It was crazy how quickly the market changed, says real estate agent Dajan Kumarasamy.
“It was like flipping a switch,” he says. She had three or four houses listed in March. One week, those houses were getting 15 to 20 offers. The following week, there were two or three.
“I was so surprised. I was like, ‘What’s going on?’ And then she would tell all the people in my pipeline, ‘Hey, if you need to sell, sell it now, because (the market) is going down.’”
For the past two years, Kumarasamy had been juggling bidding wars and bully offers. His territory, the Durham region, was seeing home prices rise 30 to 40 percent 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 large lots or extraordinary renovations, still get 20 or 30 bids, but houses in average condition “are a bit stagnant.”
Real estate agents know no one is crying for them in this spring’s housing market chill. But the transition from bidding wars and bullying offers to a softer spring presents new challenges. They have to manage the expectations of their customers, 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 as some sellers don’t recognize that they may not get the same price their home would have gotten in February and buyers try to figure out if a home is listed anywhere near the expected sale price.
“Any time there is a change in the market, you need this leveling off period where everyone gets back on their feet and people get on the same page as the market is,” he said.
It requires officers to turn around, something they have practiced at since the start of COVID-19, Crigger said.
“We were spinning everything around how we do business, how we sell property, all of that stuff. Now it’s changing in terms of what strategy we would recommend to our clients,” she said.
Adding to the confusion is the fact that sales and prices have not decreased across the board. Some properties and prices remain the same. Luxury homes, for example, tend to be less affected, “in large part because they are discretionary purchases that are really tied to personal motivations rather than financial ones,” Crigger said.
For agents, they feel some anxiety about their next commission. Mike Walsh, a buyers agent in Oakville, thinks there are likely to be fewer agents by the time the market picks 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 an opportunity to escape the auction environment of the last two years and do some real work in terms of synchronization of offers and negotiation for your clients.
Kumarasamy, who also practices law, says he is not worried about his income this year, although he expects it to be lower than last year. But he has heard other brokers express concern about him and management at his brokerage Re/Max Realtron has been trying to offer assurances that the market will improve.
“It’s been crazy the last couple of years. I don’t think everyone has been saving their money the way they should have,” she said.
Crigger says the weaker market “is going to test a lot of people because it’s going to be more challenging over the next few months as things level out and consumer confidence gets back on a stable footing.”
As an industry leader, he advises younger agents to focus on their clients’ best interests and guide them with the information available at the time. Establishing that trust will be important to his long-term real estate business, he said.
Veteran real estate agent Georgiana Woods of Royal Lepage Connect Realty admits she wouldn’t want to start her sales career in the current climate.
“If you have previous clients, if you have a reputation, if you have a working system, you have business. But these people who come into the business, they have nothing but family and maybe the family doesn’t want to work with them because they don’t have experience.”
She says the biggest change is being felt in the suburbs, where houses were most in demand during the pandemic.
Shane Little of Richards Group confirmed that demand remains strong in its Mideast territory, Leslieville and Riverdale, although the properties are attracting fewer showings.
That was the case with a recent listing on Baseball Place near Broadview Avenue and Queen Street, he said. There were fewer introductions, but the condo still sold for about $50,000 more than Little expected because there were two offers in the same range that allowed them to broker a sale.
“People coming out is quality versus quantity,” he said.
Every market has its challenges, but after two years of GTA real estate frenzy, there’s also an element of relief. An agent Little spoke with had spent three long months losing bidding wars.
“When it comes to a really hot market, everyone thinks that all real estate agents are doing very well. But the reality is that if a place has 10 offers and only one person receives it, that means that nine other real estate agents, as well as their buyers, did not close the deal. So if the market clears, it’s really an opportunity for buyers’ agents to get houses for their clients and actually work and make a living,” Little said.
“A balanced market is better for everyone, including real estate agents,” Little said. “It is a more civilized process. I don’t think anyone wants to see the housing market artificially inflated.”
Margarita Gelowitz of Sutton Group Quantum Realty in Mississauga said she wouldn’t be surprised to see sales continue to decline in the suburbs now that more people are being called into the office.
When it comes to selling homes, Gelowitz says he wouldn’t put offer dates on listings right now and pricing 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 competitive enough to potentially attract multiple offers.
Deals don’t necessarily come on sale nights, he said, but sometimes shoppers show up the next day — consumers who didn’t want to compete with multiple deals.
Gelowitz said some of his buyer clients are pleased to see the market cool off, not because they expect to get a bargain, but because they will have a more realistic idea of what homes will sell for.
“When they see a price of $1.4 million, $1.6 million, it will be closer to that and not $2.3 million,” Gelowitz said.
Projections on how long cooler weather will prevail in the home depend on the agent you ask.
Kumarasamy believes the next correction will be harsher than the 2017 recession. He cites talk of a coming recession and real estate investment firm Blackstone’s expansion into the Canadian residential market.
“Maybe they suspect that our house prices could fall further,” he says.
Higher interest rates won’t deter immigration or migration, Crigger says.
“If you look at the level of demand in February and you look at what the weakest demand is now, the supply realities are the same,” he said.
“We are returning to a semblance of normalcy in the market also in terms of people going back to work. Once we start to feel a little more normal in our lives, I think people will be able to digest the changes in the market and the fluctuations in interest rates. And I think you will certainly see a number of people who are currently in a holding pattern come back into the market.”
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