Paige Taylor White/The Canadian Press
Tentative buyers in the Toronto-area real estate market appear more willing to approach the bargaining table as the fall market kicks off, but they are quick to back away when sellers seem immovable.
In the midtier and higher echelons of the market, those mercurial buyers are focused on striking a deal.
“The prices are still high, and that’s the problem,” says James Warren, real estate agent with Chestnut Park Real Estate Ltd.
Mr. Warren says agents are finding creative ways to bring attention to the new listings streaming on.
On a recent weekday, Mr. Warren was moving from one open house to another in Forest Hill, where agents from various firms banded together to put on a showcase of homes.
A half-dozen properties were listed in mid-September with asking prices between $7.295-million and $18-million.
“What do you think of the price?” is the first question the listing agent typically asks agents dropping by, says Mr. Warren.
That kind of feedback is important in a market where buyers are exceedingly cautious, and the agents are willing to provide an unbiased opinion when they are not visiting with their own buyer client, Mr. Warren says.
An early September interest rate cut by the Bank of Canada has given consumers a little bit of comfort, but many buyers are still holding out with the hope that housing will become more affordable if rates and prices slide. The central bank has lowered its benchmark rate at three consecutive meetings to stand at 4.25 per cent.
The Canadian Real Estate Association points to “fledgling signs of life” as monetary policy eases, but the national housing market activity is pretty much stuck in a holding pattern, acknowledges senior economist Shaun Cathcart.
On a national basis, sales edged up 1.3 per cent on a seasonally adjusted basis in August compared with July, according to CREA. New listings rose 1.1 per cent in the same period.
Compared with August, 2023, sales dipped 2.1 per cent while active listings jumped 18.8 per cent.
New listings dropped slightly in the Greater Toronto Area in August from July but rose in Calgary and Edmonton.
The national average home price of $649,100 in August remained flat compared with the same month last year.
Daren King, economist with National Bank of Canada, notes that – even though interest rates have fallen – they are still in restrictive territory. Meanwhile, the labour market continues to deteriorate across the country.
Listings in Canada are at their highest level since June, 2022, Mr. King points out in a note to clients. He believes that a relatively small percentage of sellers are listing because of financial pressures, but he will be keeping an eye on that phenomenon in the months ahead as he expects the Canadian economy will remain weak.
Andre Kutyan, broker with Harvey Kalles Real Estate in Toronto, says many buyers are still vacillating but he did see an uptick in showings in late August. A few properties found buyers after lengthy stretches on the market.
In Bedford Park, Mr. Kutyan sold a detached house for $3.3-million in late August after listing the property in early July with an asking price of $3.495-million.
Prior to that, the four-bedroom home was listed with another agent for seven months with an asking price of $3.75-million.
A buyer stepped up at another listing in Bedford Park after Mr. Kutyan listed the house slightly below the $3-million mark. The house sold conditionally, but the buyer walked away after a successful negotiation.
“They buyer changed their mind. They gold cold feet. It shows you that some of these buyers are very fickle.”
In Forest Hill, Mr. Kutyan was keeping an eye on one house listed with an asking price just below the $9-million mark in the spring of 2023.
Mr. Kutyan watched the property’s asking price drop to $8.495-million, then $8.28-million. When it reached $7.995-million, Mr. Kutyan’s clients toured the house.
The price was still too rich in their opinion, so they waited until it was reduced to $7.5-million.
The buyers submitted an offer, but they were outbid by a competing buyer who jumped in and purchased the house for $7.35-million.
“Nobody was biting at $8-million,” says Mr. Kutyan. “It shows how price-sensitive the market is.”
In the condo market, swelling inventory is giving buyers lots of power in negotiations.
The successful sellers in Bedford Park are downsizers who turned their search to a two-bedroom, two-bathroom condo in the $750,000 to $850,000 bracket in the area around Yonge and Eglinton.
Mr. Kutyan found 15 options in their price range after weeding out units that were occupied by tenants.
The buyers were able to bargain the seller down below $800,000, Mr. Kutyan says, because there were so many listings.
“If I don’t buy yours, I’ve got 14 other options,” Mr. Kutyan told the listing agent.
Even more choice was available if the buyers looked at occupied units, Mr. Kutyan says, but many sellers have trouble delivering a vacant unit as tenants refuse to leave.
“There is a lot of apprehension with buying tenanted properties,” he says.
With his own clients, Mr. Warren stresses the importance of setting a realistic asking price from the start.
“We need to price this aggressively instead of ambitiously,” he advised the owner of a condo recently.
In a segment awash in inventory, he recommends setting an asking price below the comparable units in the building.
“The only way you’re going to entice them on the dance floor is your price,” he says.
Mr. Warren often gleans some intelligence from condo tower employees in order to find out how much traffic is showing up to view competing units in the building.
“I always ask the doorman because they tell the truth.”
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