Bonuses and foreign buyers boost luxury real estate market

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Many real estate agents were busier than usual in December as mild weather and buyer enthusiasm kept the market humming in the Greater Toronto Area.

Janet Lindsay, an agent with Chestnut Park Real Estate Ltd., says she has had one large sale already to start 2016.

Just before the end of 2015, she received three competing offers for a stately home on Cluny Drive in Rosedale and sold the property for $4.506-million. She estimates the buyer will spend about $3-million on a renovation.

"Most buyers felt it needed a minimum $2-million renovation and $4-million was not out of line," she says.

Ms. Lindsay says the owners had turned down a couple of offers earlier in the fall. The property had an original asking price of $4.9-million before it was reduced to $4.65-million. The federal election seemed to slow down some sales, she adds, as potential buyers waited for the outcome. Then the market saw a year-end surge in sales.

"People came back," Ms. Lindsay says of the year-end deals.

The Toronto Real Estate Board reported last week that sales in the GTA rose 9.2 per cent in December compared with December, 2014. The average price jumped 9.5 per cent to $609,110 in December from $556,259 in the same month a year earlier.

Ms. Lindsay says buyers had been circling around 61 Cluny Dr., so when a bid arrived in December, two more parties quickly came to the table.

One of the three then came back with a higher offer and the house was sold, Ms. Lindsay says.

"People realized it was, in fact, great value," she says.

December is bonus time for many players in financial markets, she points out, and some buyers figure they might get a better deal as the end of the year approaches.

She adds that the drop in the Canadian dollar against the U.S. currency makes purchasing in this country more attractive to foreign investors.

"The softer dollar definitely attracts foreign investors, and I'm seeing that."

The overseas investors view Canada as a country with a stable government and banking system, she says, and are drawn from a variety of countries, including China, India, Russia and Iran.

A recent move by Royal Bank of Canada to raise borrowing costs on some of its fixed-rate mortgages likely won't cool the market, she adds, because rates are still so low. Still, buyers in the upper echelons are not immune to rate increases because some hold mortgages and invest their cash in other asset classes where they might get a better return on investment.

"People at every segment will look at mortgage rates," she says.

Ms. Lindsay says the timing of new listings in the spring market will be interesting this year because the provincial Family Day holiday is followed by public- and private-school spring breaks and then the Easter holiday weekend at the end of March.

"March is pretty crammed," she says.

She adds that that the El Nino weather pattern that has brought unseasonably mild temperatures in December and parts of January is helping to keep buyers and sellers thinking about real estate. She is getting lots of calls for evaluations on upcoming properties.

"I think the weather is in our favour."

Geoffrey Grace of ReMax Hallmark Realty Ltd. is hearing from homeowners who are preparing to list their properties for sale in early 2016.

Mr. Grace, who often sells in Leslieville, Riverdale and the Beaches, says he advises sellers who don't have an urgent reason to list their property for sale in January to hold off until February.

In years past, the average price in the 416 area code typically rose about 11.5 per cent from January to an annual peak in May, he says. But in 2015, the gap widened, with the average price jumping 17.5 per cent over the period.

About 5 per cent of that gain takes place between January and February, Mr. Grace adds, so it may make sense for sellers to wait if they can.

A phenomenon that hinders sellers gives buyers an edge, of course, and house hunters may find a bargain in the first weeks of the year.

"I try to coach buyers to get out and buy in January," Mr. Grace says.

Real estate brokerage TheRedPin.com is reminding house hunters that the crowd of buyers is thinner in January because many consumers are trying to pay down debt left over from the holidays. Meanwhile, since those who sell in January tend to be highly motivated, they may be more willing to negotiate on price.

Prospective buyers often wait until the traditional spring blitz, says Rokham Fard, co-founder of TheRedPin.com, which means that GTA real estate typically tips over to a brief buyer's market and bidding wars are less common.