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In December, a two-bedroom-plus-den unit in the luxurious Florian building at 88 Davenport Rd. was listed for $3.78-million, but the price was cut in January to $3.495-million.Royal LePage Real Estate Services Ltd.

Real estate agents in the Greater Toronto Area often talk of the “buyer fatigue” that can take hold when clients become worn down by fierce bidding wars and runaway prices. Now some “seller fatigue” is infusing the downtown condo market.

Many landlords who have been struggling to rent units have decided to try their luck at selling, but that has been a challenge too.

“I think certain investors are starting to get tired,” says Manu Singh, a real estate agent with Right at Home Realty Inc. “I’m seeing some seller fatigue.”

New condo listings hit the market in early January, he says, and the fresh supply is motivating some sellers to agree to offers that they would have spurned in the fall.

“Investors are weakening,” he says, of those who haven’t been able to collect rent or sell the unit at the price they hoped for. The speculators on the sidelines are looking at the opportunity for arbitrage.

“As soon as people smell there’s an ability to buy low and sell high, there’s going to be a ton of investors.”

The discounts available in the condo segment helped boost the GTA real estate market to a surprisingly strong performance in December, says economist Rishi Sondhi of Toronto-Dominion Bank.

The Canadian Real Estate Association recently reported that sales in the GTA jumped 24.9 per cent in December from November.

“A chunk of December’s gain can be put down to strong growth in GTA condo sales – itself likely a function of heavy discounting in recent months, the magnitude of which could lessen in the future” Mr. Sondhi said in a note to clients.

Mr. Sondhi cautions that he is expecting sales and prices to cool somewhat from their robust pace, but he adds that December’s strength makes hitting his forecast a tougher proposition.

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The Florian unit is move-in-ready and boasts a large balcony.Royal LePage Real Estate Services Ltd.

Elli Davis, a real estate agent with Royal LePage Real Estate Services Ltd., has many of her listings in midtown Toronto, which has not seen the flood of inventory that swamped large, downtown towers.

She says the larger units - which tend to appeal to people who want to live in them rather than rent them out – have been selling if they are move-in ready.

“It’s a little bit more questionable now with the ones that need renovations,” she says.

Rules vary from one building to another, but many condo corporations are not allowing renovations while the city is struggling to control the spread of COVID-19.

“People will not be able to buy and close, and start their renovations,” she says. The delay could be costly for purchasers if they have to hold onto an existing residence in the meantime.

For units that are ready to go, Ms. Davis advises sellers to be realistic about pricing.

“I’m a very sharp pricer,” she says, adding that owners are willing to listen if they are intent on selling.

In December, Ms. Davis listed a two-bedroom-plus den in the luxurious Florian building at 88 Davenport Rd. The spacious unit has a large balcony and is fully move-in ready, she says.

Ms. Davis listed the unit with an asking price of $3.78-million, then reduced the price to $3.495-million in January.

“The owner is serious,” she says.

Last week she sold a two-bedroom unit at Yonge Street and St. Clair in the $755,000 range.

Ms. Davis says listings for single-family houses and larger condos are scarce at the moment but more will be coming on.

“I think people are not sure what to do, but I’m encouraging them to get ready,” Ms. Davis says.

Those who aspire to be real estate investors or expand their portfolios are trying to figure out the optimal time to leap in, says Mr. Singh, who has been flooded with calls and e-mails from his investor clients.

“It’s a tricky game to play,” Mr. Singh says. “It’s very hard to time the bottom.”

He is seeing positive signs, but he’s still advising his clients to be cautious because he’s noticed some wild swings in sales and prices. Showings have also increased, and offers are coming in on units that have been languishing.

“All of these things are pointing to a change in sentiment.”

Some of the inventory that rushed into the market in September is starting to be absorbed – especially for the larger two-bedroom, two-bathroom units. The micro condos and small one-bedrooms are a tougher sell.

Mr. Singh estimates condo prices downtown have fallen about 10 per cent, but he expects to see a further decline of about 5 per cent.

Prices in real estate are a lagging indicator: When sales tumble, it generally takes months for prices to fall because sellers stubbornly hold out for the number they want. Trading in properties is relatively illiquid compared with buying and selling equities and other assets, he adds.

Also, deals can still be fragile, says Mr. Singh, who had one conditional offer for a downtown condo fall through after the buyer read through the condo by-laws, which set a maximum height for vehicles entering the parking garage. There was enough clearance at the entrance for the buyer’s pick-up truck, but a perusal of the fine print showed that the truck wasn’t allowed.

The outcome was disappointing for the seller because the unit had been sitting with an asking price of $799,000 for 32 days before receiving an attractive offer.

Mr. Singh expects more volatility through the first quarter, but he notes that, overall, real estate has been resilient so far. He is optimistic that the downtown condo segment will be able to gain ground later in 2021.

Rents in the core have dropped as much as 35 per cent in many high-rises, he says, but once a large percentage of the population is vaccinated, immigration will ramp up and international students will return, in his opinion.

“I think we’re very close to the bottom because we’re seeing things starting to turn.”

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