One prominent Toronto-area real estate broker says more would-be sellers are choosing to delist their homes as the housing market cools and prices sink.
“Yes, I mean, a huge increase in the number of, sort of, cancelled listings compared to last year,” John Pasalis, president of Toronto-based brokerage Realosophy, said in an interview Monday.
He said there are three general reasons why a seller might delist their home.
Some are delisting, only to relist at a lower price – a “sign of mispricing in a slower market,” he said, whereas others are delisting their home and staying put.
And Pasalis said some homeowners are finding themselves in a position where they’ve bought a new property, but aren’t able to sell their existing home, forcing them to back out of the new property deal and subsequently delist their current house from the market.
Some sellers are changing tactics to drum up fresh interest in their property, he said, such as restaging or re-photographing their home, or even offering higher commissions to buyers’ agents.
While there are no specific or readily available data on how many homes have been delisted, there’s no doubt there’s been a slowdown in the Greater Toronto Area real estate market.
The latest Toronto Regional Real Estate Board (TRREB) data for June showed home sales sank 41.4 per cent year-over-year and the average selling price declined for the fourth month in a row to $1,146,254 – a drop of about $200,000 compared to the record-high average selling price in February.
The number of newly listed homes in Greater Toronto was essentially flat in June compared to last year, while active listings were up 42.5 per cent, the TRREB data showed.
Pasalis said so far there hasn’t been a flood of sellers rushing to the market to list their home, but that could change over the coming months.
“The catalyst, I think, really just might be, especially for investors, you know, once they start refinancing, once they get hit with this higher rate increase, whether that’s six or 12 months from now, you might see some people who just can’t cover the difference between their mortgage payments and their expenses, and their actual rent,” he said.
“You might start seeing some investors exiting just because they can’t manage the negative cash flow on their investment properties.”
Investors are a key vulnerability in any housing market, according to Pasalis, since “they aren’t particularly attached to their properties the way a family is,” so they’re typically first to “hit the exit doors.”
“Investors are usually the ones that are highly leveraged and distressed and the first ones to exit so we haven’t seen that yet. But we might see that in the months ahead.”