Real estate buyers in Toronto appear to be treading more cautiously into the fall market – especially compared with the excessive bidding that took place in the city last spring.
Chander Chaddah, a real estate agent with Sutton Group-Associates Brokerage Inc., listed two houses recently; one sold on offer night and the other didn't.
The one that didn't sell is a three-storey semi-detached house on Wright Avenue in Roncesvalles Village.
The house, which has an asking price of $1,249,900, is the type of large, renovated family home that often attracts a crowd of bidders, he says. There's a high-end kitchen with an eating area and doors opening to a deck. The owners also enlarged the lower level in order to build a media room.
"The offer date came and went," he says, adding that several other houses in the same area remained on the market after the official deadline for bids. It's an area where buyers often do battle and listings are relatively tight.
Diana Petramala, an economist with Toronto-Dominion Bank, says some of the momentum has come out of the Bank of Canada's interest rate cuts, which fuelled so much of the buying in the spring.
The central bank trimmed its benchmark rate in January and again in July. The decrease at the start of 2015 caught market watchers by surprise and ignited the markets in Vancouver and Toronto.
Ms. Petramala points out that five-year fixed mortgage rates have not fallen in recent months. But, since rates are already hovering at historically low levels, the risk is to the upside, she adds.
"There's little left in the form of a driver for housing demand," Ms. Petramala says.
Sales in August were already showing signs of stabilizing at elevated levels, she adds, but prices have been pushed up in the hot markets of Vancouver and Toronto by the tight supply.
The economist notes that the country's housing market outperformed the broader economy during the first half of the year. Markets whose fortunes are heavily tied to commodity prices – notably Calgary, Edmonton, Regina and Saskatoon – have already weakened, she adds.
Looking ahead, Ms. Petramala expects a few more months of above-average activity, then the lagging effects of the economic slowdown will likely catch up with the housing market.
In Toronto's west end, Mr. Chaddah describes the traffic through recent weekend open houses as steady but not spectacular. In one instance, house hunters may have been discouraged by rain and the Roncesvalles Polish Festival, which made getting around the neighbourhood a little harder, he adds.
The feedback he's getting from potential buyers is that they are looking for a completely open plan, he says, while this house has a more traditional layout.
"Everybody wants to live in their kitchen 24/7."
He figures the right buyers could be a family with older children. Parents with teenagers often like a bit of separation between spaces, he says.
On the other side of town,
in East York, last week Mr. Chaddah sold a detached bungalow with an asking price of $699,900 and sold for $765,000 after two bids came in by offer night.
Mr. Chaddah is also working with buyers who are willing to spend $1.5-million or so for a house in move-in condition in a central neighbourhood such as Little Italy. They are not finding a lot of properties to visit.
"In that sense, the market's still tight for product," he says.
Other sets of clients are shopping for condo units at prices between $400,000 and $550,000 in neighbourhoods such as St. Lawrence Market and Bloor West Village. While there are lots of condos on the market in Toronto, he says, options become much more limited when buyers are particular about the neighbourhood.
Robin Pope of Pope Real Estate Ltd. has also noticed hesitation in the market in recent weeks.
He recently listed a Victorian semi-detached house in the micro hood known as the Pocket, near Danforth Avenue and Greenwood Avenue. The three-bedroom house on Dawson Avenue had an asking price of $699,900.
On offer night, one buyer arrived with a bid at $35,000 above the asking price.
"We happily accepted and are celebrating," Mr. Pope says. "It is an unpredictable market."