Welcome to my blog on housing, culture and design in Toronto, Ontario, Canada. I’m Steve Fudge and I’ve been selling real estate in Toronto, Ontario, Canada for 35 years.

Before this post disappears to be repurposed – in deference to anyone who felt maligned by its publication – I want to state that while I can clearly be insensitive and prone to poorly choosing my words, I do not want to cause anyone pain. That my point of view would upset the Purchasers of the property featured in this post was my failure, and I am sorry this happened. The context I was lost in was how disheartened our Buyer client was. Their purchasing power, like many Buyers, has diminished due to the policies and posted interest rates set by the Bank of Canada, and while it has demonstrably caused the market to shift, the outcome of this sale made them feel their goal of homeownership was even more out of reach.

When a property gets 30 offers in a sea of ‘For Sale’ signs, there are reasons why the market responded with such enthusiasm. People often roll their eyes when I talk about the intangible value of a ‘home with ethereal light’, or how executing small thoughtful decisions can create a bigger more impactful kind of exceptional, and that those who lean into elevating an architectural feature like an Edwardian staircase will be rewarded when their efforts create a timeless slice of sculpture.   

My intention in this particular blog is to illustrate that how much a property is worth at any given time is dependent on who comes to the table, how many offers there are, the Buyer’s motivation to secure it, and how deep their pockets are. In a bidding war, the Seller’s motivation may not even be revealed. A Seller can dictate how open or closed the process operates and remain silent to see if their expectation of value is met or surpassed. A property that goes into competition in any market condition is often to the benefit of the Seller because the final sale price is determined by Buyers bidding against other Buyers, rather than negotiations occurring directly with the Seller.

In the recent past, I wrote about a listing that came to market and wasn’t warmly received, garnering an offer of $910,000 that was rejected by the Seller. Six weeks later, in similar market conditions, we sold the property firm and binding for $150,000 more. This wasn’t because the market improved. It was because the second Buyer loved the property and its location, such that the sum he paid was within his budget. I wrote about this to illustrate that at any given moment how much a price is worth is extremely subjective. In fact, under the right circumstances – as I wrote in my “It’s a different market folks!“, most any house can have a spread of several hundreds of thousands of dollars at any given time. This site is peppered with counsel and advice that are my own opinions and unique to me. it includes tales from the real estate trenches that explain why there are four values in a bidding war, and how the psychology of real estate taps into the hyper-competitive. I do my best to explain a very complicated topic so that readers understand nothing is simple and straightforward in the world of real estate.

In this piece, I endeavour to explain that I have the responsibility to understand how the freehold and condominium markets are broadly oscillating and analyze where prices are typically landing. However, my objective as a listing realtor isn’t to achieve a typical sale price. It’s to craft the alchemy that compels a Buyer to pay their top dollar because that’s what I’m hired to do by my client. My task as a Buyer’s realtor is to show what the range of value is for properties fitting their brief, but during that exercise, if their priority is to purchase a primary residence, my goal is to distill their personal preferences so I can weed out the houses and show them the ‘Homes’ that hopefully make their heart sing. If they’re buying to build financial security, my goal is to identify the properties that will provide them with the highest return while aligning with their personal Zeitgeist. Throughout the process, my job is to ensure my Buyer client understands what the range of value is for similar properties so they have sufficient context before subjectively deciding how much they’re going to offer for ‘the one’. Realtors rarely determine how much a property is worth. That is decided between Buyers and Sellers.

This will be shuttered shortly. Thank you for your time. Here is the most recent iteration of this post.

If you were to do a simple, cursory glance at headlines about Toronto real estate overall, you might naturally conclude that there’s a widespread softness right now, especially considering the data over the past 3 years shows a declining number of sales that generally take a longer period to sell and an increasing number of listings getting relisted more often because it takes more time to expose any property to a pool of active Buyers when their numbers are shrinking. Although the headlines and soundbites that define and refine the broad narrative of Toronto’s macro real estate market are based on stats and supported by examples, relying on generalizations in the media without deeper due diligence may foster misunderstandings on the nuances of competing micro-markets.

As a salesperson and shelter consultant who has navigated Toronto’s ‘real estate trenches’ for 35 years, I spend a lot of time assessing and analyzing the property market. It usually starts as part of my commitment to serving the preferences, priorities and objectives of my clients and the needs of their household or mandate. To achieve this, I create a custom housing matrix that ranks the qualities they seek in a location, the importance of favourite amenities, the necessity of accommodating certain functions or offering specific features, and the weight they attach to the structural, mechanical, space plan and design qualities unique to each dwelling. I may assess their risk appetite, their willingness to invest time, energy and/or capital to improve a property, and explore whether the timeframe they estimate they’ll live there holds.  When it comes to opportunities or constraints, the importance of an area’s status or reputation, the site’s features or drawbacks, and the dwelling’s age, type, condition, and configuration may come into play. This may include current or projected income & expenses, existing use, future use, as well as the highest and best as-of-right use. In some instances an area’s cultural history, the immigrant diaspora placemaking in the here and now, or signs of decay or rebirth in the urban fabric may be of high importance. All of this is influenced by the market dynamics of two different but interconnected property types – the freehold and the condominium – which each have a host of considerations specific to each Buyer profile. 

I share this synopsis to illustrate the multitude of factors that may motivate a Buyer to buy. Often this decision comes not because they’re trying to time the bottom of the market, but because a property comes to market that matches the specificity of their needs.  It underscores that Toronto is a city of micro-markets. Some of those markets are in a lull, while others are full steam ahead, supporting bidding wars that remind us of a pandemic-fueled heyday when money was cheap and people sought space.

For example, we recently witnessed a bidding war that began with a busload of Buyers submitting bids for a box of bricks in the central east end. As can happen in any bidding war, the price of this conventional Edwardian in this former working-class neighbourhood soared above the asking price. What’s more, it surpassed the highest price ever achieved in the area which was during the pandemic in 2021. 

I will explore the dynamics and details of this sale below, but first, let’s look more broadly at the market.

The Condominium Versus Freehold Markets

The key players in this twisty plot that characterizes Toronto real estate are two main housing types:  condominium and freehold ownership types.

Thanks to the fundamental impact of supply and demand, the dynamics of these two housing types are currently at odds with each other. Freehold remains in demand – particularly in sought-after downtown neighbourhoods – where there is a limited supply of property geographically and a diverse range of Buyer profiles seeking it – such as double-earning professional households who are single-family end users and small-scale developers who seek to capitalize on the now as-of-right to create a multi-unit dwelling up to four (and sometimes five) units. Conversely, there is a dearth of condos in the market but very little engagement from prospective Buyers. With so much similar condominium stock to choose from, Buyers aren’t feeling rushed or pressured, and are waiting either for prices to drop further or for more suitable candidates to come for sale. This is in part because much of the current condo supply is predominantly smaller units – in particular the ubiquitous cookie-cutter studio, 1bed & 1bed+den high-density developments – that have historically catered to investors to become rental stock. For the most part, over the past 25 years, Toronto’s condominium supply has not been developed with end-users in mind, particularly families who require 2+, 3, or more bedrooms. 

The shifting market dynamics – which have been yo-yoing since March 2022  – affect Buyers and Sellers alike. Although I’ve written a baker’s dozen or more posts exploring how each is being impacted by the changing conditions, these three articles pack the most punch: 

July 2023 – Is The Toronto Real Estate Market Crashing? 

February 2024 – It’s A Different Toronto Real Estate Market, Folks! 

July 2024 – Has The Toronto Real Estate Market Gone SLO MO? 

My View Of The Market Right Now 

Just a month ago, the website Better Dwelling posted a piece called “Toronto Real Estate Inventory Surges, Now Deeper Into Bear Market“.  

Along with providing some context and stats on the state of the market – basically, Toronto has seen prices decline over five consecutive months rolling back prices to the start of the year such that the story is ‘supply up, demand down’. The takeaway can be succinctly summed up by saying –> “Greater Toronto home prices are now 18.7% (-$245,100) lower than the record high achieved in March 2022.“  

The outlook for a market where real estate prices have dropped an average of 18.7% within 31 months is – from a Seller’s perspective – rather bleak. 

Given the average total cost to buy and sell a property in Toronto is around 7% of its value, when added to the 18.7% price drop, it means even Buyers who put the required 20% down for a conventional mortgage could find themselves financially underwater if they were to sell at this time.  

The Condo Market 

This downward pressure on prices is most apparent in the Toronto condo market. In the following three posts analyzing specific segments of the condo market this year, I found in each instance 20% to 33% of the Sellers netted less money than when they originally purchased after accounting for their buying, selling, and renovation costs (if any). And some of the Sellers bought their condos as long ago as 2017! Imagine buying a condo 7 years ago to discover it’s costing you money! The financial losses they incurred ranged from $16,000 to a substantial $425,000.  

 – Over A Recent 90 Day Period I Discovered 1 In 4 Sellers Of Downtown Lofts Lost Money  

– For Loft Sellers In MLS District E01 Who Sold This Year, Nearly 1 In 5 Took A Financial Hit  

– 1 In 3 Owners Of Downtown Condos That Sold For Over $1Mil In August Lose Out  

The Freehold Market 

The freehold housing market is not suffering to the same degree as the condo market – in part because the number of houses for sale is fewer and the number of Buyers is greater, while the pool of condos for sale is greater and the number of Buyers is fewer.  

The condo market is suffering because the two largest buyer Profiles – first-time buyers & investors – have nearly evaporated. Investors are exiting Toronto for greener pastures, with some cashing out their existing condo holdings at a loss to make a future gain. The first-time Buyers are on the sidelines under the watchful eye of the Bank of Mom & Dad who want to wait until there’s more stability in the market. 

Although the markets for these two different dwelling types are operating differently, they also oscillate together, meaning what is happening with the condo market has ramifications for the freehold housing market too. All the fixer-uppers and upgraded but tired freehold housing stock in the $1,250,000 and lower price points that would otherwise be snapped up by flippers and young professional couples keen to start raising kids are taking much longer to sell (and, when properties are not being snapped up it tends to reveal which Sellers are motivated).  

Entry-level houses are taking longer to sell because flippers are gone (developers, mind you, are not but they require bigger margins). Meanwhile, many couples keen for kids are stuck in their too-small condos that no one will buy unless they’re substantially discounted. The problem, however, is that the substantially discounted sum necessary for those condo couples to secure a Buyer won’t – after their buying and selling costs – net the couple sufficient funds to climb the property ladder into the freehold housing market.  

As a result, the crashing condo market is impacting the demographic filtering of housing stock up and down the property chain, affecting the entire market.  

Full On Mic Drop Downtown East

So! Cast your mind back to the property that I mentioned at the beginning of this blog – the one that soared in price – propelled by a bidding war starting with two and a half dozen Buyers that became a duel between two parties.

Despite the downward pressures on the market, anomalies do occur, hinting that prosperous times may return. The most recent occurred when a renovated single-family dwelling with a finished basement and detached garage was listed using the List Low Holdback Approach, receiving offers after a week on the market. 

One of our Buyers was very keen on this property, so we had front-row seats for this astonishing sale. We knew the moment this property came to market it would attract a lot of attention, in part because the renovations were exceptionally well done, and because it was priced to incite competition.  

Anticipating it could spike to a sum beyond our Buyer’s ceiling, I conducted a 5 Year Comparative (Micro) Market Analysis – which is when you compare the sale prices of similar properties located nearby over a longer period of time so you can see whether the conditions broadly trending in the Toronto real estate market are being reflected in the micro market. This is particularly helpful when navigating a shifting market. If bona fide sales follow the same trajectory as the broader market over time it gives you a foundation from which you make your projections. If it does not, then it warrants further analysis. I want to clarify that, in my opinion, an 1880s Victorian is not comparable with a 1910s Edwardian, nor is a dwelling with a family room addition, a 3-storey extension or a laneway dwelling. When I undertake these I am leaving as little room for value variation.  

Like most centrally-located dwellings, market values crested to precedent-setting sums in Spring 2022, and then declined after the Bank of Canada began increasing interest rates by a total of 475 basis points over 15 months from March 2022 until July 2023. For 11 months interest rates remained at 5% until June 2024 when the first of three 0.25% rate reductions were implemented. For this housing type of this size and above-average condition in this location, property values declined, more or less, by 10% in 2023 and a further 2% in 2024.  For many Buyers, this exercise brings veracity and reassurance when they can chart the 2022 peak in prices and see the resulting market correction spurned by rising interest rates.

In our rational, prudent educated mindsets, we are witnessing the Toronto real estate market cycling from a peak to a valley, where it will eventually flatline in stability before charting a new trajectory upward. We anticipate fluctuations in price and make allowances for anomalies, but, by and large, we expect the value of similar assets to follow the same trajectory.  

Given that the precedent for top-dollar was set in 2022, and that the data showed the market is in decline, we pegged the top value for this property would land at its pandemic precedent or a squeak over – a sum likely to only be paid by someone in a ‘really really must have it’ head space. 

But…

 … that’s not what happened.

The Sellers were flooded with Offers. Our Buyers, who submitted an Offer generously over the list price were knocked out of the running early, and by the time the dust had settled later that evening, the final sale price took an astonishing trajectory into the heavens! 

Although the number of offers registered surprised us, it didn’t shock us. What did was witnessing 2 Buyers in the pursuit ‘to win at all costs’. The precedent-setting value surges that were common pre-March 2022 were collectively experienced when FOMO was, dare I see ‘real’. But to witness it in a shifting market where real estate values are wobbling, and for a property located well beyond the tony gates of status badges where dropping a cool half mil over ask is more common. I say this not to criticize the house or the location, but to illustrate that it no longer matters whether a century-old pile of bricks and mortar hasn’t been substantially enlarged up, down or out, and that properties in proximity to diesel trains pulling boxcars filled with freight and coaches crammed with commuters with regularity are not subject to a discount. This makes sense to me.

As a sea of Canadians tread water trying not to drown under the carrying costs of their variable rate mortgages, and the remaining 2+ dozen bidders stood to the side, our Buyer clients – and one would presume others who came to the table – were disappointed by the limitations of their financial realities. The successful party shelled out a premium that surpassed the precedent-setting predecessor attained during a pandemic when cheap credit was spurning the euphoria of a real estate bubble that had been oscillating for a decade. Rationally for the risk-averse, this sort of exuberance should be over. 

After 35 years in real estate, I recognize it only takes two Buyers with deep pockets wanting the same property for a game-changer like this to happen but we’re still gobsmacked, in part, because we play for both teams. The win went to the Sellers and the successful Buyers and we’re happy for them. But it was a loss for our clients, and we feel their pain because their goal of homeownership now feels even more out of reach. 

  So.. What The Heck? 

 Although there are always a variety of factors that spurn a bidding war, here is my impression of what fuelled this one:  

 • the scale and proportions of the dwelling were superb 

• the property had exceptional natural light

• the space plan was intelligent and efficient 

• the fixtures and fittings were of good quality yet also understated 

• the owner had retained just enough original details (and added some new embellishments alluding to the same) to give it a sense of history while aligning with the desire for turnkey modern living 

• ironically, I rarely like dwellings where the staircase intersects the main floor and divides it into zones, but because it was open (with the staircase to the lower level at the rear of the house) it became an architectural feature that made the dwelling feel wider than it was. 

• the recent exterior hardscaping and expansive garage were of a high spec we rarely see (which cost more $ and translated into a higher sale price)

• the attention to detail – including the extra sound insulation and hiding the ductwork behind the thicker party wall – communicated pride of ownership (Buyers are wary of flips but love a dwelling renovated by an owner for themselves) 

• Toronto’s population has grown so much that any semi or end-of-row dwelling of this calibre within a 15-minute walk of the Bloor subway line west of Yonge to Jane has the potential to sell for this sum. In other words, our notion of valuing a location by its immediate surroundings is less important than its spatial centrality. In the context of ‘Toronto the metropolis’, property values really shouldn’t vary much spanning 6 consecutive subway stations 

• the more offers there are, the more it incites Buyers to spend more, and for a certain mindset they must ‘win at all cost’. I’m not saying this was the case here, but check out my June 2021 post called Bidding Wars And The Psychology Behind The Hyper-Competitive Toronto Real Estate Market.

What Will The Recent ‘Super-Sized’ Interest Rate Cut Do To The Market? 

 What’s to come in Toronto real estate? 

The latest twist to the plot occurred when the Bank of Canada recently slashed interest rates by .50  basis points, building on 3 previous cuts in response to a softening economy. 

 • What might this do to the market?  

Decisions are somewhat divided on whether or not this is enough to spark Buyers who had been waiting it out on the sidelines, (which represent a fairly significant number). 

With the previous rate cuts, the general sentiment was that, although somewhat helpful, they were still too high to assist or motivate Buyers to buy. However, this most recent rate cut was the sweet spot to get some Buyers back on the hunt. One of our listings saw twice as many Buyers through the open house the first weekend after the rate cut and we subsequently secured a sale the following week. If there are further rate cuts I think we may see the bidding wars return come Spring.

This will be especially true in areas where supply is limited, and the Buyer pool is steady (i.e. downtown freehold). After all, cheaper money lets people pay more money which could have upward pressure on pricing in some segments if this recent bidding war is any indication. 

 • Will the rate cut affect the condo market?  

Maybe. It might be enough to encourage investors to hold their condo properties because the full stop on new construction brought on by high interest rates means the demand for rentals will eventually outpace the supply. When that happens resale values will improve. However, given the Federal government announced that it is slashing immigration targets, how quickly the condo market recovers is questionable. 

It might be enough to encourage end-user condo Buyers to purchase. The greater issue is not as much about the price for these condos, but the suitability of design for end users for the vast number of units that are on the market. However, with cheaper money comes lower costs to Buyers, so that could be compelling for some, especially if condo prices soften further. 

What this indicates, is that both buying and selling real estate can be a complicated process. If you don’t have a strategy in place and another option at the ready, you may be subject to the shifting winds of our uncertain market. For this reason, we always analyze the data, assess consumer sentiment, and operate in a rational patient mindset when helping you secure a property purchase or get top dollar when you sell. With decades of experience navigating the sometimes unbelievable world of Toronto real estate, my team and I thrive being your steady, even keel guides.

It would be our pleasure to introduce our services to you! 

Dear Urbaneer: What’s Going On With The Toronto Condo Market?

Dear Urbaneer: Has The Toronto Real Estate Market Gone SLO MO?

Want to have someone on your side?

Since 1989, I’ve steered my career through a real estate market crash and burn; survived a slow painful cross-country recession; completed an M.E.S. graduate degree from York University called ‘Planning Housing Environments’; executed the concept, sales & marketing of multiple new condo and vintage loft conversions; and guided hundreds of clients through the purchase and sale of hundreds of freehold and condominium dwellings across the original City of Toronto. From a gritty port industrial city into a glittering post-industrial global centre, I’ve navigated the ebbs and flows of a property market as a consistent Top Producer. And I remain as passionate about it today as when I started.

We’d love to introduce our services to you.

Serving first and second-time Buyers, relocations, renovators, and those building their long-term property portfolios, our mandate is to help clients choose the property that 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 circumstances. Check out How Urbaneer Sold An East York Bungalow ‘Estate Sale’ For Redevelopment to learn more about what we do!

Consider letting the Urbaneer Team guide you through your Buying or Selling process, without pressure, or hassle.

The pleasure would be ours.

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 –

Celebrating Thirty-Five Years As A Top-Producing Toronto Realtor

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