Toronto-area real estate market continues to slow down for third month

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Along with many people who live in the city, the Toronto-area real estate market appears to be taking a bit of a breather in July. Fewer people are listing their homes for sale, and the languid pace looks set to continue through the summer.

“Things are kind of trodding along,” says Davelle Morrison, a real estate agent with Bosley Real Estate Ltd. “It feels like it’s slow.”

Ms. Morrison says pockets of action still exist: The lively downtown area near King Street West and Bathurst Street is attracting buyers who want to be close to the neighbourhood’s packed bars and restaurants.

Many single-family homes also still spark competition, but the bidding is not as intense and “days on market” tend to be longer. Altogether, the market remains hot – but buyers are not facing the blast furnace heat they experienced in February and March.

June marked the third consecutive month in which sales declined in the Greater Toronto Area. According to the Toronto Regional Real Estate Board, 11,106 homes traded hands in the GTA in June compared with 15,652 in March. New listings in the area fell to 16,189 in June from 22,709 in March.

Still, the average price in the GTA stood at $1,089,536 in June – a 17-per-cent jump from the same month last year.

Stephen Brown, senior Canada economist at Capital Economics, says that the same trends are happening across most of the country. Mr. Brown points out that a decline in listings means that prices look set to keep rising.

“While there is no doubt that the surge in prices – particularly for single-family homes – has priced many people out of the market, we suspect the more important factor behind the drop in sales is simply the lack of homes for sale,” Mr. Brown says.

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Ms. Morrison believes many Toronto-area residents are enjoying their leisure time on the city’s outdoor patios or heading out of town now that COVID-19 lockdowns in Ontario are loosening up.

Condos west of Yonge Street are selling briskly, she says, while those on the east side of the main artery are sitting longer.

Ms. Morrison listed a one-bedroom-plus-den unit at 76 Shuter Street with an asking price of $640,000 – and instead of setting a date for submitting bids, she’s accepting offers any time. Potential buyers are booking showings, she says. But so far, the unit hasn’t sold, despite the fact that it’s close to the Eaton Centre’s shopping and dining.

She also listed a condo in the Yorkville area for $1.25-million, but it did not sell when she put it on the market in May. The condo has two bedrooms and two bathrooms in just more than 1,000 square feet, which is a size that typically appeals to the downsizing market, she says.

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And when she compared her listing with others on the market at the same time, only two of 16 had sold, she says.

“It’s really hard to get that higher-end market because people have taken off,” she says of the folks who moved full-time to their cottages up north. “People are done – and now that they’re vaccinated, they’re just taking off that much more.”

Ms. Morrison plans to bring the listing back out in the coming weeks at a lower price of $1.15-million.

Meanwhile, the west end is loaded with the huge developments at Cityplace and Liberty Village, among other projects. Since sales there are so brisk, it buoys the overall condo segment.

“Whatever is going on in C01 is going to skew those stats,” she says. Under TRREB, C01 covers downtown areas west of Yonge Street, including King Street West, Cityplace and Liberty Village. “There are a ton more condos on the west side than the east.”

Another listing she has coming up for a one-bedroom unit at 1030 King St. W near Shaw Street will likely sell quickly, she anticipates. The unit with 600 square feet of living space and a balcony is likely to appeal to a buyer who wants to be close to friends and entertainment.

“It’s still sort of the first-time buyer go-to,” she says. “I think the twentysomething and thirtysomething market likes the energy.”

Looking ahead, Ms. Morrison expects the fall market to feel relatively normal after some wild swings in both directions over the past year.

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“I think September is going to be this big overhaul,” she says, as some people return to work in offices, students go back to school and international borders may reopen. But for now, she senses many people are still contemplating the changes that the fall may bring. “COVID has taught us that planning ahead is tricky.”

Meanwhile, some owners of detached and semi-detached houses are also accepting offers with conditions attached, which is a signal that the days of pressure-cooker competition are in the past. Buyers have a slightly better opportunity to negotiate a deal for a house, Ms. Morrison says, but they still need to be aggressive if they see a property they really want. As for sellers, she observes that some homeowners decided to list when health restrictions were eased, but she is advising most of her clients to wait until the fall unless they need to sell urgently.

“I think a lot of us are telling people it will be better to list in the fall. Everyone will be back in town – they won’t be on vacation.”

Looking ahead, Mr. Brown at Capital Economics predicts the Bank of Canada will continue to keep an eye on the rate of employment in this country – along with house price inflation – as economists try to gauge when the central bank might raise interest rates.

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