Much of the urgency in the Ontario real estate market in April appears to be coming from the sellers. Buyers are in no mood to rush.
In the Greater Golden Horseshoe, as the zone that curves around Toronto is known, listings are rising ahead of the upcoming Easter and Passover holidays.
Buyers, meanwhile, are detecting the first signs of softening prices. Mortgage rates are less attractive. As sentiment shifts, many are saying, “let’s wait and see.”
Dennis Mehravar, broker at Engel & Volkers Waterloo Region, says the market is less frantic in every price range.
“We are seeing some slight price adjustments,” he says.
Mr. Mehravar estimates that prices have dipped between three per cent and eight per cent, depending on the property, since the beginning of 2022.
A starter home in Waterloo, Ont., for example, was recently listed with an asking price of $699,000.
Agents chose a list price below market value and set an offer date. The 1,100-square-foot bungalow sold with a bully offer of $850,000.
When his office discussed a target price with the homeowner in January, the goal was to sell for $900,000, he says.
In another instance, his team listed a detached, five-bedroom house with an eye-catching asking price of $1.99-million. Based on what a nearby house had sold for, the agents were hoping the house would fetch closer to $2.5-million on the offer date. The house did receive four offers but sold shy of the goal at $2.385-million.
“They still sold quite quickly,” Mr. Mehravar says of the two houses. “We could have got more in January.”
Mr. Mehravar says he continues to set a relatively low asking price and an offer date because house hunters are accused to that strategy.
They know that most asking prices are artificially low and they will likely face competing bidders.
“The buyers are conditioned to add a certain percentage to list price,” he says.
At the moment, many are wary of overpaying.
“If they wait two months from now, is this going to be a better deal?” is a common mindset, he adds.
Bay Street is keeping a keen focus on the Bank of Canada and its moves to rein in inflation with higher interest rates. Many market watchers are forecasting an accelerated pace of tightening with a 50 basis point hike at the central bank’s next policy-setting meeting on April 13.
Stephen Brown, senior Canada economist at Capital Economics, notes the central bank’s officials recently expressed the opinion that consumers are in a better position now than they were in 2017, when the central bank last embarked on a tightening cycle.
Mr. Brown notes that the central bank’s latest survey of consumer expectations shows that the share of Canadians who are worried about meeting their debt payments is already six times larger than it was in 2017.
In a separate Bank of Canada survey, businesses indicated pessimism about future sales growth.
Mr. Brown remains skeptical that the central bank will hike its policy rate to more than 2.5 per cent, as markets have recently priced in.
Against a backdrop of uncertainty, Mr. Mehravar is seeing some homeowners who were contemplating retirement in another area in three or four years moving their plans forward in order to take advantage of lofty prices.
He’s had clients move in the recent past to Port Dover, Ont., on Lake Erie and out-of-province to Alberta, Nova Scotia and Newfoundland.
Mr. Mehravar has noticed that fewer buyers are streaming in from the Toronto-area 416 and 905 area codes. Prices in the region have increased substantially in the past couple of years, he notes, and the jump in fuel prices may be encouraging some to forgo added space for a smaller property closer to their workplace.
As for the months ahead, it’s difficult to predict whether the market is in a short lull or a more protracted malaise, he says.
“The next 30 days will give us an idea of what our spring and summer market is going to look like.”
In Guelph, Ont., real estate agent Aimée Puthon, says the frenzy has left the market now that buyers have more properties to choose from.
Ms. Puthon says many properties are still selling on offer night at prices above asking but not for the outrageous premiums that buyers offered in January and February.
Ms. Puthon notes that on April 1, the Guelph market had 145 residential properties listed for sale. That’s a significant increase from a typical day in January, when there were between 12 and 15 listings available, she says.
Drilling down into the numbers, she found single-family homes had the heaviest weight, with 90 available. There were also 28 apartment-style condos and 27 townhouses listed.
“People who really needed to sell got their property to market in January and February,” she says.
Some of the sellers she’s seeing now don’t need to sell so much as they hope to take advantage of rich prices.
Ms. Puthon says those sellers need to set an asking price suited to the current market instead of looking in the rear-view mirror.
“It really just comes down to what is for sale in their neighborhood,” she says. “We want to lead the market, we don’t want to follow the market.”
Ms. Puthon says most agents in the single-family segment still appear to be using the strategy of setting an attention-grabbing asking price and an offer date. The list price is lower than the seller hopes to receive from competing bidders.
For example, Ms. Puthon says, agents in her office recently sold a small, well-kept bungalow for $840,000 after it was listed with an asking price of $799,000 in the downtown area.
In Guelph’s south end, a three-bedroom detached house was listed with an asking price of $1.9-million and sold for $2.15-million.
A four-bedroom in the same area was listed with an asking price of $980,000 and sold for $1.055-million.
That less frenzied bidding is better for the psychology of buyers, who feel less pressured to make a quick choice, she says.
On some occasions, she says, houses are not receiving any offers – or any acceptable to the homeowner – on offer night. In that case, the homeowner may want to relist at a higher price.
She points to the example of an $800,000 house that failed to sell on offer night relisting for $1.2-million.
That’s where homeowners need to understand that they are facing more competition from other sellers now than in January, when lots of buyers were chasing very rare listings.
“Where is that $1.2-million coming from,” she wonders. “Is it even realistic?”
Ms. Puthon says Guelph has been wildly popular with buyers in recent years because it’s close enough to the Greater Toronto Area that workers can commute. Along Highway 401, it’s the first community past the Greenbelt surrounding the GTA.
Residents of Guelph can also easily reach cottage country on the shores of Lake Huron and other popular areas.
There, the market has not slowed down, she adds.
Ms. Puthon recently represented buyers who bid on two separate cottages in Southampton, Ont. Both properties were a block or two from the water. One drew 14 offers and the other 16.
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