It was crazy how quickly the market turned, says realtor Dajan Kumarasamy.
“It was like a flip of a switch,” he says. He had three or four homes listed in March. One week those houses were drawing 15 to 20 offers. The next week, it was two or three.
“I was so shocked. I was like, ‘What is going on?’ And then I was telling all the people in my pipeline, ‘Hey, if you need to sell, sell now, because (the market’s) going down.’”
For the last two years, Kumarasamy had been juggling bidding wars and bully offers. His Durham Region territory was seeing house prices escalate 30 to 40 per cent annually, month after month, as buyers flocked to the suburbs during the pandemic in search of more space.
Now, he says, some unique properties — those with big lots or extraordinary renovations — are still seeing 20 or 30 offers, but houses in average condition “are just kind of stagnant.”
Real estate agents know no one is shedding tears for them in this spring’s cooling housing market. But the transition from bidding wars and bully offers to a softer spring is presenting new challenges. They have to manage their clients’ expectations — both sellers’ and buyers’ — as well as their own businesses, said Kevin Crigger, president of the Toronto Regional Real Estate Board.
It can be a confusing time with some sellers not recognizing they may not get the same price as their home would have fetched in February and buyers trying to figure out whether a home is listed close to the expected selling price.
“Whenever there’s a change in the market, you need this period of levelling out where everyone gets their footing again and people get on the same page where the market is,” he said.
It requires agents to pivot, something they’ve become practised at doing since the start of COVID-19, said Crigger.
“We were pivoting everything about how we do business, how we sell property, all those things. Now it’s pivoting in terms of what strategy we would recommend to our clients,” he said.
Adding to the confusion is the fact that sales and prices haven’t dropped across the board. Some properties and prices are holding. Luxury homes, for example, tend to be less affected, “largely because they’re discretionary purchases that are really tied to personal motivations as opposed to financial,” said Crigger.
For agents, they’re feeling some anxiety about their next commission. Mike Walsh, a buyers’ agent in Oakville, thinks it’s likely there will be fewer agents by the time the market swings up again.
“You know, I don’t see it as a bad thing,” he said, adding that for an agent like him, who only represents buyers, it’s a chance to escape the auction-like environment of the last two years and do some real work in terms of timing offers and negotiating for his clients.
Kumarasamy, who also practises law, says he’s not worried about his income this year, although he expects it will be lower than last. But he’s heard other agents expressing concern and the management at his Re/Max Realtron brokerage has been trying to offer reassurance that the market will lift.
“It’s been crazy the last couple of years. I don’t think everyone has been saving their money the way they should have been,” he said.
Crigger says the softer market “is going to test a lot of people because it is going to be more challenging for the next number of months while things level out and consumer confidence regains a stable footing.”
As an industry leader, he advises younger agents to focus on the best interests of their clients and guide them with the information available at the moment. Establishing that trust will be important to their real estate business in the longer term, he said.
Veteran realtor Georgiana Woods of Royal Lepage Connect Realty admits she wouldn’t want to start her sales career in the current climate.
“If you have past clients, if you’ve got a reputation, if you’ve got a system going, you have business. But these people coming into the business, they’ve got none of that other than family and maybe family doesn’t want to work with them because they have no experience.”
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She says the biggest change is being felt in the suburbs, where homes were most in-demand during the pandemic.
Shane Little of the Richards Group confirmed demand is still strong in his east-core, Leslieville and Riverdale territory, although properties are attracting fewer showings.
That was true of a recent a listing at Baseball Place, near Broadview Avenue and Queen Street, he said. There were fewer showings, but the condo still sold for about $50,000 more than Little was expecting because there were two offers in the same range that allowed them to negotiate a sale.
“The people that are coming out, it’s quality versus quantity,” he said.
Every market has its challenges but after two years of real estate frenzy across the GTA, there is also an element of relief. One agent Little talked to had spent three long months losing bidding wars.
“When it’s a really hot market, everyone thinks every realtor is doing extremely well. But the reality is, if a place has 10 offers and only one person gets it, that means nine other realtors, as well as their buyers, didn’t get a deal done. So if the market does balance, it’s actually an opportunity for buyers’ agents to get their clients homes and to actually do work and earn a living,” said Little.
“A balanced market is better for everybody — realtors included,” said Little. “It’s a more civilized process. I don’t think anyone wants to see the housing market be artificially inflated.”
Margarita Gelowitz of Sutton Group Quantum Realty in Mississauga said she wouldn’t be surprised to see sales continue to slow in the suburbs now that more people are being called back to the office.
When it comes to selling homes, Gelowitz says she wouldn’t be putting offer dates on listings right now and determining price has become more difficult. Agents have to help their clients find the sweet spot where a home is priced reasonably close to the seller’s expectations but sufficiently competitive to potentially attract multiple offers.
Offers aren’t necessarily coming in on offer nights, she said, but sometimes buyers are coming forward the following day — consumers who didn’t want to compete with multiple offers.
Gelowitz said some of her buyer clients are pleased to see the market cool, not because they expect to get a steal but because they will have a more realistic sense of what homes will sell for.
“When they see a price of $1.4 million, $1.6 million, it’s going to go somewhere close to that and not $2.3 million,” said Gelowitz.
Projections on how long the cooler housing climate prevails depends on which agent you ask.
Kumarasamy thinks the coming correction will be harder than 2017’s downturn. He cites talk of a coming recession and the expansion of real estate investment firm Blackstone into the Canadian residential market.
“Maybe they’re suspecting our home prices could drop even further,” he says.
Higher interest rates aren’t going to deter immigration or migration, points out Crigger.
“If you look at the level of demand in February and you look at what is softer demand now, the supply realities are the same,” he said.
“We are coming back to some semblance of normality in the market as well in terms of people returning to work. Once we start to feel a little bit more normal in our lives, I think people will be able to digest the market changes and the interest rate fluctuations. And I think you’ll certainly see a number of people who are currently in a holding pattern return back into the market.”
Tess Kalinowski is a Toronto-based reporter covering real estate for the Star. Follow her on Twitter: @tesskalinowski
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