As home prices are going down in Toronto, one real estate expert says that buyers and renters can expect the market to be in their favour.
A report by Rentals.ca revealed that average rental prices across the country are going down, including in Toronto, despite still being higher than before the COVID-19 pandemic.
Toronto has one of the most expensive housing markets in Canada, where rent for a one-bedroom apartment costs an average of $2,317 a month, only behind a few cities in British Columbia, including the current most expensive market in North Vancouver, with an average rent of $2,680.
Although this Toronto average represents a 0.2 per cent increase from last month, rent prices have still significantly decreased from the previous year, as the average rent was 5.8 per cent higher.
On the other hand, the study suggests residents are still feeling a drain in their pockets related to housing costs, as renting across Canada is still 28 per cent more expensive than before the COVID-19 pandemic.
Last month, the Toronto Regional Real Estate Board (TRREB) revealed that home sales were down in the city by 23.1 per cent, after the real estate industry faced a slowdown related to political and economic uncertainty.
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This month, a new TRREB report shows that while there was a slight growth in home sales, the market is still significantly slower than a year ago, with a 23.3 decrease in sales.
The slowdown resulted in a housing price drop, with the selling price in the city at $1,107,463, which is 4.1 per cent lower than last year.
According to the board, the reason remains the same from a month ago: political and economic uncertainty is pushing potential homebuyers to wait for more stability.
Last month, Canada went through a tight federal election race resulting in Prime Minister Mark Carney securing a minority government for the Liberals. The election turmoil was accompanied by a shaken relationship with Canada’s southern neighbour and ally, after the U.S. President Donald Trump introduced tariffs on Canadian goods and publicly challenged the country’s sovereignty, triggering a trade war.
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EXPERT SAYS TORONTO ENTERS BUYER AND RENTER-FRIENDLY MARKET
Co-Founder and CEO of real estate website Zown Rishard Rameez spoke with Now Toronto about the recent market slowdown.
According to him, Toronto has mostly been a seller’s market, which occurs when there are more people seeking to buy properties than available listings. The condition enables sellers to get multiple offers, and often even get paid more than what the property is worth.
However, with the new shift, the city has now become a buyer’s market, with more properties listed than offers, giving buyers the power to negotiate prices.
“What this is really allowing first-time homebuyers is to have more options, more power in terms of what they want to purchase, and not really having to pay for more than what a property is worth. And even in most cases, actually, it gives [them] the ability to even negotiate a lower price than what [the properties are] even worth today, which is usually not the case,” Rameez explains.
The real estate expert also suggests that Toronto renters can expect to feel the market difference, as more home and condo owners will probably decide to put their properties up for rent in the absence of potential buyers.
“Because [there will be] 31,000 new condos being added to a market on top of the existing inventory, we won’t be able to find that [number] of buyers overnight. It’s going to take a realization where some of these condos do have to go back into rentals, rather than sellers realizing, ‘Hey, I actually won’t be able to sell my home, even if I decrease the price. I just need to take it out for a few more years and then maybe sell [it] in a few more years,’” he said.
With more properties in the market, a similar effect will take place, with renters having an advantage in bargaining offers, which could bring prices down.
“I think the rental market will also come down, because now there has to be some incentive for sellers to attract renters to particular properties,” he added.
Rameez also explains that while more condos are currently being built in the city, many homebuyers are looking to shift from the downtown core and purchase a house instead of an apartment.
“I think what happened in the shift in the job markets, where people were allowed to work from home, and now people are able to sort of move away from that downtown core, into areas where there is transit that brings them into downtown to be able to afford a freehold home for now,” he said.
That means that once these newly-built condos are ready, there might not be enough interested buyers, causing prices to drop further.
IS THIS A GOOD TIME TO BUY A HOUSE?
Although the market is still slower than last year, Rameez said he would still advise home seekers to wait and see at this time.
“I think if you are a homebuyer and you are looking to purchase a condo, I would save it, because I think the market’s going to continue to push the condo prices down,” he said.
Meanwhile, the expert says that now might be the prime time for buyers looking to purchase a freehold property. These types of properties imply that the unit owner also owns the land or building where it is on, giving them complete control over decisions like maintenance and improvements, which are much harder to build and find than regular condos.
“With the limited amount of freehold properties that are available, freehold properties will gain slight, slight demand as we get closer to the spring summer market, but it’s a condo market we think will continue to go down and will reach an equilibrium probably early next year,” he said.
“If you are looking to purchase a freehold property or a freehold townhome, this could be a point where you essentially can take advantage of not having to bid for offers, not having to pay overpriced more than what the market value is,” he added.
