If the past few months have taught us anything, it’s that Toronto’s housing market doesn’t stay downcast for long. Sales activity began to ramp up in the latter few months of last year, and as of last month, transactions were up a hair shy of 18% on a year-over-year basis.
“Things have definitely picked up, but what's interesting is the segment of the market that's picked up, and that’s kind of the under $1.5M price point,” says Toronto realtor Lisa Bednarski. “And I'm talking more about Toronto than the broader GTA, but that tends to be first-time buyers.”
Bednarski, who is an agent with the BREL team, tells STOREYS that first-time buyers are flooding into open houses and dominating offer nights, which is something she hasn’t seen happen since the Bank of Canada began to turn up the heat on interest rates in the middle of 2022.
She recently had a listing on Symington Avenue, which she priced at a million dollars. It got some 6,000 views on Realtor.ca (which Bednarski notes is “off the charts”) and had over 100 showings. Ninety-three people attended the open house.
“All were first-time buyers. And we got 23 offers on offer night,” she says. “Buyers are gambling that interest rates are going to go down in the summer, which is not a bad gamble. So they want to, you know, date the rate and marry the house.”
Bednarski isn’t alone in noticing that first-time buyers are making a comeback in Toronto. Deanna Parrell, an agent with Bosley Real Estate, says that what she classifies as “first-time buyer freehold properties” are getting the most traction. “That would be something like a semi-detached, three-bedroom home in the $1.2M price range,” she explains.
Parrell also notes that buyers in her network seem to be more “serious” about purchasing these days, and that’s showing when they’re putting in their offers.
“We aren’t seeing as many lowball offers like we saw last year when the market was quieter,” she says. “In an offer night I was recently a part of, five of the nine offers were asked back for a second round because they were all within a similar price range.”
“A Freehold Bidding War Extravaganza”
Although Toronto tipped into buyers’ territory for a brief period last year, mortgage expert Jerome Trail says that the freehold segment of the market is now shifting in favour of sellers once again. And it’s all happening quite fast: Trail says that “a freehold bidding war extravaganza” has taken hold in Toronto within the last 30 days or so.
The bulk of those bidding wars are on homes that are in what Trail calls the “opening price point,” as anything priced under a million dollars can be purchased on an insured basis and for less than 20% down.
“What has really escalated activity is that the five-year fixed has dropped from 6.5% to about 5%. And that has precipitated this influx of buyers,” he adds. “They’re more or less saying, ‘I was sitting on the sidelines long enough, it's time for me to jump in and place an offer, I've had enough of living in this two-bedroom condo with my three kids.’ Or, ‘I can only live in my in-laws’ basement for so long.’”
In contrast, Trail has observed that the condo market has been quiet. This kind of bifurcation — between freehold and condo — is something that Shay Asnani, an agent with Right at Home Realty, is seeing as well.
“I have a client who is looking to purchase a freehold property in the city [and] there were a couple of homes in the Danforth area we were keeping an eye on which both sold in multiple offers. One was listed for $949,000 and sold for $1.25M, and one was listed for $999,000 and sold for $1.35M,” Asnani tells STOREYS. “So I would say there’s more demand for freehold properties right now, but if prices do go up, we could see that activity trickle down to condos, which have been slow for the past while.”
Despite the recent burst of energy in Toronto's freehold segment, Asnani says that there are still plenty of buyer hopefuls in his network who are erring cautious. “I do think once a few rate cuts have taken place, we could see some of that pent-up demand from buyers come out,” he adds.
However, Trail cautions that trying to time the market in this way is a risky game.
“The much-anticipated rate cut is only going to impact variable rate holders. The fixed-rate mortgages have already dropped, so that ship has sailed,” he says. “We're already seeing a shift, in this price point, from a buyers’ market, where buyers could place offers with conditions, to a seller's market where sellers have got multiple offers and they're just not entertaining an offer with a condition. So it's happened very quickly. The most conservative people will remain conservative, and they will have missed the opportunity.”
