In Toronto, a bewildering landscape for would-be buyers
Buyers and sellers in the Toronto-area real estate market need a sound strategy and the ability to maneuver quickly in a market that has become unpredictable.
“It has been such a changing market – there’s no consistency,” says Christopher Bibby, broker with Re/Max Hallmark Bibby Group Realty.
After an eye-watering run-up in prices during the coronavirus pandemic and manic sales in the early months of 2021, the market seems calm – with sporadic outbursts.
Mr. Bibby recently took clients to see houses in desirable neighbourhoods such as Wanless Park and Davisville that sat on the night reserved for viewing offers without drawing a bid.
A week later, a house in Bedford Park sold with 16 offers for $505,000 over asking.
That kind of volatility can be bewildering for buyers, he says. But most are extremely educated about the market these days and that’s why they refuse to bite when an asking price is too rich.
All of the houses were listed in the $1.6-million to $2-million range, he says, but the two that languished were priced at about market value, in his opinion.
Sellers who want to spark a bidding war need to price below market value, which is the strategy that spurred on the competition in Bedford Park.
“You still have to be very mindful of the starting point and the types of people you’re going to attract,” he says. “You can’t necessarily list at a record price and hold back bids. Enough’s enough.”
Mr. Bibby is relieved that the market is a little more balanced. He believes that setting a realistic asking price and negotiating around that mark is much more healthy than sparking chaos with bidding contests that frustrate buyers.
Still, buyers have to be nimble.
In the city’s west end, Mr. Bibby and his buyers dropped everything to see a house on Humbercrest Boulevard as soon as it hit the market with an asking price of $2.89-million.
Three hours later, his clients submitted an offer for $3.011-million and the homeowners quickly accepted.
“It was so refreshing that we didn’t wait a week and we were able to get a deal done.”
The condo market has also been running hot and cold from one week to the next, Mr. Bibby says.
He sold one unit in March for $880,000 after listing it with an asking price of $749,000.
A few weeks later, a couple of owners in the same building asked him to achieve a similar outcome for them. Mr. Bibby advised them that a fresh supply of listings had arrived and buyers were in no mood to bid aggressively.
“Sometimes they don’t want to hear that,” he says, but changing levels of inventory require different tactics. “The market strategy and analysis has to be up-to-date.”
In both cases, the owners listed with other agents. When the units failed to generate bidding wars, the sellers called Mr. Bibby back to ask what they should do next. Currently he is advising them and other potential sellers that they will have to hold off if they want a return to the level of frenzy seen in March.
“I think you have one chance – if you have certain expectations, you have to wait.”
Still, as inventory rises in the market below $1-million, Mr. Bibby is seeing strength in sales of larger, more luxurious units.
He recently sold a unit with views over Lake Ontario in the Humber Bay area for $1.3-million after listing it with an asking price of $1.249-million.
“It was a south-facing penthouse and the first person in offered $50,000 over asking with no competition,” he says.
The emptynesters and downsizers who are selling their houses now are keen to buy condos again after a hiatus during the pandemic. Another cohort is looking at the prices for single-family homes and opting for a condo instead so that they have an easier lifestyle and money to travel.
“I think a lot of people are being a lot more sensible,” he says. “I don’t think people are as all-in on real estate as they were earlier in the pandemic. Young, professional couples say ‘we don’t want to spend our life savings on a house that needs work.”
Farah Omran, economist at Bank of Nova Scotia, notes that the softening in the housing market in the past couple of months is not just a big city phenomenon – the trend was apparent across much of the country – and for various sizes of houses.
Ms. Omran adds that, despite the slowdown from the sizzling opening months of 2021, the Canadian market is still very strong.
While national sales dipped 7.4 per cent in May from April, they were still 45-per-cent higher than their long-term average for the month of May.
New listings in May dropped 6.4 per cent in May from April.
And while sales fell slightly more than new listings, the market is still tilted in favour of sellers, Ms. Omran notes, pointing to the sales-to-new-listings ratio, which stood at a steep 75.4 per cent in May. The long-term average is a more balanced 54.5 per cent.
The average national sale price jumped 38.4 per cent in May from the same month last year.
The economist figures the third wave of the pandemic may have held sales down in May since much of the country was under lockdown. Also, unsustainable price increases and the persistent shortage of listings may have pushed some buyers to the sidelines.
Plenty of buyers may be worn out from house hunting and participating in bidding wars, Ms. Omran says, and some may be turning their attention towards a return to normal life and working arrangements at this stage of the pandemic.
“With summer weather arriving and provinces easing restrictions, maybe this shifts some of the focus away from needing more spacious homes in the suburbs,” she says.
Potential sellers, meanwhile, might be tempted to cash in on peak prices, but they face the problem in turn themselves – too many buyers and bidders are chasing too few homes, she says.
Looking ahead, Ms. Omran says demand may wane a bit across the country but it will undoubtedly pick up again once Canada reopens its borders and newcomers respond to the ambitious immigration targets set for the next few years.
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