Hi everyone – hope you’re doing great! Every year at this time we get asked the same set of market timing related questions, an extension of talks we’ve had with friends & clients at the tail end of the year prior (Sept-Dec). And, while the cycles may shift (i.e. what we call a “late spring market”), the conversations are always the same and simply echoed by yours truly 🙂
So, I thought to sum it up for anyone who wants to know more on the “secrets” of the Toronto real estate market – and more specifically, when the “best time” is to sell or buy your new home!
So first off, let’s very quickly break down the 4 seasons of Nature vs. Real Estate, namely:
Ok, weird enough for you?
Before we go on, just remember, weather is dictated by seasons and nature forces. However, real estate seasons are dictated by consumer behaviour, which affects supply (S) and demand (D). And consumer behaviours are dictated, in large part, by … you guessed it, weather!!
So now, to understand the cause and effect of how nature plays a role in dictating our real estate markets, let’s break down what happens in each season. First, from a weather perspective, and then, try to correlate this to how weather affects people and their (selling/buying) behaviours, sound good?!
Photo Credit: seetorontonow
- Nature – Spring is a rainy season in most parts of Ontario and it’s wise to have your umbrella or raincoat with you at all times. Average daytime temperatures are about 8°C in March, rising slowly through the rest of the season.
- Real Estate – In real estate, spring starts MUCH EARLIER – mid-January earlier! Why? Because there are MORE BUYERS vs. SELLERS (D > S) at the onset of each (and every) year! Super simple as to why, namely, it’s much harder (and takes longer) to prep/list a home for sale vs. getting out there to look/purchase a property. On top of new Buyers that hit the market every New Year, you have a spillover from the year prior of Buyers who never bought and got “lazy” or “tired” or what have you and took the “we’ll pick up next year” or “let’s wait and see what happens” approach. Mix that with the fact that homes are slow to list (paint, renos, repairs etc.), you have a supply vs. demand issue. So, each year, in and around the early parts of January, we find a lack of supply relative to the demand of Buyers out looking! Naturally, this sets up the perfect stage for higher sale amounts, and we often find record prices (or anomalies) set in the mid-January to late March periods as listings slowly start to trickle in. This is EXACTLY what’s happening this year – as we’ve seen numerous bidding wars over otherwise quite ordinary properties (i.e. the same properties would have very likely sold for less Winter of 2018).
- Conclusion: Good time to sell! Especially if demand far outweighs supply & other factors fall in line (i.e. mortgage rules, interest rates, economy etc.).
Photo Credit: Wayne Barrett & Anne MacKay/Getty Images
- Nature – July and August can be very hot and humid. Daytime temperatures are usually above 20°C and frequently above 30°C (especially with the humidity).
- Real Estate – Ah, the good-old-cottage effect! The Christmas and holiday rush were followed by the “Spring Market” and everyone was out in full bloom. Fast-forward 5 months, the weather has warmed, birds are out, cottage country and patios are open for business! So, Buyers take a step back, they choose a weekend trip to the cottage, an evening stroll, or a casual patio dinner over their Real Estate objectives – after all, summer is (very) short relative to the colder months in Toronto. So again, we have a shift in supply vs. demand. This time we have spill over of inventory from the Spring market into the summer, and new listings hitting as well. Buyers are still coming out to buy, but the pool thins a bit and hence, less competition for the same or even more product equals stagnant prices or even the elusive “good deals” as fewer eyes are on the prize!
- Conclusion: A better (or potentially less competitive) time for Buyers – especially if demand and supply are more equal (because let’s face it, it’s unlikely that supply will be greater than demand as demand in Toronto doesn’t seem to be going down anytime soon!).
Fall or Autumn
Fall or Autumn
Photo Credit: flipboard
- Nature – In the fall, the weather gets cooler, the days get shorter, and an everchanging landscape of colourful trees start shedding their summertime bloom. The temperature slowly drops during fall, but it can creep up on you!
- Real Estate – While summer is technically still with us until September 22, it’s back to school and back to work! And that means, back to business in Real Estate. Parents rush to buy in the desired school district or to simply get the move “over with” prior to the new school year, Buyers who took a “break” get back into the swing of things, Sellers who thought the summer months were a bit slow decide to list their homes. The fall market is here and like the Spring market we see an influx of listings with each passing week. The same idea as the Spring market, but dulled down. Why? Because, more spill-over listings from the Spring/Summer (homes that didn’t sell or decided to wait) equals more inventory relative to the Spring market. In addition, hind sight allows people to make better judgments (and by people, I mean Buyers), things are less frenzied and Buyers are more reluctant to go “crazy”. Into the mix, add shorter days and cooler temperatures, and it’s easy to see why supply and demand are not as far apart as they might be in the spring market.
- Conclusion: Sell! Fall is historically the second strongest (real estate) market in Toronto (next to Spring). So if you have reason to sell and missed the Spring market, didn’t get what you wanted in the summer (or didn’t list), here’s your chance to sell!
Photo Credit: Roozbeh Rokni
- Nature – What can I say, winter in Toronto (in all of Ontario) is fu#$i*g cold! Temperatures are most often below 0°C, day and night. As we progress from mid-January into February, we’re often graced with temperatures as low as -20°C to -30°C (especially when you account for wind-chill – ah yes, good old wind-chill).
- Real Estate – By mid-to-late November, it’s over! That is, the Real Estate rush is over. At this point, Buyers are fatigued and Sellers have a shorter timeline to get their home ready/prepped ahead of the holidays. Decorations are being put up, malls are being flooded, holiday plans are in full swing and everyone has had enough … time for a break! And so, naturally, we find the biggest slowdown in the market during this period. So here’s the answer to the most common questions we get asked by Buyers “when is the best time to Buy/get a deal?” … well, when nobody else seems to be looking! The flip side is that there’s less inventory and a VERY short window (i.e. 1-1.5 mths tops, before the market starts showing signs of strength again) – but, there’s always that diamond if you’re consistent and the Seller has a desire and/or need to act – even better!! Seller’s, unless you HAVE TO SELL, avoid this period like the plague. The difference can be anywhere between 5-15% for 1-1.5 mths – and on an average $1 million dollar sale, that’s a modest $50K-$150K – not a bad monthly salary, no?
- Conclusion: Buy anything and everything in your path! No, I’m just kidding (well, sort of). Look, if you’ve been looking throughout the year, didn’t find or couldn’t secure what you were seeking, here’s your chance! Less product, yes, but less competition too! Races are often won at the very end (at least that’s what my cross-country coach used to tell me .. I never won .. but he seemed to make sense!).
Hope this helped you! And remember, the above is a general guide based on patterns observed. But, your circumstances dictate your needs. So, if you NEED TO SELL, then sell!! And if you NEED TO BUY, then buy!! It’s not always about the bottom line. But, if you have time on your side and you don’t have a desperate need to act, then try your best to understand supply, demand, and current market conditions, and use them as best as possible in your favour (baby!).
If you need to chat on what’s BEST FOR YOU, just reach out!