Cancelled Listings Surge in the GTA as Sellers Bet on Market Shift!

Cancelled Listings Surge in the GTA: Sellers Hold Off as They Bet on Market Shift

Lately, you may have noticed more homes being pulled off the market than usual. Why are so many sellers choosing to cancel their listings after going through the effort of listing their homes in the first place? It’s an interesting trend that’s been emerging across the GTA, and it raises an important question: What’s driving this surge in cancelled listings? In this blog, we’ll break down the reasons behind the increase in cancelled listings, the strategies sellers are using, and what this means for buyers and sellers in the coming months.

1. The Data: Rising Cancellation Rates

Let’s start by looking at the numbers. In Ontario, approximately 35% of listings were cancelled in September, a significant jump from the usual 25%. And it’s not just Ontario—across Canada, the cancellation rate has risen from the typical 15% to about 24%, according to economist Daren King from National Bank Financial Markets. So, what’s causing this surge?

The main reason behind these cancelled listings is that sellers are hoping to get a better price by waiting for market conditions to improve. With the anticipation of interest rate cuts in the near future, many sellers are opting to hold off, hoping that waiting will bring better offers when the market shifts in their favor. Both buyers and sellers are betting on improved market momentum, particularly with more potential interest rate cuts. As long as news continues to point toward lower rates, the trend of sellers pulling back from the market is likely to persist.

2. Financial Flexibility and Timing the Market

Not every seller has the luxury of pulling their property off the market. In fact, many sellers choosing this route are in a strong financial position, meaning they don't need to sell urgently. These sellers can afford to wait for more favorable conditions, hoping that market changes will result in a higher selling price.

For example, some of our clients have already secured a new property, often from pre-construction, and have little to no mortgage on their current home. This financial flexibility allows them to bide their time and see how the market unfolds in the next few months. However, there is some risk involved—waiting could mean higher prices for both the property being sold and the property being purchased. It’s all about timing the market, and this can be tricky, especially when dealing with high-priced homes. In some areas, demand for homes priced over $1.6M has slowed down, making it a more challenging market for sellers of luxury homes.

3. Realtors’ Strategy: Cancel and Relist

One of the most common strategies in today’s market is the "cancel and relist" tactic. Rather than simply lowering the price of a property, agents are canceling the listing and relisting it as a new property at a lower price. Why? When a home shows up as a “new” listing, it can attract more buyer attention and prevent the property from looking stale. This tactic is especially useful in competitive markets like the GTA.

This strategy works best when the price change is significant enough to make a fresh impression on buyers. For instance, if a property initially listed at $999K didn’t generate the offers the seller hoped for, it might be relisted at a higher price that better aligns with the market value or what the seller wants to achieve. It’s a way of bringing renewed attention to a property that may have been overlooked previously.

4. Interest Rates and Market Conditions

Interest rates are another major factor driving this surge in cancelled listings. Many sellers are hoping to relist their homes after interest rates drop, which could boost buyer confidence and increase demand in the market. This creates a "chicken and egg" situation where both sellers and buyers are waiting for interest rates to go lower before making a move. As we’ve seen recently, a 50 basis point rate cut from the Bank of Canada has already created a slight uptick in market activity, with home sales increasing by 12% in the last month.

With rates expected to continue to fall, many buyers are holding off, waiting for the conditions to be right. Sellers, on the other hand, are anticipating these changes and hoping that lower rates will lead to more competitive offers. The market is in a waiting game for now, but it could shift quickly as rates continue to drop.

5. First-Time Buyers and New Mortgage Regulations

Another group of people waiting on the sidelines are first-time buyers. With new mortgage regulations coming into effect in December, the maximum amortization for insured mortgages will increase from 25 to 30 years. This change is expected to make it easier for first-time buyers to qualify for mortgages, as their monthly payments will be more manageable.

Many first-time buyers are waiting for this change to take effect, hoping that not only will it make home ownership more affordable, but that interest rates will continue to drop. Additionally, the cap for mortgage insurance will rise from $1 million to $1.5 million, allowing more buyers in high-priced areas like Toronto, Mississauga, Richmond Hill, and Oakville to qualify. This shift could lead to higher demand in these regions, potentially nudging prices up.

6. Spring Market Anticipation

Looking ahead, many experts believe that the spring market will bring a significant increase in activity. As interest rates drop further and more buyers return to the market, we can expect higher demand in key markets. While this doesn’t necessarily mean a dramatic price jump, it will likely lead to more buyer interest, more showings, and potentially more multiple offers on properties.

Already, we’re seeing an uptick in inquiries and a healthy number of sales in more affordable segments, with homes priced between $900K and $1M. As we move into 2025, more buyers may enter the market, hoping to capitalize on the improving conditions. Spring has traditionally been a strong market season, and experts expect the trend to continue, even with ongoing interest rate cuts.

What Does This Mean for Buyers and Sellers?

The takeaway here is that many sellers are playing the waiting game because they have the financial flexibility to do so. Buyers, on the other hand, are holding out for lower interest rates and the new mortgage rules to work in their favor. While timing the market is always a bit of a gamble, the best time to act is when you’re financially prepared, and the market conditions align with your personal situation.

Right now, we’re in a relatively balanced market with more options and less competition. For buyers, this could mean better opportunities to negotiate on price and conditions. For sellers, if you’re prepared to wait, the market could improve in the spring. However, it’s hard to predict exactly when the market will shift, so it’s important to stay flexible and informed.

Key Takeaways:

• Sellers are waiting for better market conditions, especially with anticipated interest rate cuts.
• Buyers are holding off in hopes of lower rates and more favorable mortgage terms.
• The spring market could bring a surge in activity, with more demand and potentially higher prices.

If you're considering buying or selling, it’s important to stay informed and be ready to act when the time is right. Feel free to reach out if you have any questions or need help navigating the current market!