Has the GTA Condo Market Finally Cooled Off? Depends What You’re Looking For

It’s a known fact among Canadian realtors that the housing market definitely has a dormant season. Traditionally, real estate activity tends to slow down near the end of the fall as people get ready to bunker in for the winter months.

Prior to the COVID-19 pandemic, you could pretty much expect a blanket cooldown across many areas of the condo sector. That’s because it was assumed that most people just weren’t interested in transacting on anything when it’s cold outside and leading up to the (often costly) holidays in December. (It’s important to note, however, that realtors have largely expected competition to remain fairly consistent for downtown Toronto condos for sale, even in the slowest months of December and January.)

But over the past year and half, the shifting priorities among Ontario homebuyers has meant that many of the ‘seasonal rules’ realtors have come to expect are just no longer relevant. So while it’s true that there is a decrease in overall demand — we may still see a competitive market this winter, but only for very specific unit types.

Smaller units, suburban townhomes most coveted

After all the stories this past year of surging prices and fierce competition, it’s no surprise that buyer fatigue is real. But what about right now? Is the GTA condo market cooling down, or is it still on fire?

Most agents at Strata.ca will say it really depends on what you’re looking for.

“In general, yes there’s definitely a cooling of the market,” says Strata.ca realtor Cyrus Ghazvini, who represents clients in a number of high-profile neighbourhoods, especially in North York and Toronto's East End. “But if you’re looking specifically for a one bedroom or a one plus den, the demand is certainly high.”

One reason these smaller units are in higher demand is because a lot less of them are being put up for sale. For example — When it comes to larger units, such as 2 bedrooms, 758 have been listed so far in the month of November. But take a look at the number of new listings for those coveted smaller units:

• 1 bedroom: 444 new listings
• 1 bedroom+Den: 506 new listings

Similarly, competition for condominium townhomes in the GTA suburbs remains particularly fierce...despite a general cooling of the market. Strata.ca realtor Osman Omaid has felt this firsthand as he tries to secure a townhouse for one of his clients in Peel.

“Even with a reasonable budget, we’ve been losing out because some of these listings are attracting over 10 bids on offer night,” he says, adding that his clients lost out on two townhouses in a relatively short period. “My clients are understandably exhausted and have decided to wait until next year; but who knows where prices will be by then?”

Omaid says one of the most interesting things about his client’s situation is that had they begun the townhome search just several weeks prior — things may have played out quite differently.

“It was so irritating because my client’s budget would have easily secured them a property just five weeks prior,” he explains. “Demand spiked so fast that comparable sold prices weren’t even relevant anymore.”

It appears to be a different story though for condos in that middle territory. There are many high-quality 2-bedroom listings in popular neighbourhoods that aren’t attracting as much attention. Had we been in a different market, the following units may have sold already:

• 8 Wellesley St E, Unit 807
• 38 Forest Manor Rd, Unit 1310
• 260 Merton St E, Unit 901
• 8 Ann St, Unit 201

‘No offers came in on offer night. Period.’

Realtors say they’re seeing a trend where a number of units are being relisted because the seller’s original pricing strategy backfired. One such strategy is to include what’s called an ‘offer date’, which is a specific time when the seller will accept and review offers from all interested buyers, usually about a week after the property is listed on the market.

“I’m seeing offer dates listed by overly optimistic listing agents, but then many of those same listings are being put back on the market at a higher price a week later,” explains Ghazvini, who says he’s pretty sure it wasn’t because the seller didn’t like any of the offers that came through. “It’s likely because ‘no’ offers came in on offer night, period.”

In the past 12 months, we’ve actually seen a 20% increase in GTA condo values as we continue to see some of the lowest inventory in 25 years. However, a lot of that price gain is attributable to a natural ‘snapping back’ from pandemic pricing as the market resumes some degree of normalcy.

During this adjustment period, there’s often a lag where sellers still believe they may get a minimum of 5 to 10 offers on their property. But this is certainly a different market from the one we saw back in March, which saw condo values jump by 11 per cent in just three months alone. So in practice — some sellers, particularly those without the coveted smaller units or suburban townhomes, are seeing far fewer offers or simply none at all.

The good news though is that buyers will continue fighting for unique condos, especially in high-demand buildings; no matter the unit type.

“A few of my clients that had decided to sit on the sidelines a couple of months ago are now calling me to restart their search,” says Strata.ca realtor Larry Medina. “They’re feeling a bit more hopeful and optimistic as the market, or at least parts of it, cool down for the winter.”