People put homes on the market for any number of many different reasons, and that’s true at any given time. But what occurs is that there are specific factors that come into that decision based on the current environment paired with the nature of the sellers’ prerogatives. This is nothing new, but a recent article on Bloomberg Business stated that the number of homes that have been pulled off the Toronto real estate market is shockingly high. It doesn’t take a rocket scientist to understand the primary reason this is happening – dropping median home values across the country – but what may be more noteworthy is the way this part of the ‘correction’ may actually be pushing the prices for homes still on the market higher.
How that works won’t be difficult to understand either. Fewer homes on the market along with lower market values for them will mean the homes remaining on the market will be listed at lower prices. That much will sound appealing for home buyers, but with more prospective home buyers than ever before in Canada the bidding on those homes may well take them up to the pricing levels that were considered ‘inflated’ in the first place. This will always be the case in hot markets like Toronto and Vancouver where the desirability factor never abates and it seems supply will never catch up to demand.
For a realtor this can go either way in as far as their fortunes are concerned, and how well they’re able to make a viable career out of being a real estate agent in 2022. Having mass numbers of homes be de-listed isn’t going to be a good thing for any of them, but here at Real Estate Leads our online real estate lead generation system is very beneficial for giving realtors the means of drumming up new clientele no matter how the market is going or which area of Canada they are working as a real estate agent.
That’s the positive slant for now, but let’s look at this de-listing trend for homes in Toronto.
Waiting Game?
Toronto-area real estate brokers are saying one thing is very clear here now in the summer of 2022 – more would-be sellers are choosing to delist their homes in the face of a cooling housing market and sinking prices. There has been a very large increase in the number of cancelled listings compared to last year, along with different rationales for why a homeowner would be choosing to delist their home.
In a best-case scenario for prospective buyers there are some who are taking their home off the market to re-evaluate and / or re-list at a lower price. This will cover the majority of owners who are selling because they need to sell, and that can be the case for any number of reason but most of the time it is related to their employment or new family realities. In the industry this is regarded as a ‘sign of mis-pricing in a slower market’ he said.
Fewer in number but still relevant in this segment of the trend are homeowners who’ve simply decided they no longer want to sell their home and are going to remain in it for the foreseeable future. There are also those who find themselves in a position where they’ve bought a new property, but selling their existing home and getting what they need for it isn’t happening. This forces them to back out of the new property deal and subsequently delist their current house from the market.
Different tactics are part of this too, with some owners re-staging or re-photographing their home, or deciding to offer higher commissions to buyers’ agents.
Directly Related to Sales Drop
There’s been a real slowdown in the Greater Toronto Area real estate market, and the reality is that most homeowners who don’t 100% need to sell are probably thinking that it’s best to wait until median home values rise again – which they almost certainly will for all sorts of firmly established reasons that we’ve talked about at length in previous entries.
TRREB data for June indicated home sales went down 41.4% year-over-year and the average selling price declined for a 4th month in a row to $1,146,254. This works out to a drop of about $200,000 compared to the record-high average selling prices seen in February.
We can also look at the many investors who will be delisting properties because of the fear of diminished returns, and there are many that can afford to ride this out – and will. The only consideration might be once they start refinancing, or once they get hit with this higher rate increase. But as of now, it would seem they don’t have anything significant preventing them from holding on to the bulk of new condos built in Toronto. They will continue to rent them out for now rather than having them on the market as they may have earlier this year or last.
As of now, we’re not seeing those investors being highly leveraged and distressed.
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