What we are calling a “bottleneck effect.”

Like many, we watched the market take off for the first half of 2022 and then halt for the second half. Incremental interest rate hikes, market slowing, etc. etc. - we all know the story. Well, when the market halted, we had 21 clients sitting in our ‘pipeline,’ our client roster, ready to either buy or sell when the right property came up. And many agent colleagues we talked to were also servicing a packed pipeline, ready to go. But when the market slowed last year, it stopped many from transacting. Most clients in our pipeline that didn’t need to transact out of necessity took a ‘let's wait and see what happens to the market approach.’ We personally did the same thing with our real estate decisions amidst the climate of uncertainty.

Well, here we are in 2023, in the subsequent aftermath of last year's hikes and slowdown, with relatively stable prices, unemployment holding firm, and homeowners hanging on to their real estate. I joke that maybe it’s these cold Canadian winters that have built this resiliency. But we didn’t see the number of mortgage delinquencies and “chicken little” headlines play out as the mass media reported on and perhaps anticipated. And we still have those 21 clients carried over in our pipeline from last year. And so do our fellow agent colleagues we talk to regularly. We all have this pipeline, a good number of clients ready to transact last year that didn’t now carried over to this year to add to our client list for this year. We have a bottleneck. A build-up and a high number of clients would have transacted. And we have no inventory to sell to them.

We know that inventory is at an all-time low when agents start calling expired listings, looking for properties for their buyers to buy. We now just witnessed 34% of low-rise homes selling for more than the list price. This past week, we watched a 2.2M west-end property sell for well above what we calculated to be fair market value for our client. But more surprising was that it received six offers and required extensive renovations. Meaning whoever bought it potentially had the capital to purchase and renovate. And so did potentially six other buyers/bidders. We assume. This sale surprised us. And validated what we have been experiencing. Bids are back in Toronto. Another property in Leslieville listed at 1M received eight offers this week. Our client held off bidding on this one, which sold relatively close to what we consider fair market value. With a slight premium to win it, likely given that eight buyers were competing.

Bottleneck of Buyers. No/low inventory. Agents calling expired listings. Historical low inventory. Bids are back.

The irony is that of the 13 years of being in this business and working full time in and with Toronto real estate, bids are what we know. It is usual business practice for us and has become the norm for the last decade. With one-third of condo pre-construction projects cancelled last year and 500k new immigrants, we anticipate housing will continue to experience a supply shortage with this increased demand. The tides turned quickly and early this year.

We will be watching closely and reporting what we see. We anticipate the spring market will take off. We are crossing our fingers that some inventory will come out to alleviate this bottleneck roster many of us agents are carrying over from last year. We all have buyers who want to get in.

Any questions? Feel free to reach out.