TORONTO – Prospective homebuyers saw clear signs of a cooling Toronto market in April as the region’s real estate board reported sales dropped by about 41 per cent since last year and 27 per cent from a month earlier.

The Toronto Regional Real Estate Board said Wednesday that April sales amounted to 8,008 across the region, down from 13,613 during the same month last year and 10,939 in March.

The board attributed much of the decline to homebuyers who are taking a break from the market to reassess how they will change up their strategy as interest rates climb and reduce their buying power.

“We’ve seen a change in the market … business is still happening, but it’s not as crazy,” said Despina Zanganas, a Toronto Realtor with PSR Brokerage.

“What I’ve seen is a lot of properties just sitting on the market.”

Months ago, it was hard for her to even secure a booking to visit some condos listed for sale, but now viewings have plunged. She often sees condos receive only one or two visits a day from prospective buyers, leading her to believe demand has slowed.

The slowing is most pronounced in the area surrounding Toronto known as the 905, which includes municipalities such as Mississauga, Brampton, and Markham. TRREB found the year-over-year decline in sales was greatest in the 905 last month and was particularly apparent in the detached housing category.

Sales of detached homes in the 905 totalled 2,732, a more than 47 per cent plunge from the year before, while the market’s 1,033 townhouse sales amounted to a 44 per cent drop. There were 491 sales of semi-detached homes in the 905 last month, a 40 per cent fall from the year before, and the 685 condo sales decreased by roughly 32 per cent.

April detached home sales in the city of Toronto, which is linked to the 416 area code, reached 868, a 34 per cent drop from a year before, and semi-detached home sales fell 26 per cent to 311. Townhouse sales for the month amounted to 335, a 42 per cent fall from the same month a year earlier, while 1,488 condos sold in April, down 35 per cent from the same month in 2021.

The drops in sales also weighed on home prices, which have been climbing steadily for much of the COVID-19 pandemic and were often fuelled by bidding wars and intense competition.

April’s average home price for Greater Toronto reached more than $1.2 million, down from about $1.3 million the month before.

However, April’s average price was still up by about 15 per cent from the year before, when the average price was more than $1 million.

Zanganas believes it is taking time for sellers to adjust to the market’s current conditions.

“A lot of these sellers are not accepting the reality of what’s happening, so they’re still overpricing their properties and expecting like $200,000 over,” she said

Last weekend, she viewed several homes, which had offer dates and didn’t yield the kind of bids sellers were hoping for.

The sellers have since increased the price, but a lot of these homes have been sitting on the market for about 20 days, far longer than they would have earlier this year or last, when conditions were heated and homes sold in little time.

TRREB previously predicted the average selling price across all home types would be more than $1.2 million by the end of 2022.

“It is anticipated that there will be enough competition between buyers to support continued price growth relative to 2021, but the annual pace of growth will moderate in the coming months,” said Jason Mercer, TRREB’s chief market analyst, in a release.

Price growth and supply are being closed watched because buyers and brokers spent the start of the year bemoaning a lack of listings and predicting that the spring market would turn things around.

April’s new listings dropped by about 12 per cent to 18,413 from 20,841 during the same month the year before, TRREB found.

Many clients have yet to list their properties because they are anxious about how the market will respond to interest rates, the forthcoming Ontario election, Russia waging war in the Ukraine and soaring inflation, said Zanganas.

“There’s so much in the air right now that people just are waiting to see what happens and they’re waiting to pull the trigger, but there’s definitely a lot of people who want to get in.”

• This report by The Canadian Press was first published May 4, 2022
• Picture by Blake Wheeler on Unsplash

One of Canada’s “Big Six” banks is declaring next year to be “The Year of The Hike.” National Bank of Canada (NBC) chief strategist (and poet-in-residence) Warren Lovely is calling the first interest rate hike in just a few months. He sees the Bank of Canada (BoC) making its hike in March, way ahead of schedule. Over the next year, the overnight rate is forecast to recoup much of the ground lost during the pandemic. However, Canada’s real estate bubble will prevent it from going much further. Since the country went all-in on housing, it can’t pursue more aggressive policies like healthier economies. 

The Bank of Canada Will Hike Rates In March

Canada is expected to wind up its overly easy monetary policy pretty fast. Next year, National Bank sees five full, 0.25 basis point (bp) hikes. The first will be in March, bringing the overnight rate to 0.50% about a month before the BoC forecast. The only other institution to call a hike that early is BMO. However, mounting inflation pressures might force others to adjust in the coming weeks. 

The remaining four hikes to the BoC’s overnight rate are forecast throughout the year. The second and fourth quarters are expected to see one full 0.25 bp hike each. In the third quarter, they see two full hikes. Canadians should see the overnight rate at 1.50% in one year, 6x the current level. That’s going to be a significant change. 

Canada’s Real Estate Bubble Will Prevent Rates From Rising Too Fast

In 2023, they don’t see much more happening due to Canada’s real estate bubble. The bank only sees one more rate hike, topping out the country at 1.75% — the lower bound for the neutral rate. A neutral rate is the level of interest where money is cheap enough to support full employment but high enough to control inflation. According to the BoC’s last estimate, the neutral rate for Canada is between 1.75% to 2.75%. 

The reason NBC only sees the rate rising to the lower bound is “interest-sensitive demand in the economy.” It’s a friendly way of calling out Canada’s real estate bubble, which is now so big it weighs policy decisions. “We don’t see the BoC as wanting to crush one of the main drivers of Canadian economic activity,” said Warren. 

National Bank sees interest rates rising earlier than most other forecasts but ending faster. For example, Scotiabank sees interest rates climbing in the second half of next year. However, they also see rates rising closer to the middle of the neutral range, ending hikes around 2.25% in 2023. A slower start but higher rise compared to the NBC forecast. 

While National Bank’s forecast is lower, it’s higher than the current rate, and that’s going to throttle credit. The forecast is the same level before the recession began, which had slowed home sales. It wasn’t until the end of 2019 when the BoC began providing mortgage liquidity injections, that the market picked up.

Daniel Wong. (2021, December 11). National Bank of Canada Calls 2022 “The Year of The Hike,” Sees Rates 6x Higher. Betterd Welling Website.

How The Real Estate Industry in Canada Adapted Through The Challenges Of COVID-19

Before the pandemic began in Canada, the typical situation for realtors in selling properties is conducting open homes, arranging private showings, etc. However, Conducting Open Houses are currently banned by the Toronto Real Estate board because of the prevailing health hazard. While COVID-19 challenged everyone who wanted to sell property, the real estate industry transformed itself to adapt and resume the business.

The Challenges That COVID-19 Brought to Real Estate in Canada

The government of Canada and Ontario is doing everything they can to protect the health of citizens in Great Toronto and in Peel region of Ontario, including the restrictions for public gatherings. It challenged the realtors, builders, and preconstruction teams to find new sellers in the real estate market. The reduced competition also caused rarer discounts. It encouraged realtors to hold off buying and selling unless they have to.

Another challenge is the increased doubt of lenders and mortgage brokers. They are more careful than ever because of the rent strikes that existed in some places last April. The crisis caused buyers and tenants to face a loss of income from their businesses and Jobs, affecting their ability to pay.

The ‘New Normal’ In Real Estate

Everyone in the real estate industry is continually looking for solutions to operate safely, following government protocols. One new solution they have found is using technological advancements. Realtors conduct virtual open houses for their clients online through a live stream. They equip reliable technical gear to entertain every client and elaborate on the actual measurements.

The experience of an actual open house is different from a virtual one. Because clients tend to gather at a specific schedule, the video conference only requires less than an hour to view the property. However, technology still cannot replicate the emotional element that a real viewing can provide. These changes are gradually becoming the “new normal,” while the internet serves as a standard media.

The decline of sales forced some realtors to conduct strategies such as going door-to-door to search for a new seller or a new buyer. This practice puts everyone’s health at risk, and these agents can face disciplinary actions from the government. Thus, the best way to find a client is by increasing the online presence of the property listing.

Photo by Gus Ruballo on Unsplash

How to the find the best Real Estate Agent in Canada? Offer presentation and Negotiations explained for home buyers in Canada

For the buyers and specially First Time  home buyers in Ontario, Canada:

Many buyers – when making an offer to buy a property, house  in Canada are not fully aware as how the offer presentation/negotiation system works or what is the common practice  for the sellers to deal with their offers.

What is an Offer ? Offer is the common term for an Agreement of Purchase and sale (APS) which is prepared by the Real Estate Agent or your Realtor for you and to be presented to the seller on your behalf. Usually the offer is presented through the sellers agent or the listing agent in Ontario, Canada.

In Canadian real estate home buying or selling process, usually – Buyers and sellers never meet for negotiations face to face or even talk directly to each other.

So you are all dependent on your Real Estate agent who is representing you in the process.

How much Commissions do I have to pay for buying a house/Condo? In Ontario Canada 99% Time you don’t have to pay any commission or any kind of fee to your Real Estate Agent, When you are buying a house or a Condo apartment. Your agent  gets paid through the seller. In other words seller pays the commission for their Real Estate agent as well as for the buyer’s agent.

So, if you are a home buyer you get the free services of your agent. Your REALTOR is the most important person in your home buying process in Ontario, Canada. Because he is the only one dealing on your behalf. You trust him with the Biggest purchase of your life.  It is all about the knowledge, experience, professionalism, honesty  and skill set of your real estate agent who is working for you.

In realty most situations your agent must also work as your consultant, but in 95% cases they fail to deliver honest and valuable advice.  As on October 2022 there are around 70,000 agents in Greater Toronto area (GTA) and out of these 5% of these 70,000 agents do 95% of Total business. So, 95% of GTA agents are doing hardly 1 to 6 deals in the whole year. In other words either they are new, not very knowledgeable and successful or may be a part time agents. So, you need to find an agent who is at least 10+ Year experienced and has a track record of doing at least 25 deals every year and on top of that enjoys a great ranking on RankMyagent.com , Only most authentic Web portal approved and recommended by REALTOR.CA and RE/MAX.CA

As often, many agents are more concerned to make the deal happen ASAP so that they may get paid.

It is very hard to comprehend for the first time home buyers or even if you are buying a property after long time that how important is the selection of a right and good realtor/agent.

Now the question is: How to find a great and honest real estate agent in Greater Toronto Area, Brampton, Milton and Mississauga?

Now Let us look at the different scenarios of how your offer or Agreement of Sale and Purchase is dealt with.

For the protection of buyers and consumers in Ontario, Canada the format of the offer document is prescribed by the Ontario Real Estate Association known as OREA.

Scenarios # 1 : Yours is the only  offer on the table.

Your (Buyer) agent will find out from the seller’s agent that yours is the only offer in the hand of sellers–that means no one else is competing against you in this transaction. That is the best situation for you to negotiate with the Sellers. (Well many factors will decide – how much you may negotiate).

Scenarios # 2 : Yours is the NOT the only  offer on the table.

This is NOT a good situation for you as now you are going to compete against the other offer.

Now, What will happen and how your offer will be dealt with ?

• Sellers agent is NOT supposed to inform your agent – what the value (Price and other terms) of this offer.
• You may only find out total # of offers you are competing with.
• Sellers will and have to pick and choose  only one offer out of multiple (2 or more) offers to work with

Sellers will select the best offer in their interest and situation, based upon many merits and reasons.

1. Price on the offer
2. Conditions in the offer.
3. What are the implications? 
4. Sellers will and have to pick and choose  only one offer?

That means if yours is not the best offer – it will not be picked – in this out of multiple (2 or more) offers to work with.

The whole process in multiple offers or commonly known as bidding war  situations is very complex. This is the real acid test of your Realtor and this is the time you will find out if your agent is doing his/her job most honestly and only in your best interest.

It is the time when most agents are unable to handle it or cope up with it. 

At such times , Only a highly skilled, experienced and honest agent may deliver the best results in your best interest.

Interested to understand the whole process better?

Have questions–What if?

Ask for the information to attend a “ First Time Home Buyer Seminar in Ontario” or for a Face to face meeting for a clear understanding of the home buying process in Canada.

Get in touch with highly acclaimed and RE/MAX International -Hall of fame, Platinum Club award winner RE/MAX  TEAM Paliwal today !