“Be fearful when others are greedy, be greedy when others are fearful.” I never tire of this well-known quote by iconic investor and businessman, Warren Buffet. Our real estate market is never static, yet we’re often guilty of succumbing to a herd mentality that is both emotional and that emphasizes short-term trends over the long game. This phenomenon of FOMO, the fear of missing out, is bewildering. 

Consider 2021, when buyers would often pay $1.1M for a home that could have been had for $1M just two weeks earlier, for fear it would jump to $1.2M in another week. Fast forward to today, and we find ourselves in a vastly different landscape: prices are relatively stable, sales activity is down substantially, the time it takes a home to sell has increased over 40% from just a year ago, and we regularly read about how would-be homebuyers continue to sit on the sidelines. Yet, as Buffet wisely points out, it’s in moments like these where the real opportunities lie.

Ask yourself: Do you really believe that in a year’s time, or in 2, 3, or 4 years, you’ll be able to buy condos in prime locations like Yonge and Eglinton for less than a thousand dollars per square foot? History tells us that the window for such opportunities can be narrow and fleeting.

But seizing these opportunities requires a willingness to go against the grain, to be independent and to take risks. And let’s be honest, it’s tougher now. From an investor’s standpoint, the current return can seem discouraging. A multi-residential home might yield only 2%, with any unexpected costs eating into those slim margins. However, I believe that the real prize is future capital appreciation. Imagine what that apartment building will be worth in 10 years or even 20 years. That’s the real opportunity today.

For perspective, let’s delve into some statistics. One key metric we often use to gauge a Buyer’s vs. Seller’s markets is Months of Inventory. This is calculated by dividing the number of available listings by the number of sales in a month. This statistic reveals how long it will take for the current supply to be exhausted if sales continue at the same pace and no new properties are added to the market.

In the condo market, we currently have 5.8 months of supply on the Toronto Regional Real Estate Board. Compare this to 2.3 months a year ago, 3.1 months two years ago, and just 1.5 months in 2021. Today’s inventory figures are unique, signalling opportunity for those willing to act.

And it’s not just condos. Single-family detached homes tell a similar story. Currently, we have 3.4 months of supply. Last year, it was 1.9 months. The year before that…2.4 months. And in 2021? Less than one month of supply! So, at over 3 months of supply in 2024, these elevated figures suggest a solid opportunity for those buyers ready to lead rather than follow.

Adding to this dynamic, the Bank of Canada recently lowered the key lending rate by a quarter point in June. With another announcement on the horizon later this month, economists are divided on whether we’ll see a hold or another quarter point reduction. While these minor adjustments alone might not dramatically alter affordability, they may suggest a future trend. With interest rates on a downward path and inflation stabilizing, eventually buyers will flood into the market. This surge will drive up competition, prices, and FOMO. 

But remember the time to be “greedy.”

Today’s market conditions are setting the stage for future gains. So, take a cue from Buffet: seize the moment when others are hesitant. The real estate landscape is ripe with opportunities for those willing to avoid the herd, think independently, and embrace a bit of fear in exchange for future rewards.