A house for sale sign is shown in front of a house in Oakville, Ont., west of Toronto on Feb.5, 2023. The Canadian Real Estate Association says homes sales in January were the lowest for the month since 2009 and fell 37.1 per cent compared with a year ago.Richard Buchan/The Canadian Press
Toronto-area real estate buyers who sat out the fall market are suddenly back and ready to compete.
Spirited bidding is common for properties around the $1-million mark, which is typically the entry point for a single-family home. In that range, agents are regularly reporting sales with 10 to 20 offers.
To drum up that many bids, agents are listing with an eye-catching asking price, then setting a date for reviewing offers.
In Scarborough, the three-bedroom detached house at 17 Sandyhook Square was listed with an asking price of $899,000 and sold for $1.038-million with 16 offers.
At 58 Antique Dr. in Richmond Hill, Ont., a three-bedroom detached house was listed with an asking price of $1,299,900 and sold for $1,487,500 with 10 offers.
Tyler DeClute, a real estate agent with DeClute Real Estate Union Realty, says most of the competition is taking place in the segment between $999,000 and $1.3-million.
But even with multiple bids, the action is not approaching the frenzy at this time last year.
“We’re not seeing crazy prices out of it – they are fairly reasonable in their offers.”
Mr. DeClute recently represented buyers who were outbid for a three-bedroom semi-detached house near the intersection of Danforth and Pape when 24 bidders came to the table.
The house at 50 Dewhurst Blvd. was listed with an asking price of $995,000 and sold for $1,455,055.
Mr. DeClute’s says buyers are becoming accustomed to the current conditions, and fixed-term mortgage rates have come down a little bit recently. Sellers are also more realistic in the prices they are willing to accept, he adds.
Back in October, agents weren’t setting offer dates because sellers and buyers remained in a stalemate, Mr. DeClute notes. But in February, setting a lower asking price is bringing more attention to the listing.
“You’re trying to get boots in the door.”
Still, even with the spurt of activity, many people are still cautious he adds.
“Some buyers need a stronger sign that we’ve hit the bottom.”
Mr. DeClute adds that many deals come with conditions in the current environment.
He recently represented buyers who purchased a house in the Beaches neighbourhood in mid-January and made the offer conditional on the sale of their existing four-bedroom house at 56 Fernwood Park Ave.
The agreement gave Mr. DeClute’s clients 40 days to sell their home, so they renovated a bathroom and had some rooms painted.
Last year at this time, Mr. DeClute estimated the value of the semi-detached house at $2.1-million. But with softer prices in the area this February, he set an asking price of $1,799,900 and an offer date.
The sellers received one offer and the house sold for $1.86-million.
If the homeowners did not receive an acceptable offer, they could have backed out of the purchase of the other home, Mr. DeClute says.
At popular price points for first-time buyers, broker Andre Kutyan of Harvey Kalles Real Estate Ltd. believes competition will help buoy prices.
He represented one couple with a preapproved mortgage agreement set to expire in March who recently purchased a townhouse in Newmarket for $940,000 after it had been sitting on the market since September.
Mr. Kutyan says the couple looked at the property when it was listed in the fall with an asking price of $950,000 but they weren’t willing to pay close to asking at the time and the seller was also hard-nosed on price.
This month, a new agent listed the townhouse with a low asking price and an offer date. A bully stepped up within a day or two and Mr. Kutyan’s clients then decided to join the bidding.
The combination of little supply on the market and a mortgage agreement set to expire prompted the couple to pay up, and their offer turned out to be higher than the bully bid.
That shift in attitude marked a change from even mid-January when the buyers refused to pay above $900,000, he says.
Nationally, sales in January dropped 37.1 per cent compared with January, 2022, according to the Canadian Real Estate Association. The average price fell 18.3 per cent in January compared with the same month last year.
Farah Omran, economist at the Bank of Nova Scotia, says the historically low inventory the market has seen in recent months is likely subduing sales and also bolstering prices against softer demand.
Ms. Omran sees room for prices to decline farther in Toronto and other markets across Canada, but population growth, resilient labour markets and the expected stabilization in the Bank of Canada’s policy rate are some of the factors that should support price growth in the long term, she says.
Despite the numbers, some Toronto sellers are still looking for peak prices, Mr. Kutyan says. In the luxury segment, many downsizers are holding firm.
Mr. Kutyan was recently asked to evaluate a high-end property in the Bayview and York Mills area.
“The meeting went very well until it came to my assessment of the value of the home,” Mr. Kutyan says. “The meeting got cut short rather quickly.”
Mr. Kutyan’s conservative estimate was that the house should be listed below $7-million.
The sellers listed with another agent for more than $8-million.
The benchmark price in the area has dropped about 12.2 per cent from the peak to about $3.744-million in January, Mr. Kutyan points out.
The home is one of the more expensive houses in the area and therefore may take longer to sell. Properties in that price range may sit for as long as one or two years if they are priced too high, which is a risky strategy in a downward market, in his opinion.
“Frankly I see trouble north of seven [million].”
Mr. Kutyan says even buyers at the high end are influenced by the level of interest rates. If they are moving up from an existing property, the amount they are likely to fetch has fallen as well.
“The value of the home they’re selling is coming down, plus higher rates, so it’s a one-two punch.”
Mr. Kutyan says the recent burst of activity may tempt some more sellers to enter the market but he believes many people intend to hold off until the second half of the year when some economists expect sales to strengthen.
For now, homeowners are only selling if they need to.
Downsizers are hesitating because their higher-end home has dropped in value more than the property they intend to purchase, he says.
“People who are on the market are on the market for a reason,” he says. “Nobody is out there fishing.”
Those who do want to list want to do so right away.
“When prices were always on the rise, they would be thinking about selling in three to six months,” he says. “Nobody’s planning two or three months in advance.”