Hello friends and family! Danielle Demerino here, Toronto real estate agent. It’s been a minute since I last dropped a blog as our team has all been so busy with this wild market. I have had a chance over the last month to evaluate what’s going on with the Toronto real estate market and make some predictions as to where I think things are going, so buckle up!

To say the last two years have been tough for home buyers is an understatement. As the pandemic grew, so did the demand for Toronto real estate (and surrounding areas). Buyers felt it was impossible to get their hands on the property they wanted for the price they were able to spend. Many buyers had to overextend themselves financially just to get into the market. We learned that in 2021, parents gifted an estimated 10 billion dollars to their adult children to assist in purchasing property. The sellers market was on fire with no water in sight…until now.

Towards the end of February and throughout March 2022, things started to feel a little different. It felt as though my co-workers and I started to see a decrease in the number of showings and ultimately offers coming in for our sellers and our buyer clients (after so much rejection) started seeing their offers accepted.

Could it be? Has the market finally started to normalize? Are we seeing a shift to a more balanced market? Have our buyer clients simply had enough of this real estate roller coaster and taken a break? What is really going on? There is no one answer as there are a lot of moving parts here, but let’s break it down.

Interest Rates Are Influencing Buyer Decisions

As I am sure most of you know, for the first time since the pandemic hit interest rates have been adjusted. Earlier in March, we witnessed the era of “cheap money” nearing the end. It has been predicted by economists that we will see the bank slowly raise rates another 3 times by July. These rate hikes are something that make buyers nervous.

While buyers may have the down payment sorted out, what about carrying costs? With rising interest rates, that 1.5 to 2 million dollar range is not as realistic as it was prior to the hike.

The reality is we are seeing buyers taking a seat on the sidelines while they observe where interest rates are going along with the market. As of late, we have seen properties not sell on offer night and re-listed at asking price. On average, I would estimate our 10 or so offers have dropped to around 3 to 4. Buyers are finally holding those cards close.

Increase in Inventory

Now that we know the effect interest rates can have on buyer decisions, we can’t ignore what is available on the market. While historically we have seen the same type of bump from January to February with regards to inventory, it is that coupled with interest rates that has made such a difference on purchasing. February 2022 we saw inventory jump from a total of 4,140 active residential listings in January 2022 to 6,985 active listings in February 2022.

We are all keeping a close eye on inventory to see where it goes and we will keep you posted in our next Market Update.

At the end of the day, the positive side to this shift is that it offers buyers their best chance in a long time to land a home that fits their needs. If you were planning to list your property but the shift in the market has you second guessing yourself, I have an exciting project coming up. How does an interest-free loan to prepare your home for selling sound? My next blog I will go into further details but the shift in the market means that prepping your home properly will hold a heavier weight in the home prep process.
For more information, call Danielle, your Toronto real estate agent at 416-728-5401.