Increase in Condo Listings
The Toronto real estate market has experienced an unprecedented surge in the number of condos listed for sale. This trend is primarily driven by a significant number of investors choosing to exit the market.
Investor Exit
Real estate analysis firm, Ropy, highlights that many investors have decided that owning rental units is no longer financially viable. The high interest rates are severely impacting affordability and buying behavior, making the rental market tougher. Consequently, some investors are opting to sell their properties.
Creative Selling Strategies
Broker Devel Morrison notes that the market has shifted drastically from the days of bidding wars and skyrocketing prices. Currently, many properties are not selling, and even securing showings for condos has become challenging. To combat this, Morrison has resorted to using a rare strategy known as the reverse offer. In this approach, the seller attracts a prospective buyer by offering a discounted price and showing a genuine willingness to negotiate. This creative method is employed to move properties in a stagnant market.
Decline in New Condo Sales
A report by Urban Nation indicates that new condo sales in the Toronto area have plummeted to the lowest quarterly total since the financial crisis. Despite the drop in sales, prices continue to rise due to increased construction costs.
Impact of Interest Rates
Although the Bank of Canada announced a minimal rate cut earlier this month, and there are high expectations for another cut in July, many real estate experts believe these measures will not significantly impact the current glut in the Toronto condo market. Experts predict that interest rates will remain elevated for an extended period, which is unlikely to trigger a surge in buyer activity. This scenario sets up a buyer’s market, potentially leading to more reverse offers.
Conclusion
The Toronto housing market is facing significant challenges with a high inventory of unsold condos and declining sales. Investors are exiting the market, and brokers are adopting innovative strategies to attract buyers. Despite minor interest rate cuts, experts remain skeptical about a swift recovery, expecting higher rates to persist and continue influencing market dynamics.
