Toronto real estate market still slow due to concerns around interest rates and inventory, despite social media hype around bidding wars and over-asking sales.
The Toronto real estate market is experiencing a surge in client inquiries from potential buyers and sellers. However, realtors report that this interest has not translated into sales due to concerns over rising interest rates and a lack of available listings. Reports of sales above list price and bidding wars on social media have fueled speculation of a hot market behind the sluggish statistics. The latest report from the Canadian Real Estate Association (CREA) showed that the GTA's sluggish start to 2023 helped drag down the national average in home sales to a 14-year low in January. The average selling price of Canadian homes also dropped 18.3% year over year last month to $612,204, a less dramatic 3% decline from December.
The industry has been forecasting a slow start to the year, given that year-over-year statistics are based on the market's peak in January and February 2022. CREA predicts Canadian home prices to drop another 5.9% this year. The Toronto Regional Real Estate Board (TRREB) is expecting a 4% dip in this year's average GTA selling price to $1.14 million from $1.19 million last year. However, both the national and local real estate boards expect the market to turn around in the second half of the year.
Ipsos polling for TRREB in December and January showed that 28% of those surveyed in the Toronto region expected to buy a home this year, up from 26% a year earlier. Meanwhile, 46% of those who planned to buy were first-time home buyers, up from 39% in the previous year. Some real estate agents, such as Desmond Brown of RE/MAX, report that the market is still struggling with a lack of supply. Brown's clients recently submitted one of 19 offers on an Oshawa home that was listed for $649,000, offering about $100,000 more than asking. However, the home sold to someone else with conditions on financing and inspection, which is something that would not have happened a year ago. Two days later, the sale fell apart, and the seller's agent asked other bidders to come back with offers around the $800,000 mark. Brown's clients declined, and the house went back on the market for $800,000.
Despite reports of bidding wars and over-asking sales, Brown believes that people are more aware of pricing now and are not overpaying. There are many sellers out there who are still unrealistic when it comes to what they think the property is worth, he said. Although offer nights are coming back as a means of driving competition, some realtors are encouraging their clients to list at "fair market value."