Dynamics in the housing market in and around Toronto are shifting so rapidly that many people are afraid to make any move at all. But some sellers and buyers are reacting quickly to the changes and striking deals as a result.
On Lake Ontario’s waterfront in Oakville, Ont., developer Marc Hewitt mixed up his strategy for selling the luxury condo units he plans to build at t an enclave known as Edgemere Estate.
As a result, he sold one unit at more than $3-million in July and another at more than $2-million.
Those sales stand in contrast to the overall market trend in July, when sales fell off sharply. In the Greater Toronto Area, sales fell 34 per cent in July compared with the same month last year.
Even Mr. Hewitt was surprised that two clients signed on in July after he booked no new deals in June. In comparison, he notes, more than 19 houses listed with an asking price of more than $1.5-million sold in Oakville in June. In July, that number dropped to two.
To draw potential buyers, he re-engineered some of the 28 units so that he could drop the entry-level price to $1.75-million from $2.59-million.
“I think that opened up the market to people who thought that they couldn’t afford it,” he says. In order to offer less expensive units, Mr. Hewitt decided to make some of their features optional. The state-of-the-art system for controlling lights, music and climate in every room is now an option that buyers can choose to forgo altogether or pay to add, for example.
“Back in 2007, everything was included,” he says of the year he offered the first units for sale.
Mr. Hewitt finds that buyers are cautious but he’s seeing nothing like the fear he saw in the fall of 2008, when the market came to a halt. The deep-pocketed clients that he deals with take a long time to look around and thoroughly research competing properties.
“They want a deal; they’re looking for value,” says Mr. Hewitt of the mood among buyers right now. “We’re not hearing any reluctance or skepticism about the market.”
He points out that buyers often have more time to think about changing their lifestyles in July when the pace of business tends to slow down.
Many of the buyers who are looking around the 12.5-acre Edgemere Estate are downsizing from a larger house with extensive grounds, says Mr. Hewitt. They are moving because they want to be free to travel more easily or do less yard work. Because the purchase is discretionary, they can take a long time to make a decision.
“They already have a wonderful roof over their heads,” says Mr. Hewitt. “It’s a different thought process. I’ve talked to thousands of them now.”
Jimmy Molloy, an agent at Chestnut Park Real Estate Ltd., says he recently sold a house near St. Clair and Yonge on the first day it was offered. Two buyers made offers on the property, which had an asking price of $1.75-million.
The price was low compared with the asking prices in the area and no other house had been offered for sale on the street for a long time. Buyers are out there, says the agent, but they know the market is soft and they want to feel that they are getting a bargain.
“When quality appears, demand takes care of it,” says Mr. Molloy.
Mr. Molloy says that some selling prices in the spring were unjustifiably high. In bidding competitions, some buyers offered eye-popping amounts because they were afraid that the market would keep escalating at the same pace and they would be priced out.
“People thought, ‘if I don’t buy this, I can’t afford to buy the next one.’”
At Graywood Developments Ltd., chief operating officer Stephen Price says his company is selling condominium units at a brisk pace and plans to build more high-rises to keep up with the demand. Graywood is one of the joint venture partners building a new 45-storey tower called Five for its location at 5 St. Joseph.
Sales have been strong since the sales office opened in June, says Mr. Price. He believes Toronto’s swelling population is going to keep demand for downtown properties high.
Mr. Price adds that the credit crunch helped to keep the market in balance because financing was hard to get. That way, developers can’t build until a large portion of a project is sold.
“The market has natural counterbalances,” he says.
