TORONTO – Potential buyers who are tired of facing dozens of competitors for a home are getting some relief from the frenzy of the past two years.
Toronto, Vancouver and Montreal brokers say plenty of properties are seeing lower bids than they were just two months ago when buyer anxiety was still driving frantic bidding wars, but the slowdown in bids has not yet led to significant price drops.
Sarah said: “With so many small apartments under 1,000 square feet, or semi-detached properties valued at $1.5 million or even just under $2 million, I find for sure that there are fewer people who have bid. Compared to February” Rowshanbin, broker with Chestnut Park Real Estate Limited in Toronto.
“So, since I was going to bid against more than 15 people, I might now bid against four or five people.”
The Toronto Regional Real Estate Council reported earlier this week that the number of April sales on the market was down about 41 percent from the same month last year and 27 percent from March.
The median home price was more than $1.2 million, down from $1.3 million the previous month, but still about 15 percent higher than a year earlier, when the median price was more than $1 million.
The lower bids are fueling potential buyers who Roshanbein has noted feel too nervous to enter the market if conditions change quickly, preferring instead to wait on the sidelines until they get a better sense of how weak the market is and how much. Price changes will affect their purchasing power.
“They want to sort of reassess how they’re going to deal with this new market at higher interest rates, but I don’t think they’re going to stay on the sidelines for very long,” she said.
Marc LeFrançois, broker at Royal LePage Tendance in Montreal, has similar observations.
He’s recently seen homes sold after receiving an offer from one or a few brokers, instead of the 20 brokers he’s used to for months.
Last month, home sales in Montreal fell 17 percent from a year earlier, making it the least active April the market has seen since 2017, the Quebec Professional Association of Real Estate Brokers said.
Despite signs of a weak market, buyers didn’t get much relief. Median single-family home prices rose 16 percent to $580,000 in April 2021, up even from March 2020, when prices hit $566,000. The median apartment price increased 15 percent year-over-year to $410,000.
But the lower number of bids that some properties receive has made some LeFrançois clients wonder why they should bid so much on asking price if sales drop.
“Buyers are somewhat hedged. They worry when they are buying a home and it hasn’t been under multiple offers.”
“I have a client this morning I was talking to and he said, ‘Have you paid too much? Nobody else was bidding and that’s weird because in the last two years there have been 20 home buyers. “
Similarly, Despina Zanganas, a Toronto realtor with PSR Brokerage, has seen a drop in the views enjoyed by some properties. Although it was normal to fight for reservation, many hotels are only visited once or twice a day now.
Some of her clients hope this is a sign they can strike a deal, but she said, “I don’t know there are a lot of deals to be done yet, especially downtown.”
But that doesn’t mean people can’t negotiate anyway.
Over the past week, several of Kelsie Struch’s clients have been able to negotiate “for the first time in a really long time” as inventory slowly returned to Vancouver and the market’s sense of urgency began to evaporate.
“We’re seeing a bit of a change in harmony,” said the broker with Kelsie & Morgan Real Estate Group in Vancouver.
“They’re not excited. They’re a little bit more hesitant, maybe a little bit more conservative, and they’re more methodical in their decisions.”
LeFrançois discovered this shift in mindset too, especially when the house was listed and is still on the market three weeks later. Now, buyers are increasingly trying to rationally negotiate these properties, rather than moving at the tense pace they would have before, he said.
It takes a long time to adapt to many sellers.
“They see (the market) as a linear line going up,” he told Francois. “They say, ‘I just waited a bit for the market to keep going up’ and that’s going to be a little tricky.”
Struch recently had an eager buyer bid on a home listed for less than $2 million. Sellers received six offers but did not accept any and then raised the price to $2.5 million.
Last month, the Greater Vancouver Real Estate Council said the MLS home price index’s composite benchmark price for all residential properties in Metro Vancouver was $1,374,500, an 18.9 percent increase from April 2021 and a 1 percent increase from March of this year. .
“We advise people to make a list of what you want, what you are willing to accept and don’t rely on these crazy bidding wars,” Stroch said.
This report was first published by The Canadian Press on May 6, 2022.
Tara Deschamps, The Canadian Press