Confidence growing among buyers as spring real estate market opens

Open this photo in gallery:

The Toronto-area real estate market is heading into April with some renewed vigour now that March break has passed for Ontario schools.

Patrick Rocca, broker with Bosley Real Estate Ltd., holds off on listing homes that appeal to families during school breaks.

In Ontario, public schools take a one-week sojourn and private schools are off for two weeks.

With the Easter holiday falling in late March this year, many sellers have been holding off until April. Some activity has been dampened by the lack of supply.

“There still is a lack of inventory – I think that’s going to change,” says Mr. Rocca, who is preparing to launch several listings in the coming weeks.

Some agents do list during school breaks because they figure not every family leaves town and the seller may benefit from competing with fewer rival listings.

But Mr. Rocca prefers to wait until more buyers are likely to be home and focused on house hunting.

“If you want to cover your bases and get 100 per cent of your market, wait until after March break,” says Mr. Rocca.

He viewed one house recently that was listed in March around the $2-million mark with an offer date scheduled for three weeks later instead of the usual one week.

The listing agent explained she wanted to give people a chance to return from vacation.

“Guess what – it’s still sitting on the market,” he says.

Mr. Rocca adds that prices are firming up again after sagging during the fall as buyers gain confidence that interest rates are not likely to rise.

One client was interested in a house that Mr. Rocca advised would be a good deal for about $2.5-million in the fall but the buyer wanted to hold out for a discount to the $2.3-million level.

The property was recently relisted and sold for $2.7-million, he says.

Houses are selling quickly in the segment below $2-million, he adds. Above that mark, deals are slower to come together.

“There’s still caution – it’s not 100-per-cent optimism – but it’s better than it was.”

Against that backdrop, the strategy of choosing an attention-getting asking price and setting a date to review offers is still risky, in his opinion. Agents typically set a deadline for reviewing offers when they expect multiple bidders.

Mr. Rocca is listing a traditional four-bedroom house with a centre-hall plan in south Leaside with an asking price of $2.399-million. He will allow offers any time at 111 Hanna Rd. because it is in the price bracket above $2-million.

Another property in north Leaside with an asking price of $1.9-million will also be listed without an offer date. But an older bungalow with an asking price of $1.6-million will have an offer date, he says, because it’s the type of property that appeals to a broad range of buyers, including families who plan to live in it and builders who may purchase it for redevelopment.

Ira Jelinek, real estate agent with Harvey Kalles Real Estate, recently worked with one couple who are selling their house in Toronto’s Yorkville neighbourhood in order to move to Durham Region, east of the city.

The couple has grown tired of the concentration of people and traffic around Avenue and Davenport roads, he says. In the smaller town of Whitby, Ont., they’ve found a house in an established suburb.

In addition to living with less congestion, they’re closer to family, he adds.

But overall Mr. Jelinek sees a shortage of listings in central Toronto this spring because many people who might downsize from their family homes are choosing to hold onto them.

Mr. Jelinek expects buyers to remain guarded until the Bank of Canada begins to cut interest rates.

“They’re very cautious before they make an offer.”

Farah Omran, senior economist at Bank of Nova Scotia, notes that housing sales in many markets across Canada dropped in February from January on a seasonally adjusted basis.

Peterborough, Ont. led the national decline with a fall of 15.2 per cent, while sales in St. Catharines, Ont. dropped 14.3 per cent and the Greater Toronto Area, 12 per cent.

Nationally, sales dipped 3.1 per cent in February from January.

Ms. Omran cautions against focusing too closely on monthly changes in the housing market – whether the swing is upwards or down. She notes that February’s sales were still higher than December’s tally and each of the three months before that.

Stephen Brown, deputy chief North America economist at Capital Economics, points to the data showing national house prices were flat in February compared with January as confirmation that prices have stabilized.

In addition, the latest data show inflation pressures are easing, says Mr. Brown, who sees a growing likelihood the Bank of Canada will cut its benchmark interest rate in June.

The economist doesn’t rule out a rate cut in April, but house prices may rise in the next few months, he says, which leads him to believe the policy-setting committee will wait to see how the real estate market heats up during the busy spring season rather than risk pouring fuel on the fire.

Mr. Brown is also keeping an eye on the federal government’s plan to restrict the number of temporary residents in Canada.

Last week Ottawa announced they will cut the share of temporary residents to 5 per cent of the total population from 6.2 per cent over the next three years.

Mr. Brown says population growth is set to plunge as a result and the new immigration plan raises the risk that the central bank will cut in April, though he still believes June is more likely.

Looking ahead, Mr. Rocca expects a brisk market at the peak of spring, followed by a traditional summer slowdown.

“I think it’s going to be busy right through until June.”

The fall may bring another spurt of activity – especially if the central bank cuts interest rates, he says.

But Mr. Rocca is warning sellers that the peak prices of 2022 are not returning any time soon.

“If you want to wait for a $2-million semi, wait a couple of years.”