Real Estate

Predictions for Fall market

  • Last Updated:
  • Sep 21st, 2020 9:14 am
[OP]
Sr. Member
Dec 19, 2010
773 posts
230 upvotes

Predictions for Fall market

Given we had a very busy summer (pent up demand, April/May/June shifted to June/July/August), what is the prediction for the Fall season (Sep-Nov)? Similar YoY growth in sales volume, price increases or some softness as people begin returning to work?

Single family homes in the suburbs (GTA- Oakville, Milton, Whitby) have seen very strong demand and high sale/list price ratios, curious to hear if the conventional wisdom is these levels will be maintained or pull back going into the fall season. My view is we continue to see elevated demand and prices with some seasonal adjustment compared to the summer months.

* I don’t think CERB or deferrals ending will have a direct impact on home prices in the suburbs but perhaps the news surrounding this influences overall sentiment over the next few weeks/months to soften demand/prices.
65 replies
Newbie
Oct 28, 2018
38 posts
71 upvotes
I think this crazy summer was partially a result of the pent-up demand for the spring market that never was due to the lock-down.

I'm thinking that sales volumes are going to slow down and inventory is going to increase as we head into the colder months. There's no additional pent-up demand to keep fueling this run that I can think of. Whether that'll be gradual or abrupt really depends on how the deferrals ending impacts stuff. I'm anticipating it'll be pretty gradual.
Newbie
Oct 24, 2009
31 posts
55 upvotes
callmebob wrote: Given we had a very busy summer (pent up demand, April/May/June shifted to June/July/August), what is the prediction for the Fall season (Sep-Nov)? Similar YoY growth in sales volume, price increases or some softness as people begin returning to work?

Single family homes in the suburbs (GTA- Oakville, Milton, Whitby) have seen very strong demand and high sale/list price ratios, curious to hear if the conventional wisdom is these levels will be maintained or pull back going into the fall season. My view is we continue to see elevated demand and prices with some seasonal adjustment compared to the summer months.

* I don’t think CERB or deferrals ending will have a direct impact on home prices in the suburbs but perhaps the news surrounding this influences overall sentiment over the next few weeks/months to soften demand/prices.
Single Family Homes will most likely continue to do well as people continue to work from home likely until early 2021. I think condo market, especially downtown will continue to soften. I still know several friends with families who are looking to sell their North York condos to move up to a house in the burbs.
Newbie
Dec 24, 2010
99 posts
88 upvotes
Toronto
I think that the pent up demand has had its release in GTA.

I think we are still below YTD listings on detached houses.
I would suspect a big drop in condo prices down town due to increasing supply and a sustained low demand. Oddly the prices haven't dropped much yet...
I think October will see atleast a 15-20% drop in downtown condo prices (match the drop in rent prices experienced)

Detached house listings will likely remain low (especially with second wave fear and already increasing Covid numbers in Ontario), so I'd expect the detached prices to increase. With sales volumes/listings remaining low in that segment.

Agree that CERB and Deferrals are unlikely to cause an large influx of listings on the market.
Deal Addict
Jan 12, 2017
1051 posts
492 upvotes
Imo, no major price movement this fall, neutral to a slight decline. Still some demand from spring, but wouldn't be surprised to see a round of lay offs of middle/upper middle class jobs ($70k-$180k/yr range) happen starting September and continuing until February next year. Will definitely put a damper on prices.
callmebob wrote: Given we had a very busy summer (pent up demand, April/May/June shifted to June/July/August), what is the prediction for the Fall season (Sep-Nov)? Similar YoY growth in sales volume, price increases or some softness as people begin returning to work?

Single family homes in the suburbs (GTA- Oakville, Milton, Whitby) have seen very strong demand and high sale/list price ratios, curious to hear if the conventional wisdom is these levels will be maintained or pull back going into the fall season. My view is we continue to see elevated demand and prices with some seasonal adjustment compared to the summer months.

* I don’t think CERB or deferrals ending will have a direct impact on home prices in the suburbs but perhaps the news surrounding this influences overall sentiment over the next few weeks/months to soften demand/prices.
Sr. Member
Jun 19, 2017
564 posts
840 upvotes
There is no way the deferral cliff doesnt apply downward pressure on pricing, but since we see the first wave of deferral terminations in october, my bet is there will be a lag of 2 to 4 months before we start to see it's initial effects on RE.

The real wild card is employment, many of us are sitting pretty weathering the storm, however additional furloughs are coming, and not just for waitstaffs and theatre attendants. Lot of companies out there barely treading water. I know of some tech service firms with US clients with serious pressure on their revenues. EI will make this a lagging indicator also.

Rental and for-sale Condo inventories will keep rising. No students, Short term rentals, record new build completions, resumption of evictions. Given the low and deteriorating cap rates, condos seemed primed for a correction, and possibly a sizeable one given all the headwinds. Again, it could take a few months for the MOI to really ramp up.

Finally, I'm pretty sure a lot of people will be hit by unexpected Cerb taxes or paybacks come April 31st...consumer spending could take a real hit.

This all seems like quite a mess, I'm expecting a poor Spring 21 RE market and another round of Government stimulus.
Deal Fanatic
Feb 22, 2011
7257 posts
7679 upvotes
Toronto
We are already basically in the fall market. Condos will be soft and houses will be hot. Starter houses aren't lasting and are selling in days. Bigger or luxury homes are sitting longer.
Deal Fanatic
User avatar
Jul 19, 2003
8058 posts
698 upvotes
mazerbeaner wrote: We are already basically in the fall market. Condos will be soft and houses will be hot. Starter houses aren't lasting and are selling in days. Bigger or luxury homes are sitting longer.
Why would starter houses sell hot? I see the recent sales on them, but can it last? Condos are usually lagging indicators of the house market, i.e condos go up after houses go up and so on. So the way I see it, houses should be going down first, but they aren't this year because the listing count is lower (no one wants to sell their house at a loss or low growth rate).

Are you saying the listing count for houses is so low its driving bid wars and that will continue through Fall?
hi!
Banned
May 3, 2020
77 posts
71 upvotes
Despite all the negative news and with condos, rents haven't gone to $0.
Cap rates are still enticing enough.Look, condos still renting in many pockets for $2k for 1 bedrooms. Numbers don't lie, do the math:
Condo purchase price $600,000 for a 1 bedroom 600 sq ft.
Rents for $2k
maintenance $300
tax $200
insurance $50
$2,000 - $300 - $200 - $50 = $1450 net before taxes x 12 = $17,400 / $600,000 = 2.9%
that's still a pretty damn good rate of return.
Even if rents fall to $1500 for the same unit (500 less) $500 x 12 = -$6,000 = 11,400 / $600,000 = 1.9%

The elephant in the room is interest rates which will continue to impact housing costs.
Jr. Member
Jan 27, 2018
139 posts
84 upvotes
Jimmykirky wrote: Despite all the negative news and with condos, rents haven't gone to $0.
Cap rates are still enticing enough.Look, condos still renting in many pockets for $2k for 1 bedrooms. Numbers don't lie, do the math:
Condo purchase price $600,000 for a 1 bedroom 600 sq ft.
Rents for $2k
maintenance $300
tax $200
insurance $50
$2,000 - $300 - $200 - $50 = $1450 net before taxes x 12 = $17,400 / $600,000 = 2.9%
that's still a pretty damn good rate of return.
Even if rents fall to $1500 for the same unit (500 less) $500 x 12 = -$6,000 = 11,400 / $600,000 = 1.9%

The elephant in the room is interest rates which will continue to impact housing costs.
your purchase price vs rent ratio is a little off, but the math is approximately correct.

the elephant in the room is that interest rate dropped so much, despite the crash in rent, you can still get a decent return at today's (crashed) rental prices.

i actually see resale to slow creep down very slightly, but as soon as covid vaccine is announced/available, we will rocket up real fast. the demand will return real fast real strong (e.g., all the international students all coming back all at once).

i actually think condos are a strong investment opportunity right now, esp dt in good locations -- e.g., despite no real drop in resale, the massive drop in interest rates make up for it. rates are at around 1.65 to 1.7 atm, pre-covid we were closer to 2.4-2.5
Deal Fanatic
User avatar
Jul 19, 2003
8058 posts
698 upvotes
Jimmykirky wrote: Despite all the negative news and with condos, rents haven't gone to $0.
Cap rates are still enticing enough.Look, condos still renting in many pockets for $2k for 1 bedrooms. Numbers don't lie, do the math:
Condo purchase price $600,000 for a 1 bedroom 600 sq ft.
Rents for $2k
maintenance $300
tax $200
insurance $50
$2,000 - $300 - $200 - $50 = $1450 net before taxes x 12 = $17,400 / $600,000 = 2.9%
that's still a pretty damn good rate of return.
Even if rents fall to $1500 for the same unit (500 less) $500 x 12 = -$6,000 = 11,400 / $600,000 = 1.9%

The elephant in the room is interest rates which will continue to impact housing costs.
I think maintenance is near double in many areas. Then there's mortgage fees and mortgage interest.

The big draw is appreciation of property value. That makes up for the lack of profit of your many hundreds of thousands of $ (and if you don't down pay that, no profit) sitting.
hi!
Deal Addict
Dec 20, 2018
3678 posts
2923 upvotes
Jimmykirky wrote: Despite all the negative news and with condos, rents haven't gone to $0.
Cap rates are still enticing enough.Look, condos still renting in many pockets for $2k for 1 bedrooms. Numbers don't lie, do the math:
Condo purchase price $600,000 for a 1 bedroom 600 sq ft.
Rents for $2k
maintenance $300
tax $200
insurance $50
$2,000 - $300 - $200 - $50 = $1450 net before taxes x 12 = $17,400 / $600,000 = 2.9%
that's still a pretty damn good rate of return.
Even if rents fall to $1500 for the same unit (500 less) $500 x 12 = -$6,000 = 11,400 / $600,000 = 1.9%

The elephant in the room is interest rates which will continue to impact housing costs.
Your maintenance fees are probably 20-30% too little

Taxes even if it's Toronto, mill rate is 0.7%? So that's $380 a month

And where's your mortgage payments?
Deal Guru
Feb 29, 2008
12265 posts
7386 upvotes
masterhapposai wrote: I think maintenance is near double in many areas. Then there's mortgage fees and mortgage interest.

The big draw is appreciation of property value. That makes up for the lack of profit of your many hundreds of thousands of $ (and if you don't down pay that, no profit) sitting.
Nope. I think the maintenance is accurate give or take $30. I haven’t reached $400 yet on any of my 1 beds.
Newbie
Oct 28, 2018
38 posts
71 upvotes
masterhapposai wrote: Why would starter houses sell hot? I see the recent sales on them, but can it last? Condos are usually lagging indicators of the house market, i.e condos go up after houses go up and so on. So the way I see it, houses should be going down first, but they aren't this year because the listing count is lower (no one wants to sell their house at a loss or low growth rate).

Are you saying the listing count for houses is so low its driving bid wars and that will continue through Fall?
Starter houses are hot because there's so much unmet demand for that price point. Anybody and their mother trying to get into the housing market is looking for starter homes. That's why even hundreds of km from the GTA shitty 40yo towns are still going for 400-600k with no conditions
Banned
May 3, 2020
77 posts
71 upvotes
StatsGuy wrote: Your maintenance fees are probably 20-30% too little

Taxes even if it's Toronto, mill rate is 0.7%? So that's $380 a month

And where's your mortgage payments?
Maintenance fees will vary but will likely be in the $300-$400 range

Taxes will be low. Not sure how you came up with $380. I see you don’t own property in toronto though so it makes sense.
$380 a month is $4560 per year. No condo in Toronto pays that in taxes. Maybe a 2000 sq ft one does. A 1 bedroom will be $2500 at most.
Row townhomes(freehold) with 1800 sq for are $4500 annually.


Cap rate doesn’t include mtg.
But youre welcome to do the cash on cash and cash flow calculation.

Top