Toronto

Toronto Real Estate Flippers Aren’t Making The Price Gains Being Talked About

We’ve all heard it. Everyone’s friend has a friend, that’s making a buttload flipping Toronto real estate. Considering the benchmark home price jumped $155,100 over the past year, flippers must be rolling in cash. Diving through April sales data, flippers definitely make up a big chunk of listings. While they’re making decent money, they aren’t capturing nearly as much as the headline numbers would leave you to believe.

Over 3% of April Listings Were Bought Less Than 3 Years Ago

The number of homes listed for sale last month that were bought not so long ago, was substantial. There were 661 homes newly listed in April that were bought less than 3 years ago. Recent purchases made up 3.17% of new listings for the month. Surely these can’t be speculators, since I’ve been told those don’t exist in Toronto. Maybe a family just didn’t like the carpets and thought it was easier to just move. 

Toronto Real Estate Listings For Flips

Newly listed homes in April that were bought withing the past 3 years. Plots are the percent difference between the purchase price and list price, against the number of days after buying.
Source: TRREB; Daniel Foch, REALTOR; Better Dwelling.

The gains chased definitely show home price exuberance. The median flipper listed 611 days after purchasing the home. Median increases from purchase to list price comes in at 20.84% in April. That works out to a median increase of $100,000 — right on the nose. Breaking it down, that’s $163.67 per day, minus the purchase, carry, and disposal costs.

For context, Toronto’s composite benchmark price increased a lot more. Prices across the Greater region are $155,100 higher in April, compared to a year before. Over the past two years, the composite increased a whopping $236,100 in April. Sellers are chasing about 42% of the gains we’re all hearing about. 

Toronto Real Estate Listings For Flips In Dollars

Newly listed homes in April that were bought withing the past 3 years. Plots are the dollar difference between the purchase price and list price, against the number of days after buying.
Source: TRREB; Daniel Foch, REALTOR; Better Dwelling.

Toronto Real Estate Flippers That Listed And Sold In The Same Month Were 2% of Sales

Just over a third of the Greater Toronto properties sold in the same month listed. The segment produced 264 sales in April, after being purchased fewer than 3 years before. It works out to nearly 1.93% of homes sold in the month. That’s larger than Vancouver’s non-resident purchases, for those keeping track. 

Toronto Real Estate Flips Sold

Toronto homes listed and sold in April that were bought withing the past 3 years. Plots are the percent difference between the purchase price and sold price, against the number of days after buying.
Source: TRREB; Daniel Foch, REALTOR; Better Dwelling.

Flippers who actually sold the property held on at about the same length of time as the total cohort. The median number of days between buying and flipping was 655 in April. It was listed a median of 18.92% higher than they bought it for, and ultimately sold for 24.25% higher. This works out to a median gross gain of $119,000, or about $181.68 per day — less acquisition and selling costs. That’s just a touch over half of the composite gains. 

Toronto Real Estate Flips Sold In Dollar Gains

Toronto homes listed and sold in April that were bought withing the past 3 years. Plots are the dollar difference between the purchase price and sold price, against the number of days after buying.
Source: TRREB; Daniel Foch, REALTOR; Better Dwelling.

There are so many takeaways from these numbers, but let’s stick to a couple. The first is, flippers are making money, and a nice chunk of change, but not nearly as much as people think. They managed to capture about 50% of the headline gains, less their costs.

A few were able to capture a lot more profits, but those were fairly rare as you can see. Those are most likely professional flippers, and developers, who actually added value. In other words, it’s their actual job, not just passive income they made while driving an Uber. 

The second takeaway is more of a question. If returns are much smaller for the flippers, are they targeting cheap properties? If they’re scalping just this segment, it may not be a home you would want to buy. However, it would be attacking housing affordability in the most predatory way.

Purchasing in this way is almost a targeted attack to increase the pricing floor. A small number of people can have a big impact on the total market that way. We’ll take a bigger dive into that next week.

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17 Comments

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  • Ushq 7 months ago

    Hedonic adjustment skews for the win.

    • Jessica Yan 7 months ago

      How does that influence median prices? Serious question.

  • Oh Chanada 7 months ago

    Anyone else have a suspicion about TRREB starting to limit the views of data from the 2017 run?

    Just a funny and arbitrary decision made right when they started to lobby harder. No biggie.

  • Theo 7 months ago

    More important possibility: real estate board data is garbage.

    Houses on my street are going for a similar price to last year. Definitely not seeing a bazillion percent increase like in the burbs.

  • LJ 7 months ago

    I know few flippers that have done 50 flips so far. And made a bank. Another thing is that data can’t account for is “assignment sales”. They are a big hit and abused to the ceiling in precon projects be it be condos towns even single detached homes. That kinda flip won’t show up on mls and hence won’t count. Cause owner on title will be the end user in the end. That’s rhymes lol. Asian community live N breathe precon with assignments. And that is also a major contributor to fast increasing prices. Canadians who made money in real estate have seen 100-200-300k price jumps in recent months and tasted blood. Now they won’t settle for 4-5% yoy gain , they want 20-30% all day everyday going forward.

    • Ian Brown 7 months ago

      Someone else wants blood. The CRA has been asking developers in Toronto for their lists of pre-sale buyers, to make sure it was properly declared as capital gains. They got thousands of people last time they did that in Vancouver.

      Someone ‘s gotta pay for CERB and CEWS.

      • SH 7 months ago

        How are you in the know as to what the CRA is asking developers?

        Call me skeptical. Canada is a country where cheats win and hard work loses. I’ve never despised the country of my birth so much.

      • BlkLAB 7 months ago

        A 3 year old is NOT a flip. Many people in busines that relocate get 3 year contracts and there are several expats in this city. I personally know of 4 people that are here on assignment and chose to purchase vs rent. They will sell when they leave.

        I flip should be defined as a short term ownership… less than a year. A lot can happen in 3 years, marriage, kids, divorce, work changes, etc

        • James Ling 7 months ago

          Most people that post here don’t understand that a lot of professional positions move around to different locations… when you’re a Foot Locker you generally stay where you are.

      • Ashley 7 months ago

        CRA is just a joke, the only tax anomalies they can catch are the T4s and T5s. Other than a T4 earning worker no one cares about CRA. CEWS/CERB is filled with scam, people who earned 5k are getting $14k in free. I don’t understand that kind of a math.
        I used to think Canada is low on corruption but with situation now I 100% believe Canada is more enticing for cheats and frauds, no wonder business investment is on decline.

  • James Ling 7 months ago

    I find it odd that for even a few years on this site it was constantly said to ignore SNLR completely as it’s a skewed junk stat… but now it’s being parroted to fit the narrative. I mean come on at least be consistent.

    • Paul 7 months ago

      Not the way I’ve read it. They often check in with SNLR to see which way the wind is shifting, perhaps you don’t understand when it is important to look at the ratio.

      • James Ling 7 months ago

        2016-2017 a few times a week on this blog you would see SNLR trashed as total junk data. The posts are still there.

        • Liam 7 months ago

          Can you point to that? From using the search there’s monthly articles that go back to 2017 that use the SNLR as an indication of why prices will grow and shrink.

          Although I’ve seen a lot of real estate agents say the SNLR doesn’t matter.

  • StupidCanadians 7 months ago

    The TREB Mafia Is starting to shake! Some of these agents have to start hiring protection for the people they’ve screwed over! Gonna get nasty!!

  • Smug Canadians 7 months ago

    TREB is a criminal organization. They’re worse than the NRA when they need to apply pressure. We Canadians are just too dumb to realize this is happening before our eyes. In fact in the the USA, the numbers are all for public disclosure. Not like this group of thugs.
    In fact, Zillo was allowed to come here a few years back and the TREB Mob were fighting it tooth and nail. Well, apparently they won because I can’t find sales history yet, to this day!

    It is true, we are just a bunch of friendly pansies! WE HAVE NO BACKBONE!!

    • Alex k 7 months ago

      I can find some sales data but sparse on purple bricks or zoocasa just need to setup an account with them for free. Not sure why some houses have a sale price and other not maybe some agents submit the price themselves.

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