Those selling their homes in King Township, Ontario will not get what their neighbors received earlier this year. Not even close.
And real estate agents are asking sellers to be flexible in pricing their homes and to stop comparing themselves to neighbors who have sold at much higher prices or their homes won’t sell.
King’s price slump and inventory decline indicate how raising interest rates to fight inflation has cooled the bidding wars in the GTA. But prices have been so high for so long they needed to come down, and these current prices are more “normal,” some realtors told The Star.
“We have to manage the expectations of our sellers. It’s really hard to tell someone they’re not getting what their neighbor got three or four months ago. And much lower,” said Julianne Boileau, sales representative at RE/MAX Hallmark York Group Reality which serves several areas of the Greater Toronto Area, including King.
While single-detached home prices fell sharply in most parts of the GTA, prices in King fell, according to data released Thursday by the Toronto Regional Real Estate Board (TRREB). The township, known for its rolling green hills, grand mansion-like homes paired with suburban amenities amidst idyllic country living, saw its average sale price drop to $3,218.42 in February from 38 sales of homes at $1,664,046 on 20 home sales in July. .
That’s a 48% price drop in just three months.
Since March 2022, the Bank of Canada has raised interest rates in an inflationary environment, which was accompanied by the largest increase since 1998 announced on July 13. This brought the bank’s benchmark rate to 2.5%.
Sales in the GTA fell 47% from July 2021 and are expected to decline further in 2023.
And that scares some sellers.
Boileau said his clients are “stunned” and confused as to why they can’t sell their home for the same price as their neighbors sold theirs earlier this year.
“Now you’re faced with an overpriced ad and waiting to let them know it’s overpriced. Consumers are sitting on the fence, no one is intervening,” she said.
As a real estate agent, accepting an overpriced listing can be difficult because it involves ongoing advertising costs and hopefully the market will be in “better shape” by the fall, Boileau said.
Vadim Vilensky, appointed broker at RE/MAX Realtron Vadim Vilensky Realty Inc., said that while prices have fallen sharply over the past three months, current prices are not too different from those of the previous year.
In July 2021, the average sale price in King was $1,921,694 for 48 homes.
What really caught Vilensky’s attention was the low inventory in an area like King, as only 20 homes were sold in July 2022.
In the current environment, sellers are in a position where they cannot sell their home unless they buy something else, due to low inventory, he said. “But if other sellers don’t want to enter the market, it becomes a chain reaction,” he said.
His clients are frustrated, seeing how their neighbors have sold their homes for over a million dollars more than they will get. But he reassures by explaining that compared to the summer of 2021, they are still making a good profit margin on their house.
“Yeah, you’re down from this year’s high, which was a crazy high. But you’re still way ahead of last year,” he said.
Prices seen in February this year in King, even for luxury real estate, were unrealistic as it was a spike that borders on “insanity” due to high prices, Daniella Battaglini said, real estate broker in York Region with Laceey Real Estate. .
“These are the highest prices we have ever seen,” she said. But even if prices were high in the first quarter, there will still be fewer sales compared to 2021, she said.
King owns many high-end estates, and anything new construction or freshly remodeled sells “no problem,” Battaglini said. Many now want to avoid construction costs and are not buying homes in King that are in need of renovation, leading to lower sales, she said.
“This pattern has just continued and our sales are going down more and more. And I think everyone’s waiting…nobody’s moving. There is no rush,” she said.
Buyers are in a “position of power” right now, but that could change quickly, she said.
And the current prices are “more normal” with the declines. At the end of the day, if you sell a house to King, it’s likely always going to cost more than you paid, she said.
“You always make a lot of money,” she said.
With files from Clarrie Feinstein.
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King Township has seen a price drop of almost 50% in three months