The semi-detached house 910 Eglinton Ave. East sold for $1.190-million after being listed with an asking price of $1.199-million. No bids landed for nearly three weeks.Bosley Real Estate Ltd.
National Bank of Canada economist Daren King sees an intriguing trend emerging in real estate this spring: housing markets in various parts of Canada are evolving differently under diverging economic forces.
That’s a departure from the years between 2020 and 2024 when historically low interest rates and the lifestyle choices of buyers drove sales and prices across Canada, he says in an interview.
Looking ahead, he expects the change in course to continue, with different macroeconomic factors, such as job creation, to influence each market.
“It won’t only be a story of interest rates and consumer preference changes,” he says.
The Canadian Real Estate Association reports that national sales dipped 1.7 per cent in April from March on a seasonally adjusted basis. New listings, meanwhile, rose 2.8 per cent in the same period.
The slowing sales brought months of inventory to 4.2 at the end of April compared with 3.9 at the end of March. “Months of inventory” measures how long it would take to sell all properties on the market at the current pace of sales.
The national average sale price edged down 1.8 per cent in April compared with the same month last year to stand at $703,446.
Olivia Cross, North America economist at Capital Economics, notes that the sales-to-new listing ratio is holding back house price inflation. She has trimmed her expectations for house price growth to three per cent this year compared with her previous forecast of six per cent.
“While stretched affordability is weighing on demand, we suspect subdued sales also reflect buyers biding their time ahead of potential interest rate cuts,” says Ms. Cross, who expects the Bank of Canada to begin loosening in July.
Drilling into the national numbers, Mr. King says sales are rising or dropping in several smaller regional markets depending on factors such as employment, affordability and demand.
In Alberta, for example, sales are stronger than they were during the pandemic because of robust employment numbers.
Edmonton, Regina, Saskatoon and Winnipeg all had soaring sales in April compared with April, 2023.
On a month-over-month basis, the Greater Toronto Area saw sales drop a seasonally-adjusted three per cent while the Greater Vancouver Area posted a gain of 5 per cent in the same period.
In the Toronto-area market, real estate agents are seeing three distinct price tranches: the entry-level slice around the $1-million mark, which still has brisk sales, the upper stratosphere, where high-priced properties are trading hands and the middle segment, which is patchy.
Patrick Rocca, broker with Bosley Real Estate, has noticed a shift in the Toronto market in recent weeks. Rising inventory allows house hunters to be circumspect.
“Buyers understand that they’re not under the gun,” says Mr. Rocca, who works mainly in the midtown Leaside and Davisville area.
Recently he has sold three properties with multiple offers – but all three sold below the asking price.
At 910 Eglinton Ave. E., Mr. Rocca sold a semi-detached house for $1.19-million after listing it with an asking price of $1.199-million. No bids landed for nearly three weeks.
“All of a sudden we got two offers,” says Mr. Rocca, “and it sold under asking.”
Of 26 listings in Leaside in mid-May, he says, only three had asking prices under $2-million.
With more supply between $3-million and $6-million, he says, many are sitting.
“That’s where I’m seeing the logjam of listings.”
He says some sellers are still setting aggressive asking prices, but when buyers don’t jump on it, a listing can appear stale.
“If you’re not realistic I don’t even want to talk to you,” he says. “You’re going to burn your property.”
In the city’s west end, Luke Dalinda, real estate agent with Royal LePage Real Estate Services, has observed sluggishness in the bracket between $2-million and $4-million.
Meanwhile, he recently represented a pair of buyers who found themselves in competition for a house with an asking price of $9.6-million.
The five-bedroom house at 77 Baby Point Cres. was built before ravine conservation rules came into effect, says Mr. Dalinda. As a result, the property has plenty of table land for the pool, terraces and gardens on a promontory above the Humber River.
Mr. Dalinda’s clients beat the rival bidders with an offer of $9.85-million after eight days on the market.
“It was a process, but they won it in the end.”
Mr. Dalinda says the three-storey house offers original features such as wainscotting and stained glass windows in 8,244-square feet of living space. It has been extensively renovated over the years, he adds, noting that many buyers are less willing to take on a project than in the past.
His clients were the first to the table but he was not surprised when another set of buyers submitted an offer.
“It’s just a captivating home – it’s so unique and so rare and impossible to duplicate.”
Mr. Dalinda says houses of a similar size are listed in the same price range but the properties that move quickly stand out.
“They have to have some sort of wow factor.”
Looking at the various price strata in Toronto, the luxury market has completely different dynamics, Mr. King at National Bank says, because buyers in the upper echelons often don’t require financing and typically have a portfolio of assets.
They don’t rely on credit the way people in lower income brackets do.
“They might even be advantaged by those interest rates.”
The dynamics in the middle range are more complex, he says, because the buyers are often moving up from a condo apartment or house. In that case they may rely partly on financing and partly on a capital gain on the property they currently own.
The timing of a transaction is important because they not only need to sell an existing property but also to purchase a new one.
Those trading up are likely to remain cautious if their current house is adequate.
In the lower price points, consumers may have an imperative to buy because they are renting or living with family.
“If you’re living with your parents or you’re having a kid, you have to move,” says Mr. King. “There will always be people in that market.”
Overall, Mr. King expects to see a bounce in sales when the Bank of Canada cuts its benchmark interest rate. That move will have a modest psychological effect, he says, but more importantly it will lessen the affordability challenges holding back many consumers.
“I think it may be less of a mind game and more of a reality check,” says Mr. King.
While the first reduction may be small, the move will allow a larger pool of buyers to qualify for a mortgage, he says.
By comparison, the rebound in sales in December and January was more psychological, he says.
At the time, prices had softened and many buyers were optimistic that interest rates would decline in 2024.
As for sellers, Mr. King says rising listings may signal renewed confidence among homeowners that they will be able to complete a sale in the current market.