Summer is typically a quieter time of year for property sales.
But this summer is feeling slower than normal, said Jennifer Scaife, a sales associate with the Desmond Brown real estate team. Buyers are waiting for lower prices, and sellers are only moving when they have to, she said.
“It’s definitely a lot quieter… than you’d expect,” she said.
The slide really began in mid-April, Scaife said, when house prices began falling in a matter of weeks, closing deals plummeting, prompting sellers and buyers to pause and reassess their plans.
“Buyers in particular are just a lot more cautious now,” she said.
Home prices in the Toronto area have been falling for several months, and home sales are down 41 percent year-on-year. With an outsized Bank of Canada rate hike around the corner, homeowners looking to sell might be wondering if they’ve missed their moment.
John Pasalis, president of real estate brokerage firm Realosophy, said the latest home price and sales data came as no surprise.
The combination of high house prices and rapidly rising interest rates has put some people under pressure to sell quickly, especially if they’ve already bought their next home, he said, sending prices down rapidly month after month.
But when you’re feeling the pressure, Royal LePage CEO Phil Soper said it’s important to look at the bigger picture. Most sellers also plan to buy, he said – so if you sell your home for a little less than you planned, you’ll likely buy your next home for less too.
“For most people, a correcting market is a good time to sell when it’s moving sideways or up,” he said.
But that doesn’t mean now is the time to act without caution.
As prices trend down, Soper says conditional listings are becoming more common and banks may require a second valuation if your home is on the market for an extended period of time.
In some cases, a second review can result in a large price drop just a few weeks later, Scaife said. This leaves more opportunity for conflict in the sales process.
Even if the paperwork is signed, people may be pulling out of real estate deals or trying to renegotiate during this downturn, Soper said.
Now, as the market cools and in the face of uncertainty, Pasalis said more people will — and should — try to list and sell before they buy.
But don’t rush into a sale if it’s not the right time for you or your family. Scaife said this near-term correction is just that — a dip, a slowdown, but not a cliff.
After all, this is Toronto.
“Toronto is really just the market that doesn’t take a hit,” Scaife said. Even if buyers and sellers take this time to reevaluate, “they aren’t frozen yet.”
Soper agrees with Scaife: In a market like Toronto, where demand remains high, prices can only go so low. Interest rates are still relatively low by historical standards, he added, and he doubts they will match previous highs.
“We are now in a much more stable part of the corrected market,” he said.
“Prices are falling rapidly from where they were in February, March. But they are stabilizing at lower levels because demand is still there and inventories have not exploded.”
Also, the prices are still increasing year after year. So unless you bought your home at the top of the market, it’s guaranteed to have risen even over a couple of years, Pasalis said.
“It’s not like we’ve plummeted to pre-pandemic levels,” he said.
It might take a while for prices to recover, but Pasalis agrees that Toronto’s unbalanced, expensive market hasn’t fundamentally changed.
“There will be a bottom” for this downturn, he said.
The big challenge for many sellers will be letting go of the price they were hoping to sell at, Pasalis said. If you really need to sell, then waiting isn’t the best approach — swallow your disappointment, make your home stand out and get the best possible price, he said. Because even if you’ve only owned your home for three or four years, “you still made money.”
So, despite the stress and uncertainty, the advice remains the same: when the time is right for you, sell.
“It’s been a crazy two-and-a-half years and this is a time when sober thinking makes perfect sense,” Soper said.
“But the underlying strength of the real estate market, particularly in southern Ontario, hasn’t diminished one bit.”
Rosa Saba is a Toronto-based business reporter for the Star. Follow her on Twitter: @rosajsaba