The market is slowing down. By this, we mean that prices are down (down 5% from June 2023 to July 2023 and down 4% year-over-year on average). Listings also are coming up. Right now, the market has come to its regular seasonal halt. Here’s what we expect for the fall market in Toronto.
Continued pressure on affordability: Bank of Canada is acting aggressively to curb inflation, which is still higher than their target. Therefore, we’ll likely have another rate increase before the end of the year. This means homeowners who renew mortgages or buyers needing to update their pre-approvals will be hurting. This will push home prices down more, but those lower prices won’t make up the difference in the monthly carrying cost of the house with high-interest rates.
Lots of listings: Sellers are busy prepping their houses to sell in the fall. We know this because we’re working with several waiting for the fall to get their home on the market. Many of the agents we are speaking with are also busy prepping listings. The high rate of listings isn’t necessarily because of the interest rates. Instead, many homeowners have been holding on to their homes, waiting for the market to return to the 2021 frenzies we were all used to. Now, it is clear that those days are gone. People are getting on with their lives. Beyond this, investors will likely start to liquidate their properties because rents will no longer cover their expenses.
Buyers will have the power: We expect the fall to be a buyer’s market. There will be more listings than buyers so that buyers will have choice and time, formerly unheard-of luxuries in the Toronto market.
Fewer bidding wars: bidding wars favour sellers and not buyers. Bidding wars are created by agents because they artificially underprice the list price to create interest. However, cautious buyers are trepidatious with bidding wars, and, therefore, therefore, in a buyer’s market, we will likely see a sharp decline in bidding wars.
The most important thing is not to panic. Remember that the best time to buy a house is when you need a place to live. And the best time to sell a home is when you’re ready to move. If you are a buyer with lots of cash, you are the king of the castle right now. The market is slowing, and you can take advantage of this.
If you need a mortgage, remember to focus more on your monthly affordability rather than the property’s price. And put as much cash into the house as you can.
If you need to buy and sell simultaneously, you should sell first and then buy. The market is too unpredictable to buy first and then sell safely.