The cooling GTA housing market means new buying and selling strategies

After more than a decade and a half of bidding wars and record prices, the Toronto real estate market has now switched gears. But a slower pace is good for buyers and sellers says Royal LePage CEO Phil Soper, who calls it a return to a "normal" market.

Day of multiple bids, overnight sales and unconditional offers over, for now

Greater Toronto Area housing sales and price increases have come off a boom that's lasted a decade-and-a-half. But Royal LePage doesn't foresee a crash, just a return to a balanced market, and buyers and sellers should adapt their strategies accordingly. (Royal LePage)

Whether you are buying or selling a home in the Greater Toronto Area, you might be saying the same thing: what a difference a year makes.

Cindy Sampson. 39, and her husband had been looking for a house for more than a year and were about to throw in the towel.

"We got really discouraged last year. Last summer, actually, we were going to open houses with hundreds of people doing walk-throughs of houses that were wildly overpriced for what they were offering," she said.

They had ventured as far out as Hamilton in search of affordability and while the prices seemed right, the commute made it a difficult decision.

"We still wanted to live in the downtown core, but we basically gave up. We gave up because the prices were so, so astronomical. We'd been priced out of the market," said Sampson
Then, last week they found a place that was within their reach, made an offer and found themselves on their way to home ownership.

"The overbidding wasn't crazy and out of control. We jumped," she said. 

Accordng to Phil Soper, president and CEO of Royal LePage, since April the GTA housing market has moderated from unsustainable increases in prices from the first quarter,  as the combination of eroding affordability and government legislation has pushed many buyers to the sidelines — at least temporarily.

Phil Soper, CEO of Royal LePage, says home buyers and sellers have not experienced a 'normal' real estate market since the early 2000's and may need to adjust their strategies and expectations. (Philip Lee-Shanok, CBC)

"It has and will continue to be for the rest of the year, a much much better market for buyers," said Soper. "It's not that homes have suddenly gone on sale, that's a misconception. Home prices continue to rise"

But Soper says there's "no longer a lineup of 15 or 10 people all bidding on the same property."

That means buyers and sellers will have to change their strategies when it comes to bidding and listing, he says.

Conditional offers

On the buyer side that means offers can come with strings attached.

"You should be making offers conditional on a home inspection. If you need to get financing in place, you should be making an offer on that home conditional on receiving financing," said Soper.

On the flipside, those selling their homes have noticed a big difference too.

Sampson says she can see it because she has friends who are trying to sell right now. "They put their house on the market and haven't had an offer," she said.

Soper says those listing properties have to adapt to the new market too.

"You don't want to play games with underlisting and you don't want to overreach and take a flyer and price it 10 per cent over market. Because there's more inventory now there's more choice and people won't overpay for a property," said Soper.

On the other hand, if you underlist hoping to attract multiple bids, you could get caught out and be left with a single bid well below what the property is worth.

'A normal market' 

"It's what we call a normal market. and for almost a generation Toronto has not had a normal market," said Soper.

And that means a return to normal in the number of days properties may be on the market before they are sold, he adds.

"We've become accustomed to the stories of home selling overnight, Soper said.

 "In a typical market two-to-three months is not an unreasonable time to have an asset as expensive as a Toronto home," Soper said. "Expect it to be weeks if not months and that's normal."

A drop in sales activity may well signal a more sustainable, healthy market that will be better for buyers. And while there will not be a double-digit increases in prices, Soper expects prices will still increase yearly in the two-to-five per cent range and not depreciate, which is good for sellers.


Philip Lee-Shanok

Senior Reporter, CBC Toronto

From small town Ontario to Washington D.C., Philip has covered stories big and small. An award-winning reporter with more than two decades of experience in Ontario and Alberta, he's now a Senior Reporter for the National Network based in Toronto. His stories are on CBC Radio's World Report, World This Hour, World at Six and The World This Weekend as well as CBC TV's The National and CBC News Online. Follow him on Twitter @CBCPLS.