This spring, the Canadian housing market, particularly in metro markets such as Toronto and Vancouver, was experiencing a giddiness similar to our own. Peak prices, peak sales numbers, peak demand, etc. and then came summer. Canadian buyers are now trying to renegotiate the deals they had made with sellers now, just before those ensuing deals are to close.
One attorney in Vancouver, Jason Gottlieb has had five such “buyer’s remorse” request letters go to his home-selling clients in just the last several weeks. Those buyers are regretting what they had agreed to do. Why? “I think that buyers are finding it difficult to come up with the money needed for the property price deal at the time,” said Gottlieb.
Some remorseful buyers are requesting $50,000.-$100,000. price reductions, closing date extensions and loans from sellers in vendor take backs for $500,000. and more. All this from a Canadian housing market currently defined by falling prices, interest rate increases and decreased demand.
In just three months, the average price of a home (considering all property types) in Toronto went from $920,791. in April ’17 to $746,218. in July ’17. Granted, the summer selling season is sleepier than the spring selling season but still, that’s a hefty drop. The number of sales in the Greater Toronto Area (GTA) during the spring and summer also shows a shift. Along with the benchmark for detached single family home prices dropping by 8% from April to July, the number of resales in the GTA dropped a whopping 40% between 7/16 – 7/17. We’ll have to see what happens to average valuation and average sales numbers in September when the typically more active fall selling season kicks in.
In the meanwhile, Toronto and Vancouver are looking at Ontario’s actions earlier this year to help ease escalating home prices that result in lack of affordability issues for local buyers. Ontario’s Fair Housing Plan, introduced in April, 2017, initiated a 15% tax (based upon the sales price of the home) on real estate purchases by non-resident buyers. Perhaps these types of initiatives will help take the pressure off and help decrease the number of remorseful buyers and in limbo sellers.