BY: MAURICE ANDERSON
Only 36% of freehold properties that sold in the city of Toronto last week changed hands at prices above the asking price. That compares with 84% in early April and 66% last year at this time. The condo segment has fared better than freehold recently, with 39% trading above asking last week. After watching the Greater Toronto Area market cool this spring and, after visiting a growing assortment of houses that are better and cheaper than those available a month ago many individuals no longer feel the same pressure to make a choice. Data compiled by the Toronto Real Estate Board shows the number of homes sold in the GTA fell 50% in the first two weeks of June compared to the same period last year. The slowdown comes on the heels of a 20% drop in sales in May compared to May last year. The drop began in earnest after the Ontario government introduced new regulations in April to cool the housing market in the Toronto region, including a new 15% foreign buyer’s tax.
Buyers have more choices, more time and even a little more negotiating power but they should not expect a steal. We are moving towards a more balanced market. A lot of buyers misunderstand some of the data. They’re assuming there’s some sort of crash, some sort of huge buying opportunity. There is an opportunity to buy with much less competition but there certainly isn’t an opportunity to buy at a major discount. It could also be the frustration of sellers who listed their home this spring expecting to attract cut-throat bids from desperate, over-extended buyers instead they’re seeing fewer showings and fewer offers with a longer selling time. Toronto area home prices decreased approximately 7% compared to April but remained about 15% higher year over year averaging $863,910. Even as the market has soared, there were some month-to-month price declines, said Jason Mercer, director of market analysis for the Toronto Real Estate Board (TREB), which released its month-end May statistics on Monday.
The TREB poll also found there were less first-time homebuyers looking to buy in May than there was last fall when they conducted a similar survey. The real estate board reported that 40% of likely buyers indicated they would be first-time buyers as opposed to 53% in the fall findings. “It makes sense that some first-time buyers have decided to, at least temporarily, put their decision to purchase a home on hold,” Mercer said. “First-time buyers are more flexible and can take a wait and see approach. They could also re-enter the market quickly once they make the decision to purchase.” The real estate board’s president, Larry Cerqua, noted that, despite the dip in sales and increase in listings over the past two months, there are still many people thinking about buying a home this year. “This could reflect the fact that new policies, like those contained in the Ontario Fair Housing Plan, can have an initial psychological impact before long-term impacts become clear,” Cerqua said.
If it is feasible, get your home inspected prior to listing your home for sale. It’s better to be proactive in this market if the repair is not very expensive to fix. It is best for you to know what the inspector is going to find and be able to fix. The more you know about your own home the more power you have as a seller and negotiating price. There was a time when people decided we need a bigger house so we’re going to sell this spring and move up to a bigger house. For the last few years a lot of people weren’t able to do that and now they can.