There’s some
surprising room for optimism when it comes to the health of the real estate
market in the Greater Toronto Area (GTA).
But- like
many things in life – it depends on perspective. And on who you ask.
On Monday,
real estate expert John Pasalis, President of Realosophy Realty, highlighted on
Twitter that low-rise inventory levels fell below two months last week in the
GTA, while condos fell below three months of inventory. “These are all signs of
a market that is gradually heating up which is consistent with what I have been
sharing here,” wrote Pasalis.
Of course,
low housing inventory usually means that buyers will typically pay more for
homes because the demand for the limited number on the market tends to be higher.
“I have no
idea if inventory levels plateau from here or trend lower or higher. But in a rapidly
changing market is moving between the start & end of the month,” wrote Pasalis
in a subsequent Tweet. Pasalis was quick to tell STOREYS that he’s not
suggesting the market is remotely close to being as competitive as it was last
year, just that it’s more competitive than it was in the fall.
Inevitably,
users chimed in to offer their two cents in dispute of Pasalis’ apartment optimism.
“Oh here we
go again lol what’s the total inventory on the market compared to the last 3
years? It’s much higher,” one Twitter user wrote. “The market will be far from
hot this year… it’s ppl catching a falling knife thinking rate cut[s] are
around the corner… they will be disappointed.”
According to
expert predictions, the Bank of Canada’s aggressive perpetual rate hike campaign
may come to an end. But that doesn’t mean they’re going to drop significantly
overnight- it will take time.
“Hey John,
this data feels a little misleading. Where are the sales?,” wrote another
Twitter user. “What does it matter if a bunch of people took their homes off
the market, the sales data certainly shows plenty of weakness. Seems more like
a stalemate with unrealistic sellers than a hint of a new bull market.”
For some,
there remains a narrative that the housing market will continue to tank as we
move further into 2023. After all, we are deep in a climate of sky-high
interest rates and stagnant home prices.
“There are significant
economic vulnerabilities ahead in our housing market but some agents are
concluding that these risk suggest the market must be trending down – which of
course is not necessarily the case,” Pasalis tells STOREYS.
Pasalis also
says that many people may be making what he calls “simplistic conclusions”
because sales are close to a 20-year low, so they may assume that the market is
trending down. “But the path of home prices is a function of both sales and
inventory levels and new listings are also close to a 20 – year low” say
Pasalis. “If inventory levels remain low it keeps the market competitive, even
when sales are at close to a 20-year low.”
While some may
focus on slumping sales numbers or flat prices, there are strong indications
that the market may not be in as rough shape as today’s headlines would
suggest.
“On the
ground we are seeing for more competition on homes, more homes getting multiple
offers and receiving more offers than we were seeing in the fall,” says
Pasalis. “This is coming through in the numbers as well with inventory levels trending
down (which is a sign of a market that is becoming more competitive) and the
percentage of low-rise homes selling for more than the list price is at its highest
level since July.”
However, as
he highlights on Twitter, it’s still quite early to make predictions for the year,
and that these are short-term trends. As he highlighted in January, the only
trends Pasalis predicted for the year were prices remaining flat or trending
down.
Lat week,
the Toronto Regional Real Estate Board (TRREB) released its anticipated 2023
Market Outlook & 2022 Year in Review Report. Offering optimism for realtors,
the report suggests an uptick in GTA real estate activity in the second half of
the year. According to the report, the second half of the year will see a
gradual uptick in home sales in the GTA, along with an increase in competition
between buyers, with a renewed upward pressure on home prices.
In the
meantime, the reality remains that sales have slumped across the city. According
to TRREB, GTA home sales were down 44% year-over-year in January. But, we’re about
to head into spring – a time when sales typically start to trend up – so only time
will tell the fate of this ever-dramatic market.
Written By:
Erin Nicole Davis
Source By:
STOREYS