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Are We Really In A Buyer’s Market In Ontario?

The current real estate market in Ontario is providing a unique opportunity for buyers, and conditions are expected to persist into 2024, according to a recent RBC report. The bank highlights a decline in the MLS home price index in Toronto, attributing it to softening demand-supply conditions resulting from the Bank of Canada’s aggressive interest rate hikes. This buyer-friendly trend extends beyond the GTA market and is observed in various Ontario markets. However, are we truly in a buyer’s market?

In short, no. Well…sort of.  Let’s dive deeper into this.

A buyer’s market is typically considered one in which the Sales-to-New-Listings Ratio (SNLR) is below 40%. While we were just below that threshold in October, there was a bounce back in November & December. This rebound likely occurred for the following reasons: historically there is less action in terms of listings this time of year, buyers are becoming more aggressive, and sellers became more willing to accept a lower price than in previous months. Currently, we find ourselves in what is commonly referred to as a “balanced market.”

Our latest Q&A delves into the considerations of negotiating in the current market, going beyond offer price to provide a comprehensive guide for understanding and taking part in a market that is more open to fair negotiation.

Data taken from wowa.ca‘s Ontario Housing Market Report

Shifting Landscape in Ontario Real Estate

Buyers are not currently grappling with the challenges of intense bidding wars, inflexible transaction terms, and tight irrevocable periods. We are no longer witnessing properties going into dozens of offers for mind-blowing figures. In the present scenario, buyers find themselves in a position of increased negotiating power. Buyers and their agents can now contemplate a scenario that is not based on fear of missing out and panic.

The Ontario real estate landscape, particularly challenging in the GTA, is undergoing a bit of a change. Although overall prices are holding steady, there is a noticeable softening trend and a rise in available inventory, presenting distinctive prospects for buyers. The opportunity to have open conversations with sellers and their agents gives buyers the ability to carefully assess their options, potentially resulting in negotiations on terms that were once considered out of reach. The scarce commodity of time, up until recently limited when it comes to real estate in most of Ontario, is now at the disposal of buyers, enabling more thoughtful decision-making. 

In this market, being well-informed is paramount. Your agent should be looking to longer trends, analyzing previous years to offer more accurate guidance on property value for a more informed offer price. Negotiation strategies have evolved, allowing buyers to include conditions in their offers, such as mortgage financing, the sale of their current home, status certificate reviews, and inspections, with a lot more willingness to accept from sellers.

Unique Opportunities for Buyers

We are seeing sellers have a little more flexibility and buyers are leveraging that to their advantage. In the past it would be fairly common to accept things as they were, especially in the GTA. Sellers are more willing to make small improvements if they can come to agreeable price terms with the would-be buyer. Perhaps you can even ask for that cool couch to be included or for all those broken or missing electrical outlet covers to be replaced.

In a transaction of this magnitude everyone wants to feel like they are winning so conducting an offer and negotiation in good faith without offending a seller is key. Putting forth an overly aggressive or worse yet an offensively low offer can quickly remove that aforementioned leverage and leave you in an undesirable situation. One in which you may entirely miss out on that property you are really hoping to acquire.

Navigating Market Dynamics: Anticipating Shifts and Buyer Trends

Although we currently appear to be in a balanced market, things can quickly change, and they usually do in the spring. Also, interest rate reductions, or even talk of it, are likely to bring about a resurgence in buyer competition and a shift back to a seller’s market sooner than expected.

We are already beginning to see hints of that with some of our buyer clients where multiple offers are starting to come in, and at times, even missing on properties in which a competing offer was over asking. It’s key to stay on top of trends and check in regularly with your agent.

It’s also important to note that a growing number of Canadians are displaying impatience with waiting for improvements in the housing market. Dye & Durham Ltd.’s latest consumer trends research for Q4 2023 indicates that only 20 percent of potential homebuyers plan to wait for prices to decrease, and merely 21 percent intend to wait for interest rate cuts.

These figures represent a decline from Q3 when 24 percent indicated they would postpone home purchases until prices dropped, and 23 percent would wait for interest rates to decrease.

The research also highlights a shift among renters, with eight percent planning to explore homeownership in the next 12 months, compared to six percent in Q3.

Meanwhile, homeowners are becoming more open to the idea of listing their properties for sale and buying a new one within the year, with the percentage planning to sell rising from 10 percent in Q3 to 12 percent in Q4.

Empowered Buyer-Seller Dialogues

All this to say that although we are seeing conditions for buyers that we have not seen in quite some time, it is important to note that most sellers and their representatives understand the current market and are willing to wait for favourable and fair terms, particularly when it comes to price.

It is a time for fair and open negotiation with the ability to take stock of all the things you would not have the luxury to do in a seller’s market, which most of us are accustomed to in recent years. It’s a great time to utilize your realtor and leverage all the information and experience they possess to submit an offer on a home that is likely to cost you less than it would have a couple of years ago. This can be done without experiencing immense pressure to put forward an offer that would push you outside of your comfort zone, as was the norm up until recently. A much welcome and refreshing change.

Curious To Know More?

Are you curious to know what’s going on in a particular area of interest to you or just want to chat about the market? We’re not just here to help – we’re here to make your real estate journey as enjoyable as possible! Drop us a line with your questions or thoughts, and let’s have a friendly conversation about turning your housing dreams into reality!

Have any questions or just wanna chat?  Give me a call or send me an email.

416-274-3710 | info@laragroup.ca

Andres

Thinking of buying? Check out our 8 Steps To Buying Your Home.

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