Incite Podcast Interview Oct 25 2023
- In: Real Estate, Residential
- Posted By: Jeffrey Veffer
- Comments: 0
Patrick Rocca on Toronto Real Estate-Is it a good time for buyers?
JVeffer · Patrick Rocca on Toronto Real Estate-Is it a good time for buyers?
Jeffrey:
I’m here with Patrick Rocca, Bosley Real Estate here in Midtown Toronto. And, I know that we have talked to Patrick, several times in the past. He is an authority on Midtown real estate, but why don’t I let Patrick tell everyone about him and what he does.
Patrick Rocca:
Hi, good morning, Jeffrey. It’s Patrick Rocket here with Boley Real Estate, in Lisa. I predominantly worked in the midtown area, Leaside and Davisville area, and I’ve been doing this for 30 years.
Jeffrey:
Yeah, that’s right. We did touch base last time about 30 years in the business. Bit of a difference since, February, March, 1993, where, you know, we used faxes, we used lots and lots of paper, and things generally took a lot longer. Now people have access to more information for better, for worse. And, things tend to happen a lot quicker. And even in the market, we’re seeing changes in the market, which happen quicker. So we talked last around the spring market, so maybe you could bring us up to speed now that we’re in October. What are the changes that you’ve seen in the market?
Patrick Rocca:
It’s kind of very eerie. It’s, it’s, somewhat similar to last year’s trend, but with different economic and world impacts happening that are affecting the market. We had a fairly good spring. when I say fairly good, it was, it was good right through till May, June, as it always usually is. Summer as usual was quiet. you know, people are traveling more now and, but there was still some transactions happening. interest rates continued to rise, and a lot of uncertainty in the market, and the fall has not picked up as we had hoped or expected. there seems to be a little uncertainty and concern in the market, or lack of competence. buyers, everybody’s wondering what’s gonna happen on October 25th with, with the bank rate. inflation did come down, recently, so in my opinion, I don’t see the need for another rate hike, but with the Bank of Canada, one never knows.
Patrick Rocca:
So I think a bank hike in this area in time is going to be not good. I think if they pause and do anything, I think that maybe put a little bit more confidence back into the market and, I think that’s what buyers are looking for. So hopefully they don’t do anything. Hopefully we get a little bit more confidence back in the market and maybe we’ll have a better ending to our fall market right now. There is a heck of a lot more product stuff sitting a lot longer, and, we’re not seeing multiple offers, like we used to that are few and far between. so it, it, and prices are down. Prices are down from, from Sprint for sure.
Jeffrey:
Yeah, and that’s what I’ve been hearing anecdotally about, you know, pricing and, you know, the, the effects, like you said, inflation, interest rates, a little bit of uncertainty, but also there’s kind of, a couple of other things that are on the horizon as we speak right now. There’s, you know, internationally a lot of uncertainty about what’s gonna happen, with a few of the international conflicts. And, as we know in 2024, the US goes into another election cycle. So there’s all that stuff going to be happening as well. Now we’re gonna switch gears a little bit. the, the, one of the key things that I’ve been hearing about is the fall, the precipitous fall in terms of vacation properties or in terms of cottages north of the city. Do you have any clients who are either interested in those or, or have invested in those and are looking for their next step?
Patrick Rocca:
no, no, I, I don’t personally. I know people who have bought, I know people that bought during the pandemic, prices went crazy there. We have an office in Thornbury, and, in talking to the top agent up there, a week or so ago, this market’s back down to 2019 prices. so pre covid prices, I mean, they’ve had a big drop off. I think a lot of it has to do with, in my personal opinion, again, I’m not as familiar with that market, but we’re seeing that here too there’s, there’s, there’s, there’s a lot of debt. interest rates have, has, have risen, people’s carrying costs have increased substantially. so people are looking to unload stuff like that. and we’re seeing that effect here in the Toronto market as well, where I’m hearing any personally, I I’m not seeing any of my own clients, affected, but I can tell you, I hear your stories if, if not daily, weekly about, people’s personal situations with debt and, you know, credit card debt, as you know, is, is, is way up.
Patrick Rocca:
The banks came out and said that it’s, it’s higher and it’s, it’s ever been. and I’m hearing stories of people’s mortgages coming up for renewal that will double and triple. so, you know, there could be a bit of a reckoning in, in that sense. but I’m not seeing that rate yet. I’m hearing that, I’m hearing a bit about it in 9 0 5, but, I’m hearing in the city, but I am hearing stories . And I think that’s a concern, as well, into 2024 with, you know, mortgages. I think I heard some crazy statistics, like 10 to 20% are already in default, and there’s another 2% that are coming up for renewal in the next six to 12 months. So, I mean, there’s, there’s gonna be a, I think a bit of a reckoning there.
Jeffrey:
And, sometimes it affects buyers in the kind of lower tier of the market, whether you’re talking about condos or entry level. Well, entry level is kind of a, a, a funny term when you’re talking about a million plus for a, for a detached house in the Toronto area. But, a lot of times, you’re right, those buyers really stretch to get into the market. They’re counting on, you know, maybe being able to stretch and meet payments, and then the value of their property goes up so that, you know, if for instance, they do need to sell, you know, after purchase, they aren’t completely underwater. But, you know, as you said, properties are, you know, staying on the market a little longer now, so perhaps prices aren’t rising. And then you’ve got the double whammy of increased carrying costs. You know, inflation, everything is more expensive as well, you know, like you said, if your, if your mortgage payment is up 50%, or, or even I heard, they, they’re doubling. If you started out with a, you know, two point half, 2% variable and then you’re gonna renew at five, 6%, there’s going to be significant pressure on certain parts of the market.
Patrick Rocca:
A hundred percent. Yeah. You know, and, and, and like I said, I mean, I’m hearing, I’m hearing those stories and, and that’s, that’s obviously concerning as, as well as we, as we head into the, the, the, the new year, right?
Jeffrey:
and affordability is always something that we touch on. You know, in this type of market, even internationally, I’ve seen news stories that say, you know, Toronto, Vancouver, even by international standards are overvalued and they’re going to be, you know, kind of coming down over the next six to 12 months. Now, we’ve, we’ve heard those stories for the past 20 years, but, these days, again, with the cost of housing being what it is, are you seeing anything in terms of buyers saying, you know, this is, this is getting a little bit outta hand. I’m going to wait for a period to enter the market.
Patrick Rocca:
So yeah, Jeffrey, in terms of affordability and, and buyers, and their thoughts on the market, as I was previously mentioning, I mean, we had similar, this has been going on for years. Buyers think they can find the market. They think the market’s gonna fall more. You know, I’ve always said there’s, there’s two things in real estate you can’t predict, and that’s top and the bottom last year where we had a drop off from the spring, , I’m using as an example, and Leaside selling for 1.92 million. They were selling for 1.5 in November, October. people were still waiting, and of course they went back up to 1.8, 1.9 in, in February, March of this year. So, I mean, you can’t find the market. I think that the big thing now is, is, the rates for affordability.
Patrick Rocca:
I mean, it’s, it’s really, and, and, and the cost of living, I mean, let’s, let’s be honest. I mean, I think what’s really driving inflation, obviously is, is gasoline, is, is the number one thing. You know, we need gas for everything, right? And, you know, you look at the, again, I don’t wanna get political, but you, you look at the carbon tax, and I mean, it, it’s had a significant effect on, on, on gas, you know, the, the farmers being taxed, you know, the tax, the, you know, it just, it, it’s rolled all into one. and you know, I, you know, the cost of food has gone significantly because of all these other factors. So, I mean, it’s not just, you know, mortgage rates and interest rates, it’s, it’s, it’s everything. So it’s a big cluster. And like you mentioned previously, we’ve got a few wars going on in the world, so there’s uncertainty right across the board. But I mean, now is a really, actually, I, I know this sounds crazy, and this is not the real estate agent in me speaking, but it is, I mean, it’s a good time to buy now. I mean, I sold the property three weeks ago, for 1.7 million, the same property sold in May for over 1.8. So there’s a discount right now .
Jeffrey:
, I mean, is it
Patrick Rocca:
The bottom? I don’t know. So if you’re a buyer and you’re qualified and you can afford, you should be looking at buying. I mean, you know, the reality is, rates aren’t gonna come down anytime. You know, in my opinion, we’re mid 2024 and we see maybe a decrease. It, it, it’ll be good, but I don’t, there’s nothing’s gonna happen before then. So, I mean, that’s the way I look at it.
Jeffrey:
Yeah. And I, I think I know the property you’re talking about, and I was quite surprised at the price it actually went for, because, you know, previously it was, it’s, you know, a, a solid property, it’s a little dated, needs some upgrades, but, you know, I would’ve expected that to go for significantly more than it actually went for. So, you know, is that a case of, of timing where maybe there weren’t as many buyers on the market at that point? Maybe people were just, you know, they took their foot off the gas and said, you know, I’m not going to invest at this point. But did you see, when you were doing the showings, did you see a lot of interest in that property?
Patrick Rocca:
There was a lot of interest. But again, cautious buyer, the open house just after Labor Day, it was one of the first properties that had come out, and the similar property on that same street literally sold for over 1,000,008 in May. So, I mean, if you are looking apples to apples, I mean, we figured we were gonna get more than 1.8. in this situation. Obviously we didn’t, we got 1.7, that’s a significant prop. But what was key in this situation was not only, you know, I mean, I ended up getting a couple of offers. I had to reduce the property, but I ended up getting a total offer. But in this instance, I had a very realistic seller. People were very reasonable. They understood the market, they understood what was going on and what you’re seeing now. and, and it’s clear.
Patrick Rocca:
I mean, just for example, if you take, well, in Davisville, over 30 listings on the market and lease side is over 30 listings on the market. If you take Leaside, for example, prior to Labor Day, there were 12 listings. Now we’re over 30. A lot of those have been sitting, and they’re sitting for a reason in my opinion. You’ve either got an agent who’s overpriced it and or has no control over their client that is not advising them properly, or you’ve got an unrealistic seller. So if you’re, if you want to sell now, and if you have to sell now, the key thing is you gotta be realistic. You can’t be chasing 2022 prices. It’s just not there. You have to be in tune with the two days’ market. And that’s unfortunately where we’re seeing a lot of these properties sitting. and it, it’s, it’s, it’s unfortunate .
Patrick Rocca:
so I mean, being realistic is really key. I mean, we’re seeing it, it’s very interesting. We’re also seeing on our daily reports, on the system, if you, if you look at Davisville on these sites, lots of price changes, lots of terminations, lots of relists .
Patrick Rocca:
Sometimes people re-listing higher than what they were originally listed for, which is incredibly stupid. and it’s, it’s, you gotta be realistic. You have to be, as an agent, you have to have control and be able to advise your client. And, you know, I, I walked away from a listing last week where the seller thinks he’s gonna get huge. He was off by a million dollars in my opinion, and I, I don’t even want it. And he wanted me to do it for nothing. And I’m like, no, why would I do that? You’re gonna be a hundred, sorry, a million, at least overpriced, and you want me to work for nothing. Wow. And I’m like, I don’t, I don’t want it. I don’t need it. And you try to advise people, but they, they, some people just are stubborn and have it in their own mind, and they, they look at 2022 and they’re still, you know, dreaming and technicolor .
Jeffrey:
and things tend not to go well. historically for people who hold on for a high price, you know, they think, well, you know, even if I have to carry this for X more months, if I hold it on the market, I’ll eventually get my price. And you, the, what we’ve seen is that the market just doesn’t work like that. If, you know, number one, if your house is on for more than the average days on market, people are like, okay, what’s wrong with it? And, and number two, you know, if, if you’re continually above what the average price is doing, if the average price is falling, again, people are like, this is not a reasonable situation. I don’t, I don’t wanna negotiate with a seller who is not really realistic about what their property’s worth.
Patrick Rocca:
Yeah, you’re a hundred percent right. I just recently got called into a situation where the individual had listed with an out of area agent, and clearly it was overpriced. And, of course I get called in after the fact, after it hasn’t sold. And, to, to seek advice as to, you know, what they need to do. And of course, you know, I have to be, I have to be honest, I tell people what they should hear, not what they want to hear. And I’m like, you should have been at this price. And now if you listed with me, I’m gonna have to list you lower than what you should have. Because, you know, if you would’ve listed at that price in the first place, you would have been sold. but you list it high, you list it without an area agent, and now you’re gonna get less than you should have if you had done it properly in the first place.
Jeffrey:
Yeah, yeah.
Patrick Rocca:
Like I said, you’re, you’re, if the sellers are realistic enough, they’re educated properly, and they, they do it right in the first place. And if it doesn’t work in seven to 14 days, you have to adjust quickly. you can’t sit around and, and keep hoping and waiting. I mean, right now we’ve got, what, four weeks, six weeks left of a good market
Jeffrey:
and, and or,
Patrick Rocca:
Or what’s left of this market . Yeah.
Jeffrey:
So
Patrick Rocca:
I’m saying to people now, if you have to sell, be realistic. If you don’t have to sell, maybe wait till spring because the activity is really slow right now.
Jeffrey:
Okay, yeah, that’s a great point. And it, it brings us back to something we touched on, in, in an earlier conversation is, you know, if you do have to sell in a specific market, you know, it, it’s really is better for you as a seller to go with someone who’s got local experience and someone who sells a fair amount of properties, who can hear what’s going on, who’s going out to speak with other agents, and, you know, who’s got a certain amount of volume. Because you have to, like you said, it just very quickly to what’s happening in the market. And if you’re someone who sells, you know, I don’t want to pick on the 9 0 5, but if you’re somebody who doesn’t have local experience, you know, it’s very difficult to understand what’s happening very locally and be able to adjust quickly enough to advise your seller properly. Yeah,
Patrick Rocca:
No, you’re a hundred percent right. It’s, that’s, it’s, it’s very key. It’s like if someone came to me and asked me to list a property in, in, in Mississauga or something, why would I do that? I, I don’t know that market. I’m not doing my client any justice. Right?
Jeffrey:
Yeah, yeah. That’s exactly right. And, I think that, like you said, sometimes for a seller, it’s a good idea if you get the right advice to, to wait if you’re not pressured to sell. But for a buyer, if you’re looking at something in this market, as you mentioned, if you are properly financed, if you’re properly set up, this could be a good opportunity, one of the few opportunities in the last couple of years, to get a property that you may not have thought was possible.
Patrick Rocca:
You’re a hundred percent right. I mean, you know, we’re, we’re, we’re, we’re at a discount now. I mean, are we gonna discount further? Like I said, I don’t know. Spring usually is a better market than fall, but you know, there’s, there are other factors that are in play right now, as we discussed earlier with, you know, mortgages coming up for renewal and, you know, the war and, and all this stuff. So, I mean, but spring historically is always better. So, I mean, if you have, there’s lots of people that have to sell and there’s reasons for that. They’ve bought something else. you know, there’s all sorts of reasons why people have to sell. I, and again, I’m like a broken record, be realistic, otherwise you’re gonna say it.
Jeffrey:
And, and sitting is the enemy of selling as you, as you mentioned before. So, Patrick, it’s been a great chat, you know, always something interesting to talk about in the market. If somebody wants to get a hold of you, what’s the best way for them to do that?
Patrick Rocca:
They can call me directly at my office here at Bosley, at 416 322 8000. If I’m not here, you can leave a voicemail, I can get back to you right away, or you can email me directly anytime. mail@PatrickRocca.com.
Jeffrey:
Perfect. Alright, Patrick, well, thanks again for the chat. I hope the last few weeks of the fall market go well for you and your clients, and I know we’ll chat soon.
Patrick Rocca:
Absolutely. Thank you very much, Jeffrey. Have a great day.