The Toronto real estate market is bananas 🍌🍌 right now – despite a global pandemic and a province-wide lockdown. This isn’t actually unusual – we see an imbalanced market and frantic Buyer activity every January/February. And while REALTORS usually refer to this time as ‘an early spring market’, it’s time this phenomenon had its own name – I’m calling it the winter surge.
What happens during real estate’s annual winter surge?
- Buyers are eager – and aggressive during bidding wars
- Sellers are moving slowly and ‘waiting for the spring market’ to list their homes
- Strong Demand + Record-low Inventory = Rising Prices and new record-setting price benchmarks (Related: read more about benchmark-price setting).
- REALTORs one-up each other with stories of the crazy market they are experiencing
In just this past week, we witnessed:
- Off-the-charts Buyer showing activity: Listings for good houses in good neighbourhoods were getting 10-20+ in-person showings per day (despite the fact that most Buyers are narrowing the number of properties they see in person by touring homes virtually)
- Frenzied bidding wars: For example, last week: 27 offers on a home in Pickering; 71 offers on a townhouse in Mississauga; 37 offers on a house Toronto; and 5 offers on a downtown Toronto condo on its first day of the market
- Increasing prices: In Toronto, the average house sold during the third week of January 2021 got 108% of its asking price; in Durham region, homes sold at 111% of the asking price; in Mississauga and Halton regions? 106%. How crazy did it get? In Durham region: there was a house listed for 499K – it sold for 731K. In Toronto: Listed 897K, sold 1,351,000. In Mississauga? Listed 975K, sold for 1,261,000.
- Bully offers: Buyers are so excited about some homes that they are circumventing the ‘offer night’ process with aggressive bids in the first hours or days that a home is listed for sale. (Related: Read more about bully offers here).
- Sold prices that defy explanation: We’re regularly seeing sold prices that can’t be explained by the recent comparable sales. Some days, it feels like the crazy market of 2017.
So what’s fueling the 2021 winter real estate surge? How can the GTA real estate market be this hot in the middle of a pandemic?
1 – People are bored – and sick of where they are living. It’s easy to long for more or different space when you’re cooped up with your virtual-schooled kids and also-working-from-home spouse. Scrolling through properties for sale while on a boring Zoom call is a legit hobby these days.
2 – Interest rates are at record lows right now – and Buyers know they can get more bang for their buck. Today’s discount interest rates are a full one per cent lower than they were in January 2020, which means a $600,000 mortgage costs almost $300 less per month than it did just a year ago.
3 – People have been hoarding cash – multiple lockdowns and a pause on non-essential travel have allowed first-time Buyers and upgraders to amass bigger down payments faster, triggering real estate moves that might not have otherwise happened for a few years. In 2020, Canadian disposable income or savings is expected to be 8% – from the more usual 2%.
Source: The Toronto Star
4 – Despite the pandemic, many potential homebuyers are feeling confident about their jobs and economic prospects. While many people have seen their jobs (or their entire industry) disappear over the last year, others have seen their incomes grow. The ‘K-shaped’ economic recovery that we are experiencing – where one segment of our population has more opportunities and the other segment has less – is impacting our real estate market too.
5 – Buyers are feeling ‘safe’. Today’s Buyers have embraced virtual tools and showings and have readily accepted the safety protocols that reduce the risk of in-person househunting.
If you’re thinking of selling your home in 2021, it’s time to seriously consider moving up your timeline to take advantage of the red-hot real estate market.
Key things to keep in mind if you’re looking to list your home for sale right now:
- Despite all the real estate market activity, it isn’t business-as-usual. While real estate in Ontario is deemed an ‘essential service’, the process of preparing and selling your home is different. Work with an experienced REALTOR who can help you navigate the new world. (Related: Find out how we’re helping sellers during the pandemic).
- Safety is paramount. It’s to your benefit as a Seller to provide virtual options and a safe in-person showing experience for potential Buyers. That means:
- Frequent cleaning, disinfecting and PPE
- Pre-screening potential Buyers and restricting how and when people see your home
- Working with an agent who provides HDR photos, floor plans, information and virtual online experiences that allow your home to be exposed to as many as people as possible while limiting the number of in-person interactions.
- Vacating your home during showings – or better yet, finding alternate accommodations for your family during the time your home is listed for sale. (True story: we converted one of our offices into a temporary apartment to house some of our clients while their home is listed for sale. They refer to it as the ‘BREL Hotel’ and we kinda love it.)
- The market is fluid and can change at any time. When your REALTOR gives you an estimate of the value of your house, know that it’s a moving target. We know the market is great right now for certain types of properties – but nobody knows what the future holds.
- You might want to re-think some of the pre-sale repairs and renovations you were planning, in order to get on the market faster. If your goal is to take advantage of the current lack of inventory and strong Buyer demand, don’t spend a month renovating your kitchen and risk missing the market. If you’re set on renovating before selling, be ready for building supply issues, challenges finding home service professionals able to work during the stay-at-home order and of course, the resulting higher materials and labour costs. If you want to get top dollar for your home, it’s important to balance the need to be on the market ASAP with your desire to make improvements.
- …but that doesn’t get you out of needing to declutter and stage. In many ways, home preparation and styling is more important than ever because Buyers will almost certainly experience your home for the first time, online. Many top agents (including the BREL team!) offer professional staging as a standard service, included in the commission. (Related: Staging is Just the Beginning)
- Hire the right REALTOR – or better yet, a team. Because time is of the essence, make sure the REALTOR you hire has the capacity, resources and connections to bring your home to market quickly. Top teams in Toronto have in-house staging and marketing talent that they can deploy quickly to make sure you don’t miss the current market opportunity.
- You need to be strategic. Your REALTOR will help you identify the right strategy: timing, pricing and marketing – to get you what you want. The sooner you get them involved, the better.
The real estate winter surge is here – and it presents a great opportunity for GTA home Sellers.