A surge in real estate listings in the Greater Toronto Area is helping to calm potential buyers as the anxiety shifts to sellers who now have to wonder if anyone will show up on offer night.
The hottest properties are still selling quickly and prices are hitting new milestones: This week a three-bedroom semi-detached house in east-end Toronto sold for $1.289-million.
Real estate agent Kevin Smith of ReMax Hallmark Realty Ltd., who represented the sellers, listed the house with an asking price of $799,900 and set a deadline for potential buyers to register their bids. Nine parties came to the table and the sale price for 27 Mountnoel Ave. established a record for that type of house in the Greenwood-Coxwell area, he says.
But Mr. Smith notes that the house drew lots of attention because it is located on a dead-end street with a park at one end. It's extensively renovated and visitors were enthusiastic about its welcoming feeling, he adds.
"It appears that buyers are gravitating towards the nicer listings," he says. "Some properties aren't selling as quickly because everyone is still expecting top dollar."
He adds that even houses that didn't show well were being scooped up a couple of months ago, but now the less-appealing properties are being passed over without offers.
Still, Mr. Smith is seeing activity pick up again after a lull that hit the market last month. In April, many house hunters moved to the sidelines as politicians at various levels of government met to discuss whether they needed to tap the brakes on runaway price growth in Toronto's real estate market. At the same time, listings were scarce and some potential buyers were waiting for new offerings to arrive along with spring bulbs.
On April 20, Ontario Premier Kathleen Wynne's government unveiled a package of 16 reforms, including a 15 per cent tax on foreign buyers, expanded rent controls and a promise to grant the City of Toronto the power to tax vacant homes.
Numbers from the Toronto Real Estate Board show that listings jumped 33.6 per cent in April compared with the same month last year. That's a huge shift from previous months, when listings had shrunk to about 50 per cent of 2016 levels.
The average price in the GTA soared 25 per cent in April compared with April, 2016. The average price for a detached house, however, edged down from the benchmark set in March.
Agents say sales in the segment for detached and semi-detached houses stalled in recent weeks while trading in condo units remained on fire.
Jimmy Molloy, an agent with Chestnut Park Real Estate Ltd., believes that the urge for caution from politicians combined with the jump in listings has led buyers to feel a little less pressured.
"There's almost a psychological warfare mounted by the government to get everyone to step back and be a little more thoughtful."
He doesn't expect the foreign buyer's tax to have a large impact. There is an influx of foreign money into the GTA, he says, but many of the buyers have kids going to school in Canada. Such buyers are exempted from paying the tax.
Mr. Molloy says the 33 per cent year-over-year price increases posted earlier in 2017 are not sustainable, and he's glad to see a little relaxation in the market. Buyers tend to be more cautious, he says, and the "win at all costs" mentality has diminished.
"They're taking their time and being a lot more logical on the purchase – and not emotional," he says. "Because there's a little bit on the market, there's not the crushing immediacy."
Mr. Molloy worries that government policies, including rent controls, can end up harming the market.
"It's very difficult to meddle in the free market because when you do that you put the brakes on too hard."
He would like to see an expanded subway system and better infrastructure throughout the GTA. That would help housing development, in his opinion.
Mr. Molloy recently sold a grand house in Rosedale with an asking price of $3.895-million. The home, which had been divided into a triplex, drew five offers and sold for $4.5-million. All of the competing bidders were local, he says.
Still, he sees the typical spring mentality developing: house hunters who have been deprived of listings for so long feel immediate relief when they see more "for sale" signs appearing on lawns.
"Now there's more supply, they don't want to buy them either."