momentum is suggesting that we may see a much stronger recovery compared to the first half of last year.
Let’s break things down and take a look at different market segments.
We’ll start with the low rise market and that includes detached, semi-detached and townhomes.
In the 416 area, if you compare the number of sales in January 2024 to January 2023, it’s up 17%.
But in the 905 area, we saw a 40% increase in sales activity.
The 905 suburbs got a bigger hit during the down time and were not as resilient as the City of Toronto.
So why are we suddenly seeing a much more significant increase in sales in the suburbs?
Let me tell you the reason behind.
What’s really happening is that prices for big houses have gone down quite significantly, those $4, $5 million dollar houses have come down to the $3 million dollar range.
People are seeing this as a great opportunity to upgrade their principal homes, say from the high $1 million dollar range to the $3 million dollar range.
Yes, the price of their original house must have dropped too, let’s just say $400,000, but those bigger houses would have dropped a million dollars.
The same applies to people who are upgrading from townhouses to detached houses.
You see, people are actually taking the advantage of the current market to upgrade at a big discount.
This is the driving force behind those sales activities.
Earlier this week, we were just in a multiple offer situation for a house in the $3 million dollar range, there were 3 offers on the table.
During the peak times, this house would be at the mid to high $4 million dollar range.
It was asking for high $3 million and our client won the bid with mid $3 million.
In the current market, it is still possible to get some good deals because prices are still more or less flat compared to the past 6 months.
But I think that’s going to change very soon with the number of activities we are seeing.
What about the condo market?
Let’s start with the condo heavy area, 416.
If we compare the sales activity we saw this past month to one year ago, we saw a 46% increase.
Even in the 905 suburb areas, we saw a 31% increase.
This is what I have been trying to tell you, condos are entry level products and the price gap between high rise and low rise is going to drive recovery in the condo market.
Once prices start to climb again in the low rise market, we will see an even stronger recovery in the condo market.
At the moment, prices are still flat in the condo market, so things are definitely not crazy, we are just seeing a lot more activities compared to the past 6 months.
There are 2 types of buyers who are active in the current market.
The first type is end user buyers who want to get into the market.
Our client had her eyes on a particular condo building in downtown Toronto and she had been waiting for a suitable unit to come out for the past 3 to 4 months.
Nothing.
A couple weeks ago, she was like I don’t want to wait anymore, I’m afraid that I would miss the opportunity in a slower market.
That’s literally what she said.
So she found a 2 bedroom unit with lakeview in another condo building, multiple offers again.
She won it in the end with a price that she’s happy with and still below asking.
That’s the market sentiment right now with end users.
They are a little bit worried that the market would be picking up too fast.
The second type of active buyers are investors who want to get deals.
They are only interested in things with a huge discount off the market price.
If you are subscribed to my Deal of the Week emails, you have seen those deals, original buyers cannot close the units and sell them at 10, 20% discounts.
The market is not flooded with this kind of deals, I actually spend a lot of effort digging them out every week, so every time I send them out, they get sold pretty much right away.
Investors are actually more active than I thought.
By the way, if you are not subscribed to Deal of the Week, you can subscribe now.
This January market update has been more story telling rather than data analysis because we need to see a few more months data before we can do some meaningful analysis.
I wanted to share more front end stories with you so you can understand the chain of thoughts behind people’s buying decisions, that together with the huge increase in sales activities should paint a better picture of the current market for you.
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