Key points:
- Toronto’s condo inventory is flat, and many sellers seem to be waiting the market out, until a time comes when they can get a better sale.
- The rental market is extremely hot with prices skyrocketing as would-be sellers are choosing to rent out their units instead.
- The condo market is still, often, the first step into owning for many people in Toronto.
Where is all the condo inventory, Toronto?
Realtor Adil Dharssi joins me for this video, where we discuss the state of the condo market in Toronto. We discuss the lack of inventory, the red-hot rental market, and what might be coming in the future.
Adil’s contact information:
Email: adil@adilknowscondos.com
Phone: (647) 223-1679
Website: https://www.adilknowscondos.com/
Don’t feel like watching? Find the full transcript below!
Chris: [00:00:11] Welcome, everybody. I am joined today by Toronto realtor Adil Dharssi from adilknowscondos.com. Hey, Adil, how are you?
Adil: [00:00:22] How are you doing, Chris?
Chris: [00:00:23] Good. Very good. Thanks for joining me. I wanted to get your insight because I saw a very interesting blog post that you recently published and it was a little bit of a mystery. Here it is here. I’m doing a screenshare. Hopefully you can see that. This is your website, adilknowscondos.com and you’ve titled it Where is the Fall Market Inventory? So in this article you are talking about something that you’ve observed which is falling inventory in the condo market, which is unusual because I think there’s a sense right now that things aren’t selling. So that would suggest that maybe inventory is growing, that there’s this ballooning inventory and impending doom, but you’re seeing something different. So what is it that exactly you’re seeing?
Toronto condo inventory is flat
Adil: [00:01:19] Yeah, that’s exactly right. Unusual, out of the norm, are probably the right words to describe it. It is typically in September, right after Labour Day, you know, the fall market kicks into high gear. Sellers are ready to sell. Inventory naturally goes up. Just the seasonal trends and activity goes up. Buyers are back from their vacations of the summer and the back to school mentality kicks in. And so I’ve been actively watching inventory levels day to day after Labour Day saying, okay, when’s this spike coming? When are we going to see this big push in inventory, condos and houses? And it’s been the opposite. Our condo inventory has been flat and somewhat dropping over the last three weeks or so, and it’s down pretty dramatically from August, which is completely out of the norm.
Chris: [00:02:10] Right. So so in your article here, I can see some numbers. I won’t do the screen share now, but on August 4th, at the beginning of August, which is, as you pointed out, traditionally a very slow month, there were 1473 active condo listings.
Adil: [00:02:29] Correct. That’s in the the C1C8 regions of Toronto, which is basically like the financial district plus or minus a 15 minute walk either direction.
Chris: [00:02:39] Gotcha. So let’s call it the core. And yeah, September 21st. Now, you may have some updated numbers for October, but September 21st, the inventory was down. And again, September is traditionally we’re listing spike, we’re down by over 200 listings to 1270 listings.
Adil: [00:03:01] Yeah. And I actually ran those numbers again yesterday and they’re exactly the same. 1270. So resale. So sellers are not rushing to sell their condos downtown. That’s pretty much the.
Chris: [00:03:16] Right.
Adil: [00:03:17] Conclusion of of September as of right now.
Chris: [00:03:20] So people aren’t eager to sell. But let me ask you this. So of of those, I guess there are two questions then that come to mind, of those condos that are listed, the available listings, how many of them are selling? Are they moving?
Sellers are waiting it out
Adil: [00:03:34] That’s that’s probably the more important part of the of the of the analysis. And that’s a very good point. So inventory, we’ll call it as flat versus an expected increase. Sales, we’ll get the numbers probably in the next couple of days. Sales are down and I think that was pretty much expected with interest rates and a lot of people saying, I’m going to wait or I’m going to wait and see or whatever the reasoning is. So sales are down. But I think, not seeing inventory go up will start to push some of those buyers who maybe are on the sideline to say maybe it’s not going to get as bad as I’m hoping it’s going to get so that I can get that deal that I’ve been waiting for. And I think that’s what sellers are basically saying. I’m not going to dump my place. I’m going to, and I think this might be the next part of the conversation, I’ll just hold on and rent it out instead.
Chris: [00:04:34] Right. So in in your article, you have a hypothesis and a conclusion at the end of it, which is pretty interesting. And we’ve touched upon it just here. So what is the hypothesis? I mean, what what are you seeing as a realtor for those that aren’t selling? What are they opting to do instead and why? What’s what is going on with the rental market?
Adil: [00:04:58] Well, the rental market, in one word is bonkers. So that’s the technical.
Chris: [00:05:02] Technical, the technical term.
Adil: [00:05:04] The technical term.
Chris: [00:05:05] Official term, bonkers.
The rental market is HOT
Adil: [00:05:06] Yeah, I, I do a ton of rentals every year doing it for since day one, and I’ve never seen a hotter rental market in my career. And landlords or sellers who are not able to sell their units are thinking, okay, what’s the alternative here? Like, I don’t want to give away tens of thousands of equity that I’ve built up over the years in a market that’s not ideal to sell in. And I just have a conversation. I’m like, hey, what if I can get you 25, 28, 3000 a month in rent? And you know, it’s not an ideal situation for everyone, but at some point you realize, yeah, that sounds pretty good and I’ll just ride it out until the next upswing in the market, which there will be. There always is. I think people seem to forget that markets go up and down and down and up and they’ll just ride it out and pocket that 3000 dollars a month and it makes life a lot easier.
Chris: [00:06:03] Yeah, certainly. I mean, that’s incredible because, you know, it’s so funny because during COVID it was the complete opposite, right? Everybody was freaking out. You couldn’t give away a rental.
Adil: [00:06:14] You couldn’t, literally words from my mouth. You couldn’t give away your property for sale or for rent. And it was a big issue. We’ve got the saving grace in that time if there was a saving grace, was the drop in interest rates. So it cut investors or anyone’s carrying costs if they were on a variable enough to kind of stomach the crappy, sorry, the bad rents you were getting.
Chris: [00:06:39] Yeah, yeah, they’re crappy, they’re crappy.
Adil: [00:06:41] Crappy rents and now interest rates are up and a lot of investors are on variables as I am as well. And it’s always usually the right thing to do. The higher rents are absorbing that increase in cost and yeah, it’s making life kind of balanced for everyone except for renters.
The condo market is a first step for many buyers
Chris: [00:06:58] Yeah, except for renters, of course, it’ll balance itself out again, there’s these wide swings of volatility. This, this changed the context of a changing world, creates volatility. And we’re seeing that this is this is where the rubber meets the road. So then I think the last question or the last observation here is, you know, from from my side as a mortgage broker, we’re concerned about affordability, qualification of mortgages. And it’s been highly publicized this month that affordability, housing affordability for the average Canadian has never been worse. So even though prices are coming down, the affordability of that isn’t meeting expectations because the cost to carry it are going up. So it’s actually, it’s a little counterintuitive when you hear affordability with declining prices. So it’s not balancing out. So that means people are qualifying for less and less. So the entry point into the market for most people is a condo. So if you have low supply and high, building demand, because affordability isn’t there, it may be setting up to be a perfect, when the logjam undoes itself, it may be the perfect storm to to drive condo prices through the roof again. I mean, this is speculation. We’re not suggesting that, I’ll be clear, but you could build a hypothesis that there is building pressure around condo prices that should support them. And we may not see a dip anywhere near as dramatic as some are predicting.
Adil: [00:08:37] Yeah, I mean, condos are the first step into the housing market in Toronto and most major cities, but Toronto, especially since that’s what we’re we’re focused on. And you know, if you want to buy real estate in Toronto and you’re looking at your carrying costs and your expenses, sometimes your only option is a condo. And that’s not a bad thing because we’re a condo centric city. I live in a condo. My parents live in a condo. Yeah, not a starter condo, but in a condo. And if you’re going to buy real estate and you’re going to be a first or a first time buyer and you want a first foothold into the market, you’re going to buy a condo and you’re probably going to buy in the downtown core. And that’s going to be the first kind of indicator of, I think, where the rest of the market’s going to go, because the condo market, the entry level condo market kind of is a leading indicator to the rest of the market. It doesn’t really make a lot of sense for the entry level point of the market to drop dramatically when that’s where the feeder buyer always goes to. You know, we’ve seen a a drop 10 per cent or so, but outside the core, we’ve seen 25, 30, 35 per cent drops in some of the suburbs where people were speculating on big, expensive houses. Right. We don’t see anywhere near that or not even I don’t even want to say anywhere near that. It’s not even in the same ballpark.
Need more help or information?
Chris: [00:10:02] And if somebody wants to get in touch with you to either talk about renting their unit, renting a unit, or getting entry into the market, what is the best way for them to reach out to you?
Adil: [00:10:15] Yeah, email is always the best. It’s adil, (A-D-I-L), @adilknowscondos.com, or you can text me anytime. My phone never leaves my side as much as my wife, 647 223 1679.
Chris: [00:10:31] I’ll flash all of that along the bottom of the video. Thank you so much for joining us, Adil. I’d like to have you more often so I look forward to the next update, maybe in Q1 of 2023 and see how this story evolves.
Adil: [00:10:47] Yeah, let’s see how right or wrong we were.
Chris: [00:10:49] Yeah. See you later, man. Very good. Have a good one. Thank you.
You can book a call directly into my calendar below, or get in touch with me here.
