LACKIE: choppy water for the GTA real estate market

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For months it felt like the ground was shifting beneath us and now it seems even the deniers among us are finally ready to say it out loud.

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You just have to look at the wall-to-wall press coverage – the market has shifted! The bubble has burst! The end is near!

After two years of hot, hot, hot, falling month-over-month sales data, it now leaves undeniable that our pandemic real estate boom has come to an abrupt end.

Now it seems we’re back in uncharted territory with enough at play that alarm is clearly justified – er, a war in Europe, a stock market taking a beating, rampant inflation, an energy crisis and rising interest rates – all while we seemingly obvious warning signs have to reconcile with market forces and consumer behavior that has consistently defied logic time and time again.

Despite all the valid doomsday predictions, there are still optimists who think the panic is overblown. And while it would be easy to call them ignorant deniers, or assume they’re just real estate agents or politicians with a vested interest in keeping things on track, it would be a mistake to jump to conclusions. or even to assume that what lies ahead will be uniform or even.

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But what actually happens?

If you’re in the central core of Toronto, not much.

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Of course, the buyer pool has shrunk, likely in response to rising borrowing costs and uncertainty, but also likely due to market absorption after years of incredible volumes and selling activity.

Fewer buyers and less competition means that sellers have lost some of their power and prices have stopped the rapid rise. Overpriced with an offer night — once a surefire way to wage a bidding war and hit the top dollar — is increasingly proving to be a gamble for sellers.

But make no mistake, a good product is still on the move and at a decent price, by and large – although perhaps for less than sellers have come to expect.

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Outside the city it seems a very different story.

Some of the markets that rose fastest in the early days of the pandemic are now in free fall, with market data showing prices falling sharply.

Examples abound on social media of homes depreciating by hundreds of thousands of dollars in a matter of weeks, leaving once-lucky buyers wondering what to do as closure approaches.

A real estate attorney friend of mine is currently trying to help clients north of town figure out how to close their new home next month when their current home can’t sell for even close to the price it had in March. estimated when she bought.

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If they get out on bail, they lose their deposit and face almost certain lawsuits. But moving forward, at best, means taking out expensive bridging financing for a home that’s already worth significantly less than what they paid.

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In the coming weeks, we can expect more stories like this, and more stories from buyers approaching sellers and asking for an adjustment to the already-agreed sale price to close their deals.

And while that would have been utterly outrageous and unimaginable at one time, I expect we’ll also see vendors heeding such requests, if only because agreeing to less money means a botched shutdown and the lengthy lawsuits it takes to recover those losses. recoup will occur.

By the way, the phrase “blood from a stone” comes to mind.

As May draws to a close, we can expect another rate hike to be announced after the Bank of Canada meeting in June – rumor has it that we’ll see another 25 or 50 basis points.

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And we should unfortunately expect more stories like the one above – there are many who will feel the effects of this market shift. I don’t even want to think about the pre-construction buyers who bought at the top of the market and are now hooked for sale prices way above anything the bank will judge.

But as irritating as it may be to hear, one increasingly likely scenario is that what lies ahead will remain uneven: Certain markets, housing types and price points will falter, while others will flatten and carry on as usual.

Undoubtedly, turbulent waters lie ahead. But as always, time will tell.

On Twitter: @brynnackie

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