Toronto’s hot housing market may be showing the first signs of cooling as a surge of new listings arrived right after Labour Day to a lukewarm response from potential buyers.
Real estate agents say it’s too soon to tell whether buyers are losing confidence or are just slow to return from vacation as the fall market gears up.
Theodore Babiak of Royal LePage Real Estate Services Ltd. says some sellers have received multiple offers in recent weeks, but the frenzied bidding that characterized the spring market has slowed down.
“I think sellers will need to temper their expectations,” says Mr. Babiak, who detected a slight decrease in buyers’ enthusiasm in the second half of August.
Bank of Nova Scotia economist Adrienne Warren says strong price gains during the summer may be encouraging more owners to bring their properties to market.
Ms. Warren says sellers definitely had the upper hand in Toronto’s real estate market last month as listings remained tight.
Early data shows that sales jumped 24 per cent last month compared with the lethargic pace set in August of 2010. She estimates that the average price rose 10 per cent in August compared with the same month last year.
But a shift may be underway, Ms. Warren says, as the strong price gains tallied through the summer may be encouraging more owners to bring their properties to the market.
“I think sellers say ‘it’s a pretty good time to list.’ ”
Consumers, meanwhile, are feeling less buoyant according to recent surveys.
Last week’s employment report from Statistics Canada, which showed the economy shed jobs in August, may dampen confidence further, she adds.
Ms. Warren says Toronto’s real estate market has been noticeably hotter than those in other Canadian cities. Demand in Vancouver has been dampened by the lack of affordability, she adds, and that same phenomenon may discourage house hunters here.
“Affordability is certainly an issue here in Toronto,” she says.
Ms. Warren is still forecasting increasing prices on an annual basis in Toronto, but she believes those gains will slow to two or three per cent by the final months of 2011 compared with the same months in 2010.
She cautions, however, that if the jobs market deteriorates sharply, house prices may fall.
Mr. Babiak says the high end of the market has been soft in Toronto in recent months as investment bankers and other Bay Street workers worry about the outlook for financial markets and world economies.
Houses priced at less than $1-million have been snapped up quickly thus far, he says, but buyers may become more nervous.
“I would have no problem telling sellers to list sooner rather than later,” he says.
For now Mr. Babiak will continue to advise sellers with a good property to set an offer date with the hope of attracting multiple bids, he says, but sellers of houses and condos that are poorly-located or have other flaws will likely do better to take offers at any time.
“New listings will have to be priced sharply to get action,” he says.
Agent Duncan Fremlin of ReMax Hallmark Realty Ltd. says he has been called out to evaluate several potential listings but it’s too soon to tell if house hunters will retreat to the sidelines.
“The wild card in all of this is the buyers.”
He hasn’t seen signs of a cool down.
“I haven’t sensed yet that the consumer has lost confidence.”