Sales in the GTA dipped for a second consecutive month in July, according to the Toronto Regional Real Estate Board. This decrease comes as the Bank of Canada raised its benchmark rate twice since June, putting the brakes on the housing market in the region.Bosley Real Estate Ltd.
The lethargic real estate market in the Greater Toronto Area is picking up a little bit of momentum in early August.
Patrick Rocca, broker with Bosley Real Estate Ltd., says inventory has been extremely low so far this summer but he has recently been heading out two or three times a week to meet homeowners who are preparing to sell.
“I’ve been really busy doing evaluations for upcoming listings.”
Sales in the GTA dipped for a second consecutive month in July, the Toronto Regional Real Estate Board reported.
Daren King, economist at National Bank of Canada, says sales dipped 8.8 per cent on a seasonally adjusted basis in July from June. That result followed an 8.4-per-cent decline the previous month.
The latest decrease comes as the Bank of Canada raised its benchmark rate twice since June, putting the brakes on the housing market in the GTA, which had seen a surge in activity since the start of the year due to demographic growth, Mr. King notes.
“As affordability continues to erode, home sales should decelerate further in the months ahead,” Mr. King says.
The economist notes that new listings jumped 7.7 per cent from June to July for the fourth consecutive monthly increase.
Combined with the decrease in sales, active listings rose 19.5 per cent to bring the active listings-to-sales ratio in line with the historical average, he says.
Sales increased 7.8 per cent compared with July, 2022.
The condo segment was hardest hit during July, with a 22.8-per-cent drop in sales from June.
Munira Ravji, real estate agent with Royal LePage Signature Realty, says many investors who own condo units are listing them for sale because high interest rates are pushing up carrying costs.
Properties with tenants are difficult to sell to other investors because they prefer a vacant unit, she adds.
Ms. Ravji is working with buyers who purchased a unit in May and planned to move in when the deal closed in July.
The tenant balked at moving out, she says, and the owner is now turning to the Landlord and Tenant Board.
The buyers could walk away from the sale because the seller is not able to provide vacant possession as agreed, she notes, but the buyers believe they got a good deal when they purchased the 730-square-foot unit for approximately $522,000.
Still, the buyers are in a bind as well, she says, as they figure the sale may not close until after a hearing at the Landlord and Tenant Board, which will likely take months.
“It came with this headache,” she says. “As they’re waiting to close, the interest rate is going up. We weren’t anticipating that we wouldn’t be able to close by the end of the year.”
Such scenarios are causing many potential buyers to refuse to look at a unit if a tenant is living in it.
“It makes people feel really hesitant,” she says.
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In another case, Ms. Ravji is listing a unit for sale at 45 Carlton St. in Toronto. The seller estimates that wear and tear on the unit from tenants living there added up to about $25,000 worth of repairs.
As a result, Ms. Ravji is listing the vacant unit with an asking price of $599,000. A comparable renovated unit in the building would sell for $850,000 or so, she says.
Some tenants are holding out for “cash for keys” as an enticement to move out, she says.
“Tenants are asking for really high amounts.”
She notes that the tenants often find it difficult to find a new place to live. In some cases their credit rating has deteriorated or they’ve lost a job.
“It’s really hard on both sides,” she says. “The tenants are in a rough spot and the landlords are in a tough spot.”
Ms. Ravji adds that real estate agents representing the seller often end up caught in the middle. The owner doesn’t want to alienate the tenant further and the tenant doesn’t want to argue with the owner.
As a result, she often feels the brunt of the anger from the two factions.
“The situation is getting so contentious, I’m a mediator at times,” she says. “It’s a really, really stressful time for everyone.”
Ms. Ravji believes these dilemmas are contributing to sluggish sales, along with higher interest rates.
She believes there will be an uptick in listings in August as potential sellers anticipate a possible rate hike by the Bank of Canada when policy-makers meet in September.
For homeowners who have their property polished and ready for a “for sale” sign, Mr. Rocca says buyers are still circulating in early August.
Following the Simcoe Day long weekend he listed a detached house with an asking price of $2.599-million backing onto a ravine at 68 Rykert Cres. in Toronto’s Leaside neighbourhood.
“There’s demand out there – if you can get on the market now.”
He is discouraging clients from listing in the second half of the month when families often go on vacation before the start of the school year.
While some properties languish, those that are priced reasonably will sell quickly he adds, pointing to the recent sale of a two-bedroom, two-bathroom condo unit he listed in Toronto’s Bayview and Eglinton area with an asking price around the $1-million mark. The unit drew three offers and sold for $100,000 above asking.
Some potential sellers are getting houses ready for sale in September, he says, but others are thinking as far ahead as early 2024.
“If they can do it in the fall they will – if not they are looking to January,” he says.
Carolyn Ireland