A Buyer's Market With No Buyers: What May's TRREB Numbers Really Tell Us

https://www.youtube.com/watch?v=Ipr7xeHYFak

The Bank of Canada met again this week and did exactly what they've done for the past 19 months. Nothing. The overnight rate is holding at 2.25%, your variable rate mortgage looks the same as it did yesterday, and the most interesting thing about the announcement might be a comment one of our YouTube viewers left under a recent video:

"I've never seen a buyer's market with no buyers."

That one sentence sums up the Toronto market better than any headline I've read this year. Mortgage broker Dion Beg of Kanga Mortgage joined me on the latest episode of RealtyChatter to break down TRREB's May Market Watch, and the numbers tell a more interesting story than "rates held again."

Why the Bank of Canada Did Nothing (Again)

Inflation has crept up to roughly 2.8%, mostly driven by fuel costs that ripple into the price of transporting everything, including your groceries. That puts it near the top of the Bank of Canada's comfort zone, which targets 2% and wants to stay under 3%. If inflation were the only indicator, we might have seen a rate increase.

But it's not the only indicator. We're sitting in a technical recession, and unemployment is at 8.1%. The recent headline of 80,000-plus jobs created across Canada sounds great, but Dion isn't buying it.

My opinion: boring is good in economics. The wild swings of 2021 and 2022 are what hurt people. A central bank holding steady while it balances rising inflation against a weak job market is the least dramatic outcome, and that's usually the healthiest one.

The May Numbers: Sales Up, Listings Way Down

Here's what TRREB's May Market Watch showed for the GTA:

Sales: up 6.3%. We saw 6,583 transactions in May, almost 6,600 sales. That's real movement, and May is typically the month that kicks the spring sales cycle into gear.

New listings: down nearly 19%. We're hovering just shy of 18,000 new listings. That's a significant pullback in fresh supply.

Active inventory: down 13.3%. With fewer new listings coming on and sales ticking up, the pool of available homes is shrinking. Some of that is also sellers who didn't get their price and simply took their home off the market.

Dion put it plainly on the show: the sales that are happening are happening where sellers are meeting the market. If you thought your home was worth $700K and your neighbour just sold for $600K, you have a decision to make. Sell at today's number or pull the listing and hope.

What Homes Actually Sold For in May

TRREB's headline average price is down 4.6% year over year, still sitting just above the million-dollar mark. But nobody buys "the average." You buy a detached home or a townhouse or a condo, in the 416 or the 905. Here's the breakdown for May:

Property Type	416 (Toronto)	905 (Surrounding Regions)
Detached	$1,600,000	$1,268,000
Townhouse	$953,000	$812,000
Condo	$673,000	$573,000

The number that jumped out at me: 905 condos are down almost 10% year over year. If you looked at condos in Durham, York, or Peel a year ago and decided they were out of reach, look again. Dion has had multiple clients close recently between $350K and $450K, and some of those were in the 416. The deals are there.

One caveat on condos: factor in the fees. Depending on the building, you're adding anywhere from $300 to over $1,000 a month on top of your mortgage payment, and your lender factors that into what you qualify for.

Sellers, Read the Room

Average days on market in May was 27. Again, that's an average. Your detached home in Newmarket and a downtown Toronto condo are living in different markets.

Here's a real example of what happens when sellers don't read the room. A home I'd been watching in Stouffville sat on the market for 16 months. It finally sold this month, roughly $600,000 below the original list price. Was that a stubborn seller or poor guidance from their realtor? Probably a bit of both. Either way, chasing the market down cost them dearly.

If you need to sell at a specific number and the market won't support it, this may simply not be your moment to sell. That's an honest conversation every listing agent should be having right now.

There's also a growing group of homeowners who want to move but can't. With a wave of mortgage renewals hitting this year, Dion is running the numbers for clients and finding that if they sold today, there wouldn't be enough equity left to fund the down payment on the next home. They're staying put, not by choice.

So Where Are the Buyers?

That brings us back to the comment. The scales have tipped in the buyer's favour: more negotiating power, softer prices, less competition. But transaction volume is down significantly, which means fewer buyers are actually stepping up. A buyer's market with no buyers.

If you're a buyer with no urgency, that is your advantage. Dion shared the story of a client helping his mother buy a condo. Months before they were ready, Dion told him to get on a realtor's daily listing email. Not to buy immediately, but to become a market expert. When a two-bedroom condo in the right neighbourhood showed up at the price of a one-bedroom, the client didn't hesitate. He knew it was a deal because he'd been watching every day.

We're not telling you to run out and buy just because you can. We're telling you to get educated now so you recognize the opportunity when it lands in your inbox.

Two Strategies Making Homeownership Work Right Now

Teaming Up: Four Incomes, One Mortgage

Dion just closed a purchase for a brother and sister and their spouses, all under 27. Individually, each couple could afford around $400K to $500K, which buys a condo or a compromise. Together, with four incomes on one application, they bought a home for about $750K where one couple lives upstairs and the other downstairs.

Run the math: separately they'd have spent up to $1M combined for two lesser properties. Together they spent $750K for one home that fits both. And down the road, when they sell, each couple walks away with a serious down payment for their own place. We've both seen this play out over seven or eight years, and it works.

The $60K RSP Strategy Most People (and Some Lawyers) Get Wrong

Under the Home Buyers' Plan, first-time buyers can now withdraw $60,000 from their RSPs tax-free, not the old $35,000 figure. Dion actually had to correct a client's lawyer on this one.

Here's the part almost nobody knows: that money doesn't have to go toward your down payment. It can be used to facilitate the purchase. One of Dion's clients used about $30K of her withdrawal to pay off her car loan. Clearing that debt freed up her debt servicing capacity and qualified her for a significantly larger mortgage and a better property.

My opinion: this is exactly why you work with a mortgage professional and not just whoever's convenient. The right structure can change what you can buy.

The Bottom Line

Are we at the bottom of the market? We'll know in six months, because that's the only way anyone ever knows. But the signs are there: sales rising, inventory tightening, and prices significantly below where they were two years ago. Buyers who get educated now will be the ones who win.

Have questions about the May numbers or your own buy-or-sell math? Reach out to me at homes@garyamcgowan.com, or connect with Dion Beg at kangamortgage.ca or on Instagram at @dionbeg.

All market data referenced is from the Toronto Regional Real Estate Board (TRREB) May Market Watch report.