Some homebuyers, sensing the market has hit bottom, rejoin the fray

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Real estate markets in Mississauga, Oakville and other areas west of Toronto have sprinted to a quick start in 2024 but industry players caution that it’s too early to say whether the recent burst of activity will maintain momentum.

Pent-up demand and a drop in prices have fuelled sales in late December and into January. Economists warn that the market continues to face headwinds in the form of higher interest rates and tough affordability.

And despite the recent enthusiasm, many buyers remain wary, real estate agents say.

Matthew Regan, broker with Royal LePage Real Estate Services, says people watching prices slide over the past 18 months or so have been looking for a bottom – and many believe that stage has arrived.

The fear many buyers had of buying a house today that would be worth less tomorrow is gone, Mr. Regan says, noting that mortgage pre-approvals have soared.

Sales in Mississauga rose 15.9 per cent on a seasonally adjusted basis in January compared with December, according to the Mississauga Real Estate Board.

The average price in Mississauga came in at $1,097,597 last month.

After seeing an uptick in sales as 2023 wound down, Mr. Regan and his team listed about a dozen houses in the second half of January. Nearly half were on the market in the fall. In early February, almost all had sold, Mr. Regan says.

“The prices didn’t necessarily go up, but the buyers were there.”

Sellers became much more realistic about giving up “the fairy-tale pricing of the past” when they faced buyers who weren’t willing to meet their expectations, he says.

In south-east Oakville, Mr. Regan listed a detached house on a Thursday with an asking price of $2.99-million.

The four-bedroom house at 2076 Blyth Cres. was listed with no offer date, he says, but by Saturday afternoon there were three competing bids and the house sold for $2.96-million.

A three-bedroom house at 1003 Mesa Cres. in Mississauga drew two offers and sold for $1.416-million after it was listed with an asking price of $1.399-million.

The property was listed at the same price in the fall and sat for 86 days with no offers, says Mr. Regan.

The house might have had five or six offers in January but some of the buyers who expressed interest backed away as soon as they learned there was competition.

Some prospective sellers are now grappling with the dilemma of the best time to list, he says.

Many figure that soft prices may strengthen when the Bank of Canada moves to cut interest rates, which in turn will spur on demand. But homeowners who wait for that event may end up listing at the same time as a lot of others who have the same idea.

“My advice is not to guess – deal with what’s in front of them now.”

Rishi Sondhi, economist at Toronto-Dominion Bank, says 2024 is shaping up to be a better year than 2023.

Improving sales activity will likely not be enough to stem a first-quarter decline in Canadian average home prices, however, given that the balance between supply and demand will likely remain fairly loose, Mr. Sondhi adds.

National prices should flatten out in the second quarter before rising through the rest of 2024 and 2025, he predicts.

Meanwhile, some market watchers have seen the social-media buzz around a semi-detached house in Erin Mills which drew 85 offers, Mr. Regan says, and wonder if the market will quickly become manic again.

But Mr. Regan points out that the three-bedroom house at 3479 Longleaf Ct. had an unrealistically low asking price of $749,000. At the end of the night, the house sold for $999,000.

“It’s false hope,” he says of the bidders who joined the frenzy.

Alex Irish, real estate agent with Re/Max Escarpment Realty, also heard about the Longleaf deal, which generated a lot of talk among agents who don’t like seeing buyers pulled into such heated competition.

A figure around $929,000 would have been a more realistic asking price if the sellers hoped to fetch close to $1-million, she says.

“It creates a lot of drama and angst,” she says of the tactic.

There tends to be a lot of buyer’s remorse in such scenarios, she adds, which means deals sometimes don’t stick.

“It doesn’t give you a lot of confidence that there were 84 people who offered less than you did.”

She believes a significant portion of first-time buyers and others shopping in lower price ranges, meanwhile, will likely wait to purchase.

“If you’re truly interest-rate sensitive, you’re probably still hesitant to jump in.”

And while many consumers are predicting the market will rally when the Bank of Canada cuts rates, Ms. Irish says that may not unfold the way many are expecting.

In her experience, when rates drop a little bit buyers hold off in the hope they will fall a little bit more.

In Oakville’s luxury segment, where Ms. Irish does much of her business, the tempo of the market changed abruptly when she sold nine houses the week before Christmas.

One house listed with an asking price of $8.5-million, sold for $8.2-million while another property listed for $6.75-million sold for $5.75-million.

Heading into the holidays, some opportunistic buyers began to table offers.

“I think buyers were waiting for this capitulation in the market.”

While some sellers pulled their listings, others couldn’t face heading into 2024 without a deal.

“I do think there was a good proportion of the sellers that were just beaten up. It was a really tough year.”

Ms. Irish says aspiring buyers in the upper echelons are looking for three things: a bottom, a plateau and an upturn.

The sales she and others recorded send a signal to buyers that the market is beginning to recover and many will make a move as a result, she says.

She believes that’s the reason for some of the activity in January, when the average price of a single-family home in Oakville stood at $2,194,175, according to the Oakville, Milton and District Real Estate Board.

At the same time, people who make their living in banking and financial markets often receive bonuses and other incentives.

“A lot of people are a little more flush at the beginning of the year.”

Savvy buyers know that the best deals are at the beginning of an uptick, she says, so some of the flurry taking place now may fade.

She is listing three waterfront properties this week as she advises sellers to get out in front of the spring market.

“I think it’s going to be intense and short.”