Prospective buyers who have grown tired of going up against dozens of competitors to purchase a home are starting to get some relief from the frenzy seen over the past two years.
Toronto, Vancouver and Montreal brokers say plenty of properties are seeing fewer offers than just a couple of months ago when buyer anxiety was still driving frantic bidding wars, but that the slowing bids haven’t yet led to big price drops.
“With a lot of the smaller condos under 1,000 square feet, or semi-detached properties up to $1.5 million or even just under $2 million, I’m finding for sure, there’s fewer people that are bidding compared to in February,” said Sara Rowshanbin, a broker with Chestnut Park Real Estate Limited in Toronto.
“So where I might have been bidding against 15 plus people, I now might be bidding against four or five people.”
The Toronto Regional Real Estate Board earlier this week reported the number of April sales in the market dropped by about 41% from the same month last year and 27% from March.
The average home price was more than $1.2 million, down from about $1.3 million the month before, but was still about 15% higher than the year before, when the average price was more than $1 million.
Fuelling the drop in bids are prospective buyers that Rowshanbin has noticed feeling too nervous to wade into the market in case conditions quickly change, preferring instead to wait on the sidelines until they get a better sense of how much the market is really softening and how much rate changes will affect their buying power.
“They want to sort of re-evaluate how they’re going to tackle this new market with the higher interest rates, but I don’t think they’re going to sit on the sidelines for too long,” she said.
Marc LeFrancois, a broker with Royal LePage Tendance in Montreal, has similar observations.
He’s recently seen homes sell after receiving a single offer or a few, rather than the 20 brokers were accustomed to dealing with months ago.
Last month, Montreal home sales dropped by 17% from a year earlier, making it the least active April the market has seen since 2017, the Quebec Professional Association of Real Estate Brokers said.
Despite the signs of a softening market, buyers didn’t get much of a break. Median prices for single-family homes rose 16% to $580,000 in April 2021, up even from March 2020, when prices hit $566,000. The median price of a condo rose by 15% year-over-year to reach $410,000.
But the fewer number of bids some properties are receiving have some of LeFrancois’ clients questioning why they should bid significantly over the asking price if sales are down.
“The buyers are a bit hedgy. They’re worried when they buy a home and it wasn’t done under multiple offers,” he said.
“I’ve got a client this morning I was talking to him and he said, `did I pay too much? Nobody else was bidding and it’s strange because the last two years it was 20 buyers for a home.”’
Despina Zanganas, a Toronto Realtor with PSR Brokerage, has likewise seen a drop in the number of viewings some properties secure. While it used to be normal to fight for a booking, many properties are only being visited once or twice a day now.
Some of her clients are hoping that’s a sign they can snag a deal, but she said, “I don’t know that there’s much of a deal to have yet, especially in downtown.”
But that doesn’t mean people can’t negotiate anyway.
Over the last week, many of Kelsie Struch’s clients have been able to negotiate “for the first time in a really long time” because inventory has slowly returned to Vancouver and the market’s sense of urgency is evaporating.
“We’re just seeing sort of a change in tune,” said the broker with the Kelsie & Morgan Real Estate Group in Vancouver.
“They’re not as eager. They’re a little more hesitant, maybe a little more reserved, and more methodical with their decision making.”
LeFrancois has detected that shift in mentality too, especially when a home gets listed and it’s still on the market three weeks later. Now, buyers increasingly try to rationally negotiate for these properties, instead of moving at the torrid pace they once would have, he said.
It’s taking many sellers time to adjust though.
“They see (the market) as a linear line going up,” LeFrancois said. “They say, ‘I’ve waited a little more so the market keeps going up’ and that’s going to be a little tough.”
Struch had a buyer recently keen on bidding on a home listed for just under $2 million. The sellers received six offers but didn’t accept any and then increased the price to $2.5 million.
Last month, the Real Estate Board of Greater Vancouver said the MLS home price index composite benchmark price for all residential properties in Metro Vancouver was $1,374,500, up 18.9% over April 2021 and a 1% increase compared with March this year.
Struch said, “We’re advising people to now list at what you want, what you’re willing to accept and don’t count on these crazy bidding wars.”