The ‘new normal’ of the Toronto real estate market has a harsh reality

Real estate is emotional. Why? Because a house is more than walls and a roof, it is a container for our lives, our families, our communities. As part of an occasional series, we asked local writers to share their stories about real estate and housing.

We all knew it was coming. There was no way to maintain the pace we saw earlier this year when prices rose astronomically and we saw increases of up to 30% in some neighborhoods over the same time period. last year.

As a day-to-day Realtor, I saw signs of change long before the media reported it.

The first sign was the decrease in the number of passages on our lists. Around mid-April, just after the Bank of Canada raised the prime interest rate by 0.5% – the biggest increase in 22 years – I put a condo up for sale in the Upper Beaches area of ​​Toronto for $649,000, an entry-level price that over the past few years would have attracted dozens of showings and multiple evening deals.

During the week this condo was on the market, we only had six visits. However, on bid night, three of the agents showing it submitted bids and the unit sold for $800,000. My client and I felt very lucky to have attracted potential buyers, and the eventual winner, after getting just a handful of visits. I knew it was a sign of things to come.

During our weekly office meetings, my colleagues shared similar stories. As the screenings dwindled, it was only natural that the number of deals entering the night of deals would also decrease.

We were now starting to see many homes not selling overnight. Sometimes it was because no offers were coming. On some occasions, properties received offers but the prices did not match the sellers’ expectations and were all turned down.

This has led to a tendency to end listing and then relist the same home at a higher price. On our Toronto regional real estate board‘s update page, we were seeing more terminated listings than sales. When the homes were relisted, it was common to see the new price between $200,000 and $500,000 more than the original asking price. Many of these sellers had already purchased another home and needed the proceeds they valued from their current home to complete the transaction on their new home.

Long closures have also become a problem. We have also started to see valuations made for lending institutions turn out to be well below actual purchase prices.

This happened on a property that my team member, Jenn Scaife, sold to her client. The purchase price was $750,000 in March, but when the home was appraised just before closing in June, it was only $620,000. This left buyers scrambling to find a larger down payment and our mortgage agent was very creative in presenting a new scenario to the lender. The sellers, who had insisted on the long close, also agreed to lower the purchase price to close the deal.

I’m a member of a few Realtor Facebook groups where agents shared other hard realities and the fallout of the changing market. Some reported buyers couldn’t close deals and risked losing their deposits because they couldn’t sell their homes to pay for the properties they bought. Others have reported buyers simply forgoing outright purchases before the completion date because they felt they had overpaid at the peak of the market. It’s going to be a busy couple of years for litigators.

There are many agents who are still in denial. In some cases, we are seeing the same old marketing strategies – properties coming on the market at an undervalued price with offer dates set a week later. The majority of them don’t sell and go through the process I mentioned earlier to get terminated and relisted.

However, there are instances where homes receive multiple bids and sell for more than requested. It depends on the house and the neighborhood, and it’s more the exception now than the rule.

The current market has changed in favor of buyers. Statistics from our business at Re/Max Hallmark show that it takes an average of 30 days for homes to sell. At the height of the market, our average was seven days. Buyers don’t feel pressured to submit bids for fear of missing out. Many are also sitting on the fence, thinking prices will fall further. When submitting offers, many include conditions on home inspections and arranging financing. Last week, I even saw a house sold on the condition that the buyer sell their current house. This was unheard of in the Toronto market for many years!

All of these changes are positive. Homes are selling but sellers need to be patient. Buyers, whether they’re just starting out or looking to downsize or get something bigger, actually have a realistic chance of realizing their dreams now.

We are all wondering if this is the new normal or if the market will return to its frenetic ways.

Desmond Brown is a former reporter for the Toronto Star, National Post and CTV News. He is currently a real estate agent in Toronto and host of the Sold In The 6ix podcast.

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