King township has experienced close to a 50 per cent price drop in a three-month period

Those selling their homes in the township of King, Ontario will not be getting what their neighbours received just earlier this year. Not even close.

And realtors are asking sellers to be flexible in pricing their homes, and to stop comparing themselves to neighbours who sold at much higher prices, otherwise, their homes won’t sell.

The price fall in King and lower inventory is indicative of how increased interest rates to combat inflation have cooled bidding wars across the GTA. But the prices have been so high for so long, that they were bound to drop, and these current prices are more “normal,” some realtors told the Star.

“We have to manager our seller’s expectations. It’s really hard to inform somebody that they’re not getting what their neighbour got three, four months ago. And significantly lower,” said Julianne Boileau, a sales representative at RE/MAX Hallmark York Group Reality that services several GTA areas, including King.

While prices for detached homes have dropped steeply in most regions of the GTA, the prices in King have plummeted, according to data released by the Toronto Regional Real Estate Board (TRREB) Thursday. The township, known for green rolling hills, large, mansion-like homes coupled with suburban amenities amid idyllic country life, has had the average selling price fall from $3,218,42 in February across 38 home sales, to $1,664,046 across 20 home sales in July.

That’s a 48 per cent price drop in just three months.

Since March 2022, the Bank of Canada has increased interest rates amid inflation, which came with the biggest hike seen since 1998 announced on July 13. That raised the bank’s benchmark rate to 2.5 per cent.

Sales in the GTA have fallen by 47 per cent compared to July 2021 and are expected to drop further into 2023.

And it has some sellers spooked.

Boileau said her clients are “dumbfounded” and confused as to why they can’t sell their homes for the same prices their neighbours sold theirs for at the start of the year.

“Now you’re faced with taking a listing that’s overpriced and waiting until you can educate them that it’s overpriced. The consumers are sitting on the fence, no one’s jumping in,” she said.

As a realtor, it can be difficult to take an overpriced listing as it involves continued advertising costs and there’s hope that the market will be in “better shape” by the fall, said Boileau.

Vadim Vilensky, a broker of record at RE/MAX Realtron Vadim Vilensky Realty Inc., said that while prices have dropped steeply in the last three months — current prices are not too dissimilar to the previous year.

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In July 2021, the average selling price in King was $1,921,694 across 48 homes.

What has really caught Vilensky’s attention is the low inventory in a region like King, as just 20 homes were sold in July 2022.

In the current environment, sellers are in a position where they cannot sell their house unless they buy something else, due to the low inventory, he said. “But if other sellers are not willing to come onto the market, it becomes a chain reaction,” he said.

His clients are frustrated, as they’ve been looking at how their neighbours have sold their homes for more than a million dollars more than they will get. But he provides comfort by explaining that compared to summer 2021, they are still making a good profit margin on their home.

“Yes, you’re down from the peak of this year, which was a crazy peak. But you’re still up by a lot from last year,” he said.

The prices seen in February this year in King, even for luxury real estate were not realistic as it was a peak that bordered on “insanity” due to the high prices, said Daniella Battaglini, a real estate broker in York Region at Laceey Real Estate.

“Those were the highest prices we’ve ever seen,” she said. But even though prices were high in Q1, there will still fewer sales compared to 2021, she said.

King has many high-end estates and anything that is new construction, or freshly renovated is selling “no problem,” said Battaglini. Many are wanting to now avoid construction costs and are not buying homes in King that are fixer uppers, which leads to less sales she said.

“That pattern has just continued, and our sales are getting less and less. And I think everyone is just waiting … nobody is moving. There’s no urgency,” she said.

The buyers are currently in a “power position” but that could change quickly, she said.

And the current prices are “more normal” with the drops. At the end of the day — if you are selling a house in King, is likely still going for more than what you paid for it, she said.

“You’re still making a large amount of money,” she said.

With files from Clarrie Feinstein.

Olivia Bowden is a Toronto-based staff reporter for the Star. Reach her via email: obowden@thestar.ca

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