'Sell first' says Toronto realtor as higher interest rates, rising inflation cool city's housing market
Published Thursday, July 7, 2022 7:19PM EDT
Last Updated Friday, July 8, 2022 1:21AM EDT
As Toronto's once-hot real estate market continues to shows signs of cooling, one realtor says sellers are growing increasingly “desperate."
Brett Stein, of Toronto’s Stein Realty Group, said those looking to buy a home now have more negotiating power as lowball offers are becoming more common place.
“Right now, I mean, the table’s open for negotiation. Low ball offers are coming in on houses hundreds of thousands of dollars lower than the asking price and as a seller you can’t get offended. You have to play ball,” he told CTV News Channel Thursday.
Stein said that so-called ball is now in the purchaser’s court.
“So, if you’re a buyer and you see something and there’s not a lot of competition on it act fast and that’ll give you a lot of opportunity to negotiate. A lot of people are desperate to sell right now because they’ve already purchased their next home and in order to get that financing, they need to sell and they need to sell quick.”
On Wednesday, the Toronto Regional Real Estate Board said the volume of homes sold in the GTA dropped for the fourth consecutive month in June by just over 41 per cent compared with the same month last year. Roughly 6,500 homes were sold in the Toronto area last month compared to just over 11,000 in June 2021, TRREB said.
June 2022 home sales were also down compared to the previous month as a 7.7 per cent inflation rate coupled with high borrowing costs continue to negatively impact the market. With the latest interest rate hike on July 6, fixed mortgage rates are now more than five per cent, compared to less than two per cent previously.
“Obviously, that’s a huge disparity, a huge change in a short period of time. So of course, as your interest rates go up, your monthly payments go up and buyer confidence drops. And as we continue to see rates go up and more hikes that’s going to continue to happen,” Stein said.
With that in mind, he said his “number one” piece of advice for prospective purchasers is to sell your current property first then buy your new one.
“In the craziness of the market, everyone was buying first because they know that their property would yield a fantastic sale price,” said Stein.
“Now, with things a little bit more up in the air, sell first, now how much money you’re going to put in your pocket. That way you can budget accordingly for what you’re going to buy.”
Stein said those buying or sell their home must “do your math.”
“If prices are going to continue to drop, how much are they going to continue to drop? If you’re getting a $50,000 discount how does that compare to a 1 per cent raise in your interest rate? So you have to know what your numbers are and what you can afford on a monthly basis,” he said.
“Create that plan with your real estate agent so that you can go forward and attack opportunities because for buyers right now there are opportunities that you can capitalize on. You really have to, you know, make a conscious decision to wait for opportunity, rather to just wait indefinitely until a news article comes that says you should go out and buy.”
Stein also said it might not be the best idea to sell your condo at this time as the market for this kind of housing is “cold.”
“I have multiple listings. I know agents all across TRREB who have multiple listings that are sitting, that are not getting the kind of showings that we’re used to and buyer confidence for condos as they continue to build more and more and more of these skyscrapers, the demand is low right now,” he said, urging people to either hold on to their condo and rent it out, or “adjust their price expectations in order to sell.”
-with files from The Canadian Press