For those who follow the worldwide real estate market the extremely buoyant Toronto market is never far from the headlines. This is an area of the world which gives the impression of increasing demand yet limited supply. We have seen many questions asked of the government and indeed some areas of the country have now put in place foreign investment restrictions to give a more transparent look to the market. However, some experts are now beginning to question the excessive real estate listing cancellations in Toronto in recent times.
Statistics, smoke and mirrors
Official figures suggest that over 45,000 real estate sale listings were cancelled in Toronto during 2016. These listings were removed for some reason without the property in question having been sold and this seems to be an increasing trend in the area. At first glance this may seem relatively innocuous – why should we be bothered about the number of real estate listings which have been cancelled?
It’s all about the impression
The problem that experts have is the fact many of the properties involved in cancelled listings reappeared under a new listing just days later. These cancelled listings do not appear in the expired listings figures released by the real estate sector and, despite the fact some were pulled and re-listed at a lower price, there is no detrimental impact on market sentiment. It must be said, there are a number of legitimate reasons for cancelling a listing but the fact that some properties appear at a lower price just days later is strange.
Many believe that this potential manipulation of the market gives the impression of properties selling within a matter of days encouraging buyers to snap up many properties as soon as possible. These potential buyers may not be aware that the property they are looking at was listed at a higher price just days earlier with little or no interest. While perhaps the best way to find the market level, does it give the wrong impression to would-be investors?
Is this a loophole in regulations?
One expert questioned the fact that Toronto would appear to have more cancelled listings per month than properties sold in Vancouver. When you bear in mind that Vancouver is still a one of the best-known Canadian property markets this is a startling comparison. There is some suggestion that this type of activity is a common tactic which has been used for many years by real estate agents. There is no suggestion of wrongdoing, no laws have been broken but unless an investor asks for a listing history for a particular property there may not be aware of previous listings.
The fact is that real estate investors need to do their own homework, be able to calculate the theoretical value of a property and see if the asking price is attractive. Whether or not some real estate agents in Canada have been manipulating the market to encourage momentum buyers to invest with relatively short notice is debatable. However, what is not debatable is the increasing price of property in Toronto and the correct or fictional impression of extremely limited supply.