(Captured from a 3 bedroom unit at 55 Mercer, newly finished in 2024)
The last time I wrote here was a year ago. I've has some major life updates in the past year. For one, I got married!
The real estate market took a sharp turn in the past year. With interest rates tripled, the market has come to a stand still. Transactions number have halved, and prices have come down. Some resilient markets such as Markham and Oakville have seen less drop (~ -10%). However, more suburban areas such as Pickering, Oshawa and cottages have seen a much bigger dip (~ -20-30%).
Having been in the real estate market, specifically pre-construction field, for a good 8 years, 2024 has been fruitful in the sense that there are more completed projects/buildings than any other years. Pre-construction market was on fire from 2018-2020 with sales records year after year. It normally takes 4-5 years for a project to be completed. So 2024 is the year some of those buildings sold in 2018-2020 get built. I've had quite some investors bought those pre-construction units to be rented out later. As a result, I have done more lease deals than any other years.
For clients who purchased before 2021, there's still a chance that they can cash flow monthly from the rental income. So far, all my clients have been happy with their purchases. Not sure if I can say the same for clients who purchased at the peak, a.k.a year 2022. There was a period where there were panic assignment sales during December 2023 - February 2024. Most of those deals were done with original buyers exit with all their equities (deposit paid) wiped out. I do have to clarify, such assignment sales constitutes just a small fraction of the total number of sold units in the city. Most purchasers are able to close. It's just unfortunate that some of them get caught up in the high interest rate environment with high monthly payments. But we all know it won't be the case forever. Rates have already come down, and will continue doing so. Hopefully, by the time of mortgage renewal, it will provide some relief.
For those who were looking to get into the market, 2024 is a great year! Especially for those who have dry powder (cash on hand) to do so. Some scooped up great assignment deals, some also got great deals in the resale market. I recently helped a client secured a 3 bedroom unit in the heart of King West with stunning CN Tower + lake view (shown at the front of this page) for 20% lower than the original purchase price. That was a great win for both my client and me. I was extremely happy for my client. There's a saying, "you are married to the price, but just dating the rates.". It cannot be more true! You should secure the low price in a down market when you can!
I foresee the remaining of the year will stay quiet, as people still need some time to digest rate cuts and recover. But the future is bright. Markets should recover, maybe it'll take 2 years? 5 years? But real estate is a long term game anyways. I am long Toronto real estate market.
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