Just last week, a house in Toronto's Bloor West Village sold in a bidding war that saw nine competing buyers lined up with their offers.
Among real estate agents, the talk was all about how restrained the bidding was - even though the house sold above the asking price of just under $800,000. The consensus among agents was that the house would likely fetch more, says Theodore Babiak of Royal LePage Real Estate Ltd., who represented one of the competing buyers.
That's Toronto's resale housing market in fall 2010: a queue of nine subdued bidders is a downturn compared with the giddy days of last spring when buyers were throwing money around with abandon.
Market watchers say sales activity this fall has been fairly steady after a more dramatic dip in the summer that lasted into early September. Purchasers have been lured by low interest rates, but only if they feel secure in their jobs, says Mr. Babiak.
The most recent data from the Toronto Real Estate Board shows that sales of existing houses in the Greater Toronto Area fell 17 per cent in the first half of October, compared with the same time last year. But that's an improvement from the steeper declines in previous months.
The average price at mid-month, meanwhile, stood 7 per cent higher compared with the same time last year.
Looking towards the end of the year and into next spring, economists warn that the Toronto housing market will likely continue to cool.
Warren Lovely, an economist at CIBC World Markets Inc., says Ontario's is one of the provincial economies downshifting from a better-than-expected 2010 to a more tepid growth pace for 2011.
Mr. Lovely says the housing market has been propping up Ontario's economy, but the same sector will likely act as a drag next year. A slowdown in the construction sector, combined with a slumping U.S. economy, will weigh on real estate and the overall economy.
He estimates that real estate prices in Ontario are over-valued by about 11.6 per cent.
The British news magazine the Economist stirred a lot of talk recently when it claimed that Canadian real estate is over-valued by 23.9 per cent. The survey uses the current ratio of house prices to rent instead to estimate fair value.
Mr. Babiak says buyers are more cautious. In the spring, houses were selling after seven to 10 days like clockwork. But many buyers today will not enter into a bidding skirmish unless the property is in an excellent location, well-renovated and listed at an asking price that is obviously below market value, he adds.
The most conservative buyers have sold existing houses before looking for another one. When they do start their search, he says, they are willing to walk away from negotiations if they don't get a good deal.
"They're ready to let sellers sweat," Mr. Babiak says.
At the same time, some agents are accepting offers at any time and trimming asking prices if the property sits for a stretch.
"Agents are catching up to where the clients are," he says.
Still, Mr. Babiak thinks the erratic pace of sales means the market has some more adjusting to do.
"My take is that it's morphing into a buyer's market. It is defining itself," he says.