Toronto's real estate market has been all over the place in recent months, with contradicting trends and forecasts leaving prospective buyers and sellers more confused than ever.
Traditionally, May represents the peak of sales and prices in the Toronto-area real estate market. This year may be different. A brisk start to April lost some steam in the second half of the month as buyers remain steadfastly opposed to getting swept up in any mania. With an abundance of new listings streaming onto the market, potential buyers are now taking their time.
Home buyers were hoping that a decline in interest rates would lower their mortgage payments and make buying a home a little bit more manageable. Sellers, on the other hand, were expecting rate cuts to drive up the value of their homes as that buyer demand returned.
But things continue to trend in the opposite direction, with a radical surge in the number of homes (condos specifically) sitting on the market, fewer and fewer people buying them up, and now, a decline in bidding wars, which the city was once notorious for.
According to a new report "the tables have turned" in the GTA, at least as far as the phenomenon of bidding wars are concerned.
In March, homes in 43 per cent of communities in the region were, on average, selling above the listing price. But as of April, that figure has fallen to 39 per cent. The first time this year that there has been a month-over-month downward trend in this measure.
But despite the soft sales volume, the market for houses remains relatively competitive in certain areas. Some homes that are priced well are selling quickly, many with multiple offers, and it’s not just starter homes that are selling quickly. Higher-end end homes (up to $5M) are also selling relatively quickly if they are priced well.
Unfortunately, the condo market is feeling a chill due to a surge in the number of active listings.
Despite all this, prices have somehow yet to drop, which is in turn continuing to keep many buyers out. And those few who are in the game are starting to see the market moving more in their favour.
Many Bay Street economists are forecasting that the central bank will lower its policy rate in June or July, but no one knows for sure if this will happen.
Policy, too, is to blame for the state of things, with Toronto and Ontario both home to high land transfer and other tax rates, and things like the foreign buyer ban— designed to keep homes for people who actually live here — also potentially having some impact.