It was an eventful January for Toronto’s housing market. Local real estate agent Scott Ingram tells STOREYS that one recent listing in his network — a starter house in the city’s east end — had around 80 showings and two “very active” open houses. It ended up getting 13 offers.
“The eventual sales price [exceeded] expectations,” he says. “There was no nearby competition, so my take was that buyers have returned to the market much earlier in the new year than sellers have.”
Ingram is not alone in noticing that buyers are beginning to breathe life into what tends to be a slow time for the housing market, seasonally speaking. Back-to-back interest rate hikes last summer put the market into something of a slumber through the fall, but agents are now seeing some of that pent-up demand actualize into purchases.
That's not to say affordability has improved, but Toronto broker Erica Reddy-Choquette says that buyers seem more “optimistic” about the housing market these days, and many are just plain tired of waiting on the sidelines.
Like Ingram, Reddy-Choquette is seeing multiple offer situations; in fact, buyer clients of hers viewed a house just last week that ended up with 18 offers.
“But I would say it was also significantly underpriced,” she notes. “And it was beautifully appointed, beautifully presented.”
Reddy-Choquette won’t go as far as to say that multiple offers are the norm. She's also seeing cases where sellers are pulling their listings off the market because they’re not getting the traction they were hoping for.
It’s a bit of a mixed bag, she adds. “I don't think we can definitively say it's a multiple [offer] market or a sellers’ market, but I definitely think you're just starting to see people test the waters and figure out where their product lands and where the buyers are.”
Buyer sentiment in Toronto began to show marked improvement in the final few months of 2023. According to data from the Toronto Regional Real Estate Board, home resales in Toronto proper clocked in at 1,266 in December, and that figure was up around 10% from the December prior. Across the entire Greater Toronto Area, there were 3,444 sales, up 11.5% year over year.
“What everybody has to remember is that September, October, and November were tough months in the market and a lot of people sat on the sidelines,” Reddy-Choquette says. “They were scared, they were nervous, they didn't know what to expect. Days on market were longer, pricing was stabilizing, and nobody wanted to be the person that bought a house, and then three weeks later, it was down 10%.”
However, three consecutive rate holds from the Bank of Canada (BoC) — not to mention, the promise of rate cuts to come — seemed to be enough to bring the market back to life as 2023 drew to a close. And then January brought yet another rate hold from the central bank, along with the sweeping consensus that rates have finallypeaked. Though the BoC is yet to say anything concrete about rate cuts and their timing, Reddy-Choquette says that buyers are more motivated than they've been in months.
“Good inventory that's coming to market that’s really well priced and well presented and in good pockets, you're starting to see some multiple offers, you're starting to see increased showing volume, you're starting to see high traffic at open houses,” she says.
“I would kind of say that the million-and-a-half to $3M price-point is where I’m personally experiencing the largest kind of pickup and surge, if you will, in Toronto proper. So Riverdale, Leslieville Roncesvalles, Bloor West — those prime pockets where families are looking to lay roots are definitely seeing buyer demand.”
From the lawyer’s desk:
January 2024 is hugely and unexpectedly busy. Consumer confidence in housing is, three weeks into the year, back in a big way. Product that has not moved for months is selling.
Where we go from here is anyone’s guess…
— Mark Morris (Markinmetaform on Threads) (@MarkinMetaForm) January 24, 2024
Mark Morris of Legalclosing.ca agrees with the consensus amongst agents; it’s been an “unexpectedly busy” January, he says. His understanding is that buyers are aware that the market is due to heat up in a matter of months, and are eager to get ahead.
“I do think that there's a perception that the spring market is not going to be depressive. There's a lot of pent-up demand from the previous six months, which have been severely depressed. People felt that they needed to put the brakes on because they didn't know where things were going,” he says.
“And more importantly, they believed that waiting had no negligible consequence. That is to say, the longer they waited, the lower prices would get. But now, I think there's a belief that interest rates have reached as zenith; they’re not necessarily going down but have reached their top, and that has given renewed confidence to people that they can reemerge into the market, and perhaps now is the time to purchase.”
While Morris says that he's aware that bidding activity is hotter these days, he also says that people aren't bidding hundreds of thousands of dollars over — “they're not bidding aggressively,” he adds.
Morris also highlights that what's happening in Toronto's resale market is a far cry from what's happening in the new home market, which has remained sluggish and is expected to stay slow in at least the near term.
“There is a bifurcation that's taking place in the resale and new build markets where new build is filled with people who are replete with distress and people who are in resale are back to almost a more normal jaunt in the park,” he says. “It will make for an interesting future. But I think that the normalcy that exists in the resale market will eventually spread to new build as well.”