After perking up a bit in July, the Toronto-area real estate market seems to be sleepy again in August.
Nicole Harrington, a real estate agent with Realosophy Realty Inc. in Toronto, says some buyers are taking a time-out to enjoy the summer weather rather than looking at houses.
“People say, ‘I’m going to be spending my time at the cottage,'” she says.
But the house hunters who remain committed to the search often snag deals in August, she adds. The homeowners who have their property listed in the most somnolent of months are often motivated sellers, according to Ms. Harrington. They know their property will be compared against the shiny new listings that appear after Labour Day.
Buyers, meanwhile, have fewer rivals because of all the people who have put their search on pause.
Ms. Harrington points to a house in the west end of Toronto as an example. The two-storey detached house at 82 Methuen Ave. was listed in April with an asking price of $1.398-million.
The house had lots of appealing features, including wood trim, stained glass, a renovated kitchen, a garage and a sought-after location near Humbercrest Public School, which offers a French immersion program.
Ms. Harrington’s clients made an offer that was rejected by the sellers. The house sat on the market for 61 days. When it was relisted in July, the new asking price was $1.329-million. Meanwhile, the antique furniture was taken away and the house was given the full staging makeover – including dove grey paint and modern art on the walls.
The house remained on the market for another 24 days and sold for $1.225-million.
In Ms. Harrington’s opinion, the eventual buyers swung a good deal. By her estimate, the house was worth somewhere around $1.3-million.
By comparison, a nearby house of similar size at 21 Valleyview Gardens was listed in April with an asking price of $1.098-million. It sold seven days later for $1.2-million.
The Valleyview house had been untouched for many decades. By buying at the height of summer, the buyers of the Methuen house paid about the same amount for a property that requires far less updating.
In another instance, a detached house at 20 Cedar Ave. in the Beaches was listed in May with an asking price of $1.55-million. Ms. Harrington says the house did not sell on the night scheduled for reviewing offers.
The house was relisted with an asking price of $1.69-million, or $140,000 more than the original asking price. She figures that, after 87 days on market, it would not be surprising to see the sellers list again in the fall when more potential buyers are circulating.
August is typically a quiet month in real estate; it remains to be seen if sluggishness this month is following the usual seasonal pattern or if it’s slower than previous years.
As for why a seller would list now instead of waiting for the fall, Ms. Harrington says there can be a variety of reasons. Some homeowners and their agents prefer to get out ahead of the fall rush.
In other cases, owners have already purchased another property and they need to move their current home before the other deal closes. And sometimes, a change in circumstances – such as a job transfer – prompts the owner to list in the summer.
Agents say many homeowners are gearing up to list in September. Lots of potential sellers were discouraged from listing in the spring as buyers grappled with tighter mortgage stress-test rules and rising interest rates.
Ms. Harrington says her phone has been ringing in the past week with calls from sellers planning to list and buyers telling her that they are planning to renew their efforts after a break. The couple who lost out on the Methuen house, for example, were on a summer break, but they intend to jump back in.
Still, she and other agents are not predicting a return to the frenzied buying that characterized 2016 and early 2017 in the Greater Toronto Area.
Benjamin Reitzes, a strategist with Bank of Montreal, sees signs the overall Canadian housing market is stabilizing after “a very difficult start to the year.”
Activity in Toronto bounced back in July, he notes, but remains well below frothy 2016 levels.
Mr. Reitzes is also keeping an eye on the Vancouver area, where the market continues to struggle. He believes buyers there are still adjusting to the new mortgage regulations that came into effect nationwide on Jan. 1. Tightened foreign-buyer rules are also having an effect in British Columbia, he adds.
At Capital Economics, forecasters continue to view the Canadian housing market as fragile. While many market watchers are expecting the Bank of Canada to lift its benchmark interest rate in September, Capital Economics thinks an October hike is more likely – if a deal on the North American free-trade agreement is reached.
Stephen Brown, senior Canada economist, says the country’s economy carried more momentum into the second half of the year than he was expecting but such strong growth is unlikely to be sustained.
Carolyn Ireland