Toronto’s August 2022 sales transactions were 37% lower than August 2021 due to higher borrowing costs and inflationary pressures in food and transportation sectors. Average prices are moving in different directions as more expensive freehold properties saw a dip in prices compared to a year ago while the condo market is showing resilience with higher prices. The shift from a seller’s market to more balanced market brings it to 2.7 months of inventory compared to less than a month in Q1 2022.
Affordability continues to be a challenge as price declines from peak Q1 2022 are more than offset by higher borrowing costs and required stress test. Last week, the Bank of Canada increased the target overnight rate by 0.75% which was the 5th increase this year. It currently stands at 3.25%, 300 basis points higher than it was in January 2022. In the announcement, the BofC signalled additional interest rate hikes in order to bring inflation from its current level of 7.6% in line with its 2% target.
As the market cools, the real estate board is tracking the share of re-listed properties each month. A property is typically re-listed when a listing expires or when a seller changes the asking price. When there is a lot of competition between buyers for a property, it’s common for a property to sell for tens if not hundreds of thousands of dollars over asking price. With the market moderating, buyers may still be offering over the asking price but the buyer’s price may not meet the seller’s expectation which would lead to the property being re-listed. (eg. Seller asks $999,000 expecting $1,100,000-$1,200,000, buyer offers $1,050,000, seller does not accept and re-lists at $1,150,000).
Since 2012, the share of re-listed properties was ~16% which is considerably lower than the current level at ~24%. The higher level indicates that a smaller proportion of properties are selling on offer date.
This autumn, my advice to buyers with expiring pre-approvals is to keep active in the event a suitable property comes up. My advice to Sellers is to have measured price expectations more in line with Q4 2021.And now over to Shen…
Shen Shoot the Breeze
We just purchased an electric vehicle (EV). The purchase was easy – all done online with a $250 deposit – almost felt like placing a book order. The pre-delivery process was novel and online: they asked us to upload our insurance policy, trade-ins were also done via photos and we ordered our EV charger without having to see anyone face-to-face (perfect for social distancing – remember that concept?). The company also emailed us a link on how to get acclimated with the car’s features.
When we picked up the car, we brought in a cheque and given keys which looked like credit cards. If we had done our homework, we could just drive away. Alas, we needed help because we didn’t even know how to unlock the doors.
Thankfully, the dealership manager was there to help us through – teaching us how to open the car door, unlock the door, pair our phones to the car’s system and most importantly how to charge the vehicle. It’s amazing that if we use their superchargers, no payment exchanges hands as the charger can recognize our car’s VIN# and charges it back to the credit card on file.
We love driving this car and are like teenagers asking each day if the other will be using the new car. Our other gas-powered car now plays the role of neglected child and rarely leaves our driveway.
If you’re thinking of purchasing one, consider the following:
- Be comfortable using your smartphone and app technology.
- Depending on what type of home you live in, it’ll be way more convenient if you can get a charger installed on your property or in your parking spot. (If you live in a condo, inquire with your property manager – the rules are changing to make it easier for owners to install EV chargers).
- Install a 240V outlet installed so you can charge quicker.
- Check that you have sufficient power and available space in your electrical panel.
- At time of our purchase, leasing EVs were much pricier compared to their gas-powered counterparts and there is no end of lease buyout option; so you may need to look at purchasing outright or having good financing options.
- Some EVs boast ~1,000 hp and we heard that getting car insurance may be an issue
We understand there are shortcomings with EVs in the winter. Feel free to share with us your EV experience.