A Typical One Year Real Estate Cycle
December: in my opinion, the best way to describe a year in Toronto residential real estate starts and finishes with the month of December. This is the month that everyone talks about real estate: house sales, “SO MANY CONDOS”, interest rates and “the bubble” (the bubble is also synonymous with “the crash”). While this is the month when less than 5% of total volume of sales are transacted, I would argue (quite unscientifically) that it is the month that 90% of the real estate conversations take place.
January: the Holiday Hangover Month, where people pay for their spending sins of December. An RBC poll found that the average Canadian spends $650 on gifts (households double that) and a quarter of them will be using their credit cards. This is a month where deals can be had on the buyer side of a transaction, simply because many of the buyers look at their credit card bills, fall to the ground in a fetal position and cry. Typically though, real estate buyers and sellers are still hibernating.
February: snow is on the ground, but buyers start to remember they have to buy a home, and sellers start preparing to sell theirs. Christmas bills are paid and mortgage brokers have been consulted. Buyers are READY. Some sellers mistakenly believe they will get more money if the For Sale sign on the lawn is surrounded by greenery and flowers. What they don’t know is that it MIGHT be too late, but we will get to that later.
March – May: this is the “Spring Market” in its traditional sense. Sellers ready their homes to put signs on the lawn, and buyers awaken from their buying hibernation. Remember what I said about being too late? Sellers who are just now consulting their real estate agents may be late to the party; as oftentimes preparation and repairs are needed before listing. If they don’t get on their horse they can miss the spring market entirely. Data consistently tells us that volume in sales and listing hits its peak in May, but the story doesn’t end there.
June – August: this is the “foot off the gas” period of Toronto real estate. Listing typically drop off almost 15% from June to July. Specifically in the freehold segment (but to a lesser extent, on the condo side), people start to enjoy the weather and make plans to get out to the cottage, the boat or the airport. Even if they don’t have larger plans, buyers who have been looking at homes during the spring sometimes get fatigued and just want a break. Hey, if YOU lost three bidding wars for homes YOU loved, you would want a break too! Those who hang in there are usually rewarded for their resilience though, as competition drops.
September – November: this is MY busiest period of the year, and it takes off like a ROCKET. Clients who were thinking of buying or selling condos during the summer start making inquires around August, and they hit the ground running right after Labour Day. Clients with children on the freehold side follow a week after. Now HERE is where it get’s interesting. Those who were unsuccessful buying or selling in the spring (and sometimes summer) come back with purpose, and are aggressive with their offers and list prices. Buyers who lost homes they loved in the spring, do not hold back when it comes to homes they see in the fall. And sellers who previously listed too high (or not at all), come back to the market with realistic asking prices.
Back to December, where at every holiday cocktail party there are conversations about aggressive buyers, eager sellers and a thousands more stories of what makes this market so very interesting to people like me.