Homebuyers are starting to find deals in what’s shaping up to be one of the toughest spring seasons for the Toronto housing market in more than a decade.
A four-bedroom property near Toronto’s scenic Riverdale Park sold for nearly $100,000 (US$71,670) less than the asking price. A semi-detached home in the Trinity Bellwoods neighborhood went for almost $50,000 less than the listing. Near the edge of Lake Ontario, a buyer snagged a duplex for nearly $60,000 less. And such price cuts have become the norm.
In April, 66 per cent of homes sold in Toronto went for less than the listing price, the highest percentage for that month since 2013, according to data compiled by real estate agent Robert Marsiglio of online brokerage Valery.ca. And homes were sold at 98 per cent of the list price on average, the biggest discount for an April since the pandemic, the data show.
It all means buyers are in their best position in decades. In Toronto and across Canada, the month of April usually marks the start of the busiest period for the market, when warmer weather makes home shopping more pleasant. But this year, the season coincided with a global trade war launched by the U.S., Canada’s largest trading partner.
The economic uncertainty sidelined many buyers, right as sellers started to list more properties. That’s left more room to haggle over the price for the buyers who remain, with data from Royal Bank of Canada suggesting that Toronto’s housing market has tipped more toward buyers than at any time since the 1990s.
“There’s no more FOMO,” said Marsiglio, using an acronym that stands for the fear of missing out. “It’s just improving for buyers relative to sellers. That power balance is still shifting to buyers. It’s probably in the relatively early days of it.”
The decline has been most dramatic in Canada’s largest city, even though a similar shift in supply and demand played out across many of the country’s major markets last month. In April, Toronto’s benchmark home price declined 5.4 per cent from a year earlier to $1.01 million, according to data released last week by the Toronto Regional Real Estate Board.
Home sales in the city were at the lowest level in 30 years outside of the pandemic, even as new listings rose, according to Robert Hogue, an economist for Royal Bank of Canada. The market hasn’t been this favourable for buyers since the 1990s, a period marked by “hefty price declines,” Hogue wrote in a report last week.
Hogue said in an interview that he expects price declines to continue in Toronto and some other markets such as Vancouver.
“There’s a lot of potential buyers who would otherwise be in the market who just don’t want to commit to a big financial decision when there’s so much up in the air with the outcome to the trade war,” he said.
Some people, however, can’t put off the decision to buy or sell. With a baby at home, Vienna Waddell and her husband needed more space, so they listed their one-bedroom condo on Toronto’s lake shore and started looking for a house. They eventually found a three-bedroom bungalow in the suburbs, close to both her and her husband’s parents. But they needed money from the condo sale for a downpayment.
They had to cut the price on their own condo, which eventually drew an offer — for $50,000 less than their initial list price.
“In order to buy, we needed to sell,” she said. “We found a home we really liked in a perfect location and I wanted to jump on it.”
The shift has emboldened buyers to play hardball, according to Toronto broker Tom Storey. He’s seen initial offers that have come in five per cent below list prices at a minimum this spring, with buyers simply moving on if sellers don’t indicate at least some willingness to negotiate. In many cases, the buyers aren’t willing to negotiate their opening offers at all, he said.
Storey said he’d never seen the Toronto market favouring buyers so heavily in his 12 years being a broker, outside of the pandemic.
“Buyers are holding their foot down,” he said. “Sometimes the seller just goes, ‘No, I’m not responding; this is way too low.’ And the buyer just goes, ‘All right. I have five other options. I’ll go try on the next one.’”
Ari Altstedter, Bloomberg News
