Many Toronto-area homeowners with a property for sale are facing a dilemma as 2023 winds down: Do I cut my price now or hold out for the potential of a market rebound in the spring?
Christopher Bibby, broker with Re/Max Hallmark Bibby Group Realty, says swelling inventory is the metric he is watching most closely.
As December kicked off, the inventory of detached houses in the Toronto core was about 30 per cent higher compared with the same time last year. Condo inventory saw a jump of approximately 50 per cent in the same period.
The Toronto Regional Real Estate Board reports that the average price of $1,051,180 in November in the City of Toronto was basically flat compared with November, 2022.
Mr. Bibby says the statistics show average prices are fairly flat compared with the same time last year. And, in some areas, prices rose in November from October.
But Mr. Bibby cautions that those numbers are misleading – partly because shifts in prices tend to lag sales. Another reason is that some segments have so few transactions taking place that the numbers can be skewed by one or two high-priced properties changing hands.
“The data isn’t revealing what is happening at the moment.”
In November, the average price in the Greater Toronto Area edged down about 2 per cent from October.
Buyers have more leverage now that total transactions are down by approximately 40 per cent from the springtime in the central market, he adds.
Sellers who don’t recognize that dynamics have changed will be disappointed and unsuccessful, Mr. Bibby says.
“I think sometimes people are chasing a market that’s long gone.”
Sellers are pointing to numbers indicating that prices are flat or higher and buyers are holding out for a discount. And while some sellers turned down offers if they came in below the asking price in September, Mr. Bibby says prices have deteriorated since then.
“Based on what they’re experiencing now, that September offer might have been a good choice.”
The tide of condo units hitting the market is subsiding as the end of the year approaches, he adds, noting that just after Labour Day, between 100 and 150 new listings a day were arriving on the market. That number has dwindled to about 30 or 40 a day.
As the market stabilizes, some condos have traded hands in recent weeks, he says. The condos that are finding buyers tend to be the type of unique units that rarely come on the market, he adds.
Mr. Bibby recently sold a suite with 1,723 square feet of living space at 35 Church St. after 68 days on the market. Unit 703, with an unobstructed view of the flatiron Gooderham Building, was listed with an asking price of $1.495-million and sold for $1.46-million.
Mr. Bibby plans to keep his current crop of 15 listings on the market through December. Inventory may rise and prices may dip by the spring, he notes.
National Bank of Canada economists Jocelyn Paquet and Alexandra Ducharme are keeping their eyes on consumer confidence, which was even lower this quarter than it was at the start of the COVID-19 pandemic and during the financial crisis of 2008 and 2009, they say.
The economists note that Canadian households are already on their knees under the burden of high interest rates. Stagnant consumption in the past two quarters is particularly concerning in light of the brisk pace of population growth, they say.
Despite the gloomy economic outlook, Andre Kutyan, broker with Harvey Kalles Real Estate Ltd., says many sellers at the high end are holding out against trimming their asking price despite a moribund market.
“The most common thing I see is resistance on price changes. My advice to any seller is get on the ball because this may not be the bottom.”
Some sellers are optimistic that sales and prices will improve in the new year or early spring market, but Mr. Kutyan believes a run-up is unlikely.
“I don’t see anything fundamental changing except there may be more inventory,” he says.
Mr. Kutyan notes there were 62 properties listed for sale on the Toronto Regional Real Estate Board’s Multiple Listing Service with asking prices above $10-million at the end of November.
That’s a substantial amount of inventory considering that only eight properties in the City of Toronto have sold for $10-million and above since Sept. 1.
At approximately the same time in 2022, there were 24 listings in that tier in the core.
Properties that sold at the high end this fall changed hands at 92 per cent of the asking price, on average.
Mr. Kutyan points to that statistic to illustrate to homeowners that they need to reduce their asking price by 8 per cent to 10 per cent to catch a potential buyer’s attention.
Even in less luxurious price tiers, properties are languishing.
One detached house completed last year in midtown has been listed and relisted eight times with three different agents since September of 2022, when the first asking price was $4,388,800.
A home for sale at 233 Carmichael Avenue in the Bedford Park neighbourhood in Toronto on Dec. 3. The family-friendly area had 11 detached houses for sale with asking prices between $3.5-million and $5.5-million at the end of November.Sarah Palmer/The Globe and Mail
A home for sale at 321 Melrose Avenue in the Bedford Park neighbourhood.Sarah Palmer/The Globe and Mail
A home for sale at 91 Burncrest Drive in the Bedford Park neighbourhood.Sarah Palmer/The Globe and Mail
A home for sale at 412 Glengarry Avenue in the Bedford Park neighbourhood.Sarah Palmer/The Globe and Mail
Listing agents have tried various prices between $2.99-million and $4.4-million, but all of the strategies have so far failed to land a deal. The most recent asking price is slightly below $4-million.
Some highly coveted neighbourhoods are seeing listings sit as buyers hesitate.
The family-friendly Bedford Park area, for example, had 11 detached houses for sale with asking prices between $3.5-million and $5.5-million at the end of November.
That’s about double the number that would typically be for sale during the market’s stronger years, he says.
Many are recently finished projects built on speculation. Some that currently have asking prices below $5-million were listed above that mark in the past and failed to sell, Mr. Kutyan says.
The average “days on market” for that niche was 46 at the end of November, but many are on their second or third agent, he adds.
Mr. Kutyan says builders are in a tough spot after buying the land and materials, then spending more than one year on construction, only to face a declining market upon completion.
If they needed to sell above $5-million to make a solid profit, he understands their reluctance to sell for substantially less.
A home for sale at 70 Dunblaine Avenue in the Bedford Park neighbourhood in Toronto, December 3, 2023.Sarah Palmer/The Globe and Mail
“At $4.5-million a lot of these guys are losing their shirts,” Mr. Kutyan says.
But many will end up selling far below even their discounted asking prices, he believes.
Still, Mr. Kutyan is advising sellers to keep their listings active on the Multiple Listing Service through December. In most years, many homeowners opt to take their property off the market for the holiday season and the first few weeks of January.
But the City of Toronto’s new land transfer tax rates for properties selling for $3-million and above are set to come into effect on Jan. 1. Mr. Kutyan says some buyers looking at properties above that mark may try to secure an agreement before the end of the year to avoid the added tax.
“There still is a chance of someone coming along saying, ‘I want to close and close quickly.’ ”
For those sellers anticipating a market boost from lower interest rates in the spring, he points out that most pundits on Bay Street are not anticipating a rate cut from the Bank of Canada before the second half of next year.
“It’s all false hope with these people.”