The residual effects of a difficult year have left many Toronto homeowners uncertain if they should sell their homes right now. Much of that uncertainty stems from those gloom and doom predictions inspired by the pandemic. However, those predictions left many experts fumbling to recover the dropped ball in what turned out to be a very decent year. We saw gangbuster results for our clients because we kept a few aces up our sleeves by adapting new selling strategies. So if you’re feeling mixed emotions when it comes to selling, here’s our advice for home sellers lost in price confusion right now.
Dropping Demand in Toronto Homes
Yes, there have been some interesting shifts in high demand areas in the past year. For example:
- Call of the Burbs: The suburbs which once had an “ick” factor for Toronto home buyers, are now kind of becoming trendy. More people are working from home, so worry over avoiding traffic and long commutes is a thing of the past. All at once, people are drawn to the prospect of larger homes on larger lots where they can get more house for their loonie.
- Condo Wars: Condo owners faced some new realities in 2020 thanks to the pandemic. Most prominent was the ban on short-term rentals, as well as fear of sharing common spaces. This led to many condo owners deciding to place their condos on the market. Where bidding wars were once almost certain, you now have high inventory so the whole condo wars strategy is no longer an option.
So what does this mean when it comes to pricing strategies when selling in Toronto? Does it mean you have to drop your listing price drastically? The answer is no. What you need to do is consider comparable prices in your neighbourhood and list your home based on those prices. Pricing should never be based on fear your home won’t sell. Instead it should be based on what the market will bear. If you can’t live with that price, then now is not the time to sell.
A Fear of Lost Profits
Many homeowners fear the Toronto real estate market is tanking. This is far from true. In fact, according to the Toronto Real Estate Board (TREB) Toronto’s average selling price for January 2021 was up by 15.5% year over year. The average home sold for $967,885. So if a fear of lost profits is keeping you from selling your home, you’ll see profits even if you bought your home last year. As long as you didn’t overpay for your home or you own a condo that is! In the 416 area the average cost for a detached house was $1.58 million, semi-detacheds sold for $1.2 million, and townhouses sold for just over $814,000. Even if you live in a condo, depending on how long you’ve lived there and how much you paid, you could still see profits as the average price in January was almost $625,000. However, unless you absolutely feel the need to sell your condo, we advise you hold on a little longer as prices are still low comparatively speaking.
Staging For Fair Pricing
If demand is reduced in good old 416, you don’t want to take any risks of your home sitting on the market too long. Nope. You still need to stage your home to show off your property in its most positive light. But, BUT how you stage your home has changed slightly. So your focus needs to shift gears to showcase:
- Designated workstations: If you don’t have a designated workstation, you need to create one. It shows people they can work from home comfortably without sacrificing other living space for work. Whether you convert a guest room to a staged office, or find a nifty spot in another room to show how easy it is to set up a desk and computer, people will be looking for a workspace for either themselves, or their kids.
- Outdoor entertaining space: Social distancing has forced people to reconsider how they entertain. They want to see a safe open space outside with comfy lounge furniture ideal for small gatherings.
- Practical Kitchens: This has always been a high demand room, but with more people eating in, the kitchen has to show off functionality, not just dramatic style.
Home décor trends have also shifted from chic sophistication to nesting perfection where people see themselves cuddled up on the couch binge watching their favourite TV series. To a lesser extent there’s also demand for workout space. Depending on where you’re located, this is second to a home office, and in many areas outside the downtown core, probably even after showcasing a spare bedroom for kids.
I’ll Pay Too Much for My Burb Haven
If your plan was to sell your 416 property to move to a 905 area, but now you’re worried suburban housing prices are skyrocketing, your worries could be legit. It all depends on where you plan to move. Getting back to the numbers, if you compare the average price of a detached home in 416 ‘hoods with areas in the burbs you’ll be paying an average of $1.31 million in the 905 areas. Doing the math (ugh) that’s a difference of $270,000. So depending on how much equity you’ve built up in your home, you can still make a smart move financially. As well, if your plan includes downsizing, you’ll see even better opportunities. For example, the average condo in 905 is just over $547K and the average townhouse is just over $800K. So with a healthy down payment, you can really reduce your mortgage payments and enjoy a laid back lifestyle in a mature, attractive suburban oasis, or a brand spanking new home if that’s your goal.
My Area Is Super-Hot Right Now
The keywords here are “right” and “now”. Toronto has continued to break itself down into smaller and smaller micro-markets. As a result, prices can vary drastically within a few blocks. As well, the market is volatile, and the price you were quoted a few months ago, can change drastically to where that price sits “right now”. So don’t be surprised if you need to do a last minute price adjustment to accurately reflect what the market would bear if you discussed listing with an agent a few months ago.
And, condo owners hold onto your hats, because even the most desirable locations pre-pandemic aren’t considered hot for anything other than germs right now. So if you think your area is hot, chances are it’s not. Waiting things out a little longer, or even deciding to find a tenant to cover your mortgage and then buying a house might make more sense than trying to sell and miss out on profits right now. As well, if you insist on moving now, make sure you sell your condo before you start your home search. Your condo will most likely sit on the market a lot longer than you’d like and you don’t want to be stuck with two mortgages if this happens.
Negotiating Strategy: Reality Check
Although selling prices are excellent right now, it’s still not what one would call a sellers’ market. While friends might have bragged about their great multiple offer coup back in 2017, that was a very different market than what we see today. So, realistically, all offers should be considered when they land on the table. It’s all about smart negotiations today, instead of depending on bidding wars to crank that price up ever higher. It’s just not that kind of market anymore.
As you can see, we’ve kept an eye on the market and have adapted new views and strategies to keep our clients on the winning side of the negotiating table. If you’re thinking of selling your Toronto home, it all starts with a casual conversation with our team of real estate ninjas. Give us a call at 416.291.7372.