Navigating the Current GTA Real Estate Market
Navigating the current real estate market is proving to be frustrating for sellers hoping for the return of last year’s bubble prices, as well as for buyers waiting for the bottom to completely drop out (both of which scenarios seem unlikely). But, others in the market are being rewarded, as sellers are still seeing good selling prices and buyers are able purchase without many of the hassles that engulfed the process last year- i.e. bidding wars and bully offers. Thus, those that have accepted the reality of the current landscape appear to be much better off than the ones that haven’t.
For the sake of this article, I’m forced to draw some generalizations about the ‘GTA real estate market’. But, It’s important to note, differing neighbourhoods/markets are seeing differing trends- some areas favouring buyers while in other pockets, sellers still have the upper hand. For instance, many areas of York Region i.e. Newmarket, there is about one sale for every four listings, which is a very balanced scenario for both buyers and sellers. When you contrast that with the downtown condo market where units are flying off the market and the inventory can’t keep up, you begin to see the importance of examining specific markets and specific neighbourhoods for local trends.
But, it can objectively be said, the GTA real estate market (freehold at least) is more balanced than we have seen in a number of years. If you are currently looking to purchase, you can take comfort in knowing that there is plenty of inventory on the Toronto Real Estate Board’s MLS system. The days of running around from house to house throwing in firm offers way above ask, hoping that you might finally be the winner on your eighth try- well, they are over (at least for time being). And that added inventory changes the buying process considerably. For one, we see less ‘offer dates’ than we are accustomed too. Offer dates are synonymous with hot selling markets. Sellers put their home up for sale asking potential bidders to come on a specific date. Offer dates can lead to bidding wars, which is the obvious motive for having them. But, in a balanced market, where the buyer has gained some power back, the psychology of the selling process changes. The confidence is no longer there that buyers will show up in droves on offer dates ready to compete. And the domino effect is that pricing strategy changes. Less and less homes are ‘priced to sell’. By that I mean those attractive prices (too good to be true!), are much less common right now. Sellers and agents are not confident in the strategy of underpricing homes in order to attain top dollar, as they were a year ago. And that means we don’t have to deal with ‘bully’ offers either, another practice that became all too common in last’s years bubble. Buyers actually have a chance now to take a breath and ponder the purchase of their largest asset.
A buyer also has an opportunity to do more due diligence now. Homes are being purchased conditional on home inspections, conditional on financing, and in some cases even conditional on buyers selling their home before they firm their ‘buy’ deal up. Sellers are being forced to allow these conditional deals in order to sell and therefore firm deals are much less common at present. This is actually a very welcome change for most. Purchasing a home is a process and in those hot hot markets, the process gets cut short as buyers are forced into firm offer situations. Firm offers mean larger risk and purchasing with unanswered questions- will the bank appraise the property at the purchase price? Is there mould in the attic? Is there an some unknown variable that might come to light in the conditional period? Getting an opportunity to answer questions like this before firming a sale can save both time, money and even a potential lawsuit.
For sellers, yes, the landscape has changed, but it isn’t all doom and gloom. Houses are selling. I’ll repeat, houses are selling. No, they aren’t selling in record numbers for outlandish prices, in a single day. But, if your home shows well and is priced for today’s market (not for March 2017), you’re going to be just fine. And sellers should take comfort in knowing that a firm deal in most cases will mean that a lender has indeed appraised the home at the selling price, thus the worry about a firm deal falling apart is greatly minimized now.
The GTA market has balanced and with balance has come a sense of normalcy to the process. The normalcy may last, it may not, but at least it’s here for the time being and should be appreciated.
by Michael DeAngelis, Broker with RE/MAX Realtron