Patrick Rocca recently sold a detached house in Toronto's coveted Leaside neighbourhood for just under $1.7-million. The buyers are happy because they competed with another set of bidders and still paid less than the asking price.
The homeowners are also pleased, despite the fact that a nearly identical house fetched more than $2-million at this time last year, Mr. Rocca of Bosley Real Estate Ltd. says.
His message to sellers is blunt: "2017 is gone. Get over it."
In early 2017, Mr. Rocca presided over auctions where upward of two dozen bidders would lob offers without conditions. He was regularly shocked at the mind-boggling amounts above asking buyers were willing to pay to secure a deal.
This year, he says, some properties are selling with multiple offers, but the bidding may come with a twist. A property might draw a flurry of bids, for example, but all of them are conditional on financing. In the case of the detached house, two competing bidders offered less than the asking price.
In some cases, Mr. Rocca will go back to prospective buyers and ask if they are willing to sweeten the deal with more cash or make the offer firm.
"They will not remove their condition because the banks tell them not to," he says. "The banks are actually spooking their clients a bit."
He says some banks are concerned about making sure consumers seeking uninsured mortgages pass the "stress test" that has been in place since Jan. 1. In some cases, lenders fear a client will get carried away and the property won't be appraised at the sale price.
All of the uncertainty means a sale on offer night is no longer guaranteed.
"We're still doing business," Mr. Rocca says, but deals are more complicated. "If you're an agent, you've got to work."
Mr. Rocca is urging buyers and sellers to remain rooted in reality. The market is off to a late start, he says, and it's very inconsistent.
"I'm finding buyers are skittish on multiples."
He points to one house that was recently listed with an asking price of $1.589-million. After it failed to sell on the offer night, it was immediately relisted with an asking price of $1.9-million.
"People are kind of laughing at it," Mr. Rocca says, adding potential buyers often become incensed when they see a house that couldn't find a buyer at one price come out at a higher one. "It's the kiss of death."
Over all, he sees no repeat of the unfettered run that happened at this time last year – only to come to a near-halt after the Government of Ontario introduced a foreign-buyers tax and other policy measures in April.
"There's no doubt we're down in pricing," Mr. Rocca says.
The latest statistics from the Toronto Real Estate Board show the average price in the Greater Toronto Area dropped 12 per cent in February from the same time last year while sales plunged 35 per cent in the same period. The average price ended February at $767,818, which was a 4.2-per-cent increase from January.
He warns that March may show steeper year-over-year declines.
"I will be shocked if March isn't worse," he says, pointing to the school and religious holidays during the month.
Mr. Rocca expects sales to pick up in April. He will have more listings coming out after the Easter long weekend.
"Is it going to be 2017-good? No. And I'm saying that to my sellers."
Mr. Rocca says some industry players appear to believe that presenting a relentlessly positive view will encourage buyers, but he thinks that strategy is misguided.
"You've got to tell them what's really going on," he says. "Don't overstate it and don't say the world's crashing."
Many industry watchers have been stressing to consumers that the fortunes of the GTA real estate market vary tremendously by neighbourhood. Potential buyers can peruse the information to scope out affordable pockets and decide on a bidding or negotiating strategy. Homeowners planning to sell may delve into the stats in order to choose an asking price and decide whether or not to set an offer date.
Toronto-based real estate firm Zoocasa recently mapped out the rise and fall of individual neighbourhoods in the 416 area code to show which areas are heating up and which are cooling.
The changes ranged across price segments, but Zoocasa says many of the areas on an upswing are located farther from downtown and may have drawn buyers who were priced out of more central neighbourhoods after the stress test came into effect.
Straddling north Etobicoke and Brampton are some of the warmest neighbourhoods. Those include Rexdale-Kipling and West Humber-Clairville, for example, where house prices rose five months in a row. The Scarborough pockets of Agincourt and Milliken have posted a shorter string of gains, while the Beaches, Forest Hill South, Kennedy Park, Oakwood-Vaughan and Willowdale have recently racked up consecutive increases.
Neighbourhoods where prices have fallen three months in a row include Flemingdon Park, Thorncliffe Park and Leaside.
The Bridle Path, Hoggs Hollow and Don Mills cooled in back-to-back months.
Zoocasa used sold prices and sales numbers from TREB to calculate the month-over-month price changes for the past 12 months to identify the neighbourhoods where house prices are increasing and decreasing.
The firm says if narrowed its study to the semi-detached and detached segments because those types of properties were harder hit as the market slowed down. Many buyers had already shifted their focus to the condo market as house prices soared in recent years.
The average price for a detached house in the city of Toronto fell about 18 per cent between April of last year and the end of February.
Paul Maranger of Sotheby's International Realty Canada says buyers and sellers are adjusting to a completely different mood so far in 2018. Mr. Maranger has found listings are still below typical levels of 2016 and the years previous, but there's no longer a sense of panic infusing the market. People now tend to be more deliberate about their purchase.
"Buyers are very rational this year and I like it."
This year, he advises sellers to set realistic prices and buyers to move when they see the right property.
"Last year, our role was completely the opposite. It was calming buyers down."
Mr. Maranger recalls trying to dissuade buyers from forging ahead with a purchase that left off many of the elements on their list. Many were too anxious about the extreme shortage of listings and swiftly rising prices to wait for the right house.
"Unfortunately, a lot of buyers made irrational decisions because there was no choice."
The market was already beginning to lose some steam when the province introduced the cooling measures. The changes unsettled buyers just as homeowners rushed to list their properties.
Mr. Maranger says that shift led to a stagnant May, when "there was a preposterous level of caution." Buyers are still measured, but they've gradually become more resolved to buy, he says.
"We've had conversations with all of our sellers – don't wait. Take advantage of it. We started pushing people early because there's nothing on the market."
He adds that some house hunters still aren't used to the less hurried pace. If a house doesn't sell on the scheduled offer night or doesn't set an offer night at all, potential buyers ask what's wrong with it.
Mr. Maranger says many sellers want to wait until the garden comes to life and their backyard swimming pool looks inviting. Those sellers risk competing with the other homeowners who put up their "for sale" signs at the same time, he says. He doesn't understand the logic of waiting for spring blooms.
"If your house has snow, the house down the street doesn't have palm trees – it also has snow on the lawn."
Most sellers understand that current market conditions are very different from last year's hype, he says.
"We're having educational discussions with sellers," he says. "Last year's market was completely abnormal."
While some agents continue to time their listings to the rhythm of the school calendar, Mr. Maranger believes the schedules of many people are more fluid these days.
"Our industry is completely unlatched from the academic school year," he says. "Buyers are ready."