Ontario Market Update

Raechel Molony

Alfonso: Let's bring it back closer to home, back in Ontario. Raechel, what's going on in the markets that you're working in, investing in, and your clients are investing in. What does the REITE club nation need to know?

Raechel: First of all, thanks so much for having me here tonight. I'm excited to talk to you guys a little bit, about what's going on. As you all know, or for anybody who's been looking in Ontario right now, it's an extremely hot market. Last month, we continued to set new records for home sales and new listings for the month of October. As of right now, I have yet to see a slowdown, but we're all talking hearsay.

I'm hopeful that we might see some stability in 2020. Navigating this market climate. I've been talking back and forth with a lot of my clients. I think right now it's really important to have your financing in order with your contractors by your side, take action, but also be prepared to walk away from deals where the numbers don't make sense.

We all like friendly competition, but at the end of the day, it's not fun when it's at your expense, we need to make sure that we're running our numbers. We're reviewing our budgets and we have to make sure that all the properties are aligned with our goals and the strategies that we're looking to implement moving.

Over the last few months there's been more competition and increased prices for entry-level handyman special properties. For those of you who don't know me, I do a lot of work implementing the burst strategy. A lot of my clients are looking for flips looking to invest in multi-family properties.

What we're seeing is an extremely high increase in demand. People wanting to, I don't know. It feels like this year, everybody decided they wanted to invest, which is exciting. I think it's awesome. But right now it's like everybody keeps saying, don't just transact. We need to be smart about what we're doing and we're going to let those other people come in and flood the markets and force that lower level price up where we're going to think a little bit. I didn't know what sequence I was going to be going in. I like to add a little bit of an educational standpoint.

I know when I first started going to the REITE club, I didn't know everything. I'm going to go over some of what a sellers market really looks like. But as you've heard once or twice throughout this whole thing tonight, we're very much in a sellers market. A sellers market happens when there's a shortage in housing, or they're more potential buyers than. Overall right now, supplies are hovering at the lowest levels on record. At the end of October, we were sitting at 1.3 months of inventory here in Ontario.

To lend some insights, months of inventory refers to the current supply of homes offered for sale relative to the number of homes being purchased. The result indicates the number of months it would take to sell all properties currently for sale at the average monthly sales pace. To put things into perspective, we belong, the long run average of three months supply. Same time this the exact same time this year or last year. We were sitting at about three months inventory and it was still fairly competitive.

I think all of us remember looking at properties. Alfonso and I were out looking at properties around this time last year. There was still competition, but it wasn't like it is today. What do I want to run through as well here? Given the market conditions. It's really not a surprise that we've seen an increase in average sales prices out here. The average sales price this year is at 742,000 across Ontario, which has increased by 17.2% from the same time last year.

As introduced, I work a lot in the Halton, Hamilton and Niagara region. I predominantly focus out in the Niagara region in Hamilton when working with investors and then I was born and raised in Halton. I'm very familiar with that area when I'm working with just your everyday average buyer or somebody who's just looking for a residential home.

I thought it'd be great to lend some average sales prices from the same time last year. In Hamilton last year, we were sitting at an average sales price of 681,000. This year, we've jumped to 730,000. It's a pretty significant increase. Halton was pretty large. We were sitting at 873,000 as an average sales price. And this year we're sitting at 1,000,062 and then in Niagara, we were sitting at 618,000 and we've jumped to 662,000. And since I've been working out there, Sarah can speak to this. We were out doing a little bit of a street tour this weekend and it's something I haven't seen in a very long time. Out in Welland, there were only two active properties under 300,000.

I can't remember the last time that happened. That was a market that we were flying and flooding and trying to get out there. And now I feel like that lower level, as I previously mentioned, that entry level of purchase price, that bird purchase price, that handyman special, those prices are starting to increase.

We really have to think about our numbers a little bit first. Just because if people are driving up that bottom line. We have to make sure the appraisals haven't quite caught up our after repair values. We just have to think a little bit smarter while we're going through this interesting time. Long story short, if you're thinking about selling off a few properties, now may be the time to do it. If it's your personal property, I would highly suggest finding your next home beforehand. because the last thing we need is panic buying.

I've heard of a couple of people who are just settling for something instead of finding that perfect home first and then selling. Because right now I'm fairly confident, depending on what market you're in. We're not going to have a problem, getting your house sold at the right price with the right strategy in place. To wrap all this up, wherein I think we can all agree. We're in such an unconventional market, between COVID-19 lack of certainty, low inventory, high demand, and skyrocketing sales prices.

It's really important to shift your plan with the market and be prepared to take action. There are still deals to be had. We just need to be strategic, creative, and patient. And if anybody wants further insights, numbers or what's going on in different markets. I'm either happy to assist you or I'd be happy to lend you, send you off to somebody who can help you in that specific market, because we work with people all over Ontario.

Alfonso: Great advice Raechel. And that is so important, that I have them written out to the rules of investing, right? Because you make money by buying it. If at that moment it might overheat. And like you said, it might have that next step before you just throw it up on the market and count the chickens before they're hatched. Yeah. Great advice. And I know you were so valuable.

Raechel: I know you were asking about some strategies for that. I forgot, I wrote down your question here and I went on a tangent, the Raechel rents, all the strategies do like I should just talk about it. Look for some off-market so being competitive, but when you're working with the right group of realtors, we all work together. We're all colleagues at the end of the day.

We like to try and get our client's home sold behind the scenes, especially if your realtor has a good reputation with working with other, these types of investment properties. And another thing to do is just to reverse your thinking. Look at things that have been on the market law. Then 15, 30 days, you don't want to get stuck in that competition. And now that person, like I just signed a contract right now, I just got it back with the property that was on the market for 78 days. We got well under market value. There's still deals to be had. And I think it's going to be a great turnaround.

We just maybe want to look at stuff that's already legal. We're not waiting on the timelines like Ronald had mentioned before. And there's lots of opportunity out there. We just have to be smart about what we're doing.

Alfonso: On the flip side, scared money doesn't make money, right? You gotta be able to put, you need to go in and make those efforts. The other part too, there's things that we can't change, the market sellers, all these things that are going on pandemics, but you know what you can make the choices on who you're working with, who you're partnering with.

Rachel and I are going and looking at properties and she knows the realtor and they're like, even fist bumping before COVID, when it was cool and they know each other and they're like just catching up on the front lawn and I'm walking through the property, looking at what I should be. Those relationships have been established and been built and then continue to keep the building from here. How you treat people and who their team members are. Those are the things that we can control our team members and their knowledge and their experience and the multitude of criteria they've built out and their businesses. Awesome, Rachel.