Scrap the Stress Test!!

Published on 7th March 2019

The dreaded stress test, whether you like it or not, has 100% made its mark on the 2018 real estate market and continues to do so in 2019. As a quick refresher, the stress test is a requirement when you apply for a mortgage that forces you to be tested at a rate that is 2% higher (200 basis points) than the posted rate. So, if you were going to get a mortgage at 3.5%, the lender would have to test you at 5.5% before they qualify you for the mortgage.

20/20 – In hindsight, that seemed like a great idea with the rising Canadian debt levels. However, it has had such a profound effect on buyers, especially first-time home buyers, that the general public is making their voice heard for it to be removed.

Ultimately, the stress test has reduced buying power by around 20%. So in effect, if the stress test gets scrapped, then you could be approved for a 20% higher mortgage amount. For example, if you were told that you are pre-approved for a $500K purchase and if the stress test is removed, then you can now afford a $600K purchase instead. Oh how a simple change can shift the landscape of the entire market!

Word on the Street – There are many rumblings as of late with regards to what we can do to ultimately help Canadian citizens with the biggest purchase in their life. There have been many options thrown out there such as:

Extending the amortization term (lower monthly payments allow for a higher purchase price)
Reducing the stress test to 1% instead of 2%
Completely removing the stress test
Exempt first-time home buyers from the stress test
…plus a whole bunch of wacky ideas tossed around!
In my opinion, the stress test seemed like an overreaction to media headlines talking about our rising debt levels, which prompted the Federal government to take action. As with most changes, it all begins with a conversation and then more and more people will join in until there is a critical mass that pushes the government to make a change (i.e., the rent control that was issued 2 years ago by the Wynn government).

Winning Your Vote – Without getting too political here, there will bound to be at least one campaign in the upcoming Federal election later this year that will promise the removal of the stress test to win your vote. The stress test issue is very likely going to be constantly brought up.

What This All Means – Do I agree with removing it? [BREAK] YES, of course! For personal reasons, I would love to be able to afford more properties (who wouldn’t?!). For the City as a whole, it’s a good idea because people ultimately want to be able to own a property, and the removal of the stress test would help to facilitate just that. However, regardless of whether it is removed or not, we’re still going to have a supply issue. The removal of the stress is going to help the “next” Torontonian by allowing them to qualify for an entry-level property. When that supply gets gobbled up by the “next” Torontonian, the prices will go up (as a result of no more supply) and the “next-next” Torontoian will not be able to afford it. Hence, that vicious cycle will start again.

Unfortunately, this is the reality that many Torontonians are facing today. Unless we have less demand by reducing immigration or allow for more supply, the stress test is just the next talking point. After that, there will be another talking point about something else. The stress test is just the lowest hanging fruit for the politicians to pick on in order to win your vote.

The Wrap – Over the course of the next decade or two in Toronto, we will be a city where there is a clear separation between those who own at least 1 property, and those who do not own this type of asset at all. Very simply, the affordability gap is going to be so large that it will just be impossible to buy a property unless you inherit money from parents who own real estate.

We are following in the footsteps of big metropolitan cities such as Hong Kong, New York, Tokyo, and Paris. At the end of the day, it’s just like Monopoly – buy real estate and hold on to it. It’s simply the best way to win!


Until Next Time, Happy Real Estate-ing!

Pre-Construction Condo Sales DROP by 42%!

Published on 28th February 2019

What an eye-catching headline! Although that headline is true, this is not as alarming as you may think. The sky is not falling. We’ve had record years in the condo market for the last 4 years with over 10% growth in prices. That type of growth rate is simply not sustainable. It’s great that we are levelling off and stabilizing now.

The Numbers are IN! – Here are the numbers from Urbanation, take a look at the graph below.

I’ve circled in red the difference in sales that we experienced from 2017 to 2018 (I know, it’s a ridiculous drop off, isn’t it?!). Again, most of that was due to the foreign buyer tax and the mortgage stress test that we got hit with in the last 2 years. Although the 42% drop off is a catchy headline, we actually just reverted back to our 10-year average in the range of 20,000 new condo sales – you can see that with the green line that I put across the graph below for you.

The Healthy Green Line – Given the green 10-year average line, the results for 2018 are actually relatively healthy in contrast to what the headlines may indicate. 2017 was simply a ridiculous record-breaking year for pre-construction condos. We are now back to more “normal” growth rates.

Thinking Pre-Con? Anyone who is looking to buy pre-construction for investment purposes and is banking on appreciation alone should ought to reconsider. If that sounds like you, then make sure you do your due diligence on the project to ensure that it will cash flow and your investment will have the capability to carry itself upon completion.

In an article that I wrote in December of 2018, I outlined how you can profit from the biggest price gap between pre-construction condos and resale condos. This continues to apply in 2019. The link to that article can be found HERE.

Absorbing Available Units – Remember, sales in pre-construction are dictated by the builder and when they release their inventory. It is much more controlled than the resale market whereby each individual owner puts their property on MLS (via a Realtor). So with pre-construction condos, it is often very important to look at absorption rates. I’ve broken out the sales volumes and absorption rates from the last 3 years below.

Rest Easy, We’re Stable Now – The absorption rate in 2018 for pre-construction condos is significantly lower in 2018 (i.e., 16% less). In other words, for every 100 condos available to be purchased from a builder, 16 more are not sold relative to 2017. However, as with most numbers and stats, it’s all relative. The 10-year average for sales volume and absorption rate is 20,493 and 58%, relatively. The sales volume in 2018 was slightly lower than the 10-year average (20,028 vs 20,493) while the absorption rate in 2018 was slightly higher than the 10-year average (68% vs 58%). So you can rest easy – the sky isn’t falling, just stabilizing!

Pre-Construction Pricing – If you read the article in the link above, “How to Profit from the Biggest Price Gap in Years”, you’ll see how quickly pre-construction condo prices have jumped in the past 2 years. There are a ton of reasons why the prices have gone up in recent years but for the first time in Q4 2018, the prices have stayed put (only up about 0.4%). This means that we’re at about the cusp of pricing for pre-construction condos.

Below is a chart to show you the rate of growth for pre-construction condos, resale and condo rents over a two year price period. The sole purpose of this chart is to show you the correlated growth rates that I monitor in the condo market. These categories are independent of one another, but you can see why I have been steering many clients away from pre-construction investment in the last few years, UNLESS it was absolutely a home run type of project.

  • 19% price increase in condo rents is ridiculous – that’s 9.5% per year. The normal rate should be roughly 3-5%.
  • 35% price increase in resale condos is also ridiculous – that’s 17.5% per year. The normal rate in this category should be approximately 3-5%.
  • 56% price increase in pre-construction condos is just absolutely, ridiculously nuts!! Need I say more?

The Shock Effect – There are many reasons why the price of pre-construction condos have jumped by so much. I’ve written a ton about city permit delays, Toronto secretly doubling the development charges overnight, land acquisition costs, labour and material costs, etc. So as a result of all of these things that have happened, the spike in pre-construction condo prices should not be a total surprise and hence, why a 42% drop off in sales should not be a shocker either.

The Wrap – Similar to most sectors in the real estate market, the number of transactions have dropped but the prices have stabilized. I don’t anticipate that prices will continue to fall, but rather I believe they will stagnate. Every sector of the market is behaving quite differently now, so if you plan to make a real estate move in 2019, make sure you are equipped with the proper knowledge along with the guidance of our team who keeps a close eye on these matters on a daily basis. Contact us today to see how we can help.

How to Find the BEST Tenant

Published on 21st February 2019

One of the scariest things about real estate investing is finding the tenant that will cover your carrying costs on your property. This is usually the last step of the entire investing process, so I wanted to give you my tips and tricks on how to find the ideal tenant.

Most Realtors would NOT share this type of info openly with you, but I find that if you know the process (whether you decide to hire our team to find a tenant or not), at least you can arm yourself with knowledge that may result in a better sleep at night.

So here are my tips and tricks on how you can find the perfect tenant:

1) Have a Good-Looking Product.

Most of the time, prospective tenants will find your property through some online channel. As a result, their first impression of the property will be its photos. I always recommend hiring a professional photographer to get it done for you (approx. $100). If you’re a somewhat skilled photographer and have the know-how to edit photos, then you can always try to do it yourself. Remember though, you can always reuse these photos when you’re looking for your next ideal tenant, so having great photos is a worthwhile investment.

2) Good Copy and Advertising.

If you have good copy-writing skills, then this is where it will come in handy. You want your ad to stand out and attract the best tenants. Furthermore, where you advertise is incredibly important. Using a Realtor gives you access to MLS and exposure on along with many other listing crawler websites. If you do not hire a Realtor, then I would recommend using the following sites and pay for the listing so that it is at the top of the search results:
A) Kijiji
B) Craigslist
C) Toronto Rentals
D) Facebook

3) Arranging for Tours.

Most people in Toronto live a very busy life. If you are not available for showings, it could be difficult. This is also why a lot of people hire Realtors. However, this is my tip for managing that issue – do all of your showings AT THE SAME TIME. That is key! If you have multiple interested parties going through your property at the same time, then that will make your property look highly coveted! If you followed steps 1 and 2 to a tee, then you will have a ton of interest in your property and your phone will be ringing like crazy. If you’re worried about not picking up all of the calls, then you should set up a call screening program such as RingCentral or Grasshopper to screen calls and give next steps for viewing the property. Alternatively, you can change your voicemail message temporarily to address all of the callers interested in your listing.

4) Application

Instruct everybody who is interested in your property to submit a rental application and credit check application. This will help provide you with a list of the top prospective tenants that you’re working with. A standard rental application can be found HERE. For credit check, I would recommend using a program called Naborly.

5) Making the Selection

Once you have multiple applications, select your top prospective tenant and have them sign an Ontario Standard Lease form and collect the first and last month’s rent. If you want to add additional clauses, I’ll put OREA’s standard clauses HERE for you. Keep in mind though, any clauses you put will only be as good as how it holds up in the Landlord Tenant Board.

6) Closing Day!

On the day of closing, exchange your keys for all post-dated cheques from your tenant, proof of fire and liability insurance, and utility transfer to the tenant (if your tenant is responsible for their own utilities). Voila! You’ve found the ideal tenant! Rinse and repeat for all of your investment properties.

The Wrap – I hope that sheds some light on the entire tenant selection process. Once you do it once, it is not very difficult (albeit reading this for the first time may sound very overwhelming). That being said, many people still do prefer to hire a Realtor for this whole tenant selection process because one of the worst things that everyone dreads is having a bad tenant in your property. If you are all for sparing yourself of potential future headaches and want to make sure you put the best possible tenant in your property, then give our team a call. We have many years of experience doing exactly what this Insight Article is talking about, and can get your investment property going with an A+ tenant!

Until Next Time, Happy Real Estate-ing,

Word on the Street: 2019 Condo Update

Published on 14th February 2019

As condos have become the new entry-level asset class for most first-time home buyers and investors, it is paramount for us to keep a close eye on the condo market. This holds especially true because the condo market functions completely different from the freehold market. It is literally a tale of two markets. If you want to learn more about how the freehold and condo markets are different, you can read the Insight Article HERE.

Coles Notes – More often than not, and as a result of a cultural shift, we tend to seek things that are short and succinct nowadays – the “give me a one sentence summary of everything” mentality. When you read media headlines, they’re always negative and most people don’t read the entire article, but instead take just the headline for the facts.

If you were to only consume real estate information by reading headlines, then you would think the world is crashing right now, and that the entire market is going for a huge dip.

However, if you only look at condos, then that tells a completely different story because it is the condo market that is keeping the entire real estate market afloat right now.

Fourth Quarter Stats – Below are TREB’s 2018 fourth quarter reports specifically for condos. I’ve changed the formatting a bit so that the information is more easily consumable.

Condo Central – You’ll notice right off the bat that Toronto basically makes up over 70% of the condo sales (3,728 sales transactions in Toronto out of a total of 5,191 across the TREB areas). That’s because freehold is too expensive for most people in Toronto right now. To live in Toronto, condos are essentially the sole option for most people. Very soon, this will happen in the other surrounding areas as well. Many, many developers are building in the urban centres of the other regions right now.

One Down, One Up – The key statistic that I want to point out to you is the declining number of sales transactions from 2017 to 2018 in the major downtown cores that have a huge condo presence, such as Toronto, Mississauga, Vaughan, and Markham. However, despite this, the condo prices are all UP. Toronto and Mississauga, more specifically, are up more than 8% with sales down over 12%. Interesting eh?

The prices are up because there is a demand for downtown entry-level condos and the lack of supply in the area. The sales are down due to a combination of supply (lack of listings) and buyer confidence in the market right now (yes, those negative headlines that people skim do affect the market).

If you ask me, this is the time to be looking for investment properties as there is less competition under the current market conditions, and you can ACTUALLY negotiate.

Long-term Outlook – My outlook for Toronto has always been such that in 10 years time, you’ll make money, but be prepared for a dip at some point. That’s why it’s imperative that if you’re investing, buy a property that cash flows – don’t just bank on appreciation.

If you’re looking for cash flowing condos, our team puts together turnkey properties with guaranteed rents for our clients. To stay up-to-date on that front, please subscribe to the mailing list by clicking on this link: CLICK HERE

Now, let’s take a look at the rental numbers.

Inventory Shortfall? The first thing that I’ll divert your attention to is the Months of Inventory (MOI). We’re at a ridiculously low 1.7 months of inventory in the fourth quarter, which tends to be the slowest months for rentals. This means that if we get no new listings, in less than 2 months, we’ll run out of supply. That’s what we call a “hot market”.

Rentals Outperforming in Slow Quarter – Now, take a look at the entry-level condos for rent. We can see an increase in the number of leased units and a jump of almost 10% in price. That’s pretty great if you’re an investor, especially since Q4 typically tends to be the slowest quarter of the year. The increase in the number of leased units is how quickly the market is absorbing all of these new condos being built. There have been a lot fewer listings on the market since rent control has disincentivized tenants from actually moving out.

The Wrap – With a massive number of tech companies coming to Toronto and opening their offices in the same location as all of the condos, plus the ridiculous 6-figure starting salary that these tech companies pay, my intuition tells me that we’ll continue to see increases in the prices and rental rates. I truly believe that in the next 10 years, you’ll either own real estate in Toronto or be a renter for life. Which side do you want to be on in 10 years? if your answer is to be an owner, then we’ve got the solutions for you!

Where to Find Opportunity in a Slow Market

Published on 7th February 2019

Regardless of whether we are in a buyer’s market, seller’s market, or balanced market, there is always opportunity to be had if you just look hard enough (I truly believe that). That’s why there are so many people who became super wealthy after the 2008 financial crisis. That’s why there are people who profit when the market changes. That’s why there are people who make a fortune in every market. You just need to know where to look.

What’s in Your Portfolio? Making money in today’s real estate market is not as easy as buying a property and hoping the appreciation will come in the next few years. Nobody is expecting that at this moment, or at least not based on the news headlines anyways.

In the past two weeks, I’ve had numerous calls from non-clients who are looking at what options they have for their portfolio. Fortunately, most of them are in a good position and have money to work with.

Oddly enough though, recently, there have been an influx of people inquiring about what to do with the pre-construction unit they originally bought for personal use but now need more space and are looking to sell their unit on the assignment market. Those people are sitting on a lot of equity! This is exactly where the opportunity lies. Anyone who bought a condo before 2017 is likely sitting on quite a bit of equity that has built up over the past two years.

The Perfect Storm – The current market is actually the perfect storm for anyone who is looking to upgrade from a condo to a freehold property right now. The condo prices and demand are about the highest they have ever been. On the flip side, the freehold demand is about the lowest they have ever been. The combination of these two factors results in the smallest gap in recent history from a condo to a freehold property.

This means that you can sell high on your condo and buy low on your freehold. This opportunity is especially great for people who live in a condo and could use some more space (i.e., for those who are thinking of kids or pets).

Wait a Minute Though – “Isn’t the current freehold market the worst it has ever been?” That’s exactly the point. It’s not about whether the market will go up or down that you need to worry about. It’s the difference in price between the asset class you own and the asset class you can upgrade to.

Land Ownership – Over the course of the past 10 years, I can without a doubt tell you that a freehold property will go up in price. We are running out of land to build on yet lots of people are making their way to the GTA. Now’s the time to own a piece of land (or two, three, whatever you can get) before it’s too late. If you can buy a freehold property at this moment, then you’re capitalizing on this opportunity and will be heftily rewarded in the next 10 years.

Determining Your Purchasing Power – So how do you know if you can capitalize on this opportunity? Well, the first thing you need to do is to determine what equity you have in your condo. Your equity is essentially what your property is worth less your total mortgage owed.

If you’re not sure what your property is worth, you can reach out to me for a free assessment. Contact Zhen @ 416-436-9436 or

Step 2 is to determine how much mortgage you qualify for.

As a result of the steps above, you will determine your total purchasing power, which is your equity plus your mortgage. Most of the time, that will give you a good idea of what kind of freehold property you could buy.

The Wrap – Most of the custom scenarios that I have assessed for my clients have allowed them to upgrade into the freehold property asset class quite easily. These current market conditions, where the gap between a condo and a freehold is the smallest it’s ever been, may not last that much longer. Once an increasing number of people start realizing freehold properties are priced less than its actual worth, these properties will be in demand again and prices will shoot back up again. It’s the Year of the Golden Pig and this is YOUR year of Golden Opportunity! Don’t miss out!

What Your Money Gets You!

Published on 24th January 2019

People who talk to me about real estate often have some sort of story about missing out on a great real estate opportunity, something along the lines of, “A few years ago, I could have bought this for X and now it’s worth Y”. If you bought anything 10 years ago anywhere in the Golden Horseshoe, it has at least doubled in value by now.

Rule of Thumb – The key to real estate is don’t wait to buy real estate, but instead, buy real estate and wait. This is especially true if you have available cash on hand or cash in the form of a Home Equity Line of Credit (HELOC).

I always joke with the fiancée that if we knew what we know right now when we were in university, our portfolio today would be ridiculous because with our OSAP funds, we could have bought 4 pre-construction, 1-bedroom condo units for around $250,000 each at Yonge and Bloor. But alas… hindsight!

The Constant – Things change and they always will. There’s that saying that “the only constant is change.” I tend to agree with that statement. If you always think in hindsight, you’ll miss all of the present day opportunities in front of you. This generally applies to real estate and everything else as well.

My very first condo

Should Have, Would Have, Could Have – Here’s the real kicker the deposit structure back in the day would only have required 5% TOTAL upfront deposit for a pre-construction unit. Yes, that’s only $5,000 to buy a condo and the next payment wasn’t due until 2 years later. This would have meant that I would have had at least 4 semesters of OSAP to cover the next deposit! Crazy way to put things into perspective, eh?

Things change and they will continue to.

Costs are Way Up! Today, if you’re looking at a pre-construction condo, most of the time you’ll be looking at a 15% deposit in the first year for a hot project. Furthermore, that 1-bedroom condo at Yonge & Bloor is going to cost you closer to $600,000 instead of $250,000. In addition, the unit is probably only 480 square feet now instead of 600 square feet back in the day (and we thought the latter was small before!).

Things change.

Upfront Cash – If you break down the deposit structure on the example above, then your investment in the first year is going to be $90,000 instead of $5,000 back in 2006 (13 years ago). With available credit (buying power) shrinking and supply dwindling, things are changing right before your eyes. Investing in a condo near the subway line is only going to get increasingly expensive. It’ll be reserved for the people who have the $90,000 cash available. As the deposit increases with the price, many investors will be pushed out of the Toronto real estate market.

Investment Sprawl – Expect to be investing in other cities outside of Toronto, such as Vaughan, Mississauga, Hamilton, Kitchener, and Ottawa. Right now, those would be my secondary choices outside of Toronto.

In Vaughan and Mississauga, you can still get away with a 1-bedroom condo for around $450,000.In all of the other cities, you are still looking at a starting price tag of $350,000 for a 1-bedroom condo.

Here is a chart to quickly breakdown the prices for you right now.

The Wrap – Depending on your budget, you may have to consider moving to another city. Of course, there are deals to be had in pre-construction from time to time, and if you want to be notified of these deals, please make sure that you subscribe to the PrimeProperties TO VIP mailing list. You can subscribe by clicking here:

If you have a specific question about what to do after you have seen the chart above, please reach out to us to learn more. Remember, don’t wait to buy real estate, but rather, buy real estate and wait. Don’t have a hindsight story to tell someone 10 years from now!

Until Next Time, Happy Real Estate-ing,
(416) 436 9436

Predicting the Future Without a Crystal Ball!

Published on 17th January 2019

If you have been following my weekly Insight Articles and YouTube vlogs, you’ll notice that from time-to-time, I joke about not having a crystal ball to predict to the future.

If you haven’t been following along, you’re missing out, but it’s never too late to get started. Here’s a link to subscribe to my YouTube Channel and a link to all of the weekly Insight Articles that you may have missed.

Subscribe to PrimePropertiesTO YouTube Channel: CLICK HERE

TONS of great, insightful content here: CLICK HERE

Completing the Puzzle – While I don’t have a crystal ball to actually predict the future for you, I am, however, capable of putting all of the puzzle pieces together to get a sense of what is going on and what is likely going to happen. My predictions are formulated from constantly being around and taking in so many stats, behaviours of clients, trends in the market, and some anecdotal evidence.

In this week’s Insight Article, I wanted to put together a formal list of items for you that have been shaping my views on how the 2019 market will turn out. Consider this as Part 2 of an Insight Article that I wrote earlier this year titled, “What to Expect in 2019’s Real Estate Market”. If you’d like to read Part 1 before Part 2, here’s a link to it: CLICK HERE

It’s All in the Stats! Take a look at the graph that I mapped out from the latest 2018 stats below.

I’m sure you may have seen something like this before. Many people put the same stats into a similar graph, presenting it one way or another. In my opinion though, there really is nothing to see here. A lot of the real estate bears (a.k.a, the pessimists) will make a big deal about the prices dropping for the first time since 1990, as depicted by the previous graph above. The prices dropped 4.3%, and while that isn’t a small number, it isn’t necessarily considered to be a crash either.

Breaking from the Crowd – What I did do differently was chart the number of transactions against those prices that we saw in the graph above onto the same graph for you, so that we have a better representation of what happened.

Reading the Lines, and the People – The number of transactions is seemingly more related to the buyer-psyche than prices. With prices, we’ve seen that if a seller doesn’t get what they want, they will withdraw their listing unless they absolutely have to sell for a specific reason. Anyone who has held onto real estate for over 10 years has almost tripled their money, so unless they need it out of the market immediately, they have no reason to sell it for less.

The number of transactions, on the other hand, is dictated more so by the buyers than the sellers, unlike prices. If you take a closer look, the line representing the number of transactions seems to be 1 or 2 years ahead of the price trend line. The former has been a very good indicator of prices in recent years.

From the previous graph, you can also see that in the last 2 years, we have seen the biggest drop off in the number of transactions to date. We closed the 2018 year below 80,000 transactions. Evidently, buyer psychology is at its weakest levels since 2008.

The Lows – The number of transactions that we are seeing is still relatively high, just not as high as we have been accustomed to over the past 10 years. There are some reasons for that though, because every time the number of transactions dipped dramatically, something drastic has happened. Let’s look at each of those points.

Key Event Dates:

  • 1990 – The interest rates spiked over 4% overnight
  • 2008 – World financial crisis
  • 2017 – Foreign buyer tax introduced
  • 2018 – Stress test introduced

All of the above events caused some psychological effect on buyers, leading to a drop in the number of transactions for that year. However, shortly after those events, the market bounces back and transactions are back to normal, slowly increasing again. Is this going to happen in 2019?

Where Are We Headed? Over the next 10 years, I’m extremely optimistic about where the market is headed. In the short-run though, at the end of 2019, I’m predicting a slight increase in the number of transactions from 2018 (a very small one). This prediction would change though, and will be contingent on whether there are any drastic government-related interventions that occur in 2019.

Through the Grapevine – On the government front, there have been some news running through the grapevine as of late, which I have been hearing from multiple sources.

  • We saw the first Bank of Canada interest announcement date come and go with a hold on the interest rate. Even prior to that, multiple sources have told me that there may even be a rate cut this year given the “slightly depressed” Canadian economy.
  • January 9th was one of the few times when the Bank of Canada did not follow the Federal Reserve in raising their interest rates (rather interesting, to say the least). If interest rates stay the same or are cut, that could increase the confidence of the buyer psychology and ultimately increase the number of transactions and prices.
  • Another external change that we could expect is from CMHC. There are rumblings that CHMC is going to change the mortgage qualification process in April 2019. On their docket right now is how self-employed, business owners and commission-based workers will qualify for their mortgages. In the last few years, it has not been pretty for people in those categories. We’ll see what ends up changing. If there is less stringency on how these types of individuals can qualify for a mortgage, then that could increase the number of transactions and prices as well.

The Wrap – Considering all of the factors above, plus many conversations with clients over the last two months, I’m predicting a slight uptick in the number of transactions in the GTA as a whole (we’ll probably clear 80,000). In terms of prices, I would say that it’s going to stay relatively the same (perhaps plus-minus 1-2%). If you’re unsure of where to take your real estate strategy from here, do reach out to us and we’ll help you draw up a plan for this year and beyond.

The Tale of Two Markets – What’s Actually Going On?!

Published on 10th January 2019

If you are a casual follower of real estate in Toronto (which everyone seemingly is these days given the number of opinions people have on this subject matter), then there is a very good chance that you may be confused about what exactly is going on in the market. It may even be more confusing than the bookcase in space scene in Interstellar (all Christopher Nolan movies require a re-watch!).

So allow me to shed some light on it for you and to clear the air of any confusion there may be. There are two narratives in the Toronto real estate market right now. Well, actually, it’s more like two and a “half” narratives, but I’ll explain the half part of it later.

Narrative #1 – The first narrative is the slow down, crash, stagnation, or whatever you want to call it, of the market.

Everyone is going to focus in on the end of the graph (the area circled in red) that depicts the drop in prices to $787,300 or a decrease of 4.3%. This drop in prices is for all of the GTA as a whole, which will lead many to lose their minds. Before you freak out, do take a deep breath (or maybe a few more), do some yoga, and drink some chamomile tea.

Even worse, if you read some headlines, they’ll try to mislead you and tell you that “sales are down 19%”. While the fact that sales are down 19% is true, sales in this context actually means the number of the transactions. We closed the year with 77,426 sales, which is down from 92,335 in 2017.

So that is narrative #1. Whether you choose to follow and digest the news of this narrative is completely up to you.

Narrative #2 – The second narrative is the complete supply disaster, that is, the Toronto condo market. The lack of supply caused a huge spike in both purchase prices and rental rates.

If narrative #1 is true, then how can narrative #2 also be true? If the market is supposed to be trending down, somebody please tell me why the condo market is going the opposite way! We saw an 8.7% increase in condo prices in Toronto in 2018!

So there you have it – Toronto’s real estate dichotomy, a tale of two markets.

How Is This Happening? Well, in short, it’s essentially what I have been preaching for all of 2018 and will probably continue to preach in 2019 as well. The markets sub-$800K are super strong while markets over $1.2 million are incredibly weak.

You can see that the chart above showcases each subcategory and how they performed pricing-wise relative to each other. Green means increased in prices and orange means a decrease in prices.

Toronto and the Half Narrative – This is where the “half” narrative comes in. With the decrease in prices, the confidence in the 905 is at an all-time low and the millennial generation, who are now slowly becoming the primary purchasers, prefer the urban density approach to lifestyle as opposed to suburban sprawl (unlike the baby boomer generation who preferred the suburban life).

Combine all of those narratives and the availability of credit due to the stress test (purchasing power) – ladies and gentlemen, that is exactly what is going on in the GTA real estate market right now.

In 2019, we will continue to see more of the same with a slight uptick in buyer confidence. If you want more in-depth expectations for 2019, then you can read last week’s Insight Article here: What to Expect in 2019’s Real Estate Market!

If you know that you’re going to make a move in 2019, but still not sure about what kind of move to make, then make sure you give us a call at 416-436-9436 to see how we can help.

What to Expect in 2019’s Real Estate Market!

Published on 3rd January 2019

It’s 2019!! So with a new year upon us, what can we expect from the real estate market? Well first off, if you haven’t already watched my 7 crazy predictions in 2019, the link to that video is provided below. Plus, you can also check out the 2018 market recap as well.



  1. Top 7 Crazy Things to Expect for Real Estate in 2019!
  2. The 2018 End of Year Recap. Better or Worse than You Think?!

The Prediction – This year, the numbers will be very similar to 2018. The number of transactions will be similar, but with a slight uptick in overall prices driven by the condo market.

Stop the Intervention! 2019 will be the first year since 2017 where we will have no government intervention. This should help us avoid violent swings in the market.

In, 2017 the introduction of the foreign buyer tax & rent control policies led to the massive market cool-down period. Last year in 2018, the stress test was put into effect, which resulted in less available credit to almost everyone out there. So let’s keep our fingers crossed that something of this nature doesn’t happen in 2019!

What to Expect – If nothing changes drastically, DO expect the following:

  1. Prices of condos will continue going up, especially 1-bedroom units with parking
  2. Prices of freehold properties over $1.2 million will continue to stagnate
  3. Freehold properties under $800K will continue to be very competitive
  4. Expansion of city centres in the 905
  5. Rental rates in the downtown core will skyrocket

In my professional opinion, everything we have seen thus far in 2018 will continue into 2019. Buyers will still be very wary. However, prices will continue going up slowly and the number of transactions will stay about the same as 2018. Additionally, the pace of the market should remain roughly the same as 2018.

The Wrap – Overall, if you are purchasing a property in the GTA or Southern Ontario, you can expect to make money over the next 10 years (expect to be in it for the long haul). But if you are trying to get into real estate and are expecting over 10% increase in prices within a span of only 1 year, then you are in for an unpleasant surprise. It is markets like this where you must understand exactly what is going on and how to navigate through this real estate web. Get in touch with us today to see how we can help you make your real estate goals come to life!

Until Next Time, Happy Real Estate-ing,
(416) 436 9436

How to Buy a Property for LESS Money During the Winter!

Published on 27th December 2018

The holiday shopping season isn’t just for buying gifts during Black Friday and Boxing Day. Many investors will use this time to actively pick up investment properties – talk about a big ticket item purchase! But will there be a steep discount on real estate like there is on TV’s during these shopping bonanza days? Unfortunately not, but oftentimes, you can find a below-market deal with less pressure from other potential competing buyers.

By the Numbers – As you know, real estate is very seasonal. Just take a look at 2018’s sales numbers below that are broken down by month.

The number of transactions from March until June 2018 is significantly higher. This is what I would call “peak season”, especially for houses.

On the other hand, condo transactions are fairly consistent year-round but the number of transactions in this asset class will also peak in the spring.

Real Estate Deal Days – So how do you find a deal during the winter? The answer is simple. You must be ready to close and ready to act fast.

Spring Market Explained – Many buyers, especially owner-occupied buyers, will look for properties during the spring because the weather is nice and the most number of options available will be during this timeframe as well.

There is reason why there are so many transactions in the springtime. Sellers are more likely to list their properties in the spring, which translates to more options. In addition, those who list in the spring usually have thought about it in advance and will ready their home for sale with repairs, upgrades, photos etc.

More often than not, this type of listing in Toronto will attract owner-occupied buyers who are looking for their “dream home” (i.e., purchase for personal use). As investors, you don’t want to compete with these buyers. These are the buyers who are willing pay over asking price for their dream home, instead of worrying about whether their cash flow numbers will still work with the higher bid price. Simply put, investors cannot win against these owner-occupied buyers.

Taking Advantage of the Winter Woes – However, in the wintertime, it’s a different story. There must be a reason for someone to sell their home during the winter (during a time when people are less likely to want to move). So, sellers during this time are likely more motivated. Additionally, they may not have listed their home in the “nicest” way possible (photos in the winter tend not to look as nice). As a result, there are a lot less buyers.

This means that if there is a good investment opportunity, you can quickly swoop in and put an offer on the property (even an offer with conditions because of the lower number of buyers).

The Winter Checklist – Here are a few things that I would recommend for you to ready yourself with beforehand if you want to increase your chances of getting a great deal on a property:

  1. Know what you are looking for;
  2. Be approved for a mortgage;
  3. Have a lawyer ready; and
  4. Have the down payment funds ready in order to close quickly (if needed)

Seasonal Shifts – I’ve had many clients pick up a property between December and February for less money compared to an equivalent property during any other time of the year. Take a look below at the price fluctuation in the average prices seasonally in 2018.

Would you rather buy a property in January 2018, when prices were $736,783 or in June when prices were $807,871? That’s a $71,088 swing in prices, or almost 10%!

The caveat to this is that there will be less listings to choose from but if the numbers work and if you get it for below market price, that’s an automatic win!

The Wrap – If you’re looking to find a deal within the next two months before the spring market turns the corner in 2019, then reach out to us here at PPTO and we’ll help you find a steal of a deal. But do contact us ASAP before the below-market properties are out of stock, just like that item you’ve had your eye on for Boxing Day! Happy shopping!