The Toronto real estate market has been laughably inflated for what feels like forever but all signs are pointing to a legitimate nosedive in home sale prices. Finally!
Click here to read the full Toronto Real Estate Board ‘Market Watch’ report.
The Toronto Star reported, care of real estate brokerage Realosophy, that home sales are currently down 40% week-over-week and home sale prices are down 26% year-over-year. The average home price last month was $863,910 — $111,810 more than last May when houses and condos averaged $752,100 — according to month-end statistics from the Toronto Real Estate Board (TREB) released Monday.
“This is definitely a turning point for Toronto’s real estate market,” John Pasalis, president and broker at Realosophy.com, told BNN in an email.
“New listings are up significantly and demand is cooling, which is what caused prices to fall from their April peaks.”
Pasalis thinks that a higher rate of investment buyers in York Region may be one reason that area has seen a dramatic drop since the province announced a foreign buyer tax in April.
“This is not doom and gloom. This is not the end of the world. This is an influx of inventory coming into an extremely busy market,” he said.
It means buyers have choices and can negotiate conditions on their offers, like home inspections or new windows and doors.
Real estate agents and brokers are always positive
Whether it’s a boom market or a bust market, real estate professionals are always going to tell sellers and buyers that it’s their advantage — always! It’s their job.
But the truth is, the advantage belongs to the buyers who now have more room for negotiation with more inventory on the market. Sellers, alternatively, are in a more competitive position which may drive their sell price down considerably.
However, Pasalis admits that foreign buyers aren’t likely behind the whiplash-inducing turnaround across the Toronto region, which was so hot the first four months of the year.
“The decline we’re seeing now is all consumer psychology. It has nothing to do with any macro-economic indicators or variables,” he said.
“The run-up was people getting anxious, feeling they can’t buy and the need to rush into the market. That pushed prices through the roof. Similarly the decline is just people’s attitudes about the market. That’s the hardest thing to predict,” he said, adding that he doesn’t expect to see a change before the fall.
“The big bet in September is going to be, ‘how confident are Toronto buyers?’” said Pasalis. “Are they going to be thinking, ‘now’s a good time to jump in,’ or are they thinking, ‘this is still insane, I’m going to wait this out’?”
In the meantime, buyers who only a few short weeks ago expected they would get bidding wars on their homes are pulling them off the market and listing them at higher prices — closer to what they hoped to actually get.