Toronto realtor and chartered accountant Scott Ingram says that September coaxed a shift in the GTA’s housing market.
“Different pockets and different housing types can and do experience different market strength, but to generalize, it seems very clear to me we're in a buyer's market right now,” Ingram tells STOREYS.
Although TRREB hasn’t explicitly used the phrase "buyer’s market" — the board’s Chief Market Analyst, Jason Mercer, has only said “buyers may benefit from more negotiating power” given September’s jump in new listings — there were 4,642 sales recorded in September, alongside 16,258 new listings, resulting in a sales-to-new-listing ratio (SNLR) of 28.6%.
“SNLR is definitely the weakest in recent years,” notes Ingram. Speaking specifically to the City of Toronto’s freehold segment, he says SNLR has slipped to 30%.
“September is usually the lowest month for SNLR because lots of new listings hit the market for the fall, and the first couple of weeks are slow for sales as families settle back into school and work. But this 30% is the lowest single month since at least the start of 2011,” Ingram continues.
It’s the “same story” for the city’s condo market, he also notes, where the SNLR has plunged to 25%. That figure is well below the 10-year average (49%) and is the lowest single-month SNLR on record since the start of 2011.
“Investors, especially those with variable rate mortgages, are bailing, driving inventory levels up,” says Ingram, adding that active listings are 27% above the 10-year average, while sales are 39% below the 10-year average.
“Very few investors are out there buying right now, so [that’s] really affecting both parts of the market negatively.”
Sellers’ Market Status Quo
Beyond the stats, Ingram says the market has perceivably slowed down. Boots on the ground, both buyers and sellers are aware that tides have turned.
“You’re not seeing as many bidding wars going on and you're seeing increasing re-listing activity. Showing activity is way down because of a high amount of listings for buyers to choose from,” he says. “And listing agents are following up with buyers to see how they liked the place. In a hot market, that doesn't happen because you know you're going to have a lineup of people on offer overnight.”
With less competition for individual listings, that there’s now more opportunity for buyers to insist on clauses and conditions, without jeopardizing their offers, adds Ingram. “A client of mine purchased a house a few weeks ago and we had 4 conditions in there, and another client bought a condo with 2 conditions last week. That's buyer power right there.”
As for whether today’s market has precedent? Sure. But Toronto broker Erica Reddy-Choquette says that you would have to look pretty far back to find a market that’s comparable.
“We have experienced buyers’ markets before, but I think the challenge is most people don't even remember what they look like because we've pretty much operated in a seller's market for the better part of the last 10 years. So it’s a huge shift,” she says.
“It kind of takes resetting [your] mindset and figuring out what did it look like when property sat on the market for 30 days or 60 days or 80 days. I remember 13 years ago, 15 years ago, I felt like we really had succeeded if we sold the house in under two months.”
While Reddy-Choquette urges her clients to keep their expectations at bay when selling a home these days, she also says many are already unsettled as they see their listings sweat on the market.
“There’s some fear in sellers, there’s some seller fatigue, there are a lot of unknowns,” she adds.
How Low Can Prices Go
Home prices are still finding support, according to TRREB, with the average price up 3% year over year to $1,119,428 in September.
However, with fewer buyers to, well, buy, that upward price trend could be on numbered days, warns BMO Economist, Robert Kavcic.
“Going forward, we're not necessarily going to see prices crash down like we saw in the US in 2009 or that we saw in the early ‘90s in the GTA, but I would say there's probably more room for adjustment, especially if interest rates stay up,” Kavcic tells STOREYS. “Best case, prices will stagnate for a while, and that could be for a long while.”
While Kavcic reckons that the GTA is in for softer selling conditions for the rest of the year and well into 2024, he also stresses that it’s a tricky time for buyers. Price slide or not, purchasing ability has been severely implicated by interest rate hikes, he says.
“At the moment, from an affordability perspective, the mechanics just don't really work right now for households to buy at these prices. So that price adjustment has to go on I think.”