Article excerpt from the Globe and Mail written by Carolyn Ireland.
The Toronto-area fall real estate market is entering the final stretch of 2022 with dispirited buyers, a lack of inventory and the table set for an interest rate hike in December.
The cautious mood in November follows a sombre October which saw sales in the Greater Toronto Area tumble 49.1 per cent compared with October, 2021, according to the Toronto Regional Real Estate Board.
The average price in the GTA dipped 5.7 per cent from a year earlier to stand at $1.089-million at the end of October.
Rochelle DeClute, broker at DeClute Real Estate Union Realty, says rising interest rates have offset the drop in average price. House hunters who line up a preapproved mortgage and fail to buy before it expires find out they are approved for less each time they apply for a renewal.
“They’re preapproved for a certain price and that price keeps dropping,” she says. “That’s been discouraging.”
Meanwhile, the family money that propelled many first-time and move-up buyers during the run-up in prices during the pandemic is not as readily available,” Ms. DeClute says. Older generations have seen their investment portfolios decline, she says, and higher interest rates make it less attractive for parents to take out a home equity line of credit on their own house in order to help their adult children.
While such a move made sense when rates were low and real estate prices were rocketing higher, parents are more hesitant when prices are declining, she says.
With prices softening, Ms. DeClute says her team is making sure that sellers are serious before they take on a listing.
Prepping houses for sale is costly for agents, who invest in staging with fresh furniture, painting and landscaping in some cases.
“We really have to have a good conversation about their motivation,” she says. “We have to be very sure that they’re ready to sell and they’re not just testing the market.” Some homeowners see a property in their neighbourhood sell quickly and expect the same result, she says. If their own house lingers, it’s hard for homeowners not to take it personally.
“The reality of living through it is something sellers are not prepared for,” she says. Still, some houses are selling with multiple offers – particularly if they have an asking price below the $1-million mark.
Ms. DeClute points to one recent sale in Toronto’s east end. Agent Melanie Wright listed the semi-detached house at 36 Ashland Ave. with an asking price of $999,000 and drew 20 offers.
Six of the offers were clustered around the high end, says Ms. DeClute, and the house sold for $1.415-million.
Houses in higher price brackets are also selling, but a little more slowly compared with recent years, Ms. DeClute says.
In the Scarborough Bluffs, agent Rick DeClute listed a large house at 53 Lynndale Rd. with an asking price of $4.2-million. The house sold after 16 days on market for $3.9-million. The average number of days on market in October was 21, up 61.5 per cent from the 13 in the same month last year.
New listings, meanwhile, dropped 11.6 per cent in October from October of last year.
Traditionally, many homeowners have taken advantage of a declining market to trade up.
But agents say some potential move-up buyers appear to be nervous about taking on more debt after a series of interest rate hikes by the Bank of Canada that lifted its key rate to 3.75 per cent.
