With the kids back to school, and the social media deluge of first day photos mercifully over (who started that trend anyway?), we are entering the time of the year when the real estate market typically awakens after the sleepy summer months. 

I stress typically because recent times have been anything but atypical, but I’m writing this entry with an eye on both the past 12 months and the 12 months to come. Looking both ways is making me dizzy, but I will trudge ahead.

Smart Buyers Will Be Active

The Bank of Canada just announced another 75 basis point increase in interest rates, meaning we have gone from 0.25% in January to the current rate of 3.25%. As the cherry on top, the smart money says we will probably see at least one more increase before years end.

The pandemic chickens have definitely come home to roost, and it hurts. For me personally, my payment on my variable mortgage has gone up $1,000 per month since January. It sucks, but it’s also forced me to take a closer look at where and how I spend money, and be way smarter about it. 

A penny saved is a penny earned, and smart (and disciplined buyers) will realize that. They will realize they can absolutely still buy a house, but they can’t still get bottle service at the hot new club every weekend, and they certainly can’t go on that extended European thirst trap trip. For a generation that has gorged on massive amounts of debt, its a tough but necessary pill to swallow.

It may be boring and conservative, but it’s the way our parents did it. And what a glorious Fall it will be to be a buyer, with decidedly less competition, very few offer dates and flat prices in many areas of the GTA. It’s the dream scenario, and the time is long overdue for buyers to flex their muscle.

Inventory Will Be Low

I firmly believe that most of the people that decide to sell this Fall go in the category of “need / have to sell”. Maybe they bought another house already, maybe they are ill or maybe they can’t afford their current mortgage, but the motivation for these sellers will be strong.

Conversely, those sellers that can wait until the Spring will wait, and sit out the next few uncertain months. The average GTA price for August was just reported at $1,079,000, which takes us all the way back to August of last year. 

Last Fall was the start of the massive run up in pricing, but we were still in the grip of pandemic housing horniness and pre interest rate hike craziness. This Fall the water is much muddier, and waiting it out is certainly not a bad play.

Some Houses Will Still Go Nuts

Just because the market is softer, it doesn’t mean you can snag that SWEET 3 bedroom semi with parking on Coady Ave for pennies on the dollar. In fact, you still might have to pay almost as much as you would have in February.

Premium, “A” caliber houses that tick all the boxes and are marketed properly are still going to sell for a good price. They are still going to attract multiple offers and sell significantly over the asking price. Houses like that will always do well.

The difference is that in February every single house seemed to get 10 plus offers, no matter how mediocre it was or how badly it was marketed. That is no longer the case, and in the current market these houses will languish on the market.

Cutting Corners Will Result In Failure

This plays off the point above. In February, even the shittiest and most horribly presented house sold for stupid money. The laziest of agents could simply throw up a sign and wait for the offers to come in. This is now no longer the case, and you will get burned if you go that route.

To get top dollar now, you need to do EVERYTHING. Think putting your entire house in storage, painting, staging every inch, handyman repairs, landscaping, and 15 other things to get ready to go to market. It will pay off in the end, and if your agent doesn’t think this is necessary please go find another one.

Return Of The “Casual” Investor

For years, especially at open houses, I have encountered the “casual investor”. You know the type, they watch some flip and renovation shows on HGTV and then all of a sudden fancy themself a serious investor. Inevitably, they would tell me they would certainly be interested if the “right opportunity comes up”.

Unfortunately for the “casual” investor, this has been a pipe dream for years. They would always turn up their nose at what they could actually afford, and could never afford properties they deemed to be up to their standard. It’s a vicious and futile cycle.

But now, at long last, it’s possible. The “casual” investor can now purchase a B minus level property at a reasonable price AND take advantage of the hot rental market. The Red Sea has finally parted, and it’s going to be very interesting to see how many of these people wade in.

Have a great week everybody, and go Bills!