For sale signs in Oakville, Ont. on Dec.1, 2018.Richard Buchan
Sellers holding out for lofty prices in real estate markets around Ontario are seeing their ambitions crumble in many cases as listings continue to swell.
Shawn Lackie, real estate agent with Our Neighbourhood Realty in Oshawa, says properties in Durham Region are changing hands, but sales are erratic and sometimes baffling.
“A desirable house can get no action; another can be a dump and get lots of interest.”
The area east of Toronto includes communities such as Oshawa, Whitby, Ajax and Pickering, which are often popular with first-time buyers.
Mr. Lackie says bidding wars have slowed down in the region. He estimates approximately 50 per cent of homes are listed now with an eye-catching asking price and a date for reviewing offers.
Active listings in Durham jumped more than 60 per cent in April compared with March, then another 20 per cent in May from April, he says.
The same trends are echoed in many markets across the country as inventory rises and sales remain sluggish.
The latest figures from the Canadian Real Estate Association show that sales across Canada dipped 0.6 per cent in May from April on a seasonally-adjusted basis.
The average price edged down 0.2 per cent in the same period.
Stephen Brown, deputy chief North America economist at Capital Economics, notes prices have fallen for nine straight months to bring the total decline since August to 4.8 per cent.
The economist adds, however, the Bank of Canada appears to have won its battle against inflation and, now that policy-makers are embarking on a loosening cycle, odds favour a gradual recovery in house prices.
Victor Tran, mortgage specialist for rates.ca, says buyers remain cautious as they wait for rates on fixed-term mortgages to fall.
The Bank of Canada’s move this month to cut its key interest rate to 4.75 per cent from 5 per cent is an encouraging sign to some aspiring buyers, he says. While rates may not drop dramatically any time soon, consumers see the cut as a sign that rates have peaked, he adds.
Mr. Tran was working with clients recently who were heading into another offer night after running into competition for properties in Ajax.
The clients sold their condo unit a couple of years ago and having been living with one spouse’s parents ever since. Recently they’ve been trying to find a home in Ajax in the $700,000 to $800,000 range, but they have been losing out in bidding contests with 10 or more offers, he says.
Mr. Lackie says some houses draw multiple offers but others are languishing. With so many active listings, the balance of power has swung to buyers.
In Port Perry, for example, one house was listed with an asking price of $1.4-million, then had a slight reduction to $1.385-million. Another was listed around the same time at $1.2-million, then trimmed to $1.185-million.
Both have been on the market for more than 60 days.
“If something is sitting for 60 days, something is wrong,” he says. “The market will establish what the value of a home is.”
Mr. Lackie says some homeowners hold out for the price they want while spurning all offers below that amount. But if they have received a few offers around the same mark, the sellers should grasp that that’s the amount buyers have deemed the home is worth.
“It becomes obvious that it’s not worth $1.5-million, it’s worth $1.2-million, because that’s what all the offers are coming in at,” he says.
A vintage cottage property at 5904 Park Lane Crescent, Washago, Ont.Royal LePage Signature Realty
A little farther north, real estate agent Alexis Victor of Royal LePage Signature Realty has been seeing price reductions on year-round residences and cottages in the area around Washago, Ont., which is positioned between Lake Simcoe to the south and the Muskoka region to the north.
In a wide swath of cottage country between Honey Harbour and Huntsville, 18 waterfront properties changed hands in May compared with 72 in the same month last year.
“I think people are having a hard time pulling the trigger and making decisions,” says Ms. Victor.
She adds that some properties listed with inflated asking prices have failed to sell even after price reductions.
“Things have been sitting – for years in some cases,” Ms. Victor. “It’s constant price adjustment – finding that sweet spot.”
On Sparrow Lake near Gravenhurst, Ont., for example, a three-bedroom cottage was listed for sale in May of 2022 with an asking price of $2.95-million. Last year the asking price was reduced to $2.695-million, but still the property languished.
This spring, the 2,500-square-foot cottage was listed with an asking price of $2.495-million. It sold this month for $2.425-million.
Ms. Victor also points to the example of a four-bedroom cottage on Lake Muskoka which traded hands for $3.65-million in 2021.
In 2022, the property came back on the market with an asking price of $4.65-million, followed by a series of price cuts. In 2023, the cottage was relisted with an asking price of $4.179-million and another set of trims followed.
In March, the property was relisted with an asking price of $3.695-million and recently sold conditionally for $3.2-million.
Looking ahead, Ms. Victor believes some sellers who have a very low-interest mortgage will become more realistic about cutting their asking prices before those loans come up for renewal at higher interest rates.
That will create some momentum in sales, she predicts, because those sellers will then become buyers as they search for another home.
For now, Ms. Victor presents homeowners preparing to list with three options: a low asking price for a quick sale, a median price and a top-of-the-range price for those prepared to be patient.
“Seven out of 10 times, people always want to try at the higher price,” she says.
Even at the more affordable end of the market, cottages are taking longer to sell, says Ms. Victor.
One reason for that in her area is that the Township of Ramara has brought in strict bylaws governing short-term rentals.
Many people will buy a cottage for their family but rent it out for part of the summer to help pay the mortgage, she says. Others buy with the intention of renting the property year-round.
In a wide swath of cottage country between Honey Harbour and Huntsville, 18 waterfront properties changed hands in May compared with 72 in the same month last year.Royal LePage Signature Realty
Now the rules restrict that strategy if another property within a certain distance is already a short-term rental.
“This is slowing things down – we’re not seeing as many investors.”
Ms. Victor is listing a vintage three-bedroom riverfront cottage in Washago with an asking price of $485,000, which she considers in the median spot between a fast deal and a property that sits.
She says a builder may tear down the cottage and rebuild, but she can also see a buyer looking for an entry-level cottage being charmed by the “Mad Men” backdrop of orange shag carpeting and green vinyl furniture.
“It’s being sold ‘as is,’ ” she says of the time capsule. “It’s the coolest thing ever.”
She’s hoping that retro appeal will catch the eye of artistic types who might post some images on social media.
“The reality is, you have to be very creative with marketing.”