A house for sale in the east end of Toronto in March.Cole Burston/The Globe and Mail
Potential real estate buyers in Toronto and the surrounding areas are taking a languid approach to house hunting as summer sojourns take over.
Robin Pope, broker at Pope Real Estate Ltd., says some are hitting pause as they assess the impact of higher interest rates. Competition has eased and those still on the hunt appear to be feeling less pressure.
For example, after he listed a hard loft in the city’s west end, one prospective buyer’s agent cancelled a showing about 30 minutes before the scheduled time because afternoon traffic was heavy. Typically, a spacious loft is hard to come by and buyers rush to get inside.
“I was just surprised that she would take the risk when somebody was there waiting to open the door for her,” Mr. Pope says. “They just don’t feel any urgency.”
One reason for the hesitancy, he says, is that buyers saw that the average price in the Greater Toronto Area in May had rebounded to a level close to the peak set in February, 2022. He figures some were reluctant to surpass that previous milestone.
But buyers who persist can also take advantage of a shift in the market, he adds.
Mr. Pope points to clients who were becoming frustrated by bidding contests and the rich premiums some were willing to pay. In June, they were able to purchase a house in the west end after an offer date fell through.
The house, located south of Dundas Street West in the Kingsway area, was listed with an asking price close to $2.3-million and a date scheduled for reviewing offers. After that strategy was unsuccessful, the house was relisted with an asking price just below the $2-million mark with offers any time.
Mr. Pope’s clients saw the property soon after it was listed for the second time and knew that other showings were booked. They decided to quickly submit an offer.
A home inspection by a reputable company was provided by the sellers so Mr. Pope advised the clients to make their offer unconditional at a few thousand dollars above the asking price.
The homeowners accepted and the deal was done.
“The market had slightly changed,” says Mr. Pope, who believes that the buyers landed a better deal because of the failed offer date.
In another instance, a young buyer was looking for a property with help from her parents. The father is expecting the Bank of Canada’s most recent interest rate hike to knock a few first-time buyers out of the market so the family has halted their search.
Mr. Pope will continue to list properties in July but he figures August will be quiet, as both buyers and sellers rejuvenate before the action picks up again after Labour Day.
At Bank of Nova Scotia, economists are forecasting that interest rate cuts by the Bank of Canada will be delayed until the second quarter of 2024.
Keeping rates higher for longer could be viewed as insurance against upside surprises to inflation, say René Lalonde, director of modelling and forecasting, and Farah Omran, senior economist, in a note to clients.
Mr. Lalonde and Ms. Omran point to the recent strength in the real estate market, which suggests housing will no longer act as the drag on economic growth it was during a string of interest rate increases.
“The Bank of Canada can ill afford for the most rate-sensitive sector in the economy to roar back when they are actively trying to slow growth and inflation,” the analysts say.
East of Toronto in Durham Region, sales have cooled in recent weeks after a burst of activity in the spring that saw buyers competing for some properties in Oshawa, Whitby, Ajax, Pickering and nearby communities.
Shawn Lackie, real estate agent with Coldwell Banker R.M.R. Real Estate, says listings rose 32 per cent in June compared with May.
Some homeowners decided to list after seeing strong sale prices reported for their neighbours’ houses in May, he says.
In the past few weeks, a house in Ajax drew 12 offers and sold for $1-million after it was listed with an asking price of $839,000; a property in Oshawa with an asking price of $899,000 sold for $1-million; and a starter home in Oshawa with an asking price of $599,000 sold for $791,000.
But fierce competition caused some buyers to back away.
“Now you’ve got buyers with sticker shock,” he says.
Sales in the region dipped 15 per cent in June from May, he says, and the average price remained roughly flat at $999,000.
Months of inventory, which measures how long it would take to sell all available listings at the current pace of sales, crept up to 1.4 months in June from just less than one month in May, Mr. Lackie says.
Supply remains historically low and firmly in sellers’ territory, Mr. Lackies says, but buyers who see a little bit more choice in the market tend to act less aggressively. As a result, sale prices are unpredictable.
“When you’re in a crazy up-and-down market like we’ve been in, all you can do is roll the dice,” Mr. Lackie says. “It’s frustrating for the sellers because they don’t know what they’re going to get.”
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/NHHPZDMN6JF4NO4EZM2D2F74EY.JPG)
