Real estate agents in all segments of the Toronto area market are changing their tactics to a market that seems tilted in favour of buyers in some instances and sellers in others.
Those in the middle are in a classic standoff: Buyers are nervous about jumping in before prices come down and sellers are stubbornly refusing to lower them.
Davelle Morrison of Bosley Real Estate Ltd. has been keeping an eye on a duplex in midtown Toronto that's currently listed with an asking price of $1.9-million. The owners paid $2-million for the property earlier in the spring. The catch is that they hadn't sold their larger single-family home at the time.
The owners told their agent to list both properties and see which one sells first, Ms. Morrison explains. Still, they so far haven't seemed willing to look at offers below the asking price.
"They're in a pickle," she says. "They're motivated but they're still not that motivated."
Buyers, meanwhile, are jittery – especially when they see a house that's languishing on the market. They don't want to buy a property they're afraid no one else wants.
"Sometimes, I think there's too much choice for buyers."
Meanwhile, Ms. Morrison saw an unusually strong demand for rental properties when she listed her own investment property for lease recently. Within 48 hours, she had seven offers for the one-bedroom unit in Leslieville. Many of the people who viewed the unit told her they have to move because their current landlord is selling the condo unit they're renting.
Sales of condo units have held up better than those of single-family dwellings. Ms. Morrison says that's partly because the prices of detached and semi-detached houses have soared out of the reach of many buyers.
In the first two weeks of July, sales in the Greater Toronto Area plunged 39 per cent from the same period last year. Detached houses took the biggest tumble, with a 45-per-cent fall. The smallest decline was in the condo segment, which slid 35 per cent in the first half of July compared with the same period in 2016.
This week, the Toronto Real Estate Board shed some more light on the condo market's performance in the second quarter. TREB numbers show sales slipped 8 per cent in the three months to June 30 from the same period last year. New listings edged up 0.7 per cent in the period compared with the same quarter last year.
Those relatively tight conditions pushed the average condo apartment price in the GTA to $532,032 at the end of the second quarter, from $415,454 at the same time last year.
Jason Mercer, TREB's director of market analysis, says a recent survey of prospective buyers suggests that condo units will continue to gain in popularity over the next year.
"This makes sense given that many households, especially first-time buyers, looking to live in the city of Toronto have turned their attention to less expensive forms of ownership housing," Mr. Mercer says.
Andre Kutyan, a real estate agent with Harvey Kalles Real Estate Ltd., says agents need to switch up their tactics depending on the neighbourhood and the type of house or condo. He is still sparking competition in select North Toronto neighbourhoods by setting an eye-catching list price and setting a date for reviewing offers.
"I have to be very aggressive in my asking price," he says.
The practice frustrates some buyers, he acknowledges, but it has prevented properties from languishing.
Last week, he created a buzz when he listed a semi-detached house at 170 Castlefield Ave. with an asking price of $895,000. The renovated three-bedroom house, in the sought-after Allenby Junior Public School district, attracted 135 groups through the open house and 117 groups by appointment.
On the night set for reviewing offers, 14 bidders put offers on the table and the house sold for $1,391,018.
Two other bidders registered offers but withdrew before presenting.
Mr. Kutyan and another member of his team at Harvey Kalles represented the buyers.
Ms. Morrison says some buyers are studiously avoiding competition.
"I think now people are viewing offer dates as very discouraging."
She is working with clients who visited the Castlefield house and considered jumping into the contest. But she looked at what comparable houses sold for in the neighbourhood and advised the couple against making an offer unless they were willing to come up with a huge premium to the asking price.
"As a buying agent, sometimes you shouldn't let your clients offer," she says.
She could see a crowd was circulating and the house was creating some buzz among agents on social media, she adds.
Agents generally recommend that clients gauge the interest in a house by looking at the number of registered offers. For each additional rival, bidders typically increase their own offer. But that practice ultimately pushes up prices for a whole layer of the market.
"You're driving up the price not only for that bidder but for yourself as well," she says. "That becomes the new comparable for the neighbourhood."
Mr. Kutyan says he tends to set the list price as much as 30 per cent to 40 per cent below the expected sale price, which is a significant reduction from the 5 per cent to 10 per cent he trimmed from his estimate of market value during the spring frenzy.
Earlier this month, Mr. Kutyan drew 18 bidders for a four-bedroom house with an asking price of $1.195-million at 64 Felbrigg Ave. The red-brick Georgian in the prestigious area near the Toronto Cricket Skating and Curling Club area sold for $1,872,017, or $677,017 above the asking price. More than 200 people streamed through, the agent says.
On the same day, he listed another four-bedroom house at 167 Armour Blvd. with the same asking price. That house, in the Armour Heights area near Avenue Road, attracted four offers and fetched a whopping $1.820-million, or $625,000 above the asking price.
Mr. Kutyan believes one reason his strategy is successful is that prospective buyers are surrounded by potential rivals.
"Nobody is talking about market conditions when they're surrounded by all kinds of people," he says. "They're looking at each other. Everyone thinks they're all in the running."
Mr. Kutyan notes that the Cricket Club house, south of Highway 401, had twice the number of hits on MLS and twice the number of showings as the Armour Heights house north of the 401.
"The result for the latter still exceeded our expectations," he says. "However, it was interesting to see the stark difference in activity between the two listings."
Mr. Kutyan adds that the strategy doesn't work as reliably as it did in the first quarter, when buyers seemed more ravenous, but it's still successful in areas where there is high demand, such as Lytton Park, Allenby, Bedford Park and Lawrence Park.
"These neighbourhoods right now have way more buyers than listings," he says.
He points out that the Armour Boulevard house is located in the Lansing-Westgate area, where the level of inventory far outweighs the number of sales. In the pocket Mr. Kutyan looked at, there were recently 28 properties listed for sale, with only two sales in the previous 30 days. In the slice he examined near Yonge and Eglinton, there were 97 active listings and 42 sales in the previous 30 days.
At that rate, it would take 14 months to absorb the existing inventory in Lansing-Westgate and only 2.3 months at Yonge and Eglinton.
"It's all inventory-based and location-based," he says.
Mr. Kutyan adds that the traditional family neighbourhoods south of the 401 don't have as many speculative buyers as areas such as Willowdale, where vintage bungalows have been razed and replaced with much larger new houses.
As for sellers, the agent says some don't want to acknowledge that prices have softened. If they are too unrealistic, he says, he will pass on the listing rather than have a property that languishes.
Ms. Morrison is listing most properties these days without an offer date. She believes many house hunters are worn out by previous bidding wars.
"I'm certainly encouraging owners to take offers at any time."
Ms. Morrison expects to see the supply of listings swell in the fall because many owners who tried unsuccessfully to sell in the spring will list again after Labour Day. Meanwhile, those owners worried about the summer slowdown are also holding off until September or later.
Buyers already have trouble making a decision when there's too much to choose from, she says. She is encouraging clients who want to sell a property to list now before there's too much competition. "List in the summertime. People are here. Why wait?"
Still, she knows of anxious sellers who hope to strike a better deal when summer vacations are over.
"I think that's a huge mistake. People who list in the fall are going to have a rude awakening."