The Greater Toronto Area (GTA) real estate market is experiencing a wave of uncertainty this fall, with both buyers and sellers hesitant to commit. Cheri Dorsey McCann, a broker with McCann Realty Group, notes that while negotiations often conclude with a deal, getting both parties to engage is the real challenge. She advises formalizing offers, even if they seem low, as 80% of them eventually lead to a sale.
The market has seen a slowdown in the second half of October, with consumers waiting for clarity on U.S. midterm elections, tariffs, interest rates, and Canada’s economic outlook. The Bank of Canada’s recent interest rate hike to 2.5% from 2.25% has added to the uncertainty, with economists predicting a slow grind towards the end of the year. Buyers are trying to gauge how much farther home prices have to fall and whether lower prices offset the risk of higher rates.
Ms. McCann highlights the importance of counter-offers, citing an example where a house priced around $2.8-million failed to sell after the seller refused to counter a bid. She advises sellers to always make a counter-offer, even if the initial bid seems too low, to understand the buyer’s willingness to pay. Some homeowners with equity are taking advantage of price drops to move up, while first-time buyers are re-entering the market as prices become more affordable.
Victor Tran, a mortgage and real estate expert with Rates.ca, observes that some buyers are accelerating their searches before their preapprovals expire. Higher rates may affect buyers’ ability to pass the Canadian mortgage stress test, which requires them to handle payments at 5.25% or the contract rate plus 2%, whichever is higher. Buyers are also considering variable-rate mortgages, which are currently just below 4%, compared to fixed rates just below 5%, to qualify for loans more easily.