December 2020 Gta Real Estate Review with Lawrence Mak

January 13, 2021

December 2020 GTA real estate review.

We sit down to talk with Lawrence Mak, a Mississauga On real estate agent with eXp Realty to talk about the December 2020 GTA real estate market.

We discuss another record breaking month and some surprising stats on condos and rentals. Join us for the full discussion below:

Lawrence Mak’s contact info:

Website: www.lawrencemak.com
Facebook: @lawrencemak.realestate

 

Don’t feel like watching? Find the full transcript below!

Chris: [00:00:00] Welcome. Today we’re going to talk about the December real estate numbers just released by TRREB. And I’m joined by one of my great friends and colleagues, Lawrence Mak, a Mississauga real estate agent. Lawrence, are you there?

Lawrence: [00:00:16] I’m here. How are you doing, Chris?

Chris: [00:00:18] Good to see you. Happy New Year.

Lawrence: [00:00:20] Happy New Year.

Chris: [00:00:22] Excellent! So, Lawrence, lots of buzz about the December numbers. I think we’ve broken some records. I’m curious to see what you are seeing and how those numbers are breaking down for you as a realtor. Why don’t you go ahead?

What happened in December?

Lawrence: [00:00:36] Awesome. Well, let me share my screen. Give me a second. There we go. So December, this is based on just the December numbers and not 2020 as a whole, but specifically, in December, we’re talking 7,180 sales. This is across all the different types of houses and across all the GTA, which is up 65% since last year. And the average selling price is about 932,000, which is up 11 % from last year. So what’s with all the different types of houses and but condo apartments specifically have been going down overall, just about 2% overall. And specifically downtown Toronto, it’s about 4.6%

Chris: [00:01:19] Are you shocked to see those numbers?

Lawrence: [00:01:22] Not quite. You can see the going trend because of covid again, everybody is trying to get out of the downtown core.

What are the problems?

Lawrence: [00:01:29] So you have problems such as no more Airbnb. You have problems such as the student housing, the rental market there isn’t quite there because you can do virtual learning and international students are no longer living here. So there’s a lot of reasons why that’s happening. And plus, people want more space. Yeah. OK. Overall, in Toronto, as you can see, typically you have a spring market, it goes down to the summer market and you have the fall market this fall, market was quite extended, probably pent up demand from the previous spring. And you can see a peak around October. And now we’re down a little bit, although we are down a little bit in December compared with November. It is quite significantly up since the previous year, up 11 %.

Chris: [00:02:09] And this is what we’re looking at here, prices on this graph.

Are average prices up?

Lawrence: [00:02:13] Yeah, this would be the average selling price. On average, the price sold for 932,000, which is up 11% from 2019.

Chris: [00:02:21] Got it. Wow, that’s incredible.

Lawrence: [00:02:23] That is quite a bit. So this is the snapshot of the different types of houses, just to give you a quick idea, the detached home market is going crazy. A massive inventory usually around one month or less, and a list prices pretty good, close to a hundred percent, a few weeks, days on market kind of thing. But the main thing you need to look at here is the Toronto condos, which have been a lot of sales.

Months of inventory is about two months of inventory. What that means is that there’s about.. If everybody if no additional condos came on the market, it’ll take about two months to sell. All right. That’s significant since previously it was measured in weeks and as measured in months.

The condo market is less hot than usual

Chris: [00:03:03] Right. And the average day, it feels that somebody is trying to sell a condo right now, reasonably, they should expect between 30 and 60 days to sell.

Lawrence: [00:03:13] Yeah, pretty much. And plus, this is the number based on whenever a property is listed and then tried to sell.

Lawrence: [00:03:20] It does not really include when a property is listed, delisted and real estate and the deals in real estate again.

Lawrence: [00:03:26] So the number is probably higher by a little bit, but we don’t know what the actual number is unless you do complex calculations.

Chris: [00:03:33] Now I’m looking at the, sorry at the bottom if we can go back to that, if it indicates between 0 and 3 months of inventory is still considered to be a seller’s market. So it’s not as if the sky is falling.

It’s still a seller’s market in the GTA

Lawrence: [00:03:45] Correct. It’s been pretty much a seller’s market in the GTA for many, many, many years.

Chris: [00:03:51] Hasn’t figured it out in decades now.

Lawrence: [00:03:53] Yeah, possibly decades.

Lawrence: [00:03:54] I mean, it hasn’t really been a in the buyers market in certain pockets, but in general, the real estate market is very robust and that the values hold and the share going up.

Chris: [00:04:05] Right.

[00:04:08] So this is the conductor on the Toronto condo apartments, and they did some weird thing, which goes up and down, up, down. We’re roughly here. First of all, it’s gone down since October. The second thing is, as you notice, this is the previous line for 2019. We’re actually down about five percent from the previous year. Right. And this is in terms of sale price. This is in terms of sales price. So previously, when condos were appreciating $50,000 per year or 15 to 20 percent appreciation year over year. Now we’re talking a depreciation of about five percent.

Changes for foreign buyers

Chris: [00:04:42] So right now, when we can, you know, that trend, that downward trend seems to be pretty good. Well, we’ve seen it before. I’m looking at what year is that? The Burgundy? 2017. There was a similar dip at the end of the year, as well as when the B 20 rules came into play.

Lawrence: [00:04:58] Yeah, and here’s where the foreign buyer’s tax haven. So, yeah, there’s always a lot of things that affect the market. But they’re going to right now, as you can see, it is going down. I mean, anecdotally, we’re seeing that the inventory is starting to tighten a little bit, but it’s still, in my opinion, a little bit more of a buyer’s market than it was previously.

Chris: [00:05:19] Sure.

Lawrence: [00:05:22] So these are the ideas of the Toronto condo rental market. This is only based on Q3 of 2020. We don’t have the Q4 results yet in Q3, which would be the third quarter of last year. We’re talking about the number that is just for lease. We’re talking about 35,000 for lease. And this is an increase of 114% from the previous year. So the previous year had maybe 16,000 units that were for lease and now we have 35,000. So there’s a significant number of people trying to rent out the number of people who actually rented it was about 14,000.

As you can see, these are the average prices of rental per month and it’s gone down since the previous year, 2019. So maybe a single bachelor would have been like 1800, 1850, something like that. Now it’s only 1600 per month as of Q3 of 2020. So as you can see, as a landlord, owning right now isn’t the best time. The general recommendation is if you could hold it, try to hold it because a lot of people are trying to sell or rent it.

What about evictions?

Chris: [00:06:22] Right, right, right, right. OK, I see that that trend downward. So what are we looking at here?

Lawrence: [00:06:27] We’re looking at a map of evictions and I believe it was a two-week period.

Lawrence: [00:06:32] This is from the LTV, the landlord tenant board. And there are quite a lot of eviction notices and hearings that just gives you a snapshot of what’s happening. So it’s not right. It’s not that easy to be a landlord just to own a place and rent it out and make a whole bunch of money. I mean, that’s you know, that’s a myth, right? It takes effort.

Chris: [00:06:55] Well, let me ask you, Lawrence. I mean, if you’re a landlord who owns property, condo or detached or a townhouse when you see something like this, should there be a concern?

Chris: [00:07:09] I mean, what what kind of guidance do you have to wait it out or do you try and dump the property Now, what what’s your guidance as a realtor on this?I don’t see it unfolding.

Is it a bad time to own rental properties?

Lawrence: [00:07:21] Typically, my guidance doesn’t have to do with the specific property. It has to do with the situation of the person who’s holding the property. So some people were speculating, maybe with Airbnb had a few properties and now they’re not making any money. You should pretty much dump them all now because it’s very difficult for you to hold them off in front of you.

But if your long term goal is you want to have three, four or five income producing properties over the long term, and this is really just a little bit of a blip in the whole situation over the decade horizon, I think it’s OK. And I would probably recommend to try to wait it out or maybe rent out for a slightly lower just to get the cash flow. And then when everything gets better, then it’s OK. But if you sell it now, you’ll probably be selling it a little bit of a discount.

Chris: [00:08:03] Right? Right. Right. Depending on when you bought it, of course. But I think it’s important for your cash flow.And, you know, one of the amazing things that I think as as a broker and dealing on the financing side is we, of course, have very strict stress tests in order to qualify for a mortgage and all those stress tests. There is a lot of criticism over the years about how the government was manipulating and changing things and making it difficult for borrowers. But in hindsight, hindsight, 2020 that may have saved the market from collapse. And we’re showing a lot of resilience, aren’t we?

Lawrence: [00:08:45] Yeah, we are. I mean, in general, I always feel that the Toronto real estate market is very robust. I mean, where else would you want to live, really?

Chris: [00:08:54] We have such a Toronto thing to say. We are the center of the universe.

Lawrence: [00:08:58] We are we are the center of the universe. Like I tell people, you know, if you’re going to pick a country to live, I mean, my top picks would be Canada, US and Australia and maybe not the US anymore.

Lawrence: [00:09:07] And if you’re going to live in Canada. Right. Toronto, Vancouver, Montreal. So if you’re anywhere in the world and you had money and you’re leaving, like, where do you want to immigrate to? And I feel like Toronto is always going to be the place to be. So my point of view, I think it’s very robust.

Chris: [00:09:23] Yeah. We’re so fortunate. I think you hit the nail on the head, Lawrence. We’re going to leave it there. I really appreciate your time. If somebody wants to get in touch with you to talk further about real estate and what their needs are and what guidance you can offer, what’s the best way for them to get in touch with you?

Lawrence: [00:09:39] Best way to give me a call myself 416 276 4895 or find me on social media. Just go to my website at lawrencemak.com

Chris: [00:09:48] Awesome. Thanks again, Lawrence. We’ll see you in a couple of months.

Lawrence: [00:09:51] Awesome. Appreciate it. Thanks, Chris.

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Christopher Molder

Mortgage Broker

Christopher is a mortgage broker based in Toronto, Canada. And a son of a broker too. He’s a second generation mortgage broker. Following in his father’s steps he joined the family mortgage business straight out of university.