Desjardins is forecasting the average home price in Canada will decline by nearly 25 per cent by the end of 2023 from the peak reached in February of this year. In its latest Canadian Residential Real Estate Outlook published on Thursday, Desjardins says it's expecting a sharp correction in the housing market, adjusting its previous forecast that predicted a 15 per cent drop in the average home price. According to the Canadian Real Estate Association, the national average home price hit a record $816,720 in February.Evan Buhler/The Canadian Press
A short burst of activity in the Toronto-area real estate market was sputtering by the end of September. The uneven pace of sales is leading some sellers to try some dubious ploys – including raising their asking price.
Across Canada, home sales dipped 3.9 per cent in September from August, according to the Canadian Real Estate Association. Sales came in about 12-per-cent below the pre-pandemic 10-year average for a month of September, CREA says.
In the Greater Toronto Area, sales dipped 10 per cent in September from August. Compared with September, 2021, sales plunged 44.1 per cent.
New listings fell 16.7 per cent in the GTA in September compared with the same month last year.
The relatively low inventory has kept the average price in the GTA essentially flat since July. It stood at $1,086,762 in September to mark a 4.3-per-cent decline from the year-earlier period.
CREA chair Jill Oudil notes that many potential sellers in Canada have joined buyers in playing the waiting game. The slow stream of listings is keeping the market on the tighter side of balanced territory, she says.
“It makes for an interesting dynamic – one that doesn’t really have many historical precedents,” Ms. Oudil says.
CREA senior economist Shaun Cathcart says the Bank of Canada’s latest rate hike played a role in soft September sales.
Until recently, higher borrowing costs had disproportionately affected the fixed-rate mortgage segment, Mr. Cathcart says, because buyers were able to qualify for financing more easily if they went with a variable rate mortgage. The central bank finally closed that door in September when policy-makers lifted the benchmark rate by 75 basis points to 3.25 per cent.
“The important thing to remember is we’re still in the middle of a period of rapid adjustment with buyers and sellers trying to feel each other out while a lot of people have had to take their search plans back to the drawing board,” Mr. Cathcart says in a statement.
The market’s foray into uncharted territory is leading sellers to try some eyebrow-raising gambits, says Andre Kutyan, broker with Harvey Kalles Real Estate.
He points to a four-bedroom house he listed for sale in late spring with an asking price of $7.75-million. When the property in an upscale midtown neighbourhood didn’t sell after several weeks, the owners agreed to reduce the asking price to $7.249-million.
The home still didn’t draw a buyer so the sellers informed Mr. Kutyan they’d like to change the price again – back to $7.75-million.
Mr. Kutyan pointed out they had already tried that price – what was their rationale?
“We don’t want to ruin the reputation of our listing,” they said.
The owners are in no rush to sell and they figure they are unlikely to strike a deal this fall. They are positioning the property to relist in the spring of 2023. They want the history to show the most recent asking price as $7.75-million so a future buyer won’t know they tried a lower price without success.
Mr. Kutyan points out that realtors can provide a complete listing and sales history to any client who requests the records.
“You’re not fooling anyone,” he says. “They’re hoping for some sucker who’s not going to find the information.”
A seller of a detached house in midtown has a similar mindset, Mr. Kutyan says. The homeowner purchased the property for approximately $2.1-million at the peak of the 2017 spring market. This year the homeowner tried an asking price significantly below the $2-million mark, then raised to $2.1-million and – more recently close to $2.4-million. The homeowner has turned down offers in the $2.3-million range.
The homeowner is holding out for a market improvement and doesn’t want to tarnish the listing if sales rebound.
“It’s short-sighted and it’s not based on any fact. It’s just perception,” Mr. Kutyan says. “The reality is, the market’s not getting better in the short term.”
By contrast, Mr. Kutyan had a different outcome when he recently listed a three-bedroom house at 60 Chudleigh Ave., with an asking price of $1.749-million and a scheduled offer date.
The only bidder made a conditional offer at the full asking price.
The seller rejected that offer and Mr. Kutyan suggested a new asking price of $1.999-million with offers welcome any time.
A new buyer stepped forward but also offered an amount close to the original asking price.
Wrangling began but the buyer seemed determined to keep the price below $1.8-million.
In the middle of negotiations, Mr. Kutyan suggested the seller drop the asking price to $1.879-million.
The move signals to the intransigent buyer, “I’m motivated and I’m not waiting for you,” Mr. Kutyan explains. “We are willing to show the entire market that we’re willing to negotiate.”
The price cut sparked interest and a new buyer came to the table with an unconditional offer, a more convenient closing date and a bank draft. Mr. Kutyan informed the buyer in negotiations that a new offer had landed and gave them a chance to improve.
That buyer did raise their offer to an acceptable price but would not budge on the closing date. The sellers accepted the second buyer’s offer and the house sold firm for $1.82-million.
Mr. Kutyan says it’s often the case that a prospective buyer will remain stubborn until they realize a rival bidder wants the property.
“When there’s a buyer who sees there’s someone else willing to pay, they jump.”
Meanwhile, Mr. Kutyan has been trying to persuade the owners with the $7.75-million listing to rethink their strategy: “Ultimately I’m telling you what you need to do to sell it, and it’s not raising your price.”