Are the days of bidding wars and panicked buyers going hundreds of thousands of dollars over the asking price a thing of the past? At least for the time being, the answer appears to be yes, as some measure of normality has returned to Toronto real estate. The average price of a home in the region still exceeds $860,000, so while price growth has slowed down somewhat, buyers can still expect to shell out a considerable chunk of change when buying a home.
Selling Requires a New Strategy
Doug Vukasovic is an agent with Zoocasa and the changes in the marketplace since the Fair Housing Act certainly haven’t escaped him. In selling a home, it now requires a different strategy than just setting the price artificially low then waiting for the inevitable bidding war to kick in.
“There are still people that try to price like that, but it’s not as effective as it once was,” he says. “The way the market has turned right now, sellers are more likely to use a conventional pricing strategy using the most recent comparable home sales in the neighbourhood.”
A Rapidly Changing Market
In the process of buying and selling homes across Toronto, Vukasovic is able to see first-hand how the overall market has shifted. He recently represented a buyer that purchased, 6,500-square-foot, five-bedroom home in Rosedale for $7 million – but selling homes isn’t as easy as it was earlier in the year, as he outlines.
“I have a condo unit right now at King West that has been on the market for a couple of weeks,” he says. “The same property, if it went on sale at the beginning of April, would probably have sold in three or four days.”
It was the process of trying to sell this particular property that he realized the Ontario government’s measures in April had put some power back in the hands of the buyers.
“We tried doing what everyone else had done in that building, in terms of setting it up for a bidding war,” he says. “When it came to offer presentation night, we only had one offer, so that means the buyer will try to take advantage of the situation and really try to leverage.”
The offer in question was significantly below what the sellers had hoped for, so Vukasovic went back to the drawing board. The property was duly placed back on the market, but this time priced at a level comparable to other similar properties in the neighbourhood.
More Choice for Buyers Means a New Dynamic
Another factor working against the seller was the fact that buyers now had more choice in this area than was previously the case.
“In that particular area inventory was up by 12 per cent; I compared the area before and after April 20,” explains Vukasovic. “That change saw 49 per cent fewer sales and prices had decreased by 9 per cent. It was up on last year in terms of price, but it was trending downward. I expect we are going to see that for the next month or two”
What’s Next for Toronto Real Estate?
Trying to assess where Toronto’s property market might be headed isn’t an exact science, but there is a pretty obvious comparison: Vancouver also experienced rapid price growth that saw the province step in to curb foreign speculation. The legislation did have the desired effect, at least initially, but the West Coast city appears to have regained its momentum when it comes to home price appreciation.
“The foreign buyers’ tax was introduced in Vancouver last year in August, the market for condos really slowed down up until the end of the year,” says Vukasovic. “We saw it pick back up in February. The condo market is doing quite well there again, so if we follow a similar path here, we will have some slow months then pick up again. Right now could be a good time for buyers.”