Welcome to my blog on housing, culture, and design! I’m Steve Fudge and I’m celebrating my 31st year as a realtor and property consultant in Toronto, Ontario, Canada.
There was a time in the not-so-distant past when it would have been difficult for many residents of Toronto – a city that has experienced near-consistent market appreciation for nearly a quarter of a century with nary a dip outside of the occasional value flatline – to envision the Toronto real estate market undergoing a shift. That was until Spring 2022, when the Bank of Canada began increasing interest rates in March 2022 through January 2023 by a total of 425 basis points in an effort to bring inflation down (and another 25 basis points on June 7th, 2023). Since then, the market has been wonky – with values dropping through the balance of 2022 and then spiking through the first half of 2023.
So where does it go from here?
Best You Consult Your Crystal Ball
So far, the current market is not as calamitous a housing crash as it was in 1989 when, over the course of 6 years, real estate prices steadily dropped as much as 35%. However, we’re only just past the first year of an interest rate shock that is unprecedented in the Canadian real estate market. Which might be a reason to give pause.
Although Toronto has seen property prices escalate for over two decades and a generation hasn’t experienced firsthand how dramatic the ups and downs can be, let’s not forget that all real estate markets historically are cyclical. In fact, both the significant corrections in the mid-‘70s and early ’90s were the result of speculation, inflation (mostly due to food and energy price shocks), and rising government deficits. Fortunately, the sub-prime mortgage crisis in 2008 only lightly impacted the Toronto real estate market due to prudent bank regulations, with values flat-lining for a brief period in the central core of the city before resuming their upward trajectory.
In my post called When Dreams Of Domesticity Became Nightmares: A Recollection Of The 1989 Toronto Housing Market Crash, I recount the following:
‘Although the bubble burst in the summer of 1989, setting off alarm bells that the market had changed and the future would be different, the housing market collapse was not an instant precipitous drop but a slow spiral. Like the plug being pulled from a full bathtub, at first, you only see the level of water slowly dropping, but as it progresses you begin to see the spiral flush forming, eventually getting bigger and louder with a sucking force. Amidst a climate of problematic inflation, rising unemployment, and the efforts of the federal and provincial governments trying to manage their own massive deficits, the economy dragged. Many good people who had clung on the edge trying to keep their heads above water to survive over those years eventually got sucked down the drain of indebtedness during bleak economic conditions. It wasn’t until 1996 that market values stabilized, but it left many people and places in ruins.’
Although it’s true that values stabilized in 1996, it would be a misnomer to interpret this to mean that everything was a-okay from that moment going forward. Because this wasn’t the case. It simply means that prices stopped their decline. For the next five years prices flatlined. They didn’t begin going up until the 2000s.
Welcome To The Lost Decade Of The 1990s
A lot of younger folk have the impression that those who purchased way back when in Oldie Times (the 1980s and 1990s) had it easy. Like it was as simple as buying a property for a fraction of today’s prices and now, four decades later, the Seller reaps the real estate rewards. But the purchase price decades ago versus the sale price today doesn’t tell the full story – and it certainly doesn’t chronicle the journey in value that Toronto real estate took during the ebbs and flows of the market over the subsequent years.
The truth of the matter is that value – and your relative return on investment – has much to do with what point of the real estate cycle a homeowner finds themselves – and how that relates to their ownership horizon. Although Buyers of Toronto real estate in the late 1980s, who bought at the peak before a profound trough in the cycle of the 1990s that I call The Lost Decade, were able to pay down their mortgage debt, for an extended period of time many owners were living in negative equity and being held hostage by their mortgage indebtedness. That they had the tenacity to hang in there for a decade waiting for prices to begin recovering is truly why they reaped the financial rewards.
Owning during The Lost Decade wasn’t a ticket to easy street by any means. In fact, during that time period – just like we’re beginning to see in our current economic climate – there are homeowners having to turn around a sale quickly with only a modest gain, a break-even proposition, and sometimes even a loss.
To illustrate this, here are some examples of sales from Toronto’s real estate trenches that I post on my Twitter Feed under the heading #TorontoRealEstate Then&Now:
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Let’s take, for example, the above 3-Level Townhouse In A Converted Mansion
1987 – Sold for $285,000
1990 – Sold for $308,000
1997 – Sold for $260,000
1999 – Sold for $285,000 (*Back where this sales cycle started twelve years earlier.)
2022 – Listed for $1,599,000 (*Did not sell).
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A Tony Townhouse In Riverside
1988 – Sold for $165,000
1996 – Sold for $127,000
2010 – Sold for $449,000
2020 – Sold for $1,199,000
(*During the decade between 2010 and 2020, the home appears to have almost tripled in price. True – if you look simply at the sale prices, it seems like this home’s value grew exponentially. Yet, if you were the homeowner who bought at the peak of the market, and did not wait for the trough to rise again, you were likely looking at a loss. It’s all relative.)
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A 2-Storey 1880s Rowhouse In West Queen West
1987 – Sold for $147,000
1989 – Sold for $230,000
1994 – Sold for $135,000
2019 – Sold for $1,170,000
2022 – Sold for $1,251,000
(*The owner tried to sell it three times in the Autumn of 2020. On the third attempt – at a list price of $1,289,000 – it sold for $1,251,000. Once you factor in buy/sell costs, they took a loss.)
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A 2.5-Storey Semi In Roncesvalles Village
1991 – Sold for $270,000
1995 – Sold for $235,000
2005 – Sold for $524,000
2011 – Sold for $749,000
2022 – Sold for $1,825,000.
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A 3-Storey Detached Edwardian in Leslieville
1986 – Sold for $230,000
1990 – Sold for $246,000
2005 – Sold for $593,000
2022 – Sold for $2,500,000
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A 1925 3-Bed Near Danforth & Dawes in MLS E03
1986 – Sold for $90,000
1987 – Sold for $170,000
1997 (Feb) – Sold for $140,000
1997 (Oct) – Sold for $155,900
2012 – Sold for $375,000
2015 – Sold for $600,000
2022 – Sold $879,000
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A 1904 2-Bed Semi Near Broadview & O’Connor
1990 – Sold for $130,000
1997 – Sold for $82,000
2002 – Sold for $118,000
2004 – Sold for $218,000
2009 – Sold for $325,000
2013 – Sold for $420,000
2020 – Sold for $815,000
2022 – Sold for $970,000
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A 1927 Semi Near The Danforth
1987 – Sold for $154,000
1989 – Sold for $209,500
1996 – Sold for $157,000
2001 – Sold for $210,000
2003 – Sold for $267,000
2011 – Sold for $500,000
2014 – Sold for $630,000
2018 – Sold for $955,000
2022 – Sold for $1,319,000
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A 1918 2-Bed Detached Barnhouse In East York
1987 – Sold for $100,000
1988 – Sold for $165,000
1989 – Sold for $180,000
1993 – Sold for $116,000
2000 – Sold for $175,000
2002 – Sold for $195,000
2004 – Sold for $229,000
2005 – Sold for $247,000
2010 – Sold for $395,000
2014 – Sold for $487,000
2015 – Sold for $601,000
2022 – Sold for $1,057,000
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A 1912 3-Storey Semi Near Yonge & St Clair
1988 – Sold for $483,000
1991 – Sold for $407,000
1994 – Sold for $360,000
1997 – Sold for $380,00
2003 – Sold for $605,000
2006 – Sold for $779,000
2014 – Sold for $1,320,000
2023 (Mar) – Listed for $2,850,000 and terminated after 33 days
2023 (April) – Listed for $2,749,000 and still available
What do all of these demonstrate? That the market is dynamic, and just because house prices rose rapidly in the past, does not mean that they will go up rapidly in the future. In fact, the data once again proves that real estate is cyclical. And most importantly – no matter the generation, season, or motivation to buy – time is an ally, a protector, and an essential tool in capitalizing on your real estate investment. Slow and steady will usually win the race – but success is more assured when you have a real estate team on your side who can read fluctuating market trends, develop smart selling strategies, and guide you along a path to homeownership paved with principles, not paycheques.
With decades of experience navigating all sorts of conditions and influences in the real estate trenches, we are here to help!
Here are some additional posts that complement this blog:
7 Reasons Why Toronto Real Estate Prices Have Skyrocketed Over The Past Decade
The Psychology Of Real Estate, Housing & Home
The Affordability Conundrum For Toronto House Buyers: Location, Condition & Costs
Dear Urbaneer: Interest Rates In The 1980s And Now
Gentrification, Densification, And The History Of Toronto Real Estate
Want to have someone on your side?
Since 1991, 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.
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Thanks for reading!
-The Urbaneer Team
Steven Fudge, Sales Representative
& The Innovative Urbaneer Team
Bosley Real Estate Ltd., Brokerage – (416) 322-800
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Celebrating Thirty-One Years As A Top-Producing Toronto Realtor
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