A realtor’s sign outside a home for sale on Kingswood Road in Toronto’s Beach neighbourhood, in May.Fred Lum/The Globe and Mail
Some buyers in the Toronto-area real estate market are uncovering deals as the result of an emerging phenomenon: seller fatigue.
The observation comes from John Pasalis, broker and president of Toronto-based Realosophy Realty, who is seeing a widening divergence in seller motivation as prices have continued to grind lower in Ontario for more than four years.
As a result, market watchers often see properties that sell for way more than they expect, while others sell for far less.
“When we see weird sales that make no sense, we have to do some homework,” he says.
In some cases, the property has a defect which wasn’t evident in the listing, he says, but these days many sellers are just keen to start a new chapter.
It seems counterintuitive to many buyers, Mr. Pasalis says, but someone who has owned their home for 15 years is likely to be way more flexible on price than a seller who purchased in recent years and stands to sell at a loss.
While many assume the homeowner in financial distress would be more willing to sign a hasty deal, agents at Realosophy have seen a raft of sellers who have a comfortable amount of equity and just want to move on with their life.
“You’re less concerned about the extra 50 grand – especially if you’re already checked out and moved on mentally,” says Mr. Pasalis.
Sometimes agents representing sellers advise their clients they can get more money.
“They push back,” Mr. Pasalis says with astonishment.
Prime Riverdale location leads semi to sell $618,000 over asking
He points to one recent deal where a buyer submitted a lowball bid and the seller was quick to say she would accept. Mr. Pasalis recommended she sign back with a counter-offer, but the seller feared the buyer could be spooked and walk away.
The seller is not wrong about the risk, he says, and some buyers do refuse to negotiate. The decision to accept is ultimately up to the homeowner, he adds.
Sentimentality may also carry some weight – especially when the buyers are young.
In one case, the homeowner had bought the house as a single woman and was happy that another young woman was the buyer, he says.
Mr. Pasalis urges agents representing buyers to delve into the history of the property and talk to the listing agent, who sometimes reveals a surprising amount of background information.
Mr. Pasalis has noticed an increase in another nascent trend: some agents are using artificial intelligence to estimate the value of a home. Some use the AI assistant Claude, while others are turning to startups that specialize in real estate.
An agent on the way to a listing presentation may ask AI to come up with evaluations packaged in a sleek presentation.
For consumers, the risk is that realtors are going to lean on this technology a little bit more, he says, and the figures may not be accurate.
“Valuing homes isn’t a science – it’s 50 per cent art,” says Mr. Pasalis.
He says some tools analyze photos, which may be deceptive.
“Certain things are just not obvious from the photos. You’re going to be duped.”
Mr. Pasalis says some sellers are more flexible than he would have predicted, but he stresses that not all share that mindset.
In many cases, homeowners still won’t budge from the price a neighbouring homeowner achieved at the market’s height in early 2022. They focus on their property’s estimate of value and the fact they might sell for $200,000 less, for example.
“There’s a lot of psychology in this,” says Mr. Pasalis. “They anchor against the peak instead of what they bought it for.”
Still, Mr. Pasalis is gradually seeing fewer stubborn sellers. Three years ago, or so, many were still holding out for interest rate cuts or other catalysts to fuel a rebound.
Now many are more resigned to slumping prices.
“In Toronto, we’re not used to a slow market for five years,” he points out. “Waiting doesn’t mean you’re going to get more money – it sometimes means you’re going to get less money.”
Toronto-area shows slow signs of real estate recovery, but risks abound
Some Toronto homeowners are not willing to accept a value of 25 or 30 per cent below the high water mark.
That’s likely one reason that listings have been declining, with new listings in June in the Greater Toronto Area down 12.9 from the same month last year, he says
The market downturn in the GTA has endured long enough that some homeowners are starting to look toward a recovery – even if rising prices are two or three years away.
Alexandra Ducharme, senior economist at National Bank of Canada, says improving sales in Ontario in recent months suggest that better affordability has coaxed some sidelined buyers back into the market.
Given the sharp correction in GTA home prices over the past several months and the very low level of sales in the opening months of the year, some normalization is not surprising, the economist says.
She cautions, however, that the modest uptick in sales in Ontario should be viewed as a recovery from depressed levels, rather than a sign of underlying strength, as sales remain extremely low by historical standards.
For his part, Mr. Pasalis expects the market to remain in the doldrums for a while. He believes that some forecasts predicting prices will rise in the second half of 2026 are too optimistic.
In his recent market update and live Q&A with market watchers, he pointed to “months of inventory” for low-rise properties in the GTA, which stood just below four months in June.
The measure captures the time it would take to sell available listings at the current pace of sales.
If more supply is absorbed and “months of inventory” falls to 2.8 or 3, Mr. Pasalis estimates, prices will plateau.
He says more potential buyers will need to see a stretch of stability before they return with confidence.
“We’re still in this phase in the cycle where most buyers are still hoping to buy for less than the neighbouring house sold for two, three, four weeks ago,” he says. “Everyone wants a slightly better price.”