TORONTO — When Shannon Tebb put her downtown Toronto loft up for sale in mid-June, she did everything she could to make the property attractive to buyers. She hired stage actors, painted walls, washed the windows, listed the place below market value, and advertised all over social media.
But in July, she pulled the property off the market — and not because she’d found a seller.
Tebb closed its listing as the market shifted so much that the bidding wars and frenzied sell-off from earlier this year had subsided.
Last month, the Canadian Real Estate Association (CREA) reported that June home sales were 48,176, down 24 percent from 63,280 in the same month last year. Seasonally adjusted, turnover was almost six percent lower than in May.
The decline is attributed to interest rates, which are rising faster than some expected and driving up mortgage costs, and inflation, which recently hit a 39-year high.
Both have caused properties to sit idle for weeks or months, forcing sellers to make tough decisions.
Not getting much interest in her ad, Tebb discontinued it and turned the loft into a rental property instead.
“Everyone said, ‘Nobody’s going to look at anything,’ so then we lowered the price…and we had a few walk-ins, but nothing, no offers.”
Strata discovered a wave of people reflecting Tebb’s decision to get rid of their property.
While the January hot market saw 380 discontinued condo listings in the Greater Toronto Area, the real estate company said June brought in 2,822 — a 643% increase.
“We see that a lot of sellers just aren’t getting the price they want and so they think, ‘We’re going to wait’ or ‘I don’t want to sell $50,000 less than what my neighbor got a month ago, because that’s a lot of money'”, says Anna Wong, a Strata sales representative.
“We were in a seller’s market for a while… and right now sellers are having a hard time adapting.”
CREA found that the national average house price in June fell two percent from the same month last year to $665,849 and, seasonally adjusted, four percent lower than in May.
“We see some sellers staying on the market. They list their properties to get yesterday’s prices and they stay there for a long time,” said Dan Campanella, a real estate agent at Keller Williams Advantage Realty, who represented Tebb.
Some end their listings and continue to live in the properties while waiting for a better time to sell, but others don’t tick the desired amount off the list to experiment with prices or turn to the rising rental market.
Research firm Urbanation recently reported that falling vacancy rates in Toronto in the second quarter pushed median rents to $2,533 with a record high of $3.57 per square foot, up 5.9 percent in the second quarter compared to the first.
Rentals.ca similarly found that average rents in Canada were up 9.5 percent from a year earlier, with Vancouver up 24.7 percent from a year earlier and Calgary up 26.1. percent saw.
Campanella describes the rental market as “on fire,” largely because of potential new buyers.
“If their purchasing power drops significantly, they won’t be able to buy their first apartment, but they will still have to move downtown, so that means more and more people are looking for a rental home,” he said.
“Prices are skyrocketing.”
Anne Hermary, a Vancouver real estate consultant at Royal LePage Westside, has similarly seen a surge in the rental market.
While she hasn’t covered offer terminations yet, she suspects some sellers will not enter the market due to the current circumstances.
“I see from my database of clients who have real estate, who don’t necessarily have to sell or move, there’s no motivating factor at this point,” she said.
“Maybe they have thought about downsizing. They’re waiting to see what’s going to happen.”
Buyers are also playing the waiting game, Hermary added.
“Some are now completely out of the picture because they can’t get financing approval for what they hope to buy, but others are just waiting because they feel the market will continue to fall in price.”
This report from The Canadian Press was first published on August 1, 2022.
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