Toronto bidding wars turn to homebuyers’ remorse as market gets nervous

Kim Chipman, Bloomberg News

After a double whammy of government intervention and the near-collapse of Home Capital Group Inc., sellers are rushing to list their homes to avoid missing out on the recent price gains. The new dynamic has buyers rethinking purchases and sellers asking why they aren’t attracting the bidding wars their neighbours saw just a few weeks ago in Canada’s largest city.

We are seeing people who paid those crazy prices over the last few months walking away from their deposits,” said Carissa Turnbull, a Royal LePage broker in the Toronto suburb of Oakville, who didn’t get a single visitor to an open house on the weekend. “They don’t want to close anymore.

Home Capital may be achieving what so many policy measures failed to do: cool down a housing market that soared as much as 33 per cent in March from a year earlier. The run on deposits at the Toronto-based mortgage lender has sparked concerns about contagion, and comes on top of a new Ontario tax on foreign buyers and federal government moves last year that make it harder to get a mortgage.

Definitely a perception change occurred from Home Capital,” said Shubha Dasgupta, owner of Toronto-based mortgage brokerage Capital Lending Centre. “It’s had a certain impact, but how to quantify that impact is yet to be determined.

Early data from the Toronto Real Estate Board confirms the shift in sentiment. Listings soared 47 per cent in the first two weeks of the month from the same period a year earlier, while unit sales dropped 16 per cent. Full-month data will be released in early June.

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