Fewer buyers going to open houses as Toronto housing market cools, agents say

Two Toronto real estate agents say they are seeing fewer potential buyers attend open houses in the city as the local real estate market cools in the wake of the Ontario government's new housing measures.

Agents also report fewer bidding wars, lower offers and more conditions being added to purchase agreements

Two GTA real estate agents say fewer people are attending open houses in light of new housing measures. (Royal LePage)

Two GTA real estate agents say they are seeing fewer potential buyers attend open houses in the area as the local real estate market cools in the wake of the Ontario government's new housing measures.

Danyelle Boily, a real estate agent with Bosley Real Estate, told CBC Radio's Metro Morning on Tuesday that the number of people going to open houses has dropped sharply since measures were introduced in April.

She said the evidence is anecdotal but the numbers at her recent open houses are roughly half that of the same time last year. Last year, for example, a "very beautiful picture perfect" house in Toronto would have attracted between 30 to 40 people to an open house, but a similar house on the market this year would likely draw only about 20 people.

It's a buyer's market and potential buyers are being cautious, she said, but it does depend on the house.

Danyelle Boily, a real estate agent with Bosley Real Estate in Toronto, said there are fewer bidding wars happening. (CBC)

"I would say it's more of a balanced market. If a house is very desirable, it will still get competing bids but I would say buyers are being more careful and more judicious about their home purchases," she explained. "And they don't swing for the moon anymore with the bids."

"Even if they are in competition, they will bid below asking and try to get a deal," she added.

Boily attributes the drop in open house attendance to fears surrounding the 15 per cent tax on foreign buyers in the Greater Golden Horseshoe region, expanded rent controls and legislation allowing Toronto and other cities to tax vacant homes.

She said the recent interest rate hike is also partly to blame. Potential buyers "don't want to step into something" they can't afford in a few years.

"It's more of an emotional reaction," she said.

New measures by the Ontario government to cool the housing market included a 15 per cent foreign buyer's tax. (Patrick T. Fallon/Bloomberg)

Boily and Dan Cooper, a real estate agent with Royal LePage, CEO Dan Cooper Group in Oakville which has 12 agents focused in the west end, said the slowdown in the housing market is also manifesting itself as fewer heated bidding wars and more conditions being put back into offers. 

Cooper said he thinks the slowdown is a correction that will be short-lived.

"If you look at the spring, it's been a crazy roller coaster ride," he told Metro Morning.

Fall expected to pick up

"When we had that correction in April, due to the non-resident speculation tax, it's been a big change. Basically, this is second consecutive month of extreme volume weakness. It's largely attributable to a dramatic shift in buyer psychology caused by the perceived future impact of the Ontario government Fair Housing Plan."

Bidding wars and extreme offers aren't as common this summer, with many people offering the asking price, or even lower, hoping to get a deal, say agents. (David Donnelly/CBC)

The spring was geared towards sellers, the market has "reset" itself, the summer is geared towards buyers which means the market is much less frustrating than it was earlier, he added.

Cooper said he's keeping a close eye on the Vancouver market because it has gone through what Toronto is experiencing. Vancouver had a four to six month lull after its foreign buyer's tax was implemented. Its situation is slightly different than that of Toronto because its prices are higher, the market is smaller and foreign buyers play more of a role in select areas, he said.

Dan Cooper, a team leader with the Dan Cooper Group with Royal LePage, says he's found the market has changed dramatically since April. (Craig Chivers, CBC)

"You are going to see our market correct probably by the fall with ease," he said.

Both agents acknowledged that the slowdown is partly due to the time of year but they said summer is not the whole story. Both expect the fall market, after Labour Day, to pick up in terms of listings and competition.

"I don't have a crystal ball," Boily said. "We'll see."

With files from Metro Morning