Houses for sale in prime Toronto neighbourhoods are scarce these days.
So when a detached four-bedroom house near the midtown intersection of St. Clair Avenue West and Yonge Street recently landed on the market with an asking price of $5.8-million, 20 prospective buyers clambered to see it.
Christian Vermast and Paul Maranger of Sotheby’s International Realty Canada listed the house at 58 Farnham Ave. and sold it on the offer date one week later.
“It sold with one solid offer,” Mr. Vermast said.
He said the Summerhill location, within a few steps of Yonge Street’s shops, restaurants and transit, was the main draw. “Walkability is all,” he said of the current mood of house hunters.
The home was also move-in ready and offered such luxuries as a waterfall white marble island in the kitchen and an inground saltwater pool with a cabana in the backyard.
Agents say that the logjam in the market is partly caused by a fear among homeowners that if they sell an existing property, they won’t be able to find a new one.
“The good listings are only trickling in,” Mr. Vermast said. “And 90 per cent of sellers are also buyers.”
The buyers he sees – who tend to trade in the upper echelons of the market – are motivated to move by the desire for a change in lifestyle. In some cases, homeowners want to upgrade to a larger house, while in others, empty nesters with a large house want to settle in a more central neighbourhood where they can leave the car at home and walk everywhere.
Very few are motivated by profit-taking after a year of volatility in sales and prices in the Greater Toronto Area, he added.
Mr. Vermast does have hope that new listings will perk up in the fall now that the market appears to be finally stabilizing. “I do think we will see it unlocking a bit.”
Josh Nye, senior economist at Royal Bank of Canada, said the national housing market finally found its footing in June.
A slow spring for resales seemed to cause uncertainty among sellers, with new listings slipping 1.8 per cent from May, he said. Last month marked the slowest June for new listings since 2009.
Mr. Nye said the latest data from the Canadian Real Estate Association showing a 4.1-per-cent rise in sales in June from May suggest that buyers are finally adjusting to stricter mortgage rules, which came into effect on Jan. 1.
He pointed out that policy changes in the past suppressed the market for a few months before it heated up again. But he doesn’t see that happening this time, he said.
Potential buyers will have a tough time getting around mortgage stress tests, he said, and rising interest rates will also prove a more persistent headwind.
He is forecasting that Canadian home sales in 2018 will come in 10 per cent below last year’s pace. He estimates that price growth will stabilize during the second half of the year, with the benchmark price edging up 1.8 per cent from 2017.
Jimmy Molloy, real estate agent with Chestnut Park Real Estate Ltd., said the lack of listings discourages even those who are contemplating selling in central Toronto. The vacancy rate for rentals is below 1 per cent, he said.
“It’s not like you can say, ‘I’m going to go rent something,' because you can’t find anything to rent either.”
Buying a condo a few years before it’s ready is no longer a way to get in at a discount either, he said.
Mr. Molloy pointed out that 50 Scollard, a boutique Yorkville building designed by the renowned British architectural firm of Foster and Partners, is selling units for prices between $2,300 and $2,500 a foot. “That’s pretty unheard of in Toronto,” he said of the price level.
The building will appeal to buyers who want to live in Yorkville, he said, but it will have only 64 suites. “It’s a bespoke property where people are going to look at it and say, 'That’s going to be my home.’ ”
At one time, well-off homeowners could sell a large house in Forest Hill or Rosedale, buy a luxury condo and still have money left over, he said.
Swapping a desirable house with a backyard for a condo and more debt is not appealing to many homeowners, he said. They may decide they would rather hold onto a house with four or five bedrooms too many.
“There used to be an enticement of cashing in if you’re going to buy a lovely new condo,” Mr. Molloy said. “That dream is over now.”
He believes the fall market will see new listings coming on, but there’s also a lot of pent-up demand. He has been working with three sets of frustrated buyers who have been renting while they struggle to find a home that suits them.
One couple is diligently looking at properties, including 58 Farnham, he said, but they haven’t found just the right house. In the case of 58 Farnham, the home is beautiful, he said, but the way the bedrooms were arranged didn’t work well for a family with very young children.
He said most buyers with $2-million and up to spend want a house they can move into without renovating. Red tape has become so onerous that many people don’t want to take on a project, Mr. Molloy said.
“There’s a great premium on stuff that’s done. When you have a house that’s just perfect – everything is done – people are there.”