May 26, 2025 • 29 mins
In this episode of The Last Honest Realtor, David Fleming breaks down the harsh realities behind Toronto’s bloated condo market—starting with a seller who demanded nearly double her unit’s market value.
This isn’t just one bad pricing story—it’s a portrait of a market flooded with delusion. From stale investor units and overpriced micro-condos to media hysteria and agent complacency, David maps out the structural cracks no one wants to talk about.
This isn’t a crash. It’s a slow bleed. And for serious buyers, sellers, or agents trying to navigate it—understanding the terrain is everything.
In This Episode:
- The psychology of overpricing—and why some sellers still won’t listen
- How 9,000+ active listings are hiding the real problem: dummy inventory
- Why “see it to believe it” is the new seller tactic—and why it fails
- What micro-condos tell us about the investor glut
- How paused development today creates a guaranteed supply crunch by 2028
- Why most buyers won’t catch a falling knife—and what that means for recovery
- The real cost of seller denial, weak listing agents, and misread metrics
Timestamps:
00:00 – A seller wants 2x her condo’s value—seriously
05:00 – Inventory is up, but quality is way down
12:00 – Buyers aren’t rushing in—and they’re not wrong
18:00 – The pre-construction collapse and its long-term fallout
24:00 – What’s really in that 9,000+ condo listing count?
28:00 – Why builders won’t save us in 2028
34:00 – What smart agents, buyers, and sellers should be doing now
If you’re trying to make sense of Toronto’s condo market—or if you're just tired of pretending everything's fine—this is the episode you’ve been waiting for.
Subscribe, leave a comment, and share with someone who needs to hear the truth.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_00 (00:00):
A prospective condo seller in downtown Toronto tells
me that she's looking forapproximately double what the
condominium is currently worth.
Is that in any way normal?
Hello, everybody, and welcomeback to the Last Honest Realtor
podcast.
I'm your host, David Fleming.
Thank you so much for joining mehere today as we talk about
everybody's favorite subject.
the condominium market.
(00:21):
Now, just the words, thecondominium market, it's going
to get clicks, it's going to geteyes, it's going to get sneers,
and it's going to get cynicalresults.
When I say everyone's favoritetopic, I mean that there are
some people, maybe the peoplethat frequent BlogTO who have
been championing the marketcrash for the last 10 years or
however long the publication'sbeen in existence, the folks
(00:42):
that just want to see the blood,proverbial, in the condominium
market, and then there are thefolks that actually kind of want
to know what's really happening.
They want the statistics, theywant the stories, and I do tell
a lot of those here on thepodcast, but we continue to see
so many headlines about thecondominium market that I might
say the media, as they usuallydo, exacerbating it, fanning the
flames, if you will, but in theopening there, I offered you
(01:05):
something that is, honest togoodness, a true story.
Yes, somebody did reach out tome looking for approximately
double what the condominium isworth.
Let me start with thatconversation.
So I've been getting a lot ofemails and phone calls from
prospective condo sellers.
Full transparency, I have 13condominium listings right now.
We just got an offer on one ofthem.
(01:26):
That's great.
One of them sold conditionally,but I'm completely realistic
about where this market is.
One of the things that I do whenI speak to prospective
condominium sellers, and thisis, I would say, new in the last
couple of months, is I ask them,are you realistic about the
condominium market?
Now, I don't want to soundunsympathetic.
I don't want to soundungrateful.
(01:47):
And as I've mentioned before inthis podcast on the blog, I will
be honest, I have skin in thegame.
I bought not one, but twocondominiums in 2024 because I
thought the market had bottomed.
Well, I was wrong.
Now, I have a 20-year timeline.
I mean, or 100-year timeline.
I mean, these are long-terminvestment properties.
But I have skin in the game.
So when I tell you the followingstory, don't think I'm a jerk or
(02:08):
that I'm unsympathetic.
I'm trying to be, above allthings, realistic.
I received an email last nightfrom somebody that says, among
other things, I have a fabulouscondo.
I'm currently interviewingagents.
And I wanted to know how youleverage modern marketing
techniques to get people into aproperty such as mine.
I looked the property up.
This individual had it listedlast year for$1,780 a square
(02:33):
foot with a discount agent inKingston, Ontario, because
that's who you want listing yourlargest asset.
And it was one of those what youcall mirror postings.
Do not contact the listingagent.
The listing agent accepts noresponsibility.
Contact the seller directly.
I'm sorry, that's a huge redflag to me.
I know we'll get a comment inthe comment section there of
YouTube, people saying, yeah, Isold my own place or what have
(02:55):
you, or you don't need a realestate agent, but well, yeah,
the mirror posting with theKingston agent, probably not the
best thing to do.
So I looked the unit up and itwas priced, as I said, over
1,700 a square.
And then I looked at the mostrecent sale.
Now here's the funny thing, notfunny, I use that word
ironically.
In 2024, In this building, askme how many two-bed, two-bath
(03:21):
units sold.
One.
For those listening, I verydramatically took a fist, maybe
making you think there's as manyas five units that have sold,
and I put up one finger.
One unit has sold.
That's out of 30 listings.
Tough building.
I get it.
So, I'll work with some numbershere.
(03:42):
I'm trying to provide someanonymity to the individual.
I don't know why, butessentially, you have a unit
that is priced at almost doublewhat it's currently worth.
Now, the market has fallen sincethis person listed with the
aforementioned discount agent inKingston, and I spoke to the
individual, and I said, listen,I want to have a quick
(04:03):
five-minute phone call just tosee if there's an opportunity to
work together.
And really it's a feeling outprocess.
The individual said, would youlike to come down and see the
property?
And I said, let's have a phonecall first.
So I said, full transparency.
I want to have conversationswith folks like yourself because
I need to ask just a couple ofquestions to get us started.
Number one, are you realisticabout the current market?
(04:25):
And she said, what does thatmean?
Okay.
I'm trying to be honest.
I'm trying to be transparent.
Already I can see that, youknow, I'm not being positive
enough.
And I said, are you realisticabout the current market?
We are in what is potentiallythe worst condo market in
history.
I've been in the business for 21years.
I mentioned, of course, hey,listen, I've got skin in the
game.
I bought two condos last year.
I totally understand.
(04:45):
And she started to tell me thatI wasn't giving her the vibe
that she was looking for rightoff the bat.
to which I said, what is it thatyou were looking for?
And she said, I need someonethat's gonna see the benefits of
my condo.
I need someone that's gonna bepositive.
I need someone that's reallygonna understand the unique
nature of what I have.
And I said, okay, you werelisted last year for$1.5
(05:08):
million.
Your identical model sold lastyear for$1 million.
And she said, yeah.
but my unit's a lot better.
I have really great finishes.
Guys, I can't work with that.
I can't.
And when I said one million,okay, I'll use a real price, it
(05:29):
was actually$930,000.
And when you subtract for wherethe market has moved, that unit
today is what, eight?
70, 880, and this person was onthe market for$1.5 million.
This person was listed foralmost double what this unit is
currently worth.
Long story short, the phone calldidn't last very long.
I tried to be nice.
I tried to be courteous.
I said, I'm asking you if you'rerealistic about the market.
(05:50):
Are you aware of the marketconditions that we're in?
I brought up the fact that thereare two units on the same floor
as hers currently available forsale.
She was at 1.5.
These things are listed for$1million.
which are still overpriced andhaven't moved.
And she said, well, you have tosee it to believe it.
So listen, guys, that's a storythat is very similar to others
(06:12):
that I could tell here, whichI'm not going to get into
because I want to get into somedata, everyone's favorite thing.
And a lot of real estate agentsthat I'm speaking to are singing
the same tune.
Now, again, I risk coming off asunsympathetic.
Or a cynic might say, you know,where was this attitude in 2022
when, you know, you guys wereall pumping tires and selling?
Look, we work in the market thatwe're in.
And I want to use anotheranalogy here.
(06:34):
If you've seen the movie WallStreet, 1987, Oliver Stone,
remember the scene where CharlieSheen is pumping up the value of
the stock.
I think it was Blue Star.
And the entire room full ofpeople are all selling, selling,
selling.
And then I believe the characterplayed by John C.
McGinley, he comes over and hesays, this baby's going to hit
the moon.
And what does Charlie Sheen do?
(06:55):
He says, sell.
And John C.
McKinley says, sell, what areyou crazy?
He says, sell, everyone sell.
Well, everyone starts massivelyselling.
The point in the movie, which ifyou haven't seen it, you
absolutely have to, is that itwas all manipulation.
It was one individual and theywere manipulating a stock.
And that was before we had theinternet and the trading systems
that we do now.
But they were able to use fearof missing out and use hysteria
(07:19):
to pump the value up and thenturn around and start selling it
and bring the value back down.
In periods of boom...
the market is exacerbated.
And if you go back to 2020,2020, and if you go back through
that to let's say 2022, the fearof missing out in the condo
market was ever present.
And that was what was drivingthe market.
(07:39):
Now it's the opposite.
It's the fear of the marketgoing lower.
So in 2020, So 2022, people werepushing the market up and they
were paying more than what wasreasonable because they were so
worried they would miss out.
Now the opposite is true.
Now you can get a great deal.
You can move in.
Remember, it's not just aninvestment.
You are actually living there.
But people are afraid that it'sgoing to go a little bit lower.
(08:00):
So I told you that storyearlier.
At the onset, I want to get intosome actual data here.
And I read somewhere that, andthis was funny because I did not
notice this.
I'll give credit to somebody Isaw on Twitter or something
else.
We just passed 9,000 activecondo listings the first time
ever.
(08:20):
I looked it up.
I spent this morning puttingdata into a spreadsheet.
9,702 active listings forcondos.
That means nothing to you.
But what I will say in activelistings is how many properties
are listed for sale at the endof the month.
The last day of the month hasnothing to do with new listings,
except what we'll get into isthe relationship between supply
and demand leads to the numberof active listings.
(08:41):
This number in April, is up38.3% since April of last year.
Now that's just active listings.
That was just a headline to me.
But the point is that therelationship between supply and
demand decides how muchinventory is out there.
So if you've got a factory andthey're making widgets and they
make 100 a month and you'reselling 100 a month, that's
(09:02):
great.
If you're selling 90 a month andyou continue to make 100 a
month, every month you've got 10left over.
Now, month after month aftermonth after month, that
inventory will continue to pileup.
So after six months, hey, you'vegot 60 widgets sitting there
left over, but you're stillproducing the 100.
So the point in this case isthat in times of boom, there are
(09:24):
simply not enough units.
Say there's 100 units listed forsale, you have 200 buyers vying
for those.
Now we're in this position wherewhere inventories up, sales are
down, and the number of activelistings at the end of the month
is continuing to increase.
So work with me here.
If you don't like stats, justlisten.
(09:45):
Listings in April.
So this is year over year.
Listings in the 416 are actuallydown 5%.
That's crazy, right?
This is condo listings.
But sales are down 29.3%.
So if you have fewer listings at5% and you have fewer sales at
5%, we're at equilibrium.
But sales are down 29.3%, soyou're going to have inventory
(10:09):
pile up.
Now, 905 listings, are you readyfor this?
In April, they are up 16%, butsales are down 28%.
Think about that for a moment.
Listings are up 16%, sales aredown 28.3%.
That is a recipe for, I don'twanna say disaster, but for more
(10:34):
units being left on the market.
So that's why we're seeing here,the number of active listings
continue to increase as more andmore inventory piles up.
Now that leads me into the firstthing that I wanna talk about
today, which is what I wouldcall a misreading of the
inventory.
So this is gonna sound kindasalesy, and you might say, well,
you're trying to explain theproblem away.
(10:56):
I have mentioned many timesbefore that if a tree falls in
the woods and no one's around tohear it, it doesn't make a
sound.
Work with me here.
If a condo's listed for sale ata price that absolutely
positively no one's going topay, might as well not be for
sale.
And that is part of the reasonwhy we're not seeing more sales.
So I have also mentioned, takethe place I had on Downs earlier
(11:19):
this year.
I'm listed at$599, the sameunit.
One floor up's listed for$699.
It's the same unit.
Exactly the same thing.
But if I'm at$599 and it's notlike I have a different stove or
or a different view,$100,000difference.
So go back to that girl thatcalled me yesterday.
I talked to her this morningjust before we decided to film
(11:41):
this podcast.
And I'm saying to her, you wereon the market for 1.5 million
last year and your model soldfor, what did I say, 935 or
something like that?
Explain that to me.
Discount brokerage from Kingstonon the market for 220 days and
like the worst photos you'veever seen, right?
Like you might as well have hada bong sitting in the dining
(12:01):
room table as a centerpiece.
that individual didn't reallyseem perturbed by that at all in
any way.
That's a lot of what's happeningin the market right now.
We have a lot of what I wouldcall dummy inventory.
So a lot of the units that areavailable right now fall into
this narrow product band.
High density, high price, lowfunctionality.
(12:22):
Brings me to the next point.
And we've seen a lot writtenabout this so far this year is
the micro condos and the smallunits.
So when you have a supply anddemand equation that is such
that there is just way moredemand than supply, that's where
you have people that makecompromises.
And so I'll tell you in thefreehold market, I've got this
saying.
When the market's ripping,buyers will sell for 7 out of 10
(12:43):
things on their must-have list.
When the market's cold, they'llsettle for 12 out of 10.
And what I mean by that is thatthey want everything and then
they want more.
So you've got a buyer that findsthe absolute perfect property.
And while they're in there, theygo, you know what?
We need a garage.
You need a garage.
You've never mentioned this atany point during our search.
(13:04):
Yeah, I just, I'm looking aroundand I'm thinking, we really need
a garage.
Okay, great.
You can afford to do thatbecause of the market that we're
in.
Now, when you're in a marketlike 2020, I mean, to be honest,
2018 to 2022, You compromise,and that is why so many of these
smaller units sold that nowpeople are saying are
unsellable.
(13:24):
And hell, I have a couple ofthem listed.
So you're seeing the mediaattention right now talking
about these micro condos thatnobody wants.
No one wants them.
And so what I'm seeing right nowis that you've got units that
are priced too high, units thathave no functionality, units
that are way too small, and thenyou've got investor-held units
that are priced beyond what abuyer's willing to pay.
(13:47):
And when you sift through allthis, you have too few units
that people actually want.
And the buyers have theopportunity right now to say no
to them.
That's part of the reason why Ithink we're not seeing more
sales in the condo market.
The inventory just sucks.
So again, you go back to a 2022,someone says, I'd love a 550
square foot unit.
(14:07):
Well, I can't afford it.
So I'll settle for a 450 squarefoot unit.
Now, We can talk aboutpre-construction another day,
which we have, but by way ofintroduction, the reason why we
have so many micro condos in thecity, of course, is because
pre-construction is only builtwhen it's pre-sold.
It's only pre-sold to investors.
Investors want the lowestabsolute price.
(14:29):
So developers, while prices areincreasing, will shrink the size
of the units.
That is what history will showis the reason for all of the
micro condos.
It wasn't like the marketdemanded it.
Society didn't get together andsay, you know what?
we should start living in 300square feet instead of 600.
No, prices went up as costs wentup.
Developers realized thatinvestors are what's buying
(14:50):
pre-construction.
So if a$300,000 condo then is750,000 now and buyers of
pre-condo don't want to spend750, let's just make the condos
a hell of a lot smaller to keepthe absolute price of 450 to
$500,000, which is what buyersin the pre-construction market
are comfortable with.
And we'll just shrink the units.
That's why we've got this glutof inventory.
(15:11):
And that is what is so muchrepresentative of so much of the
market right now.
The micro condos, people don'twant them.
And now the buyer pool has theopportunity to say no.
So the next point I wanna makeis about timing, or rather the
lack of any sort of rush orurgency in the market.
So I received an email the otherday from somebody that said, I'm
(15:34):
thinking about getting into thecondo market from the investment
standpoint.
Can you get a two-bedroom condounder$500,000?
Now, once upon a time, that wasan absolutely ludicrous
suggestion.
We're not quite there yet.
But I sent this person a coupleof places on Joe Schuster Way,
not exactly the highest qualitybuilding in the city of Toronto.
But if you're looking for acertain price point, hey, here's
a unit that's on the market for$522,000.
(15:54):
It's beat up.
Maybe you could pull that forsub$500,000.
And the individual wrote backand said...
I think things could fall offfurther.
I'm gonna wait a bit.
Now, absolutely, positively,don't blame you in that
thinking.
But once again, I would say thatis a reason why so many people
aren't jumping in now.
(16:15):
So I would offer this.
If you were a couple and youwere pregnant and that baby's
coming, right?
It's pretty much nine monthsautomatic, right?
And you're looking for a singlefamily dwelling and you're
saying, we really wanna be inbefore the baby comes.
Well, that's certainly going toaffect the timeline, wouldn't
it?
That's certainly going to affectwhen you pull the trigger.
(16:37):
Now, there are people out therethat might say, you know what,
we'll have the baby in therental or we'll stay in the
condo or what have you.
But when you look at it from thestandpoint of, and you know
where I'm going with this, thisis not just an asset and an
investment.
This is a lifestyle.
This is a home.
This is something that you doown and it's worth a lot of
money.
But you're also...
watching your baby's firststeps.
You're putting up your Christmastree.
You're having your grandmother's90th.
(16:58):
I'm trying to romanticize it.
But the point is those folks,yeah, there might be a timeline
that works.
There might be an urgency.
The investors aren't seeingthat.
The investors are strictlylooking at the numbers.
They're looking at the number ofactive listings that are going
up.
They're looking at the averagecondo price, which to be honest
is somewhat flat.
But this individual said, yeah,you know what?
I'm going to take a wait and seeapproach.
(17:20):
Listen, as I said, I bought twocondos last year.
I'm happy with them.
I'm going to make the argumentthat I got ridiculous deals on
them at the time.
And hey, why don't I be honestand say that while I did buy
them for significantly undermarket, the market has now
retreated to a point where Atbest, I'm at par.
There's an admission, and Imight say, yeah, I like them.
They're great buildings, greatlocations, solid tenants.
(17:42):
I've got a 20-year timeline,right?
I bought those because why not?
I'm entering the space for thelong term.
When you have somebody, likethis individual that emailed me
and said, I'm going to wait alittle bit longer, if the market
did turn around and this personlost a couple of percentage
points and they're buying on theway back up, yeah, okay, sure,
why not?
But it's about the risk-rewardproposition.
(18:03):
If the market turn went up 5%,versus if the market continued
to drop and went down 10%.
I mean, I don't know, that'skind of like first year
university, what do you call it,the probability tree.
In that case, why not wait forthat individual?
It seems to make sense.
So I put this all together,guys, and here's what I'm
seeing.
(18:23):
You've got really bad inventoryon the market because too many
micro condos, too many thingsthat are overpriced, too many
things people don't want.
You've got a lot of buyers who,that are sitting back and
saying, I don't need to do this.
I don't need to enter thisspace.
Primarily made up investors.
You've got far few end usersthat are that proverbial
romanticized couple that areexpecting a baby that are buying
the freehold.
(18:43):
Those people aren't buying thecondo market.
So even the users don't seem tobe in this rush.
You have a ton of inventory froma numbers standpoint doesn't
look great.
Then you have a media that isfanning the flames of this.
And is there any wonder why thecondo market isn't moving?
Now, let me give you an exampleof some of our current listings.
(19:04):
We just got an offer on one ofour townhouse condos.
It's a beautiful townhouse.
It's a phenomenal space.
And it's been on the market forover 40 days.
We've reduced the price once.
We have an offer on it.
Now, we have a very small condoon King Street, which was listed
for$499 in a glut of other unitsthat are at$499.
(19:25):
We've only had a handful ofshowings.
So the question I'm gonna askyou, the viewer is, is there a
difference between 499, 489 and479?
Wouldn't the buyer out there whowants to offer 450 make that
offer?
I wanna introduce the next pointthat I wanted to talk about.
I'm finding that there areagents out there on the buy side
that are just, let's do it,let's try.
(19:47):
And they're going out there andthey'll offer 800 on 899.
80% of negotiations meet in themiddle and maybe they end up at
850, great.
And then there are a lot of theagents out there that at$499,
they would never offer$450.
It's too low.
It's too low.
And so again, tell me, hey,David, you were working in 2022
when a$499 list got 14 offersand you sold it for$620.
(20:09):
You complete jerk.
You're driving up the price,yada, yada.
Fine, but it's 2025.
And now I'm saying that thatoffer should be made.
Bring that offer of$450 on$499.
Why not?
So I wanna blame everyoneinvolved in this, right?
I wanna blame the media.
I wanna blame the sellers thathave ridiculous expectations.
I wanna blame the investors thatare waiting a little bit longer.
(20:30):
I wanna blame the real estateagents that are sitting back and
doing nothing.
There's just a cornucopia ofreasons why we're not seeing
more transactions in the condomarket.
And the fewer sales that we'reseeing with the increased number
of listings means that theactive listings are going up.
Now, builders are not building.
So here's where I run the riskof painting this entire thing
(20:52):
with such a rosy picture.
Let me give you a hypothetical.
When we saw a market boom, condomarket exploding, it was about
supply and demand.
There was simply not enough onthe market to satisfy the
demand.
Right now, we have way too muchinventory, but what if?
Developers right now aredelaying and canceling launches.
(21:16):
We're not seeing anything beingbuilt.
We're not seeing anything sold.
Remember that freed building?
I think I wrote about it on myblog last year.
They came out at prices over$2,000 a foot.
What's happening with thatbuilding?
I heard anecdotally they sold ahandful of units in
pre-construction, which is ahandful more than I would have
expected.
What's happening in a buildinglike that?
(21:37):
That building's not going to goahead.
Now, all of the other projectsaround the city, nothing.
All of the pieces of land,nothing.
And I did read an article nottoo long ago that said that the
way to get things built is topunish developers who are
sitting on land on which isready to be built upon.
That seems like the most insanething I've ever heard of.
(21:59):
Developers, let me think, theyrun businesses.
They don't build at losses.
You can't force someone to losemoney.
So developer has a plot of landand they're like, wow, we
actually can't afford to buildon this, so we're not going to.
And the idea among some folksis, Let's tax those people.
Let's financially punish them.
Let's force them to build.
Wow, man.
Okay, yeah, no, if that's thebest idea that we have, we're in
(22:22):
serious trouble.
So we're not seeing anythingpre-sold because why would
anyone pay$1,800 a foot forsomething that's worth$1,100 a
foot, right?
I've been saying that for 17years.
We're not seeing anythingpre-sold.
We're not seeing anythingpre-built.
So the what if.
What if none of these projectsget off the ground?
It's a recalibration of futuresupply, and it's happening a lot
(22:42):
faster than the public realizes.
So here's what I'm gonna saynext, folks.
A supply crunch is coming.
And right now, I can feel peopleputting this on pause and
getting ready to write somethingnasty, but guys, I'm not talking
about today.
I'm talking about 2028, 2029.
Just think about it.
(23:03):
Bookmark this in your mind.
Think about 2028 and 2029.
think about nothing being builttoday.
Think about nothing beingpre-sold.
When this inventory is absorbed,and it will be, and nothing is
built, we're going to have amassive deficit in four to five
(23:24):
years.
And I want to get my colleagueand friend Ben Rabideau on this
podcast.
I'm going to try to do that nextweek because he has been saying
this for quite some time.
Him and I are very aligned interms of what's happening in the
You know, the fault lines lastyear, especially when it came to
all this pre-constructionnonsense, right, with all these
people that, you know, they paid$1,800 a square foot for their
(23:46):
magic beans when, you know,comparable resale was$1,200.
And it's fine if the marketcontinues to go up forever.
But now that the$1,200 resale is$1,000 and their magic beans
that they paid$1,800 for, yeah,what are they going to do?
So they're defaulting en masse.
And Ben and I have talked aboutthis in the podcast before, I've
talked about it on the blog.
We started to see this lastyear, and that is one of the
problems that we're having rightnow.
(24:08):
But Ben and I have also talkedabout what happens if nothing is
built, what happens if nothingis pre-sold, and you're gonna
see, right, a typical condotakes three to five years to
reach occupancy, so this halt in2024, 2025, and maybe even into
2026 translates into a very drymarket in 2028.
So the timeline of your typicalbuyer right now It's not that
(24:31):
someone's gonna be like, oh no,I waited too long, four years,
and now I can't get in.
But what I will say is that ifsomebody is looking at a condo
to actually live in or toactually invest in, yes, you can
continue to wait on thesidelines and watch to see what
happens with prices.
Are they dropping?
If I was a betting man, I don'tthink that I would put my money
(24:52):
on the condo market's gettingbetter.
I would say it's going to remainflat.
It's not as bad as the stats andthe media's making it out to be,
But for the rest of this year,absolutely.
The question is how long towait.
And it's that expression, no onewants to catch a falling knife.
But I've made this point before,and I'm going to do it again
because it's such a greatanalogy.
I probably do this in everypodcast.
(25:12):
If you take a widget or a stockor a product that is trading at
$100, and it goes to 95 and to90 and to 85 and to 80 and to
75, the buyer that's interestedat 75 is overcome with fear that
that it goes to 70.
They can't do it.
They can't pull the trigger, atleast 99%.
(25:34):
So they make the decision notto, and then it goes to 70, and
that buyer says, thank God Ididn't buy.
Now it goes up to 75, and thento 80.
And the buyer's waiting.
I don't know.
I've seen this before.
I don't know.
It goes up to 85, and the buyerbuys in at 93.
(25:56):
And then when it goes back upover 100, the buyer's like,
yeah, man, I got a sick deal.
You know, this thing was at 100.
I got it at 93.
It's now at 106.
Completely ignoring the factthat the buyer could have got it
at 75.
That is how 99% of the buyerswork in a market that is
falling.
No one wants to catch a fallingknife.
And that is where we are in thecondo market.
So as I said, I'm a real estateagent.
(26:18):
I drive a living from realestate.
I decided, why not?
I'll jump into the condo marketlong term.
Buy a unit a year, right?
That was Creating Wealth byRobert G.
Allen.
I read that book so long ago.
I think it's from the 80s.
Buy one property per year.
You should read that.
It's hysterical.
I actually did a blog on it.
Taking 80s real estate adviceand applying it to today, it's
(26:39):
so completely out of date.
But long story short, I sawopportunity last year and I
jumped in and I said, sure,okay, let's do it.
Catching a falling knife, Ithink in a long enough time
horizon, We should all be verybullish about the real estate
market in Toronto, but as itpertains to right now, this very
second, those folks on thatgraph of things going down, and
I use the example of somethingat 100 going down to 70, someone
(27:01):
buying back in at 93, that iswhat most people do.
So for the rest of you, I don'tknow.
I think you take that wait andsee approach.
And ask yourself, Why am Ibuying a condo?
If it's to live in, what areyour alternatives?
Do you want to leave mom anddad's basement?
Do you want to stop renting?
Do you and your roommate want tostop fighting?
(27:22):
Hey, if you paid 500 grand for aplace and the same unit, one
level up next month, sold for490, it's not going to kill you.
If you're an investor, yeah, youcan absolutely positively wait.
But what are your long-termgoals?
So I'll finish with this, guys.
Buyer, seller, and agent.
Okay, we'll start with thesellers.
(27:42):
You got to be realistic.
That phone call I had thismorning was wild.
Someone that's basically priced,and albeit it was last year, but
it was kind of funny, basicallypriced at twice what the unit is
now currently worth.
Sellers have to be realistic.
The conversations I'm having,and it's not because I'm a jerk
or unsympathetic.
We think that I protest toomuch.
It's because I'm trying to getout ahead of it.
(28:04):
I am asking people, are yourealistic about the market?
So if the market's ripping, Andyou're a buyer, I'm going to
say, are you realistic about themarket?
Which I have done many times.
I have said, hey, do you realizethat you can't offer the list
price with three conditions whenthere's 14 offers?
I can play both sides of this.
That was when the market's hot.
And now I'm talking specificallyin the condo market.
Mr.
Seller, are you realistic?
(28:25):
Do you understand what'shappening out there?
Agents, once again, berealistic.
Listing agents, stop flexing.
Put your hand out.
Extend it.
olive branch, hand that feeds,whatever you want to call it.
I have heard some absolutehorror stories in this building.
Agents that have an offer on acondo and the listing agent just
slaps them away.
(28:45):
It's arrogance, it'sinexperience, and it's ego.
Listing agents need tounderstand where we are.
And last but not least, buyers,which I just previously alluded
to, ask yourself what yourmotivation is.
And I would say you have theabsolute right to be choosy You
don't have to settle, but you'vegot to realize that so much of
(29:09):
the inventory out there is whatI call dummy.
Dummy because it doesn't exist.
From the math term dummyvariable, you've got stuff
that's overpriced.
You've got micro condos no onewants.
You've got stuff that'stenanted.
If you're a first-time buyer,don't even think about buying a
tenanted condo.
You do not want to invite thepotential that the tenant
doesn't leave into your world.
(29:29):
But that's probably a topic foranother day.
So folks, I hope you enjoyedthat very brief overview filled
with anecdotal stories today onThe Last Honest Realtor.
Thank you so much for watching,as always.
And feel free to drop us acomment there if you're watching
on YouTube.
I always like reading those.
Please remember to like,comment, or subscribe wherever
you get your podcasts.
And here's hoping the condomarket gets a little bit better.
(29:51):
Thanks again, guys.
And we'll see you here next timeon The Last Honest Realtor.
A prospective condo seller in downtown Toronto tells
me that she's looking forapproximately double what the
condominium is currently worth.
Is that in any way normal?
Hello, everybody, and welcomeback to the Last Honest Realtor
podcast.
I'm your host, David Fleming.
Thank you so much for joining mehere today as we talk about
everybody's favorite subject.
the condominium market.
(00:21):
Now, just the words, thecondominium market, it's going
to get clicks, it's going to geteyes, it's going to get sneers,
and it's going to get cynicalresults.
When I say everyone's favoritetopic, I mean that there are
some people, maybe the peoplethat frequent BlogTO who have
been championing the marketcrash for the last 10 years or
however long the publication'sbeen in existence, the folks
(00:42):
that just want to see the blood,proverbial, in the condominium
market, and then there are thefolks that actually kind of want
to know what's really happening.
They want the statistics, theywant the stories, and I do tell
a lot of those here on thepodcast, but we continue to see
so many headlines about thecondominium market that I might
say the media, as they usuallydo, exacerbating it, fanning the
flames, if you will, but in theopening there, I offered you
(01:05):
something that is, honest togoodness, a true story.
Yes, somebody did reach out tome looking for approximately
double what the condominium isworth.
Let me start with thatconversation.
So I've been getting a lot ofemails and phone calls from
prospective condo sellers.
Full transparency, I have 13condominium listings right now.
We just got an offer on one ofthem.
(01:26):
That's great.
One of them sold conditionally,but I'm completely realistic
about where this market is.
One of the things that I do whenI speak to prospective
condominium sellers, and thisis, I would say, new in the last
couple of months, is I ask them,are you realistic about the
condominium market?
Now, I don't want to soundunsympathetic.
I don't want to soundungrateful.
(01:47):
And as I've mentioned before inthis podcast on the blog, I will
be honest, I have skin in thegame.
I bought not one, but twocondominiums in 2024 because I
thought the market had bottomed.
Well, I was wrong.
Now, I have a 20-year timeline.
I mean, or 100-year timeline.
I mean, these are long-terminvestment properties.
But I have skin in the game.
So when I tell you the followingstory, don't think I'm a jerk or
(02:08):
that I'm unsympathetic.
I'm trying to be, above allthings, realistic.
I received an email last nightfrom somebody that says, among
other things, I have a fabulouscondo.
I'm currently interviewingagents.
And I wanted to know how youleverage modern marketing
techniques to get people into aproperty such as mine.
I looked the property up.
This individual had it listedlast year for$1,780 a square
(02:33):
foot with a discount agent inKingston, Ontario, because
that's who you want listing yourlargest asset.
And it was one of those what youcall mirror postings.
Do not contact the listingagent.
The listing agent accepts noresponsibility.
Contact the seller directly.
I'm sorry, that's a huge redflag to me.
I know we'll get a comment inthe comment section there of
YouTube, people saying, yeah, Isold my own place or what have
(02:55):
you, or you don't need a realestate agent, but well, yeah,
the mirror posting with theKingston agent, probably not the
best thing to do.
So I looked the unit up and itwas priced, as I said, over
1,700 a square.
And then I looked at the mostrecent sale.
Now here's the funny thing, notfunny, I use that word
ironically.
In 2024, In this building, askme how many two-bed, two-bath
(03:21):
units sold.
One.
For those listening, I verydramatically took a fist, maybe
making you think there's as manyas five units that have sold,
and I put up one finger.
One unit has sold.
That's out of 30 listings.
Tough building.
I get it.
So, I'll work with some numbershere.
(03:42):
I'm trying to provide someanonymity to the individual.
I don't know why, butessentially, you have a unit
that is priced at almost doublewhat it's currently worth.
Now, the market has fallen sincethis person listed with the
aforementioned discount agent inKingston, and I spoke to the
individual, and I said, listen,I want to have a quick
(04:03):
five-minute phone call just tosee if there's an opportunity to
work together.
And really it's a feeling outprocess.
The individual said, would youlike to come down and see the
property?
And I said, let's have a phonecall first.
So I said, full transparency.
I want to have conversationswith folks like yourself because
I need to ask just a couple ofquestions to get us started.
Number one, are you realisticabout the current market?
(04:25):
And she said, what does thatmean?
Okay.
I'm trying to be honest.
I'm trying to be transparent.
Already I can see that, youknow, I'm not being positive
enough.
And I said, are you realisticabout the current market?
We are in what is potentiallythe worst condo market in
history.
I've been in the business for 21years.
I mentioned, of course, hey,listen, I've got skin in the
game.
I bought two condos last year.
I totally understand.
(04:45):
And she started to tell me thatI wasn't giving her the vibe
that she was looking for rightoff the bat.
to which I said, what is it thatyou were looking for?
And she said, I need someonethat's gonna see the benefits of
my condo.
I need someone that's gonna bepositive.
I need someone that's reallygonna understand the unique
nature of what I have.
And I said, okay, you werelisted last year for$1.5
(05:08):
million.
Your identical model sold lastyear for$1 million.
And she said, yeah.
but my unit's a lot better.
I have really great finishes.
Guys, I can't work with that.
I can't.
And when I said one million,okay, I'll use a real price, it
(05:29):
was actually$930,000.
And when you subtract for wherethe market has moved, that unit
today is what, eight?
70, 880, and this person was onthe market for$1.5 million.
This person was listed foralmost double what this unit is
currently worth.
Long story short, the phone calldidn't last very long.
I tried to be nice.
I tried to be courteous.
I said, I'm asking you if you'rerealistic about the market.
(05:50):
Are you aware of the marketconditions that we're in?
I brought up the fact that thereare two units on the same floor
as hers currently available forsale.
She was at 1.5.
These things are listed for$1million.
which are still overpriced andhaven't moved.
And she said, well, you have tosee it to believe it.
So listen, guys, that's a storythat is very similar to others
(06:12):
that I could tell here, whichI'm not going to get into
because I want to get into somedata, everyone's favorite thing.
And a lot of real estate agentsthat I'm speaking to are singing
the same tune.
Now, again, I risk coming off asunsympathetic.
Or a cynic might say, you know,where was this attitude in 2022
when, you know, you guys wereall pumping tires and selling?
Look, we work in the market thatwe're in.
And I want to use anotheranalogy here.
(06:34):
If you've seen the movie WallStreet, 1987, Oliver Stone,
remember the scene where CharlieSheen is pumping up the value of
the stock.
I think it was Blue Star.
And the entire room full ofpeople are all selling, selling,
selling.
And then I believe the characterplayed by John C.
McGinley, he comes over and hesays, this baby's going to hit
the moon.
And what does Charlie Sheen do?
(06:55):
He says, sell.
And John C.
McKinley says, sell, what areyou crazy?
He says, sell, everyone sell.
Well, everyone starts massivelyselling.
The point in the movie, which ifyou haven't seen it, you
absolutely have to, is that itwas all manipulation.
It was one individual and theywere manipulating a stock.
And that was before we had theinternet and the trading systems
that we do now.
But they were able to use fearof missing out and use hysteria
(07:19):
to pump the value up and thenturn around and start selling it
and bring the value back down.
In periods of boom...
the market is exacerbated.
And if you go back to 2020,2020, and if you go back through
that to let's say 2022, the fearof missing out in the condo
market was ever present.
And that was what was drivingthe market.
(07:39):
Now it's the opposite.
It's the fear of the marketgoing lower.
So in 2020, So 2022, people werepushing the market up and they
were paying more than what wasreasonable because they were so
worried they would miss out.
Now the opposite is true.
Now you can get a great deal.
You can move in.
Remember, it's not just aninvestment.
You are actually living there.
But people are afraid that it'sgoing to go a little bit lower.
(08:00):
So I told you that storyearlier.
At the onset, I want to get intosome actual data here.
And I read somewhere that, andthis was funny because I did not
notice this.
I'll give credit to somebody Isaw on Twitter or something
else.
We just passed 9,000 activecondo listings the first time
ever.
(08:20):
I looked it up.
I spent this morning puttingdata into a spreadsheet.
9,702 active listings forcondos.
That means nothing to you.
But what I will say in activelistings is how many properties
are listed for sale at the endof the month.
The last day of the month hasnothing to do with new listings,
except what we'll get into isthe relationship between supply
and demand leads to the numberof active listings.
(08:41):
This number in April, is up38.3% since April of last year.
Now that's just active listings.
That was just a headline to me.
But the point is that therelationship between supply and
demand decides how muchinventory is out there.
So if you've got a factory andthey're making widgets and they
make 100 a month and you'reselling 100 a month, that's
(09:02):
great.
If you're selling 90 a month andyou continue to make 100 a
month, every month you've got 10left over.
Now, month after month aftermonth after month, that
inventory will continue to pileup.
So after six months, hey, you'vegot 60 widgets sitting there
left over, but you're stillproducing the 100.
So the point in this case isthat in times of boom, there are
(09:24):
simply not enough units.
Say there's 100 units listed forsale, you have 200 buyers vying
for those.
Now we're in this position wherewhere inventories up, sales are
down, and the number of activelistings at the end of the month
is continuing to increase.
So work with me here.
If you don't like stats, justlisten.
(09:45):
Listings in April.
So this is year over year.
Listings in the 416 are actuallydown 5%.
That's crazy, right?
This is condo listings.
But sales are down 29.3%.
So if you have fewer listings at5% and you have fewer sales at
5%, we're at equilibrium.
But sales are down 29.3%, soyou're going to have inventory
(10:09):
pile up.
Now, 905 listings, are you readyfor this?
In April, they are up 16%, butsales are down 28%.
Think about that for a moment.
Listings are up 16%, sales aredown 28.3%.
That is a recipe for, I don'twanna say disaster, but for more
(10:34):
units being left on the market.
So that's why we're seeing here,the number of active listings
continue to increase as more andmore inventory piles up.
Now that leads me into the firstthing that I wanna talk about
today, which is what I wouldcall a misreading of the
inventory.
So this is gonna sound kindasalesy, and you might say, well,
you're trying to explain theproblem away.
(10:56):
I have mentioned many timesbefore that if a tree falls in
the woods and no one's around tohear it, it doesn't make a
sound.
Work with me here.
If a condo's listed for sale ata price that absolutely
positively no one's going topay, might as well not be for
sale.
And that is part of the reasonwhy we're not seeing more sales.
So I have also mentioned, takethe place I had on Downs earlier
(11:19):
this year.
I'm listed at$599, the sameunit.
One floor up's listed for$699.
It's the same unit.
Exactly the same thing.
But if I'm at$599 and it's notlike I have a different stove or
or a different view,$100,000difference.
So go back to that girl thatcalled me yesterday.
I talked to her this morningjust before we decided to film
(11:41):
this podcast.
And I'm saying to her, you wereon the market for 1.5 million
last year and your model soldfor, what did I say, 935 or
something like that?
Explain that to me.
Discount brokerage from Kingstonon the market for 220 days and
like the worst photos you'veever seen, right?
Like you might as well have hada bong sitting in the dining
(12:01):
room table as a centerpiece.
that individual didn't reallyseem perturbed by that at all in
any way.
That's a lot of what's happeningin the market right now.
We have a lot of what I wouldcall dummy inventory.
So a lot of the units that areavailable right now fall into
this narrow product band.
High density, high price, lowfunctionality.
(12:22):
Brings me to the next point.
And we've seen a lot writtenabout this so far this year is
the micro condos and the smallunits.
So when you have a supply anddemand equation that is such
that there is just way moredemand than supply, that's where
you have people that makecompromises.
And so I'll tell you in thefreehold market, I've got this
saying.
When the market's ripping,buyers will sell for 7 out of 10
(12:43):
things on their must-have list.
When the market's cold, they'llsettle for 12 out of 10.
And what I mean by that is thatthey want everything and then
they want more.
So you've got a buyer that findsthe absolute perfect property.
And while they're in there, theygo, you know what?
We need a garage.
You need a garage.
You've never mentioned this atany point during our search.
(13:04):
Yeah, I just, I'm looking aroundand I'm thinking, we really need
a garage.
Okay, great.
You can afford to do thatbecause of the market that we're
in.
Now, when you're in a marketlike 2020, I mean, to be honest,
2018 to 2022, You compromise,and that is why so many of these
smaller units sold that nowpeople are saying are
unsellable.
(13:24):
And hell, I have a couple ofthem listed.
So you're seeing the mediaattention right now talking
about these micro condos thatnobody wants.
No one wants them.
And so what I'm seeing right nowis that you've got units that
are priced too high, units thathave no functionality, units
that are way too small, and thenyou've got investor-held units
that are priced beyond what abuyer's willing to pay.
(13:47):
And when you sift through allthis, you have too few units
that people actually want.
And the buyers have theopportunity right now to say no
to them.
That's part of the reason why Ithink we're not seeing more
sales in the condo market.
The inventory just sucks.
So again, you go back to a 2022,someone says, I'd love a 550
square foot unit.
(14:07):
Well, I can't afford it.
So I'll settle for a 450 squarefoot unit.
Now, We can talk aboutpre-construction another day,
which we have, but by way ofintroduction, the reason why we
have so many micro condos in thecity, of course, is because
pre-construction is only builtwhen it's pre-sold.
It's only pre-sold to investors.
Investors want the lowestabsolute price.
(14:29):
So developers, while prices areincreasing, will shrink the size
of the units.
That is what history will showis the reason for all of the
micro condos.
It wasn't like the marketdemanded it.
Society didn't get together andsay, you know what?
we should start living in 300square feet instead of 600.
No, prices went up as costs wentup.
Developers realized thatinvestors are what's buying
(14:50):
pre-construction.
So if a$300,000 condo then is750,000 now and buyers of
pre-condo don't want to spend750, let's just make the condos
a hell of a lot smaller to keepthe absolute price of 450 to
$500,000, which is what buyersin the pre-construction market
are comfortable with.
And we'll just shrink the units.
That's why we've got this glutof inventory.
(15:11):
And that is what is so muchrepresentative of so much of the
market right now.
The micro condos, people don'twant them.
And now the buyer pool has theopportunity to say no.
So the next point I wanna makeis about timing, or rather the
lack of any sort of rush orurgency in the market.
So I received an email the otherday from somebody that said, I'm
(15:34):
thinking about getting into thecondo market from the investment
standpoint.
Can you get a two-bedroom condounder$500,000?
Now, once upon a time, that wasan absolutely ludicrous
suggestion.
We're not quite there yet.
But I sent this person a coupleof places on Joe Schuster Way,
not exactly the highest qualitybuilding in the city of Toronto.
But if you're looking for acertain price point, hey, here's
a unit that's on the market for$522,000.
(15:54):
It's beat up.
Maybe you could pull that forsub$500,000.
And the individual wrote backand said...
I think things could fall offfurther.
I'm gonna wait a bit.
Now, absolutely, positively,don't blame you in that
thinking.
But once again, I would say thatis a reason why so many people
aren't jumping in now.
(16:15):
So I would offer this.
If you were a couple and youwere pregnant and that baby's
coming, right?
It's pretty much nine monthsautomatic, right?
And you're looking for a singlefamily dwelling and you're
saying, we really wanna be inbefore the baby comes.
Well, that's certainly going toaffect the timeline, wouldn't
it?
That's certainly going to affectwhen you pull the trigger.
(16:37):
Now, there are people out therethat might say, you know what,
we'll have the baby in therental or we'll stay in the
condo or what have you.
But when you look at it from thestandpoint of, and you know
where I'm going with this, thisis not just an asset and an
investment.
This is a lifestyle.
This is a home.
This is something that you doown and it's worth a lot of
money.
But you're also...
watching your baby's firststeps.
You're putting up your Christmastree.
You're having your grandmother's90th.
(16:58):
I'm trying to romanticize it.
But the point is those folks,yeah, there might be a timeline
that works.
There might be an urgency.
The investors aren't seeingthat.
The investors are strictlylooking at the numbers.
They're looking at the number ofactive listings that are going
up.
They're looking at the averagecondo price, which to be honest
is somewhat flat.
But this individual said, yeah,you know what?
I'm going to take a wait and seeapproach.
(17:20):
Listen, as I said, I bought twocondos last year.
I'm happy with them.
I'm going to make the argumentthat I got ridiculous deals on
them at the time.
And hey, why don't I be honestand say that while I did buy
them for significantly undermarket, the market has now
retreated to a point where Atbest, I'm at par.
There's an admission, and Imight say, yeah, I like them.
They're great buildings, greatlocations, solid tenants.
(17:42):
I've got a 20-year timeline,right?
I bought those because why not?
I'm entering the space for thelong term.
When you have somebody, likethis individual that emailed me
and said, I'm going to wait alittle bit longer, if the market
did turn around and this personlost a couple of percentage
points and they're buying on theway back up, yeah, okay, sure,
why not?
But it's about the risk-rewardproposition.
(18:03):
If the market turn went up 5%,versus if the market continued
to drop and went down 10%.
I mean, I don't know, that'skind of like first year
university, what do you call it,the probability tree.
In that case, why not wait forthat individual?
It seems to make sense.
So I put this all together,guys, and here's what I'm
seeing.
(18:23):
You've got really bad inventoryon the market because too many
micro condos, too many thingsthat are overpriced, too many
things people don't want.
You've got a lot of buyers who,that are sitting back and
saying, I don't need to do this.
I don't need to enter thisspace.
Primarily made up investors.
You've got far few end usersthat are that proverbial
romanticized couple that areexpecting a baby that are buying
the freehold.
(18:43):
Those people aren't buying thecondo market.
So even the users don't seem tobe in this rush.
You have a ton of inventory froma numbers standpoint doesn't
look great.
Then you have a media that isfanning the flames of this.
And is there any wonder why thecondo market isn't moving?
Now, let me give you an exampleof some of our current listings.
(19:04):
We just got an offer on one ofour townhouse condos.
It's a beautiful townhouse.
It's a phenomenal space.
And it's been on the market forover 40 days.
We've reduced the price once.
We have an offer on it.
Now, we have a very small condoon King Street, which was listed
for$499 in a glut of other unitsthat are at$499.
(19:25):
We've only had a handful ofshowings.
So the question I'm gonna askyou, the viewer is, is there a
difference between 499, 489 and479?
Wouldn't the buyer out there whowants to offer 450 make that
offer?
I wanna introduce the next pointthat I wanted to talk about.
I'm finding that there areagents out there on the buy side
that are just, let's do it,let's try.
(19:47):
And they're going out there andthey'll offer 800 on 899.
80% of negotiations meet in themiddle and maybe they end up at
850, great.
And then there are a lot of theagents out there that at$499,
they would never offer$450.
It's too low.
It's too low.
And so again, tell me, hey,David, you were working in 2022
when a$499 list got 14 offersand you sold it for$620.
(20:09):
You complete jerk.
You're driving up the price,yada, yada.
Fine, but it's 2025.
And now I'm saying that thatoffer should be made.
Bring that offer of$450 on$499.
Why not?
So I wanna blame everyoneinvolved in this, right?
I wanna blame the media.
I wanna blame the sellers thathave ridiculous expectations.
I wanna blame the investors thatare waiting a little bit longer.
(20:30):
I wanna blame the real estateagents that are sitting back and
doing nothing.
There's just a cornucopia ofreasons why we're not seeing
more transactions in the condomarket.
And the fewer sales that we'reseeing with the increased number
of listings means that theactive listings are going up.
Now, builders are not building.
So here's where I run the riskof painting this entire thing
(20:52):
with such a rosy picture.
Let me give you a hypothetical.
When we saw a market boom, condomarket exploding, it was about
supply and demand.
There was simply not enough onthe market to satisfy the
demand.
Right now, we have way too muchinventory, but what if?
Developers right now aredelaying and canceling launches.
(21:16):
We're not seeing anything beingbuilt.
We're not seeing anything sold.
Remember that freed building?
I think I wrote about it on myblog last year.
They came out at prices over$2,000 a foot.
What's happening with thatbuilding?
I heard anecdotally they sold ahandful of units in
pre-construction, which is ahandful more than I would have
expected.
What's happening in a buildinglike that?
(21:37):
That building's not going to goahead.
Now, all of the other projectsaround the city, nothing.
All of the pieces of land,nothing.
And I did read an article nottoo long ago that said that the
way to get things built is topunish developers who are
sitting on land on which isready to be built upon.
That seems like the most insanething I've ever heard of.
(21:59):
Developers, let me think, theyrun businesses.
They don't build at losses.
You can't force someone to losemoney.
So developer has a plot of landand they're like, wow, we
actually can't afford to buildon this, so we're not going to.
And the idea among some folksis, Let's tax those people.
Let's financially punish them.
Let's force them to build.
Wow, man.
Okay, yeah, no, if that's thebest idea that we have, we're in
(22:22):
serious trouble.
So we're not seeing anythingpre-sold because why would
anyone pay$1,800 a foot forsomething that's worth$1,100 a
foot, right?
I've been saying that for 17years.
We're not seeing anythingpre-sold.
We're not seeing anythingpre-built.
So the what if.
What if none of these projectsget off the ground?
It's a recalibration of futuresupply, and it's happening a lot
(22:42):
faster than the public realizes.
So here's what I'm gonna saynext, folks.
A supply crunch is coming.
And right now, I can feel peopleputting this on pause and
getting ready to write somethingnasty, but guys, I'm not talking
about today.
I'm talking about 2028, 2029.
Just think about it.
(23:03):
Bookmark this in your mind.
Think about 2028 and 2029.
think about nothing being builttoday.
Think about nothing beingpre-sold.
When this inventory is absorbed,and it will be, and nothing is
built, we're going to have amassive deficit in four to five
(23:24):
years.
And I want to get my colleagueand friend Ben Rabideau on this
podcast.
I'm going to try to do that nextweek because he has been saying
this for quite some time.
Him and I are very aligned interms of what's happening in the
You know, the fault lines lastyear, especially when it came to
all this pre-constructionnonsense, right, with all these
people that, you know, they paid$1,800 a square foot for their
(23:46):
magic beans when, you know,comparable resale was$1,200.
And it's fine if the marketcontinues to go up forever.
But now that the$1,200 resale is$1,000 and their magic beans
that they paid$1,800 for, yeah,what are they going to do?
So they're defaulting en masse.
And Ben and I have talked aboutthis in the podcast before, I've
talked about it on the blog.
We started to see this lastyear, and that is one of the
problems that we're having rightnow.
(24:08):
But Ben and I have also talkedabout what happens if nothing is
built, what happens if nothingis pre-sold, and you're gonna
see, right, a typical condotakes three to five years to
reach occupancy, so this halt in2024, 2025, and maybe even into
2026 translates into a very drymarket in 2028.
So the timeline of your typicalbuyer right now It's not that
(24:31):
someone's gonna be like, oh no,I waited too long, four years,
and now I can't get in.
But what I will say is that ifsomebody is looking at a condo
to actually live in or toactually invest in, yes, you can
continue to wait on thesidelines and watch to see what
happens with prices.
Are they dropping?
If I was a betting man, I don'tthink that I would put my money
(24:52):
on the condo market's gettingbetter.
I would say it's going to remainflat.
It's not as bad as the stats andthe media's making it out to be,
But for the rest of this year,absolutely.
The question is how long towait.
And it's that expression, no onewants to catch a falling knife.
But I've made this point before,and I'm going to do it again
because it's such a greatanalogy.
I probably do this in everypodcast.
(25:12):
If you take a widget or a stockor a product that is trading at
$100, and it goes to 95 and to90 and to 85 and to 80 and to
75, the buyer that's interestedat 75 is overcome with fear that
that it goes to 70.
They can't do it.
They can't pull the trigger, atleast 99%.
(25:34):
So they make the decision notto, and then it goes to 70, and
that buyer says, thank God Ididn't buy.
Now it goes up to 75, and thento 80.
And the buyer's waiting.
I don't know.
I've seen this before.
I don't know.
It goes up to 85, and the buyerbuys in at 93.
(25:56):
And then when it goes back upover 100, the buyer's like,
yeah, man, I got a sick deal.
You know, this thing was at 100.
I got it at 93.
It's now at 106.
Completely ignoring the factthat the buyer could have got it
at 75.
That is how 99% of the buyerswork in a market that is
falling.
No one wants to catch a fallingknife.
And that is where we are in thecondo market.
So as I said, I'm a real estateagent.
(26:18):
I drive a living from realestate.
I decided, why not?
I'll jump into the condo marketlong term.
Buy a unit a year, right?
That was Creating Wealth byRobert G.
Allen.
I read that book so long ago.
I think it's from the 80s.
Buy one property per year.
You should read that.
It's hysterical.
I actually did a blog on it.
Taking 80s real estate adviceand applying it to today, it's
(26:39):
so completely out of date.
But long story short, I sawopportunity last year and I
jumped in and I said, sure,okay, let's do it.
Catching a falling knife, Ithink in a long enough time
horizon, We should all be verybullish about the real estate
market in Toronto, but as itpertains to right now, this very
second, those folks on thatgraph of things going down, and
I use the example of somethingat 100 going down to 70, someone
(27:01):
buying back in at 93, that iswhat most people do.
So for the rest of you, I don'tknow.
I think you take that wait andsee approach.
And ask yourself, Why am Ibuying a condo?
If it's to live in, what areyour alternatives?
Do you want to leave mom anddad's basement?
Do you want to stop renting?
Do you and your roommate want tostop fighting?
(27:22):
Hey, if you paid 500 grand for aplace and the same unit, one
level up next month, sold for490, it's not going to kill you.
If you're an investor, yeah, youcan absolutely positively wait.
But what are your long-termgoals?
So I'll finish with this, guys.
Buyer, seller, and agent.
Okay, we'll start with thesellers.
(27:42):
You got to be realistic.
That phone call I had thismorning was wild.
Someone that's basically priced,and albeit it was last year, but
it was kind of funny, basicallypriced at twice what the unit is
now currently worth.
Sellers have to be realistic.
The conversations I'm having,and it's not because I'm a jerk
or unsympathetic.
We think that I protest toomuch.
It's because I'm trying to getout ahead of it.
(28:04):
I am asking people, are yourealistic about the market?
So if the market's ripping, Andyou're a buyer, I'm going to
say, are you realistic about themarket?
Which I have done many times.
I have said, hey, do you realizethat you can't offer the list
price with three conditions whenthere's 14 offers?
I can play both sides of this.
That was when the market's hot.
And now I'm talking specificallyin the condo market.
Mr.
Seller, are you realistic?
(28:25):
Do you understand what'shappening out there?
Agents, once again, berealistic.
Listing agents, stop flexing.
Put your hand out.
Extend it.
olive branch, hand that feeds,whatever you want to call it.
I have heard some absolutehorror stories in this building.
Agents that have an offer on acondo and the listing agent just
slaps them away.
(28:45):
It's arrogance, it'sinexperience, and it's ego.
Listing agents need tounderstand where we are.
And last but not least, buyers,which I just previously alluded
to, ask yourself what yourmotivation is.
And I would say you have theabsolute right to be choosy You
don't have to settle, but you'vegot to realize that so much of
(29:09):
the inventory out there is whatI call dummy.
Dummy because it doesn't exist.
From the math term dummyvariable, you've got stuff
that's overpriced.
You've got micro condos no onewants.
You've got stuff that'stenanted.
If you're a first-time buyer,don't even think about buying a
tenanted condo.
You do not want to invite thepotential that the tenant
doesn't leave into your world.
(29:29):
But that's probably a topic foranother day.
So folks, I hope you enjoyedthat very brief overview filled
with anecdotal stories today onThe Last Honest Realtor.
Thank you so much for watching,as always.
And feel free to drop us acomment there if you're watching
on YouTube.
I always like reading those.
Please remember to like,comment, or subscribe wherever
you get your podcasts.
And here's hoping the condomarket gets a little bit better.
(29:51):
Thanks again, guys.
And we'll see you here next timeon The Last Honest Realtor.
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