I’ve recently embarked on a rite of passage for millennials in Toronto. For the first time, my partner and I cautiously dipped our toes into the housing market to check the temperature.

Like many before us, we quickly pulled them right back out.

We encountered AI-generated listing photos covering up surprise gut jobs, a lineup of properties with tenants and listing prices far below what the owner was actually likely to accept.

What made the experience more frustrating was that we went into our search amid signals of a more welcoming climate for buyers. Home prices have plummeted by an average of $176,600 across Canada since the 2022 peak, with drops averaging $353,900 for Toronto (and as high as $529,100 for Oakville).

“We are seeing condos selling for, or below, 2017 values at this point,” Toronto realtor Anya Ettinger told me.

But in large swaths of the market, “there’s still a big disconnect between a buyer’s willingness to pay versus the seller’s expectation of value.”

Much like the ghosts in The Five People You Meet in Heaven who teach Mitch Albom’s protagonist lessons about life, Ms. Ettinger has identified three scenarios that offer lessons to first-time buyers in the housing market this fall.

The first involves owners who list properties well below what they actually expect to get. It’s a phenomenon well known to Toronto buyers scouring the heated market in the past, but more surprising given the rumours of a chill in prices.

Buyers still regularly pay not just tens of thousands but $100,000 or more above asking for properties in high-demand areas such as Riverdale and the Beaches in Toronto’s east end and Little Portugal in the West, especially as workers return to their downtown offices.

The second type of listing involves properties with tenants and fixer-uppers where prices can still be negotiated, Ms. Ettinger said. For those uninterested in becoming landlords, homes with an existing renter present the risk of dealing with a tenant who doesn’t want to move out despite being served legal notice.

The third, and most noticeable category as of late, is what Ms. Ettinger dubs “the Wild, Wild West.”

This is when a pricing strategy shows “absolutely no rhyme or reason,” she said.

Brokerage notes on one recent listing simply said “seller unmotivated, price not flexible” Ms. Ettinger recalled. In another case, a house had been sitting for 180 days, in “terrible condition,“ with the seller expecting well above asking.

Ms. Ettinger attributes some of the disconnect to memories of the boom days. “A lot of people maybe saw that really high number back in 2022 and have held on to that,” she said.

She blames a narrative that has been ingrained in peoples’ minds: “You buy real estate in Toronto, you will make money,” Ms. Ettinger said.

Now, some are confronting the possibility of not recouping even what they paid.

The lesson for first-time buyers is the need to challenge their idea of a starter home, and accept that a house is no longer automatically a short, or even medium-term, financial bet.

“We got used to an era for upwards of a decade where there was consistent appreciation,” Ms. Ettinger said. “That’s not a guarantee any more.”

Do you have lessons of your own from a recent home search, or a first-home search? Drop me a line at mpostelnyak@globeandmail.com