Canada’s hot housing markets are finally cooling down

At the beginning of this month, a home seller in Hamilton received a purchase offer with a price that exceeded the initial one by $100,000. However, he decided to reject it, hoping that a more profitable one will appear soon. According to Rob Golfi, the realtor whose office tried to seal the deal, this is the latest example of how inflated expectations in such still hot, but already cooling Canadian markets, as the GTA are making home sellers miss great offers. Meanwhile, this home in Hamilton still hasn’t been sold.

“Many home sellers start realizing that they’ve missed a great deal only weeks later. They regret being too confident and unhappy with the offers they received,” – noted Golfi, whose firm, RE/MAX Escarpment Golfi Realty Inc., is considered to be a leading brokerage in the area stretching from Halton Region to Niagara.

He says sellers can’t admit that we have entered an adjustment phase already.

Yes, the Canadian real estate market remains strong and robust, with the average home price exceeding $679,000 in June and marking a 25.9% annual gain, according to the Canadian Real Estate Association (CREA). Nevertheless, the first-quarter buying madness with record-high prices has significantly weakened, as June’s average price was 5.5% lower than the spring peak of $716,828. Moreover, home sales were down by more than 20% from March.

“The main theme for this summer is getting back to normal lives and normal market conditions across Canada”, – says Shaun Cathcart, CREA’s senior economist, amused by the June results. Some realtors and industry experts believe the problem is that many today’s sellers don’t seem to notice that.

“Seller expectations are based on how things were in previous months,” – Golfi says, noting that many homeowners tend to focus on unreliable sources while ignoring their agent’s advice. “They’re listening to their friends and relatives and not listening to professionals. They look at what their neighbours received for their properties in March and April and say they want the same or even more”.

“But those deals were signed months ago,” – Golfi goes on. “And what we’ve seen in March and April was far hotter than even during the spring boom of 2017.”

“I don’t like using the word ‘greed’, but it’s often the main reason,” – noted the Kitchener-based broker. “People paid ridiculous prices for properties this spring, just like in 2017, so that fear of missing out among current sellers is difficult to handle.” In his opinion, sellers will start changing their expectations as prices keep stabilizing, and the markets will force them to do it.

At the same time, the market conditions in the GTA and most parts of Southern Ontario remain more profitable for sellers.

“The market is still good,” – Golfi says, noting that prices might even go up again as soon as many older Ontarians who postponed downsizing during the pandemic put their homes for sale.

A wave of new inventory, he says, may be good news for buyers, but it may also cause competition for the best properties.

However, the summer of 2021 is coming to its end, and for now Golfi believes the prices have stabilized and even levelled off.

In other words, today’s sellers should think about the old saying about a bird in the hand, as those who keep inflating the expectations could miss a really great deal.