Eight housing deals that show where GTA spring market going

For home hunters it’s been two years of soaring prices, bidding wars and bully offers amidst a pandemic-induced low-interest-rate buying frenzy.

But there are signs this year’s spring market will proceed at a more traditional pace — still hectic but short of the circus that has shut out many buyers while prices continued to gallop beyond their means, said Re/Max Canada president Christopher Alexander.

“The wild card,” he said is the unsettled geopolitical climate with war in Ukraine and rising gas prices that could make some homebuyers reconsider moves to the suburbs or beyond.

He’s watching to see if the region’s sagging home listing numbers bulk up as warm weather approaches.

That would make for a calmer — but still competitive — spring market, he said.

The Toronto Regional Real Estate Board (TRREB) reported new resale home listings nearly doubled between January and February, although they remained 15 per cent below February 2021.

But a month’s change isn’t a trend, said Alexander. The February jump followed an all-time low in January.

“If I see another increase like that from February to March, it will perk my eyebrows,” he said.

With interest rates beginning to rise, Alexander thinks some homeowners will finally make the leap to list.

Some real estate agents say the spring market is already underway. But April Williams, a broker with The Agency, expects to see a burst of new listings come online at the end of March. Homeowners will have used the March break to stage their homes and the snow should be melting, which tends to bring out the buyers.

She isn’t anticipating a spring spike in home prices.

“I don’t think they’re going to go down dramatically or even go down at all. I think they’re just going to be a little bit more level,” she said.

Realosophy brokerage president John Pasalis thinks the “spring” market may already be cooling. In his March industry report, “Move Smartly,” he says the statistics aren’t yet revealing what agents and consumers are experiencing — fewer showings leading to fewer offers, or no offers on offer nights, and more bully offers being accepted.

“A seller is unlikely to accept a pre-emptive offer of a good, but not great price (i.e. over-asking price but not overwhelmingly so) when they have 70 showings scheduled,” he writes. “With such strong buyer interest in their home, why forgo the chance of their offer night bringing in even more potentially lucrative offers? But if the seller only has 10 showings scheduled when that same pre-emptive offer comes in, they may be more interested as buyer interest has not been as strong.”

We took a look at eight recent home sales that hint at where the market is going.

32 Tremely Cres., Scarborough

Listed: $1.099 million; Sold: $1.55 million (March 10)

Last sold in 2018 for $665,000

There were more than 40 showings for this modest detached bungalow in Scarborough, but only four offers by the offer date. Though the property was listed at $1.099 million, the seller had higher expectations and rejected all the initial offers, broker Bhanu Siwakoti told the Star. Though the seller ended up accepting an offer that was more than $450,000 over asking, it was still below expectations. The house was fully renovated in 2019 and includes two basement units that were rented out by the former owner for $1,200 and $1,700.

Fatigue or frenzy

Even before publishing his report, Pasalis had been reporting signs of “buyer fatigue,” after an exceptionally competitive fall and winter saw huge demand among homebuyers in hot pursuit of a diminished number of listings. Increasingly, he says, people looking for homes to live in are competing with investors.

Royal LePage real estate broker Cailey Heaps of the Heaps Estrin Team says buyer fatigue is real. But it doesn’t mean every frustrated homebuyer, desperate to stop losing on offer night, will press pause on their search.

Some will. But others will take the opposite tack and go all in to buy a home.

Heaps sold two homes on March 7, the day before she spoke to the Star. One sold for $1.2 million above the asking price. The second went for $800,000 over the list price.

She calls that “future pricing” and says it is a reflection of the chronic lack of inventory in her central Toronto territory.

“A lot of these buyers have been looking for months, if not years,” said Heaps.

“The market has continuously moved and they’re worried the market’s going to get away from them so they’re being proactive. They’re future pricing what they’re buying, creating new price levels — leading the market instead of following it.”

400 Ossington Ave., Toronto

Listed: $1.389 million; Sold: $1.555 million (March 9)

Last sold for $1.1 million in 2017

This semi-detached home with three bedrooms and two bathrooms sold above expectations, broker Joshua Chisvin says. The property garnered much attention when marketing material was released, but that interest dwindled slightly when potential buyers realized it did not come with parking. Located near Trinity Bellwoods Park, steps away from the Ossington Strip, the property was formerly owned by another real estate agent who sold it when her family with two young children outgrew the house. There were 16 showings and three offers for the property, which was ultimately sold to a young couple.

Settling on the city

When it comes to home prices, suburban sellers have had the edge since the first pandemic lockdown ended. Homes in the city remained more expensive but prices in the suburbs, particularly detached houses, rose faster.

Now that masks are coming off and offices are reopening, Heaps says it’s not clear whether that momentum will be sustained. People are still moving from the city to the suburbs but not at the same rate as in 2020 and 2021.

For one thing, she said, prices in 905 areas have risen so fast and so high, the value proposition isn’t what it was pre-pandemic.

Although Heaps hasn’t seen any transactions suggesting the migration to the suburbs will reverse course, she doesn’t rule it out.

“I’ve had that conversation with a few different people who said, ‘You know, we’ve loved being out of the city. It’s been great. But I recognize that if I want to be considered for that next promotion, I’ve got to have face time in the office,’” said Heaps.

Twenty years ago, there were a few especially desirable neighbourhoods in the city. Now, there are many, she said. The best performers offer walkability, great schools, green space and transit.

“Any neighbourhood that has those feature is a sure bet in the Toronto real estate market,” she said.

151 Tyler Ave., Halton Hills

Listed: $999,000; Sold: $1.407 million (March 8)

Last sold in 2020 for $817,000

This lake-facing, recently renovated three-bedroom house on a corner lot in Halton Hills was snapped up after two days on the market. The seller listed the property on March 6. Broker Gini Rose says the house was “very popular,” with about 30 showings. By March 8, the seller, who was moving out of province, received three bully offers — pre-emptive offers that expire before the designated offer date. The successful bid was more than $400,000 over asking.

Stuck on the ’burbs

Williams is dubious about a suburban exodus. Although city living won’t lose its lustre, she says lifestyles have shifted.

“A lot of people are going back (to work) but a lot of people are going to be permanently working from home and want that (suburban) space.”

“I think people are a little bit more open to living out in the suburbs or rural areas than they were two years ago because they know they can make it work,” she s aid.

Alexander agrees that Toronto will continue to be attractive but, he says, the suburbs offer their own draws — “Bigger yards, the side-by-side driveway where you don’t have to juggle your cars. You actually have a driveway. All those things are really valuable to a lot of people.”

1380 Costigan Rd., Unit 97, Milton

Listed: $899,000; Sold: $900,000 (March 8)

Last sold in 2012 for $236,000

This condo townhouse, in the heart of a burgeoning community filled with young families moving out of the GTA, sold for more than three times what it did in 2012. The seller originally bought the then newly developed property as a capital investment and rented it out. Broker Tanya Vakil Fernandes says the two-bedroom townhouse could be rented out for between $2,300 and $2,500 a month. The property was originally listed in mid-February, but the seller’s expectations were too high. It was relisted again in early March and sold after four days on the market to a young family with a newborn.

Condos rising

The Toronto Regional Real Estate Board (TRREB) reported the tightest condo market in 20 years in the final quarter of 2021. Even as single-family home listings dwindled in February, the number of available condos rose about 12 per cent year over year, compared to an overall 6.6 per cent decline in new listings.

Just as suburban single-family homes escalated faster than city houses, suburban condo prices have outpaced units in the core. Last month, condos outside the city sold for $66,000 less on average than those in Toronto. Before the pandemic, the gap was $188,000.

Williams says two-bedroom condos are an affordable alternative to townhouses. They’re a way for buyers to build equity and then upsize.

Townhouses sold for $1.12 million on average in the Toronto region in February, compared to $822,090 for a condo, according to TRREB.

She says the suburban condo market will remain attractive to downsizers and younger homebuyers, who grew up in the suburbs and enjoy having a car and a place to park it.

As home prices rise, Heaps agrees many first-time buyers will be forced to look at condos rather than single-family homes. “We’re just so short on housing in Toronto now,” she said.

2092 St. Clair Ave. W., Toronto

Listed: $899,000; Sold: $1,070,000 (March 10)

Last sold in 2017 for $625,000

Meaghan Granville of Royal LePage Real Estate Services Ltd. said the buyer for this semi-detached one-bedroom bungalow was originally looking for a condo. But when they saw this alternative, which came with a small backyard, parking on the same level and no maintenance fees, they put in a competitive bully offer the third day it was on the market. The seller accepted.“There’s a lot of people who would prefer having the outdoor space … especially because we’ve been so confined with the pandemic in the last two years,” Granville said.

A single-family house with a yard or at least a patio

The pandemic has increased our appreciation of physical space and, given the city’s geographic constraints with the lake to the south and the protected greenbelt in the north, the GTA’s single-family homes will always sell at a premium, said Alexander.

Ipsos polling for the Toronto real estate board found that, despite the higher cost, most people planning to buy a house this year want a detached home in the suburbs. In the city, where houses are more expensive, more people will consider condos.

Pasalis noted that 88 per cent of single-family homes, a category that includes detached, semi-detached and townhouses, sold for more than the asking price in February. But, he said, there are signs the market for those properties is cooling as inventory levels increase very slightly.

His report shows how single-family house affordability has withered even in relatively accessible markets such as in Durham Region, which had the highest price gain of 39 per cent annually last month.

168 Parkinson Cres., Orangeville

Listed: $850,000; Sold: $1.2 million (March 16)

Last sold in 2020 for $613,500

The owners of this three-bedroom freehold townhouse were looking to upsize for their growing family and initially listed their home for $949,000. A nearby property on the corner lot had recently sold for $1.25 million, and the owners expected to sell in the same ballpark, their realtor said. But after more than a week on the market with little interest, Savneet Panesar of Tri-city Professional Realty re-listed the townhouse for $100,000 less. It worked. The same night, he received a bully offer of $1.2 million from a middle-aged couple whose relatives had recently bought a home in the area. The owners accepted. “I’ve seen a lot of sold signs,” Panesar said of Orangeville. “A family of five members can easily get a bigger house outside (the GTA) in the Orangeville, Shelburne or Alliston area.”

Into the exurbs

The affordability challenges of almost any city or town in the Greater Golden Horseshoe means the popularity of the exurbs and smaller centres isn’t likely to fade, said Alexander.

Last month’s census data showed East Gwillimbury, a good hour’s drive from downtown Toronto, was among the country’s fastest growing communities with a 44.4 per cent population boom between 2016 and 2021.

The Toronto real estate board reported prices in nearby South Simcoe County and Orangeville, northwest of Toronto, are appreciating faster than traditional suburbs such as Mississauga and Markham — soaring 36 per cent and 41 per cent, respectively, in February, compared to the same month last year.

That’s an opportunity for planners to make those destinations, which are already great places to own a home, exceptional communities, said Alexander.

67 Tully’s Rd., Trent Lakes

Listed: $799,000; Sold: $982,000 (March 7)

Last sold for $630,000 in April 2021

A riverfront property on the Trent Lakes sold for nearly $1 million on March 7, just one year after it sold for $630,000. The agent, Ned Kovacevic of Re/Max All-stars Realty Inc. in Bobcaygeon, said Airbnb potential was one of the attractions of 67 Tully’s Road. The previous owners used the 1,400-square-foot property as both a cottage and investment property. There were more than 50 showings and eight offers in about 12 days. The top three buyers had a chance to make a counter-offer, after which the seller sold for $982,000.

Cash for cottages

Demand has always outstripped supply in the popular Muskoka resort area north of Toronto, but not at the fevered pitch of the last two years, said Peter de Graaf of Re/Max Professionals North in Bracebridge.

Even if the appetite declines it won’t be enough to offset the lack of inventory, especially in waterfront property, he said.

“There’s always a lot of pent-up demand from the winter. This spring anything that comes on the market is just going to have everybody on it so that’s why we expect the prices will up this year over last,” he said.

The average price in the area was $1.6 million last year.

Although buyers don’t generally start looking at waterfront homes until April, based on the lack of supply and the demand, de Graaf expects prices will climb 10 per cent this year. That’s on top of the 20 per cent they rose in the last two years.

“There’s a lot of cash buyers here taking equity out of their home, which has increased hugely in value in the city so they don’t necessarily have to apply for a new mortgage,” he said. Many of those buyers are also sufficiently well-heeled not to be concerned by the interest rate hikes and global instability that may worry most people.

The ability to rent places on short-term rental platforms to help finance a vacation home has also increased demand with communities in the area having fewer regulations on those operations than cities, said de Graaf.

81 Gough Ave., Toronto

Listed: $2,999,900; Sold: $4,170,007 (March 9)

Last sold in 2019 for $1,150,000

Adam Brind, broker at Sotheby’s International Realty Canada, said he was “surprised” at the diverse buyers who were interested in this custom build. The 3,000-square-foot Danforth-area detached home was built less than two years ago and had an 800-square-foot basement with two bedrooms and another two bedrooms in a 750-square-foot laneway house, both leased for a combined $4,600 per month. The low list price and rental units attracted families and investors, young and old. They received eight offers on offer night. A couple with adult children ended up buying it for $1.1 million over asking.

The new luxury real estate

There’s a lot of money in the Toronto region, much of it being spent on luxury real estate, says Maureen O’Neill, manager of Sotheby’s International Realty Canada.

“Everybody is looking to real estate as a safe haven,” she said.

Sales of single-family homes in the $4-million-plus category were up 53 per cent year-over-year by the end of February, she said, and there’s no sign that will slow this spring. These buyers pay cash so the luxury market is insulated from rising interest rates.

While some high-end purchasers will always opt for a house with a pool and a garage for their multiple cars, about half of luxury buyers are now opting for a condo lifestyle with amenities such as pet care, wine cellars, dry cleaning and food delivery.

Younger buyers with $4 million-plus to spend are also looking at different neighbourhoods, than their parents, said O’Neill. They’re less about Lawrence Park and more about “trendier” Little Italy and Little Portugal.

The hottest features for luxury house and condo buyers: technology — the more wireless capacity the better, plus charging stations for electric vehicles. The other thing, home buyers want to see is Canadian design and products used in their homes.

Correction — March 28, 2022: Realosophy brokerage president John Pasalis’ industry report is called “Move Smartly.” A previous version of this article misstated the name.