People clamouring for space are pushing prices higher in the Toronto-area real estate market as buyers compete for properties.
But some buyers are becoming wary of the bidding wars that have propelled prices to new records in the Greater Toronto Area.
Leslie Battle, an agent with Royal LePage Real Estate Services Ltd., recently sold a three-bedroom house in the city’s east end for $1,310,786 after listing it with an asking price of $1.089-million.
The semi-detached house at 219 Milverton Blvd. had 51 parties swarming through in the five days it was on the market and six bidders entered the fray.
Still, Ms. Battle was surprised at the number of potential buyers who decided against making an offer.
She fielded several calls from agents representing buyers who loved the property but didn’t want to compete, she says.
“I’m sensing a little bit of a pullback with buyers,” Ms. Battle says. “I think it’s the thin edge of the wedge that we’re going to see a little bit more of.”
Ms. Battle calls the segment between $900,000 and $1.4-million “the price range that does not sleep” in single-family dwellings, but she adds that lots of pent-up demand from buyers was satisfied over the summer when the market came out of the spring lockdown.
Now real estate values are disconnected from the realities of an economic recession and decreased immigration, in her opinion.
She believes consumers are more fearful that the single-family home market is becoming overheated – especially as COVID-19 case counts rise and some of the financial support from governments and lenders has been phased out.
“We may see some fall-out from people who are forced to sell,” she says.
Some of the homeowners who were able to defer mortgage payments for a time may find they can no longer afford their properties, she says.
Ms. Battle expects the changing dynamics will cause that rapid price growth for detached and semi-detached homes to level off in the coming months.
More supply might become available as research shows relationship break-ups are on the rise during the pandemic, she says, and many people close to retirement are accelerating their plans to move out of town.
Countering that is a tendency for older homeowners to delay their plans to move into retirement homes during the pandemic, she says. In recent months, she has had three potential clients who decided to keep their houses and pay for home care instead, she says.
Over all, she doesn’t see the kind of economic strength necessary to fuel the market to greater heights in early 2021, but she notes that the market this year has been much stronger than industry watchers predicted.
Real estate agent Andre Kutyan of Harvey Kalles Real Estate Ltd. has noticed fewer buyers coming out for showings recently. But move-up buyers are still willing to compete for houses at the high end of the market.
“The people who are coming out are serious.”
Mr. Kutyan says the number of new listings has slowed in the second half of November as buyers and sellers grapple with navigating life during the coronavirus pandemic.
In the upscale neighbourhood of Lawrence Park, Mr. Kutyan recently represented move-up buyers whose child goes to school in the area.
The couple looked at half a dozen houses before a four-bedroom home arrived on the market with an asking price of $6.995-million.
“Of course when we put an offer in, another offer came in,” says Mr. Kutyan, who adds that buyers often wait on the sidelines hoping they won’t have to compete.
Mr. Kutyan’s clients sweetened their offer and purchased the newly built house at 1 Cheltenham Ave. for $7.1-million.
Even at that, he figures the buyers struck a good deal because the house has such luxurious features as seven bathrooms, a library and a home gym, and sits on a large lot in a neighbourhood where building lots sell for millions of dollars.
“I cannot replace that house between land and construction,” he says of the costs of building new.
The downtown condo market may be flooded with listings, but in neighbourhoods such as Rosedale, Lawrence Park and Forest Hill, very little comes up for sale.
“What’s driving the market is the lack of inventory,” he says.
In the family-friendly, midtown neighbourhood of Cedarvale, Mr. Kutyan listed a four-bedroom house for sale with an asking price of $3.695-million.
“We priced the home right on the money,” he says, because the owners did not want the property to languish.
Mr. Kutyan put the word out among his contacts that the house at 33 Heathdale Rd. was being polished and fluffed before it arrived the market. A sign in front said “coming soon.”
Nine potential buyers toured the home on a recent Sunday before he launched the property on the Multiple Listing Service of the Toronto Regional Real Estate Board the following day.
“By Monday evening I had four offers,” he says.
The house sold for $3.855-million.
“Three people didn’t buy the home and another five didn’t offer,” he says, in pointing out that eight interested parties are still looking in that price range.
“The next one that comes up, you’re going to see a line-up again.”
The agent also has clients who have moved from central Toronto to Markham, Ont. to be closer to family. Another couple is moving north to Rice Lake and another pair of empty nesters is looking to trade their large house in Toronto for an equally spacious property closer to their sailboat in Mississauga.
“It’s definitely a lifestyle change,” Mr. Kutyan says.
Priscilla Thiagamoorthy, economist at Bank of Montreal, says she is keeping an eye on the condo segment of the market and the impact a slowdown there might have on housing starts.
Ms. Thiagamoorthy says millennials and international migrants have been purchasing high-rise condo units for the past decade, fueling new construction.
But now, with immigration flows slowing and a shift in preferences for larger, suburban homes, Canada’s big cities could see a slowdown in condo construction, she says.
Still, demand for single-family dwellings, supported by low interest rates and teleworkers, will still keep the housing market resilient over all, she predicts.
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Calgary real estate showing shift to seller's market – Calgary Herald
A recent survey of major real estate resale markets across Canada has found Calgary is now a sellers’ market.
Zoocasa, an online realty firm, ranked the nation’s most competitive markets, and it found Alberta’s major markets were much more competitive than a year ago.
“Going into 2020, much of Canada was in a sellers’ market, but Calgary and Edmonton were not,” says Lauren Haw, CEO of Zoocasa. “They were balanced, so if you were buying in Canada, they were the place to be.”
But now both are in sellers’ markets, with Calgary being the hotter of the two.
The measure Zoocasa used, however, only offers a rough picture of actual conditions, Haw admits. The realty firm used the sales-to-new-listings ratio, dividing sales by new listings.
“As a rule of thumb, anything over 60 per cent means it’s a sellers’ market,” she says.
Haw notes Calgary’s ratio was 87 per cent in November (the period used for the survey) compared with 60 per cent for the same month in 2019. Edmonton’s was 76 per cent in November.
As she further explains, a ratio below 40 per cent is considered a buyers’ market, while one between 40 and 60 per cent is balanced.
The caveat, she adds, is Calgary’s low- to mid-range single-family detached home segment is driving sales while experiencing low supply. At the same time, the condominium and higher-price segments still mostly favour buyers.
By comparison, the most competitive market in Canada was Sudbury, with a ratio of 117 per cent. Greater Vancouver and Greater Toronto had ratios of 76 and 75 per cent respectively.
Short supply, GTA migration boosts Hamilton real estate market 15 per cent – TheSpec.com
Hamilton’s housing and rental market continued its hot streak even as a second wave of COVID-19 hit the city in December.
The price of a home in Hamilton increased 15.3 per cent year over year to $659,409 in the fourth quarter of 2020, according to a survey released Friday from Royal LePage.
That’s higher than the national aggregate price of a home in Canada, which increased 9.7 per cent to $708,842 year over year.
The median price of a two-storey home increased 17.1 per cent to $698,511, while the median price of a bungalow increased 11.8 per cent to $604,827. The price of a condominium increased 0.7 per cent to $381,008.
Overall, Hamilton’s real estate market saw double-digit gains in home prices in 2020.
Joe Ferrante, broker of record with Royal LePage State Realty, said he expects this trend to continue well into 2021.
“Multiple-offer scenarios have become commonplace and buyers are offering tens of thousands of dollars above the asking price to secure deals,” Ferrante said in a statement.
“With inventory at an all-time low, some sellers held off on listing their properties in 2020 on account of having little or no purchase options.”
Ferrante attributes the rising prices to a “combination of two things — interest rates and a definite shortage of product.”
“It’s a simple supply and demand issue when you think about it,” he said. “People are just not putting their houses up for sale like they used to, while the amount of people into our market outside the Hamilton area and from around the GTA seem to be buying up whatever we have, thus driving the prices up.”
The rental market has become quite competitive as well, noted Ferrante, as many people who can’t find property to buy are renting in the meantime.
“The lack of inventory is causing first-time buyers, who want to take advantage of low borrowing rates, to be priced out of the market,” he said. “These buyer hopefuls now find themselves competing for rental properties instead.”
The pandemic has created an “untraditional” year for the real estate market. After slow sales in April, the ripple effect of the pandemic on consumer behaviour resulted in more residents working and schooling from home.
According to a recent report from the Realtors Association of Hamilton-Burlington (RAHB), sales of single-family homes in the area increased in December by 38 per cent compared to December 2019, while the average price rose by 29 per cent to $829,226.
In comparison, Ancaster in 2019 was the local area with the highest average home sales price at $772,811.
Condo Owners "Handcuffed" in the Toronto Real Estate Market? – RE/MAX News
Increasing valuations and surging rents had been the hallmarks of the Toronto real estate market, particularly for condominiums, in the years following the 2008-2009 Great Recession. The staggering demand for dense downtown housing, as well as investor speculation and short-term rentals, contributed to one of the hottest housing markets in the world.
Then the COVID-19 public health crisis happened.
Like other major urban centres, the coronavirus pandemic has altered the residential landscape in Toronto, which has become associated with an enormous inventory of tiny and ultra-expensive condominiums. North America’s fourth-largest city is enduring a two-pronged problem. The first is that Airbnb hosts are selling their vacant short-term units, with borders closed to non-essential travel, and short-term rental rules tightened last year. The second is that people are fleeing the hyper-dense city for green pastures in rural communities.
This begs the question: can condo owners sell their units in a market plagued by dwindling demand and surging inventory? Many savvy investors who got in on the ground floor in the last decade will likely turn a profit when they secure a buyer. However, somebody who acquired a one- or two-bedroom suite in the last couple of years may find it harder to make money off the property and use the proceeds to upgrade to a detached or semi-detached house.
Ultimately, some Toronto condo owners may be feeling trapped by a large inventory of condos, most of which had been erected in the last few years. Or, as Dale-Paul Jordan, who listed his Toronto condo, told Reuters: “One of the things we’re handcuffed to is selling our condo to help with the down payment.” But does the data reflect the notion that condo owners in the Toronto real estate market are handcuffed? Let’s explore!
Condo Owners in the Toronto Real Estate Market
Sales activity and prices slowed down in the fall, while condo stocks intensified across the city.
According to the Toronto Regional Real Estate Board (TRREB), average Toronto condo prices tumbled 4.7 per cent year-over-year in December to $625,828, a contrast to the 8.1-per-cent growth in the average detached home price ($1,475,758).
Could this be the new norm, at least temporarily?
Recent TRREB data highlights that condo inventories more than doubled in the Greater Toronto Area. This has been a remarkable turn of events, because the broader real estate sector is booming in Toronto and the surrounding areas.
TRREB’s Chief Market Analyst Jason Mercer noted in the report, “there was a dichotomy between the single-family market segments and the condominium apartment segment. The supply of single-family homes remained constrained resulting in strong competition between buyers and double-digit price increases. In contrast, growth in condo listings far-outstripped growth in sales. Increased choice for condo buyers ultimately led to more bargaining power and a year-over-year dip in average condo selling prices during the last few months of the year.”
For now, it seems as though Toronto condo owners looking to leave the city have two options: stay put or sell the unit at a deep discount. But perhaps 2021 will offer more options for “handcuffed” homebuyers.
A Rebound in the Condo Market in 2021?
It is widely expected that many of the public policy health guidelines will remain intact in the first half of 2021. This includes immigration controls and a crackdown on short-term rentals (Airbnb). But the second half of the year could see heated market activity, with more Canadians immunized with the coronavirus vaccine and consumers holding about $200 billion in savings.
Although there has been some speculation that the Bank of Canada (BoC) could be the first central bank to tighten monetary policy, the institution has yet to send any signals that it would raise interest rates anytime soon. In other words, the BoC’s benchmark lending rate of 0.25 per cent and the five-year mortgage rate of below five per cent are unlikely to change in 2021 and possibly in 2022. Put simply, borrowing has never been cheaper, which is allowing new homebuyers to delve into the real estate market.
Another lingering question impacting the direction of Toronto real estate: if life returns to some semblance of normalcy following widespread vaccinations of Canadians, will corporations maintain their work-from-home policies? Google recently announced that the company would have employees return to the office in September and only experiment with flexible telecommuting a few days per week. This matters because many professionals have been enjoying newfound freedom over the last several months and some have migrated to regions further from their place of employment, soaking up the luxury of no daily commute coupled with quieter rural living.
But this could potentially change toward the end of 2021, with businesses returning to their commercial workspaces. Will this translate to a wave of homebuyers (and condo seekers) returning the big cities? Should this wave start to trickle back to the city sooner rather than later, this along with the other strong demand trends forecasted for the coming year, should provide some relief for handcuffed condo owners in Canada’s largest real estate market.
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