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Hesitant home buyers tap the brakes on April sales drive
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9 Craig Cres. in Leaside, Toronto.The Print Market
Traditionally, May represents the zenith 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.
In early May, new listings are streaming onto the market, which in
turn allows potential buyers to bide their time.
Andre Kutyan, broker with Harvey Kalles Real Estate Ltd., says the
pace seemed to change almost week-by-week in some neighbourhoods
during April. The most noticeable shift came around the middle of
April.
"It's like somebody poured cold water on the hot fire," he says.
Sales in the Greater Toronto Area dipped 5 per cent in April from the
same month last year, according to the Toronto Regional Real Estate
Board, while new listings shot up 47.2 per cent in the same period.
Active listings soared 74.4 per cent last month compared with April,
2023.
Daren King, economist with National Bank of Canada, notes that
seasonally adjusted sales fell 3.4 per cent in April from March. That
marks the third straight monthly decline after sales rose in December
and January on the strength of a drop in fixed mortgage rates.
Mr. Kutyan noticed the sporadic nature of the market in Toronto's east
end, where he is working with a first-time buyer with a budget of
about $1.2-million.
Mr. Kutyan began searching for semi-detached homes in neighbourhoods
around East York, Danforth Avenue and Riverdale in the $900,000 to
$1.4-million range.
But as they looked at houses, one after another sold above the asking
price with multiple offers.
By mid-month, the aspiring buyer was cautious about submitting offers
because so many properties were selling in bidding contests.
Around that time, a two-bedroom east-end home was listed with an
asking price of $1.099-million. Based on recent comparable sales in
the area, the house was likely to sell for approximately $1.3-million.
The client decided against entering the fray.
The property received two offers and sold for $1.2-million.
"My client was kicking himself," says Mr. Kutyan.
He figures the same cautious approach to competition may have
dissuaded other potential buyers.
"They face the reality of multiple offers and some of them get
discouraged," he says.
According to his number crunching, properties in his client's search
area and price bracket were selling for an average of $1,193,878 and
115 per cent of the asking price in the first half of April.
The average number of days on market was eight.
In the second half of the month, the average price was $1,198,136,
which amounted to 111 per cent of asking. The average number of days
on market was 12, or 50 per cent longer, which suggests that many
properties were not selling on scheduled offer dates, he points out.
Mr. Kutyan says listings in the second half of the month also jumped.
Often when buyers see more "for sale" signs popping up, they feel less
urgency.
Wahi, a digital real estate platform, measured the action throughout
the Toronto area and found a surprise pullback in competition in
April.
After two consecutive month-over-month increases, the share of GTA
neighbourhoods in "overbidding" territory fell to 39 per cent in April
from 43 per cent in March.
Wahi compares the differences between median list and sold prices to
trace the trends in neighbourhoods and analyze which have a greater
number of properties selling above asking or below.
Suzanne Lewis, a real estate agent with Keller Williams Advantage
Realty, says the designers and suppliers who stage properties with
furniture are also reporting a quirky month.
Ms. Lewis recently booked a stager for a house she was planning to
list for move-up buyers who were bidding on another property. She had
to cancel the preparations because the clients were unsuccessful in
the competition.
Stagers and photographers have been hearing the same from many agents,
she says.
Ms. Lewis recently sold a four-bedroom house in Riverdale with
multiple offers after she teamed with Lou-Lou's Flower Truck for a
pop-up outside the weekend open house.
"We wanted to get more eyeballs on this listing," she says. "It
created an energy and a buzz."
Open this photo in gallery:
Andre Kutyan, who listed the home at 9 Craig Cres., said choosing the
offer date is important so prospective buyers aren't distracted by
other things, such as the tax-filing deadline and hockey playoffs.The
Print Market
Ms. Lewis says she would not have used the same strategy last fall
when potential buyers were worried about rising interest rates.
"It was about price," she says of that moribund market. "People were
frozen with fear."
The challenge now, she says, is that aspiring move-up buyers are
having trouble finding properties that meet all of their needs. High
interest rates and rich prices also hamper sales.
"Unless it ticks all of the boxes, they will just continue to live in
the uncomfortable. There are not a ton of buyers willing to pull the
trigger on something that's just okay."
In Leaside, Mr. Kutyan sold a two-storey, detached house for
$2.05-million in May after listing it with an attention-grabbing
asking price of $1.795-million.
After Mr. Kutyan set a date for reviewing offers, four bidders
competed for the house at 9 Craig Cres.
Choosing the right offer date is important, he says, so that potential
buyers are not distracted by the tax return filing deadline or NHL
hockey. Before the Toronto Maple Leafs were eliminated from the
playoffs, Mr. Kutyan made sure he never took offers on game day.
"You've got to make sure that everything is working for you."
Meanwhile, some sellers are planning to list after the Bank of Canada
begins to cut its key interest rate, Mr. Kutyan says.
Listings for high-end properties in Lytton Park, Lawrence Park, Forest
Hill, Rosedale and other upscale neighbourhoods are light.
"They say, 'we're going to wait. We think it's going to get better.'"
Many Bay Street economists are forecasting that the central bank will
lower its policy rate in June or July.
Mr. King at National Bank points out that the population is surging
but affordability challenges persist in the GTA and the area's economy
is losing steam.
"Toronto's unemployment rate has worsened significantly in recent
months, and is rising at a faster rate than that observed across the
country as a whole," Mr. King says in a note to clients.
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