It's a frozen market, with buyers waiting for prices to hit bottom and sellers not willing to play. Agents are expecting a very frosty January
CAROLYN IRELAND
From Friday's Globe and Mail
December 5, 2008 at 12:00 AM EST
For real estate agents, these are delicate times.
"The hardest thing for an agent to do is ask for a $50,000 price reduction," says Sandy Segal of Royal LePage ProAlliance Realty in Cobourg, Ont.
With the gruesome fall 2008 market in Ontario, many agents have been forced for the first time to approach sellers and gingerly suggest that they cut asking prices for their houses.
In Toronto's tony neighbourhoods, owners with $1-million sale tags are cutting the prices by $200,000 in some cases. There are more eye-popping fire sales among the ultrarich, but even owners with modest semis in popular neighbourhoods are trimming prices if they are desperate to sell.
Agents at all levels are reporting a stasis in the market: Buyers are sitting on the sidelines wondering if prices will fall further while sellers who are not pressed to make a deal are prepared to wait.
In bucolic Northumberland County, Ms. Segal is trying to sell a luxuriously appointed house with panoramic views that would have gone in a minute earlier this year. The owners have already dropped the price to $549,000 from $599,000.
"The house is gorgeous and nothing is happening," she says.
Earlier this year, two nearby houses with comparable amenities sold in no time - one for slightly less than $600,000 and one slightly higher. "They went immediately," Ms. Segal says.
She recently suggested another reduction of $50,000. Now that word of the second cut is getting out, the agent has some potential buyers returning for a second look.
Ms. Segal, who has been selling real estate for five years, says she doesn't pressure homeowners to reduce the price. Some sellers fear that agents are just looking for a quick sale, so she strives to make sure that her clients trust her judgment.
Given the eerie silence in her firm's office, some of its more experienced agents have warned her to expect a very frosty January.
"They're telling me, 'You'd better squirrel away some money,'" she says. "In February, if the phones aren't ringing, we know that's not good news."
Ms. Segal says she would advise her clients against accepting an offer that's conditional on the sale of another property.
"It might take them months and you don't know how realistic they are going to be about the price."
In Toronto, Daniel Eliadis of Royal LePage Real Estate Services Ltd. says he has had clients who wanted to buy and then cooled off.
"The mood of the buyer is, 'Let's wait and see - how low is low?'"
Sellers, meanwhile, are often reluctant to set a significantly lower asking price. "They're not psychologically adjusted to the change and not emotionally adjusted to the change," Mr. Eliadis says.
He adds that houses in Toronto's core are still changing hands, but he is seeing more of a downturn in areas outside of the city, such as Richmond Hill and Markham.
"You drop the price by fifty grand and there's still no one showing up."
Meanwhile, financial companies are becoming more stringent in granting approval for mortgages.
"Before they were a little bit more forgiving with their criteria," Mr. Eliadis says.
North of Toronto, among Caledon's country estates, John Dunlap of Moffat Dunlap Real Estate Ltd. is seeing the same paralyzing indecision among clients.
"It's not necessarily even price these days," Mr. Dunlap says of buyer inertia.
Homeowners who have sold seem willing to buy, he notes, but they have trouble actually stepping in to make a deal because of the uncertainty over what the spring will bring and which way the market is heading.
"People don't know what to do."
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