LACKIE: Real estate buyers happy to pay tomorrow's price today but they're not dummies – Toronto Sun

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The broad perception seems to be that the Toronto real estate market is now a market without reason with prices entirely unhinged from objective reality.

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We see for sale signs quickly turn to sold. Houses appear to quite literally sell themselves within days and for numbers that seem baffling.

This, of course, is the natural consequence to the market conditions we have come to recognize: low supply, high demand, steep competition.

Naturally, sellers now have bold expectations.

And in a market with such deep competition, not just among buyers but also among agents for scant listings, big numbers are being thrown around. And there have been some big sales recently that have surprised even me, and, if I’m being honest, very little surprises me about this market anymore.

But there is actually some measure to this madness.

Buyers aren’t willing to buy just anything. Overpriced listings will struggle.

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Buyers who have been at this a while are now seeming much more comfortable calculating the opportunity cost in their opinion of value in order to make their bid count.

The idea that they have any real choice is so far removed now that would-be buyers have to arm themselves with the data from comparable sales in tandem with the projected month-over-month market appreciation to land on what fair market value should be.

But while comfortable swimming in the deep end and having to pay tomorrow’s price today, they’re not dummies — prices must still be anchored in some form of reality.

Remarkable about this market is that in spite of all the talk about rising interest rates coming down the pike, there doesn’t seem to be the type of hesitation we might have witnessed in the past. Once upon a time, even the mention of a new cooling measure would have had an immediate effect. Not so right now.

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At several points since the dawn of our pandemic real estate market we have noticed little hiccups, such as in the early days when the market on the whole ground to a standstill with the first lockdown, and again as the condo market had its little seize-up alongside a surge of inventory in the fall of 2020.

To people closely watching the market there have been a number of discernible little lulls followed by surges.

If you look at the sale data for the week of February’s “Snowpocalypse” that ground our city to a halt, you will see the effect of the diminished competition. If enough buyers decide to sit this one out, the lift on the price will be hampered. Come to the table on one of those offer nights and you might score yourself a relative deal.

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So for the buyers who are happy to seize the slivers of opportunity and pounce, there have been some wins — particularly in the condo market. But now that the price gap between houses and condos is larger than it has ever been before while still being the smallest it is likely ever to be again, the condo market is the last way in for many people and we are seeing that reflected out there. We are back to 30 offers. Sale prices that can surpass closely comparable recent sales by $100,000.

And it would be easy to think that’s sellers being greedy and buyers being irresponsible, that might just be the nature of the game now. It will be interesting to see what kind of impact any bump to interest rates might have.

I suspect that there will be a resultant stall to market activity and prices, but it will be short lived. We’ll be back to this, though possibly on a proportionately smaller scale.

@brynnlackie