Newsletter

This Fall market is one that will be remembered for decades to come, I am sure. Coming off of a slow and sluggish summer and similar first half of this year, there are a lot of eyes on this Fall.

We have now experienced 3 interest rate decreases, which many are confident will ignite some interest into the market, but only time will tell.

My predictions are there will be more Buyer and Seller activity this fall, but more so in the Detached Properties as opposed to the Condo space. Even in the detached space, I don’t see this as a sudden significant increase in demand or even price increases.

With fewer end users in the market to purchase a condo and of course far fewer investors looking to purchase with today’s interest rates, the condo space has seen a record 11,079 condo units for sale, note this is the highest number of units for any month of year so far.

Personally, I have experienced condo Sellers that are motivated, knowledgeable and aware of the market conditions they are working within, in which case, my clients have been on the receiving end of a deal. But, it goes without saying, many Sellers have not been educated on the sheer volume of units they are up against.

It does make you wonder why then, haven’t prices dropped more significantly? I know many of my clients have out right asked me, why this isn’t apparent in the listing price? There could be several reasons for this, starting with the hope that interest in the condo space will improve as interest rates decrease all the way to optimistic Sellers, not quite ready to lose out on what they consider to be a good deal.

When you buy, sell, or refinance a property, closing costs are unavoidable and should be understood ahead of time. These expenses can come as a surprise if you’re not prepared. Let’s break down what closing costs entail and give you an idea of what to expect.

Closing costs are the fees and expenses that must be paid when a real estate transaction is finalized. They vary depending on whether you’re the buyer, seller, or refinancing. Typically, buyers can expect these costs to range from 1.5% to 4% of the home’s purchase price, depending on the specifics of the transaction and location in Canada. Refinancing costs can be lower, potentially just a few thousand dollars, which can often be added to your loan balance to minimize out-of-pocket expenses.

In pre-construction agreements, the Outside Occupancy date specified in the Agreement of Purchase and Sale (APS) is crucial. It’s the one part of the APS that favors buyers, detailed in the Tarion Schedule for delayed occupancy compensation. If the builder fails to meet this date, it triggers compensation where Tarion may pay you $150 per day, up to a cap of $7,500. This ensures accountability if the builder misses deadlines, putting financial responsibility on them.

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Here’s the scoop on the multifamily housing scene: Overall in Canada, the rental market is thriving, with tight vacancy rates hitting a record low of 1.5% in October 2023. And yes, I completely recognize that in Toronto, each neighbourhood varies and each building has it nuances. But overall, it is healthy and thriving.

Average rents surged by 8.8% year-on-year in March, driven by high housing costs and a shortage of purpose-built apartments. Note though, with the government’s plan to reduce non-permanent residents, this may affect population growth; it may slow, offering some relief to the market. While Greater Toronto is grappling with a surplus of condos, other regions are stepping up to balance demand.

Across the border in the U.S., rental markets are less tight, with vacancy rates up and rent growth moderating. Despite this, renting remains more affordable than owning, attracting demand amidst high homeownership costs. Although for condo dwellers, I have had numerous conversations over the past several months about if now is the right time to buy a condo, because the condo space has balanced out.

Let’s dive deeper into the current dynamics of the office market:

With remote work still a major factor, U.S. office occupancy rates are hovering at around half of their pre-pandemic levels, signaling a profound shift in how we work. Some estimates even suggest that actual occupancy could be as low as 35%, underscoring the enduring impact of the pandemic on traditional office setups. Despite this shift, many companies are grappling with concerns about the long-term implications for corporate culture and productivity, leading them to explore hybrid work models that blend remote and in-office work.

When it comes to vacancy rates, both the U.S. and Canada are facing significant challenges. The U.S. saw vacancy rates soar to a three-decade high of 18.6%, while Canada wasn’t far behind, hitting 18.4%. Notably, cities like San Francisco have been hit particularly hard, with vacancy rates reaching an all-time high of 36.7%. Despite these challenges, office rents have managed to hold relatively steady. However, landlords are feeling the pressure to retain tenants and are offering perks like free parking to sweeten the deal.

However, many landlords are facing increasing pressure due to defaults on leases. With nearly half of current office leases signed before the pandemic, renegotiations could lead to distressed sales or loan defaults. On the bright side, this could open up opportunities for new buyers to enter the market at lower prices and inject fresh capital into struggling properties.

Looking ahead, there’s potential for unused office space to be repurposed for residential or warehouse use. Government initiatives, such as a pledge to invest in converting office spaces into housing units, could further drive this trend and provide a solution to the oversupply of office space.

In terms of winners and losers, Canada’s office market may fare better than the U.S., thanks to a higher level of well-capitalized institutional owners. Modern office buildings with energy-efficient amenities are expected to outperform older, lower-tier properties. Additionally, suburban office buildings may continue to outshine their downtown counterparts, with lower vacancy rates and a more appealing work environment for employees.

Overall, while there are significant challenges facing the office market, there are also opportunities for innovation and adaptation in the face of changing work trends. It’s an exciting time of transformation and evolution in the real estate landscape, and I am here to keep you informed every step of the way.

This is the fun part, enjoy some of these fun links I have curated below:

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In early January, I had started to notice early signs of change in Toronto’s housing market, which was balanced and rarely saw any multiple offers/bidding wars. In the Fall and more specifically in late Fall, there was certainly seasonality that played a factor, but mostly it was the impact of increasing interest rates.

It was uncertain if these trends were temporary or lasting, but two months later, it’s clearer that the market has shifted. Lower fixed mortgage rates and expectations of no more interest rate hikes by the Bank of Canada has prompted many buyers to re-enter the market. January saw a 33% increase in house sales compared to last year, while new listings has remained steady.

We are expecting to see listings pick up in the coming months, more specifically a resurgence after the Family Day long weekend.

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