Welcome to the Urbaneer blog on housing, culture, and design. My name is Steven Fudge, and I’m a realtor and housing consultant who has been guiding Buyers & Sellers through the Toronto real estate market for over three decades. In fact, I started my career in 1989 just weeks after the housing bubble burst.
How’s that for timing the market?
As a realtor who saw property values drop upwards of 35% over the first 6 years of his career, flatline for the next four, and then begin their ascent for the next 2+ decades, I experienced first-hand how cyclical a real estate market can be. I also learned how accurate the idiom ‘Hindsight is 20/20’ is. Certainly, if I knew then what I know today, instead of being hyper-cautious through the 2000s that the 10 to 13 year boom and bust cycle Toronto has historically faced since the 1950s was overdue and imminent, I would have more confidently ridden the bull market. However, had I done so would I now heed my own advice – let alone counsel anyone who is the least bit financially compromised – to divest themselves, as necessary, in order to pay down or eliminate their debt?
We’ve gone so long without dark clouds on our economic horizon I’ve come to realize the lens by which I view Toronto real estate is fairly unique, given I’m one of only 3% of realtors who have been actively selling property in this city for 25 years or more. As one of a small group who has navigated ourselves and our clients through bleak economic times of austerity measures and depreciating assets, I’m not sure whether the 97% of the membership at the Toronto Regional Real Estate Board who have not done so serve as a representation of the good fortune that a generation of both property owners and those with careers in the shelter economies have enjoyed or if it portends how innocent or ignorant the masses are from the fragilities of our collective financial house of cards.
That said, real estate, at its core, is cyclical. And we are seeing this now, today, in real-time.
When I reflect on the ride the real estate market has taken over the years since I started, the analogy of a roller coaster ride is apt. When I began my career in 1989, just after Toronto real estate prices had crested a peak and began descending into a valley, I had no idea how dark the tunnel The Lost Decade Of The 90s would be, nor the torquing of swift price appreciation we have seen, particularly over the last decade, with its ultra-low interest rate environment. Unprecedented is a hyperbole that I’ve frequently used to describe the Toronto real estate market over the last several years, and I think it’s a pretty accurate description. That it’s been fueled by a global hunger for property – brilliantly captured in Fredrik Gertten’s 2019 documentary Push – is something Toronto and many other urban centres experienced for the first time.
Although spring 2022 appears to be the moment the Toronto real estate market crested to a new peak and the Bank of Canada’s subsequent implementation and swift escalation (and potential recent overshoot) of interest rates as the catalyst that calmed our super-charged housing market, the extent to which the market corrects is dependent on whether a surge of listings floods the market over the next 6 to 18 months. Will existing homeowners list en mass rather than renew their mortgages at higher interest rates? Might investors/speculators be unable to take occupancy of their pre-construction condo purchases because the units aren’t appraising at their purchase price, or because they can’t secure sufficient mortgages because of the mortgage stress test requirement? Will the generational Fear Of Missing Out that still flutters within the collective psyche of Buyers worried prices will never go down abate when they realize there’s no urgency to making a purchase?
To understand what factors are at play in the Toronto real estate market, I’ve assembled some past posts to help illustrate the “what”, the “why” and the “how” of our current property dynamics, including documenting the impact of rising interest rates, the delivery of new condos purchased predominantly by investors, the impact of policy in shifting Buyer behaviour and Seller sentiment, as well as observational moments that illustrate the forces at work in shaping our shifting market.
For years, I penned prognostics for where I believed the market was heading. In this piece, I am reflecting, rather than predicting, on what market dynamics are at play. I hope you enjoy this!
Posted February 2022
Turning A Blind Eye To The Real Costs Of Toronto Real Estate Investment Properties
In this blog, I ask property owners whether they would be in negative equity, a break-even position, or still ahead of the game if they knocked off 35% off of the value of what they realistically believe their property to be worth. Would they hand their keys to the bank and say “See Ya” or would they slog on making mortgage payments for a debt that surpassed the value of their property?
Ironically, although property values did begin to decline shortly after the Bank of Canada announced it would be increasing interest rates, the more appropriate question I should have forecast was –> “If your mortgage payments went up 35% would you be screwed?” because, “According to Statistics Canada’s consumer price index released in June 2023, mortgage interest costs rose 29.9 percent as more Canadians dealt with renewals” – Toronto Star
In this post, I publicly admit my alarm over the dynamics of Toronto’s spring housing market. It was oscillating askew, and it overshadowed the invincible braying of the real estate swag set who remain entirely convinced property values will never go down (because, ironically, they haven’t in their lifetime). Here I express my discombobulation over money being too cheap, money being spent excessively, and the popularity of negative carry. The lack of prudence. The disregard for restraint. And the feeling that everyone felt flush with money seemed exactly like the credit card wave everyone sailed on in the later part of the 1980s just before the market crashed and the Dark Ages of the 1990s arrived.
Posted December 2022
Topsy Turvy: Insights From The Toronto Real Estate Trenches
This post addresses how it’s the new homes market in Toronto – with tens of thousands of condo units nearing completion and being delivered predominantly to investors this year – may tip the market into imbalance. Will the lender’s appraised value come in below the Buyer’s original purchase price? Will the Buyer be unable to borrow the capital they require because of the stress test criteria and higher interest rates? Will demand soften because Foreign Buyers were banned from buying Canadian real estate having 3 units or less at the start of this year?
Posted December 2022
Dear Urbaneer: How Does The Toronto Real Estate Bidding War Process Work?
While this piece focuses on how the bidding war process works in the sale of Toronto real estate, it also offers details on how the market shifted – from being in flux from March through May, to stagnating in the doldrums during the Summer to slowly reigniting in the autumn of 2022. It illustrates how much the Toronto property market is shaped by The Seasons To Real Estate.
Posted January 2023
Is The Toronto Condo Market In A Precarious State?
In this January 2023 blog, I predict a buoyancy in the spring Toronto real estate market, while warning it may fall under the definition of a “Bull Trap / Return To Normal” whereby a declining market reverses after a convincing rally or pent-up demand, and then stalls after that demand is absorbed and returns to its decline. Although many believe this hinges on whether unemployment spikes or we enter into recession territory, the first indication the market is turning will be an increase in the number of listings – likely by over-extended property owners – in autumn 2022. They’ll be prepared to aggressively negotiate with buyers in their effort to minimize their economic woes.
File this under the “I did not see this coming” category, but in this article, I share how the Buyers with the least amount of money were some of the first ones to jump into the shifting real estate market while the Sellers with the greatest amount of equity were the first ones willing to cash out.
When I read that a policy change dating back to 2016 granting lenders the right to extend the amortization period of mortgages for property owners in need would be readily available to those with variable-rate mortgages, I didn’t think that meant amortization periods could be extended from 25 to 90 years! But here we are.
However, not only is this policy an effective means to control what is supposed to be a free market, but it also favours the privileged two-thirds of Canadian households who own property at the expense of those who don’t. That doesn’t seem fair.
Posted June 2023
Toronto Real Estate Then & Now: The Lost Decade Of The 1990s
Most everyone engaged in the Toronto real estate market knows that a bubble burst in 1989, but very few people are aware that once it began its decline the market took well over a decade to recover. In fact, Toronto in the 1990s was – in a nutshell – economically bleak and the property market suffered for it. It wasn’t until the early 2000s that property values would begin to go up, meaning that folks who had bought 12 years earlier only just got the price they paid for their dwelling (without even recouping their buying and selling costs). The fact this isn’t clear in the history books is one reason why I’m bringing this to your attention. It also begets the question –> Would you buy real estate knowing this was a possibility given our current economic conditions?
Posted May 2023
While most folks dipping their toes into the world of real estate are familiar with some of the more conventional Buyer Profiles – such as the first-time Buyer, the family climbing the property ladder, or the empty nester downsizing – the target markets keen to purchase property in 2023 are, in some instances, surprisingly specific. Check out the 7 Buyer Profiles I believe are most active in our current market. Are you one of them?
Posted June 2023
While the household unencumbered by property may be keen to lock a purchase down, what if you’re a Seller who effectively can’t sell because, at best, it would only mean a lateral move? In this post, I share 6 reasons why some homeowners who would otherwise list their properties for sale are sitting tight, and the 3 Seller Profiles who are definitely exiting.
Where To Next?
Face it, the market we’re collectively navigating is being propped up by Canadian lenders who are controlling the supply by extending the mortgage amortizations of the most highly indebted. By limiting the amount of supply, demand continues to swell until, after a brief reprieve, prices are again escalating, thanks to super-tight inventory. Click here to read the latest data from TRREB A Lack Of Toronto Real Estate Listings In June 2023 Led To Tighter Market Conditions.
Buyers, once again, appear to have become desensitized to the cost of borrowing, having quickly adjusted to higher interest rates and reconciled them against their real estate objectives and goals.
Meanwhile, Sellers have been reluctant to list, so supply lags demand, once again. Which, despite all the policies, is the one fundamental (and the strongest) to propel prices.
Can Canadian Households Weather The Shock Of These Interest Rate Increases?
For an entire generation of homeowners, ultra-low interest rates have been the norm – to the point where people have largely become desensitized to debt. This is particularly true in a city like Toronto, where rapidly increasing housing prices over the last decade-ish have required homeowners to pay huge sums- and low borrowing costs allow them to do so. As rates rose over the last year – and are reportedly going to continue to do until inflation floats back to 2% – it’s getting tougher.
I really question whether the two-thirds of Canadian households who own property can withstand the shock of 10 interest rate increases issued by the Bank of Canada since March 2022. Certainly with 1 in 4 Canadian households extending the amortization period on their mortgages this past year, the situation is tenuous. Is this delaying an inevitable crash or just slowing down the bleeding?
At the writing of this piece, inflation is inching ever-closer to the target of 2 percent, yet the Bank Of Canada raised rates in mid-July and is widely expected to do so again in the fall (although in recent days, it seems that opinion is flip-flopping again, according to this new survey referred to in this Global news article No Further Rate Hikes Expected In 2023). Although inflationary targets are coming into sight, other things are not unfolding as analysts had predicted. That is to say, while higher borrowing costs slowed the market, the impact was less – and shorter – than they had predicted. This is why, in part, these extra rate hikes are still on the table. Only time will tell.
Analysts had expected the market to take significantly longer to recover from the pullback in prices, but the Toronto real estate market is showing unexpected resilience. Of course, all indicators point to Immigration (like technology workers) that will keep our real estate market solid. While this may be true, I still think it could be a bit of a bumpy ride.
May we be of assistance to you, or someone you love?
The best way to stay steady when the ground around you is moving is to have a plan and keep your eye on the horizon while leaning on support. That’s what it is like in Toronto real estate. Despite at times bumpy conditions, I draw on my experience navigating similar waters to help you achieve your buying and selling goals. Be assured, you can rely on my steady support to get you there.
I – and the Urbaneer Team – are here to help!
Looking for the services of an on-trend well-informed experienced realtor who has been a consistent Top Producer for over 3 decades?
Serving Buyers who are upsizing or downsizing, relocating here or there, and building their property portfolio, our mandate is to help clients choose the property which will realize the highest future return on their investment while ensuring the property best serves their practical needs and their dream of “Home” during their ownership.
Are you considering selling? We welcome providing you with a comprehensive assessment free of charge, including determining your Buyer profile, ways to optimize your return on investment, and tailoring the listing process to suit your circumstance. Check out How Urbaneer’s Custom Marketing Program Sold This Handsome Edwardian Residence In East York to learn more about what we do!
Consider letting Urbaneer guide you through your Buying or Selling process, without pressure, or hassle.
We are here to help!
With three decades of experience navigating the ever-changing Toronto real estate market, a commitment to promote the sale of properties like yours with interesting and relevant information, and the ability to guide Buyers with credible insights and well-informed guidance, the Urbaneer Team help without pressure or hassle.
Thanks for reading!
-The Urbaneer Team
Steven Fudge, Sales Representative
& The Innovative Urbaneer Team
Bosley Real Estate Ltd., Brokerage – (416) 322-800
– we’re here to earn your trust, then your business –
*Did you know we were recently listed as one of The Top 25 Toronto Real Estate Agents To Follow On Twitter! – The Top 50 Blogs On Toronto – and The Top 100 Real Estate Blogs In Canada? Consider signing up in the box below to receive our FREE monthly e-newsletter on housing, culture and design including our love for unique urban homes and other Toronto real estate!
*Love Canadian Housing? Check out Steve’s University Student Mentorship site called Canadian Real Estate, Housing & Home which focuses on architecture, landscape, design, products, and real estate in Canada!