As lively as Toronto’s real estate market has been so far in 2015, this is the week that activity really starts to intensify.
With Easter, Passover and March break all behind them, prospective buyers have more properties to look at in every price segment – from downtown condos to a 16,000-square-foot Forest Hill mansion that hit the market with an asking price of $18.8-million.
Not only are listings swelling, but the number of buyers is increasing too, says real estate agent Boris Kholodov of Royal LePage Real Estate Services Ltd., Johnston and Daniel Division.
Families with school-aged kids begin to plan their buying and selling strategies around now because they typically want their moves to coincide with the end of the school year.
“They are home from March break and they feel energized,” he says of house hunters. “The kids are back in school and they start looking.”
Mr. Kholodov says the surge in listings began to appear early this week. “It’s definitely happening.”
Sales and prices tend to reach a peak each year in April and May – while March tends to have a bit of a lull because of the breaks for public and private school students, Mr. Kholodov says.
Looking at the March data, all harbingers point to a frenzied couple of months: The Toronto Real Estate Board reported this week that sales in the Greater Toronto Area last month jumped 11 per cent compared with March, 2014. The average selling price in the GTA rose 10 per cent in March compared with the same month last year.
The president of TREB, Paul Etherington, says lower interest rates have gone a long way to mitigate the effect of rising prices.
The number of new listings, meanwhile, rose 5.5 per cent in the GTA in March compared with March of last year.
People who think that real estate bidding wars are the preserve of downtown Toronto should check out the action in Durham region.
TREB numbers show that sales of detached houses in the 905 area code soared 17.3 per cent in March compared with March of last year, while the average price rose 10 per cent. By comparison, sales of detached houses in the 416 area code rose 4.3 per cent but the average price jumped 15.9 per cent in the same period.
“The madness is here,” says real estate agent Shawn Lackie.
In Courtice, Ont., which is about 50 minutes or so from downtown Toronto to the east, a house was recently listed with an asking price of $334,649. It received six offers and sold for $364,900 during the week before Easter.
The area is popular because it’s close to Lake Ontario, lies within commuting distance of the big city and generally has more affordable houses to attract young families priced out of the core.
Mr. Lackie recently took a young couple to see the house that inspired so much interest. They’ve already made a couple of offers but haven’t managed to close a deal.
Both sets of parents came along, Mr. Lackie says. “All were excited at the fact that this might finally be the one.”
Everybody liked the house when they saw it and – even better – it turns out one of the potential buyers happens to have an old acquaintance with the seller.
Mr. Lackie says that connection gave the couple hope that they might have an advantage at on offer night.
But when it came time to prepare a bid, the couple didn’t think they could go above the asking price. In fact, they were hoping to make an offer of $325,000.
Mr. Lackie put in a call to the listing agent and found out that three offers had already landed on the table the day before the deadline. His clients decided to sit this one out.
Mr. Lackie called afterward to find out the final tally, then sent his clients a text with the news. “To say the least, they were flabbergasted.”
In Toronto, meanwhile, not all houses attract multiple offers, notes Mr. Kholodov.
At any price above $3-million, it’s rare to see a bidding war, he notes. “Around the $1-million mark it’s almost a guarantee that it’s going to happen.”
Mr. Kholodov advises sellers to be realistic about the type of property they are selling and the price they can hope to fetch.
“If you are in a semi-detached home in the central core, your numbers are going to be very different from a large condominium in Yorkville.”
While the semi will move quickly – especially if the asking price is set below market value – a better strategy for the Yorkville condo is to set a price at full market value and expect to wait 30 to 60 days to sign a deal, he says.
In the condo market, investors are a bit hesitant to buy because they fear over-building, he says.
He senses most condo buyers these days are people who actually want to live in the unit. For most buyers, they are also a rung on the property ladder climbing towards a single-family dwelling.
“Really, they have no choice if they can’t afford a house,” he says. “In a way, the condo market in Toronto is feeding the market for freehold houses.”
Bank of Montreal senior economist Robert Kavcic says that the Greater Toronto market is seeing a dramatic shift in housing stock.
At the end of 2014, he points out, there were 57,000 condo units under construction, but just 7,200 detached homes being built.
That’s the widest gap on record, Mr. Kavcic says in a research note.
Mr. Kavcic says designation of a greenbelt, which prohibits development on some ecologically-sensitive and agriculture-based land around the region, is one reason for the changing dynamics. But he adds that there’s a common perception that there’s nowhere left to build as a result. That’s not entirely accurate, says the economist, who points to some estimates that say there are still 56,000 hectares of land designated for development.
Still, the lack of reliable and timely transit in many potential development areas could hold back their growth.
Weighing all of the supply and demand factors, Mr. Kavcic predicts that the price gap between condos and detached homes is only going to widen further through the end of the decade.
“Looking ahead, and barring a major external shock, condo prices could be in for a prolonged period of much more subdued growth – even stagnation for smaller units – while detached home prices push higher through the end of the decade.”
Published by The Globe and Mail