This four-bedroom house in Lawrence Park was listed in the week after Labour Day with an asking price slightly less than $6-million. It had more than 10 appointments booked within the first three days, the agent says.McCann Realty Group
Buyers lamenting a shortage of inventory in the Toronto-area real estate market will have a rush of fresh listings to sort through this month.
But the added supply is coming into an unsettled market where agents say some retro practices are making a comeback and new tactics are emerging.
Sales in the Greater Toronto Area dropped 5.2 per cent in August compared with the same month last year, according to the Toronto Regional Real Estate Board.
New listings, meanwhile, jumped 16.2 per cent in August compared with August, 2022 while the average price of $1,082,496 last month was nearly flat.
In an uncertain market, Rochelle DeClute, broker with DeClute Union Realty, is seeing an increasing number of home and condo owners decide to sell their existing property before they buy a new one. That’s a shift in the trend of recent years.
She adds that sales last month varied within different pockets of the GTA.
The Beaches neighbourhood, where Ms. DeClute does much of her business, saw a stronger August than last year. In that area, 38 properties changed hands last month compared with 26 sales in August, 2022.
Ms. DeClute believes buyers were willing to make a move because competition for properties was less intense than in the spring. In many years, August is the month when buyers try to find a deal on a property that has been sitting on the market.
“There are typically fewer houses on the market but better deals,” she says.
The average price in the Beaches dipped to $1.4-million at the end of August from $1.5-million one year earlier, she says.
Increasingly, sellers are wrapping their minds around the current landscape, she says.
“We’re seeing the price change happen in a couple of weeks,” she says of the more pragmatic sellers.
In an added twist, sellers are sometimes chasing buyers these days.
“Strategically, if a buyer is interested, there’s no reason the seller can’t write an offer to the buyer,” Ms. DeClute says.
Her office launched such a bid recently just as interest rates were on the rise.
A house with an asking price around the $2.5-million mark was listed with a plan for the sellers to review offers on a scheduled date.
The first prospective buyers to look at the property quickly moved to pre-empt the bidding process with an offer of $2.68-million. The buyers made clear they would not return on the scheduled offer night if their “bully” offer wasn’t accepted.
The sellers wanted to give more people the opportunity to see the property so they turned down the offer.
On offer night, the bullies stayed away and no buyers came to the table.
The sellers then revived negotiations by writing an offer to the first bidders at $30,000 less than their original bid.
They accepted and both sides were very satisfied with the final price of $2.65-million, Ms. DeClute says.
Agents need to be creative and ensure that both sides feel they ended with a win, she adds.
Ms. DeClute says the current environment remains a sellers’ market but she is also seeing an increase in motivated sellers.
Many homeowners are shocked, for example, when the time comes to renew a mortgage and they see payments double. Some are deciding to step out of home ownership as a result.
In her experience in the east end, the number of days between signing an agreement and closing the deal has also lengthened, she says.
Ms. DeClute says buyers with an existing property want to ensure they have the time to sell it before the closing on a new one.
Legal text known as a “flexible closing clause” is making a return, she says, as buyers ask for the option to extend or advance the closing date by a specified amount of time.
Ms. DeClute has also seen cases where buyers do not have any flexibility written into their sales agreement but they ask to move up the closing date so that they can take advantage of a favourable interest rate for a pre-approved mortgage. Sellers sometimes refuse because they have made their own plans around the agreed-upon closing date.
The buyers may choose to accept the closing without vacant possession so that the funds are transferred while the sellers still live in the house. Lawyers often balk at the arrangement, Ms. DeClute says, but the compromise has saved many interest rate holds for buyers.
Cheri McCann, broker with McCann Realty Group, says some properties are moving quickly in the early days of the fall market but competition is less intense than it was earlier this year.
In the core, houses in neighbourhoods such as the Junction and Leslieville were still drawing multiple offers in the quieter summer months, Ms. McCann says, but she has noticed a drop-off in activity in areas north of Highway 401.
Above the $3-million level, sales are slower, she adds, but buyers with deep pockets are still booking showings.
In the week after Labour Day, she listed a four-bedroom house in Lawrence Park with an asking price slightly less than $6-million. The house at 79 Dawlish Ave. had more than 10 appointments booked within the first three days, she says.
The combination of high interest rates, prices and taxes is weighing on many potential buyers, she says.
In midtown Toronto, properties that were changing hands for $2.1-million or $2.2-million are now more likely to fetch $1.9-million or $1.95-million.
Victor Tran, mortgage specialist with rates.ca., says 90 per cent of the calls he received in July and August were from existing homeowners and investors who were looking for advice on renewing or renegotiating an existing mortgage.
Many first-time and move-up buyers appear to be waiting for rates to come down, he says.
“Purchase transactions have been down the drain.”
The Bank of Canada’s decision to hold its trend-setting interest rate steady in September came as a relief for many homeowners with a variable rate mortgage or a line of credit, he adds.
Most of the people he sees struggling are holding investment properties, Mr. Tran says, adding that he has not yet had clients who are giving up a principal residence.
Mr. Tran predicts an uptick in inventory in the coming weeks as sellers enter the traditional fall market. But he adds that some owners are also buckling under the financial pressure and feel they have no choice but to sell.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
:format(jpeg)/cloudfront-us-east-1.images.arcpublishing.com/tgam/XU3ZVFC7Z5DX7D7LEBPSQ73AOE.JPG)
