Recent data from the Toronto Real Estate Board shows that home sales in the GTA in September were down 35 per cent compared to the same month in 2016.
As a standalone statistic, it’s certainly an eye-opener, but context is needed. The drop looks quite alarming at face value, but you must consider that it’s a decrease from a period when the market was scorching hot. So hot, in fact, that the government saw fit to intervene this year with its cooling mechanism, the 16-part Ontario Fair Housing Plan.
Those measures received plenty of criticism at the time, and the long-term implications are still unclear, but the immediate aims appear to have been met. Home prices are no longer increasing in double digits each month, while listings have increased markedly.
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It’s a change in sentiment that Zoocasa agent Chantel Crisp has certainly noticed in both buyers and sellers.
“Buyer urgency has definitely cooled, but there still are a lot of buyers out there that want to shop,” she says. “Before it was shopping to the point of people would almost buy anything. Now they have more options, so they want to look around more.”
Buyers are therefore showing a lot more patience in the pursuit of a home. With increased inventory, they simply have more options than was the case this time last year. This doesn’t mean that all the power is in the buyers’ hands, however, as Crisp outlines.
“Sellers need to be aware that buyers are hearing a lot of different stories in the media about the market being down,” she says. “They are hearing prices are down 10-15 per cent, so when they see a listing, they start to calculate and subtract 15 per cent from their offer. That’s not the proper way to look at things.”
How to Counter a Low-Ball Buyer Offer
A low-ball offer can be frustrating for a seller, but Crisp advises to stay calm and remember that this is a process. Something as valuable as a home in the GTA normally sells for what the market dictates at that time. If a buyer puts forward an offer below fair market value, they likely aren’t receiving professional guidance.
“If a buyer isn’t being properly advised by their agent, they may have a false sense of hope about what the seller might take,” she says. “If a seller gets a really low first offer, they shouldn’t take it personally. They need to understand that this is business, it’s not an attack on their home that they spent years taking care of.”
Moving Past the Summer Sale Mentality
However, Crisp adds that some sellers do need to update their expectations. From a buyer’s perspective, the price of a home listed in October should be lower than that same property back in June. While only a few month’s difference, the market’s shift means potentially thousands of dollars of savings, and it all comes down to the changing market sentiment that has taken hold over the summer.
“It’s important for buyers to realize that the sellers that are in the market right now are pricing their homes now for summer prices,” says Crisp. “In the summer sellers were still pricing using spring prices that weren’t realistic anymore.”
Have a Solid Sales Strategy
As a sales agent, advising your client on how to accurately price your home is an important part of the job. The starting point in this process is simply having a look around the neighbourhood for recent home sales. The properties may not be the same, but you will likely be in the same ballpark when it comes to pricing your home.
“We assess the market based on recent comparable sales; if we were pricing a house in June, the recent comparables sales would be from March, April, June, when house prices were still very inflated,” says Crisp. “Now we are in October, the recent comparables throughout the summer are more normal, so they are usually priced around what they normally sell for.”