For sellers in the Toronto-area real estate market, setting a tantalizing asking price is a crucial piece of strategy.
Real estate agent Ira Jelinek of Harvey Kalles Real Estate Ltd. says a house near Winona Drive and Vaughan Road wasn’t even on his radar screen until the price was trimmed by $100,000.
The newly built house was first listed with an asking price of $1.99-million. When the price was reduced to $1.89-million, the listing showed up in an online search and Mr. Jelinek quickly booked a showing for his clients.
“We jumped right away.”
The couple, who had been searching for more than one year, negotiated a deal for $1.875-million.
“In that pocket, there’s been a little correction,” Mr. Jelinek says of the area north of St. Clair Avenue West in central Toronto.
For the clients, having some bargaining power spurred them to make a move.
“Anything with an eight in it is attractive compared with the psychological barrier of $2-million,” he says.
Mr. Jelinek says house and condo owners are continuing to list properties even in the holiday season.
While some might wait for the spring, Mr. Jelinek says sellers will list now if they have a change in their living circumstances. In some cases, people have bought another house or condo and they need to sell an existing one.
“Sometimes they don’t have a choice.”
In other cases, people don’t mind listing now because there are fewer competing properties for sale.
If there are no comparable properties on the market in a certain neighbourhood pocket or building, Mr. Jelinek says, the seller may have an advantage.
“If it’s a good time on a micro level – let alone a macro level – it makes sense,” he says.
Listings have been thin, which means buyers still often compete for a desirable property. Sales and prices have stabilized in some areas and risen in others.
Mr. Jelinek says homeowners who hang a “for sale” sign now may have the only listing in the immediate area.
He points to the example of a one-bedroom-plus-den condo in a building where there hasn’t been a sale in two months.
“I’d say give it a shot because, come January, you could have more competition.”
Meanwhile, buyer traffic is steady. Mr. Jelinek has a 1,060-square-foot condo unit for sale at 18 Merton St. in midtown Toronto. In the first two weeks, about 45 parties made appointments to see the two-bedroom penthouse with an asking price of $935,000.
Looking ahead to 2019, Mr. Jelinek expects the market to continue at a steady pace. Most potential buyers are aware of interest rate movements and they will be keeping an eye on the Bank of Canada’s policy-setting meeting in January, he says.
House hunters also monitor losses in the stock market and economic jolts such as the closing of the General Motors Co. plant in Oshawa, Ont., that will likely see 2,500 workers lose their jobs, he says.
A rate hike may create a little more hesitancy in buyers and sellers, he says, but he expects the Toronto-area market to remain balanced.
“There are reasons to buy and reasons not to buy – and that’s what makes a healthy market,” he says.
At Capital Economics, senior Canada economist Stephen Brown believes the Bank of Canada could make a serious policy mistake if it raises interest rates too drastically.
Mr. Brown says third-quarter data show that consumer spending growth slowed. In additional bad news for the household sector, the household saving rate since 2016 was revised lower.
Mr. Brown cautions that households as a whole are taking on debt faster than they are paying it off. While that trend has been sustained for 16 years, Mr. Brown cautions that it can’t last forever.
If the Bank of Canada continues to raise rates, households might struggle to cover their interest payments, he warns.
Mr. Brown thinks this will be a worry for central bank officials. As a result, he believes that interest rates will peak at a lower level than markets expect and the Bank of Canada will be forced to reverse course next year.
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