The Toronto real estate market makes slow returns

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A house is listed for sale in Toronto’s Cabbagetown neighborhood on May 15.Ammar Bowaihl/The Globe and Mail

Slowly, haltingly, real estate may be getting back toward something like prepandemic normal in the Toronto area.

A combination of low inventory and a period of relative stability in mortgage rates is pushing sale prices higher after almost a year of stagnation, according to industry watchers. That price improvement may also be bringing more sellers off the sidelines.

“Our clients are people who live in Toronto and have owned for four to 10 years,” said Nasma Ali, broker with Real Broker Ontario Ltd. Ms. Ali said she’s hearing from more sellers ready to list because they’re looking to move-up properties. “There’s an expiry for how long they can stay in that first house,” she said, and while some may have been ready to move last year, they were waiting for a time when they might fetch more for their starter home.

Even multiple offer bidding scenarios have made a return, though with a slightly lower sense of urgency.

“What has changed is there would be times where you’d have listings with 10 offers; now we see two, three maybe four,” said Cailey Heaps-Estrin, broker with the Royal LePage Real Estate Services Heaps Estrin Team, who said that buyers are also taking longer to negotiate. “Even in a bidding war, what would have taken an hour before was taking five to six hours to come to the final offer.” Even bully offers, quite rare since last summer’s interest rate hikes, are coming back.

The latest sales data from the Canadian Real Estate Association help to tell the story. In April, the average home sale price was $1.106-million in the Greater Toronto Area, up 2.4 per cent from the previous month and up 2.5 per cent from three months ago. That said, year-over-year prices were still down 12.2 per cent from the inflated peaks of early 2022, although prices are still up 36.6 per cent from the early days of the pandemic in 2020.

Prices are rising faster in Mississauga and Hamilton – 4.7 per cent and 5.4 per cent, respectively, from the previous month. Meanwhile, cottage country and rural areas are staying flat or still dropping. For example, prices are down 3.1 per cent over last month in Bancroft and down 2.2 per cent in the Kawarthas.

Scott Ingram, a salesperson with Century 21 Regal Realty Inc. with background as a CPA, tracks Toronto-specific listings. He said the April inventory of 1,419 active listings made it the lowest month in the 28 years the Toronto Regional Real Estate Board (TRREB) provided data for, and more than 500 listings lower than the 10 year average.

by Mr. Ingram’s reckoning, transactions may have finally hit bottom and are beginning to rebound. He notes the 12-month rolling average of transactions inside TREB is hovering around 64,000 sales, the lowest period in the past decade and far below the peak in June, 2021, that saw a 12-month average of 129,167 sales. But throughout the first four months of 2023, the number of sales – particularly in condos in Toronto – began to increase closer to a 10-year average, and may soon pass it.

The composition of the market is also changing somewhat.

“I’m noticing quite a few estate sales,” said Dalle Morrison, broker with Bosley Real Estate Ltd. She thinks that families dealing with deaths in the last ten months may have been waiting for the market to turn around before disposing of inherited real estate. “It’s taken their next of kin a little longer to clear out belongings,” she said.

“I have also seen the power of sales increase on MLS. Often to me it looks like it’s a flipper, someone who bought that beat-up house before realizing this is not the market for flippers,” Ms. Morrison said.

Some of the improvements are the typical seasonal adjustments, but the timing is still a little off according to veteran sellers.

“We are a good eight weeks behind what we normally are, this pace feels like March, my spring market usually starts in February,” said Andre Kutyan, broker with Harvey Kalles Real Estate Ltd., who is also being asked to do more listings presentations to potential clients curious if this is a good time to sell.

“For the first time in the last six-to-nine months there’s light at the end of the tunnel. … I feel it, it’s in my gut, it’s my spidery sense,” Mr. Kutyan said.

But while price appreciation could make it easier to manage moves of necessity – the so-called four-Ds of real estate being downsizing, death, divorce and debt – many people seem happy to stay put if they’ve got a preinflation mortgage rate or they recently made a move.

“There are still a lot of people who are just not moving,” said Ms. Ali, who believes in high mortgage rates, is still diluting the usual pool of investors and first-time buyers. More to the point, during the global pandemic a great many people in the GTA have already made a move and may be done for a while.

“Do you think people move every year? If they are moving, they want to stay for a while,” she said.