In his most recent data snapshot, BMO Chief Economist Douglas Porter said that the real estate market in the Greater Toronto Area is "suddenly getting into buyers market terrain." And with many markets across Ontario seeing price drops in the past two months -- particularly in smaller cities outside of Toronto -- would-be buyers across the province are eagerly welcoming the news of a buyer's market being on the horizon.

With this kind of news making headlines and giving hope to would-be buyers, it can oftentimes lead to confusion as to what exactly a buyer's market means and what anyone looking to purchase a home right now should expect.

A buyer's market, by definition, occurs when purchasers are in a more advantageous situation than sellers as a result of the number of homes on the market surpassing the number of buyers. In other words, it comes about from a change in the market's supply and demand. This typically leads to homes sitting on the market for longer and can cause a downward pressure on prices.

READ: Housing Market Hits “Turning Point” As Prices Poised to Drop Another 10 – 20%

This is a stark change to what was seen throughout the pandemic when virtually every market in Ontario was in seller's territory. Inventory remained low while demand shot up, leading to fierce bidding wars and skyrocketing home prices, pricing many buyers out of the market. But in April, a noticeable shift in the province's most populous region -- the GTA -- began as the sales-to-listings ratio plunged, falling to just 45% -- a big change from the 70% average seen in the previous 12 months. With a balanced market typically landing between a 40-60% ration, this shift, Porter says, signals the move towards a buyer's market.

For those hoping that the move towards a buyer's market means Ontario real estate prices are going to come crashing down across the board, they're likely going to be left wanting. Although some markets, particularly smaller cities on the outskirts of the GTA, are already seeing prices dip, Porter says that as it stands right now, a stalling of prices is what's to be expected.

"What the [sales-to-listings] ratio is now telling us is that prices are about to go from 20%+ gains to a sudden stall," Porter wrote.

Porter's projections were echoed in a recent Toronto Regional Real Estate Board (TRREB) report, in which TRREB Chief Market Analyst Jason Mercer said that although the number of sales is falling and listings are going up, market conditions are still tight enough to support annual price growth, despite prices declining somewhat month-over-month in April.

“In line with TRREB’s forecast, there is evidence of buyers responding to increased choice in the marketplace, with the average and benchmark prices dipping month-over-month," Mercer said. "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."

Essentially, buyers will still be having to put in higher offers compared to pre-pandemic pricing, but they'll be competing against fewer buyers, or sometimes even none at all.

TRREB CEO John DiMichele warned, however, that there's a chance the buyer's market wouldn't be here to stay, with many aspiring homeowners who stopped their search after being priced out of the market during the pandemic still looking for their chance to jump back in.

"Policymakers should not assume that because home sales are off their record peak, we can ignore the lack of inventory in the market," DiMichele said. "Buyers who have moved to the sidelines will not remain there forever, and the population of our region will continue to grow on the back of immigration. In the absence of new supply, we will build a significant amount of pent-up demand that will need to be satisfied in the not-too-distant future. The ability to increase and diversify our housing supply needs to be a key area of debate in our upcoming provincial and municipal elections."

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