The big news in the GTA real estate market is the big slow down in sales activity compared to last year. But wait, it gets better. Turns out a large proportion of the homes currently on the market in the Greater Toronto Area are sitting empty. According to John Pasalis, the president of Realosophy, around 28% of properties listed for sale in the GTA are vacant — a 17% year-over-year increase in vacant homes for sale in this, the country’s largest real estate marketplace.
Though reasons behind this unsold inventory vary — including a higher difficulty in qualifying for a mortgage, an increase in interest rates, not to mention general higher prices in GTA — Pasalis believes “there are a fair number of stubborn sellers holding out for an unrealistic price for their home, though they’ve already moved on to another home or downsized.”
Pasalis goes on to explain that many sellers are still expecting to see the kind of price increase and frantic action we saw back in 2017. The reasons for holding out could be an unrealistic or unreasonable expectation or it could be because these sellers are too financially tied to the property. If many home flippers accepted today’s market prices, they would experience a significant financial loss after considering any rehab and construction costs incurred after purchasing properties in 2017 prices.
For many, it’s a wait-and-see game. The hope is that the fall market — historically the second busiest selling season, after the spring selling season — will bring stronger buyer bids and higher sale prices. Pasalis is certain this will happen, but he doesn’t expect a huge increase in housing prices. He claims that the market has “pretty much plateaued” at this point (particularly given the large decrease in demand and sales). Still, Pasalis believes that most of the GTA market is still a seller’s market, though a much more balanced one.
The silver lining is that buyers and seller will be able to make more data-driven decisions this year given that the Supreme Court decided not to hear an appeal from the Toronto Real Estate Board. For the last seven years, TREB fought against the Competition Bureau to prevent the public release of sold data. The Supreme Court’s decision means that a lower court’s decision stands and that TREB has 60 days to comply with the legal order and allow for the release of sold data. Proponents argue that the release of this data will make it easier for buyers to more accurately asses what a house is worth, without having to depend on a Realtor to get this information.
Sellers will also be able to more competitively price their homes to sell because they’ll have the latest data of what comparable properties have sold for in their area. While home sales prices were already public information, it will now be easier to get a hold of it.