Things will be great when you’re downtown
No finer place for sure, downtown
Everything’s waiting for you …
Right, like empty bars and restaurants, deserted concert venues and office towers devoid of life. In the pandemic, Petula Clark’s song Downtown ain’t what it used to be.
Postpandemic, I’ll bet downtown will come back. In fact, it’s already happening in Toronto’s urban condo market. Pay close attention if you’re a baby boomer who has been thinking of downsizing from a big family home to a condo located in a prime urban spot.
According to Toronto realtor Keisha Telfer, boomers have a unique opportunity now because their homes are in demand.
“While baby boomers have had the opportunity to downsize in the past, COVID has created a trend where young families are looking for three- and four-bedroom homes to raise their families,” said Ms. Telfer, broker of record at Transitions Realty Inc. “Boomers are the people who actually have these properties.”
Transitions Realty was set up a year ago as a kind of concierge service for downsizing boomers. The pandemic, paradoxically, has provided a huge lift to the housing market, but boomers musing about downsizing have generally stayed on the sidelines. Ms. Telfer said this is one of the reasons why the inventory of houses for sale is quite low right now.
“With COVID, it’s easier to stay where you are right now,” she said. “There’s so much unknown, so [downsizing] plans are on hold.”
Transitions Realty works on the basis that clients will want to take their time with a downsizing and consider various options on where to live next. “Our process is not to chat with the client today, list tomorrow, sell next week,” Ms. Telfer said.
But conditions in the real estate market today argue for speeding up the process if you’re a boomer considering a move to a condo from a family home.
First, some good news to consider. If you’re a boomer who owns a large family home, the pandemic has juiced your equity in ways that would have seemed unlikely in the prepandemic world.
In Vancouver, sales of detached homes shot up 52 per cent in January compared with the same month a year earlier, and the benchmark price rose 5.5 per cent. In Toronto, price increases for all homes in the city and surrounding areas averaged 15.5 per cent on a year-over-year basis in January.
There’s definitely been more interest in homes in the 905 area code outside Toronto, but urban homes in the 416 area code have done well, too. The average price of a 416 detached home in January rose 16 per cent to $1.6-million, while 905 detached homes rose by more than double that amount to $1.3-million (there were also some semi-detached and townhouses in the mix).
It’s hard to imagine price increases like this without the pandemic driving demand for the space and yardage available when you live in a detached house. So what kind of housing falls out of favour in a pandemic, where people are spending almost all their time at home?
Condos, especially the ones in the city. The average selling price of a condo in the city of Toronto was down 8 per cent to $624,886 in January on a year-over-year basis. Don’t wait too long if you’re open to buying a downtown condo – sales in the 416 area code picked up in December and have stayed strong in 2021.
This may signal a revival of interest in urban living, a point made in a recent CIBC Economics report that looks at the expectations underlying demand for detached houses in suburban locations.
“Should COVID fade into the background, as is expected, the vibrancy of cities will return and so will the demand for housing within them,” it says.
Transitions Realty helps clients work through their options for downsizing. One client, for example, went from a Toronto house to a condo in Vancouver. Some of the equity in the Toronto home was set aside for personal use and the Vancouver condo was bought with a mortgage that will be paid off within five years.
The extra equity boomers have gained as a result of the pandemic-driven real estate boom may offer a level of financial flexibility that wouldn’t have been available a year ago, Ms. Telfer said.
“There could be a nice little nest egg to put away.”
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