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A home for sale in Toronto is pictured on May 11 2017.Fred Lum/The Globe and Mail

Over the past few weeks, realtors have witnessed some unusual activity in Toronto's fiery housing market: Buyers are hesitating.

Properties are listed for longer than a week. Two to three offers are being made on a house instead of 10 to 15. Homeowners are agreeing to conditional offers. Some sellers are not getting the prices they expected and are yanking their properties off the market to relist them at higher prices.

"Sometimes properties are not selling right away," said Elli Davis, a realtor with Royal LePage, who has worked in Toronto real estate for more than three decades. "Some are still a week. But some of them now I am seeing over 14 days, 20 days."

Read more: Economists change tune on foreign-buyers tax in Ontario

"I would not say this market has fallen apart or anything like that," she said. "I think it is just normalizing and levelling off."

Realtors in the Greater Toronto Area started to notice a shift in consumer behaviour earlier this year, around the time Ontario's Liberal government began talking about ways to cool Toronto's housing market. The province brought in a tax of 15 per cent on foreign buyers in the area on April 20 to stop speculators who are believed to be snapping up houses, and unveiled other measures designed to make homes more affordable.

It is too early to tell whether the foreign-buyer tax will dampen enthusiasm in the Toronto region. But for now, some people are waiting to see whether real estate prices will fall.

"Some buyers are skeptical or on the fence of buying because of the recent changes that the Liberals made," said Raj Hunjan, a sales representative with Century 21, who sells homes in the Toronto area. "They are waiting to see what kind of evolves around it."

For years, policy makers have warned that the housing markets in Vancouver and Toronto were overheated and could cause people to take on more debt than they can manage. Several housing policies rolled out to slow the market, including stricter mortgage rules the federal government brought in last October, appeared to have little effect.

As Ontario's government threatened to act earlier this year, more homeowners decided to put their properties up for sale.

The number of new listings jumped by a third over April, 2016, according to the Toronto Real Estate Board, flooding the market with fresh properties and giving buyers more choice.

"You have a lot more inventory," Mr. Hunjan said. "You are starting to see a lot less of those bidding wars. Last year, stuff was selling regardless of what season you were in."

Total sales for April dropped 3 per cent from the previous year, with the biggest declines just outside of the City of Toronto, according to the Toronto real estate board. Sales fell in detached houses, semi-detached houses and townhouses, and increased in condos.

Real estate prices continued to climb, however, with the average price of a detached house in the city of Toronto jumping 25 per cent to $1.58-million in April.

Realtors agree that prices are not going to drop, even if their clients believe otherwise.

"They think they can time the market if it slows down a bit," said Karen Law, a sales representative with Keller Williams Referred Urban Realty, who specializes in Toronto. "There is some speculation that the market might slow down, they might be able to get in at a slightly better price."

Ryan Roberts, who has been selling residential property for a decade in Toronto, said he is constantly reminding his clients that prices are not going to fall, because not enough houses are available to meet demand.

"They are all saying, 'We are hearing the market is going to drop.' No professional realtor feels that there is anything that is going to impact a seller's market. It is still going to charge up," said Mr. Roberts, who is with Bosley Real Estate.

"I have no question in my mind that if there is a slowdown right now, it will be very short. It won't be dissimilar to Vancouver," he said.

The Vancouver region got its own foreign-buyer tax last August, which helped push sales volumes to a multiyear low in January and dragged down the average price of a detached house in Greater Vancouver, although prices for other types of housing, such as condos and townhouses, continued to climb.

But sales activity has started to rebound, with the number of transactions reaching 3,553 in April compared with 1,523 in January, according to the Real Estate Board of Greater Vancouver. Although that is still down from a record high of 5,173 transactions in March, 2016.

"The pile-on of the two announcements dented consumer sentiment," said Gregory Klump, chief economist with the Canadian Real Estate Association, referring to Vancouver's foreign-buyer tax and the changes to federal mortgage rules.

"There was very much a stalemate going on," he said. "People believed the hype that the housing market was going to crash and so buyers were giving lowball offers to sellers who were in no distress to sell, and they said: 'Nah, I am not taking your lowball offer.' And that would have been a bit of a stalemate. That logjam is beginning to break, it would appear."

Of course, no one knows whether the Vancouver market will resume its frenetic pace or whether Toronto's real estate sector will turn. April could have been a lull. Previously, when Ottawa tried to calm the housing sector by slashing maximum mortgage amortization periods in 2012, there was a period of weaker sales before it picked up again. "Typically, in the aftermath of tighter federal regulations, what we have seen is that after six months, the market begins to recover," Mr. Klump said.

What is known is that signs of a slowdown are also appearing in nearby Hamilton, one of the cities in the Golden Horseshoe area covered by the foreign-buyers tax. Hamilton has experienced a boom in real estate prices as buyers have fled Toronto in search of cheaper homes.

"We are still seeing purchases go through," said Brian Hogben, a mortgage broker in Hamilton. "We are still seeing bidding wars. But we are not seeing as many.

"When I am talking to my realtors, instead of having 10 to 12 offers on a property, they are only getting two or three. So, there is a bit of a slowdown right now."

The Hamilton broker also said realtors are now accepting conditional offers on properties. "It used to always be cash, right? You didn't win the deal unless you paid cash," Mr. Hogben said.

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This Riverdale semi-detached home went for $530,000 over the asking price after just five days on the market

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