The summer slump in the Toronto real estate market has industry players dusting off strategies they haven't used in eons: Agents are becoming reacquainted with conditional offers, lengthy periods of negotiations and — most remarkably — asking prices that actually reflect what the seller would accept for the house.
"I've done things this year that I haven't done in 10 years," says Wilfred Veinot of Sutton Group Partners Realty Inc.
Mr. Veinot calls this market "a reality check for sellers."
The mantra in the industry, he says, is becoming, "Sellers are thinking last year; buyers are thinking next year."
Ominously, that means that sellers still want their houses to fetch more than their neighbour's place did last year while some prospective buyers are delaying purchases in the hope that prices will crumble.
In the past week, Mr. Veinot has been fielding calls from prospective sellers who are preparing for the fall real estate market, which traditionally kicks off once kids are back in school and soccer schedules are sorted out, he says.
While August is traditionally a slow month in real estate, "The buzz is out there already," he says of the anticipation approaching Labour Day.
Agents and industry pundits are expecting this fall's market to offer more choices for buyers and a tougher environment for sellers compared with last year at this time.
The Toronto Real Estate Board reported earlier this week that sales this month are continuing the slowdown that started in the spring.
By mid-month, sales of existing homes in the Greater Toronto Area had dropped 13 per cent from the same period last year, and 8 per cent compared with the same period in 2006.
Prices, meanwhile, are holding up. The current average price in the GTA is $373,844, which is a 5-per-cent increase from the figure of $354,088 tallied at mid-August last year.
Mr. Veinot, who specializes in the Riverdale neighbourhood, says that he has recently changed his advice: He is starting to recommend that sellers put their house on the market before they shop for a new property. In the past few years, he has always advised move-up buyers to find their new house first because it was almost a given that their current house would sell quickly.
Now, he says, "If it was me, I'd sell first."
The agent adds that sellers can no longer be certain that they'll receive their asking price in a hurry. And bidding wars are less common.
In one case, Mr. Veinot and his clients offered $75,000 less than the $1-million asking price. "The seller had a fit," he says. It took a week to negotiate the deal, but eventually the two sides came together.
In the condominium market, buying and selling this year has cooled off after the blistering pace set in 2007.
Jane Renwick, editor and vice-president for the Urbanation housing report, says condo unit sales were healthy in the second quarter but average sales a project were down significantly from 2007.
The Toronto condo market has grown by 20 per cent to a record-breaking 295 projects, she adds.
Ms. Renwick says that absorbing 2008's condo unit production will take time, but prices remained relatively stable in the second quarter. The average price stands at $396 a square foot, compared with $388 in the first quarter.
In the resale market, meanwhile, while buyers have become accustomed to making offers with no conditions attached in recent years in the hopes of making their bid more appealing to the seller, conditions are starting to creep back in.
Some offers allow the buyer to back out if they don't receive bank financing or they don't like the results of a home inspection.
Indeed, Mr. Veinot has done two deals this year in which the buyers made the offer conditional on selling their existing houses.
