Published On: Mon, Feb 12th, 2018

Lull in Toronto’s housing gives buyers the upper hand

The dip in Toronto’s housing market means there’s a different dynamic at play between sellers and buyers this year.

An analysis by Zoocasa shows more neighbourhoods have become buyer’s markets — areas where there is enough competition among sellers that buyers have more choice and more room for negotiation — conditions that simply weren’t on the table in heated January 2017.

There are still seller’s markets for detached and semi-detached houses, but the number of buyer’s markets more than doubled from five in January 2017 to 11 last month, according to the analysis.

The online real estate brokerage found that the number of neighbourhoods that qualified as seller’s markets dropped from 17 to nine in the same period.

Zoocasa took the map used in the real estate industry’s Multiple Listings Service (MLS) map of the City of Toronto and, in each area, compared the ratio of homes sold to the new listings.

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In areas where 60 per cent of listed homes were sold, the neighbourhood is classified as a seller’s market. Where fewer than 40 per cent sold, Zoocasa says it is a buyer’s market. Those in the middle are considered balanced.

But some of the areas that fall within those categories had so few sales or listings that Zoocasa doesn’t consider them to be statistically significant, said Penelope Graham, managing editor with Zoocasa.

She also cautions that buyers shouldn’t necessarily expect fire sale prices on detached and semi-detached houses in neighbourhoods that have evolved from seller’s to buyer’s markets, including Willowdale, Leaside, Thorncliffe, Centennial Scarborough, West Hill, Eglinton West and Rockcliffe-Smythe.

“Just because a neighbourhood is considered a buyer’s market, it doesn’t necessarily mean you’re going to find a house there for a bargain. It simply means that a lower proportion of new homes listed for sale are selling. It doesn’t necessarily mean that prices have followed suit. Historically house prices are very sticky,” said Graham.

Zoocasa’s study shows buyers could have a slightly more difficult time finding a house in Rosedale-Moore Park, Miliken and Agincourt, areas that went from buyer’s markets to more balanced conditions.

The analysis confirms the broader market trends too, she said. Sales and prices have softened somewhat for detached and semi-detached houses and there’s slightly less demand for some of the hot east-end neighbourhoods.

“The areas where we’re really seeing an increase in balanced conditions were ones that were really dependent on detached sales — detached and single-family homes make up the majority of housing types in these areas that have seen the greatest change,” she said.

Graham said the new mortgage stress test rules that took effect Jan. 1 and the lingering chill of the Ontario government’s Fair Housing Plan in April have reduced the pool of house buyers.

The condo market, which saw double-digit sales increases in Toronto last month, according to the Toronto Real Estate Board, continues to be tight as prices and sales of ground-level homes have dwindled.

Zoocasa found that buyers are still likely to face competition for condos in Riverdale, which has turned from a buyer’s into a seller’s market.

It has also become a little more difficult to buy a condo in Morningside and Woburn in the east end of the city and Rexdale-Kipling, West Humber-Claireville to the west. Those areas have gone from a balanced market to a seller’s market, says Zoocasa.

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Lull in Toronto’s housing gives buyers the upper hand