If you’re the owner of a palatial estate in Toronto, 2014 is turning out to be a good year to place a “for sale” sign in front of your sliding electric gates.
Sales in the luxury segment of the city's real estate market have been brisk during the first eight months of the year, and market watchers predict the trend will continue through the fall.
Globe Real Estate’s fall value survey reveals plenty of pockets where prices have soared.
Even if your property is a downtown condo or a semi with a sagging porch, you’ve likely snagged a buyer without too much angst. Bidding wars have been frantic and tales of houses selling at outrageous amounts above the asking price escalated all through the spring.
“Demand was insanely strong all year right up until the summer,” says John Pasalis, president of Realosophy Realty Inc. and the collector of the data.
Some neighbourhoods have seen the average price drop so far this year compared with last, but usually that decline is a result of a change in the types of properties changing hands.
Over all, the average price increase in The Globe’s semi-annual survey was about 8 per cent.
Areas with big gains include: Caribou Park, up 58 per cent; Beechborough-Greenbrook, up 47 per cent; and Richview, up 31 per cent.
Caribou Park is an area of low-rise, detached houses lying south of Lawrence Avenue and east of Bathurst Street. In the first eight months of 2013, the average price came in at $876,000. During the same period in 2014, it swelled to $1.4-million.
Drilling down into the data, Mr. Pasalis found that a number of small bungalows on Lawrence and Bathurst changed hands during the earlier period. He suspects that builders purchased many of them in the $600,000 range, knocked them down and replaced them with larger houses. When those arrived on the market in 2014, they helped to push the average price to $1.4-million.
The wealthy enclaves of Rosedale and South Hill saw prices jump 59 per cent and 56 per cent, respectively. Teddington Park, which also has blocks lined with mansions, gained 38 per cent.
By the end of August, Mr. Pasalis said, Toronto had seen a 38-per-cent increase in the number of homes selling for more than $2-million compared with sales of homes in that price range in the first eight months of 2013. In the earlier period, 578 sales were tallied at prices above $2-million; in the first eight months of 2014, the number jumped to 795.
He attributes the increase to greater confidence in the economy and the continuing pattern of low interest rates.
Buyers of a house priced at $3-million or more may take out a mortgage even if they have the cash on hand, he says. If they can borrow money at interest rates of less than 3 per cent, they can invest their money in assets that earn a heftier return.
Sotheby’s International Realty Canada is one player in the high-end segment of the market that believes affluent buyers will continue to sign deals at a fast clip.
Earlier in the summer, Sotheby’s represented the seller of a house that sold for $14.2-million in the posh Bridle Path neighbourhood. That figure marks a record for a half-acre lot in the area, the firm says. Lots in the Bridle Path are commonly much larger.
The firm is forecasting that Toronto will lead Canada’s high-end real estate market in all categories, which include detached, single-family houses, attached homes and condominium units.
Some front-runners of years past were relative laggards in this survey: The average prices in the Beaches and in High Park were up 8 per cent; in Bloor West Village, they rose 11 per cent.
Mr. Pasalis says price gains in those neighbourhoods are in line with the overall market.
Meanwhile, some of the edgy neighbourhoods popular with first-time buyers in years past may have been weighed down by the more substantial cost of entry: Prices rose a slim 5 per cent in the Junction, for example.
As for the condo market, it gained some steam again in 2014 after stalling for stretches of time in 2013 and 2012. “The condo market has been holding up pretty well.”
Market watchers fretted that newly-completed projects could lead to a flood of condo listings arriving on the market in 2014, Mr. Pasalis says, “It actually hasn’t happened.”
Condo unit listings rose 4 per cent in the first eight months of 2014 from a year earlier. Sales, meanwhile, rose 8 per cent over the same period, which means the excess inventory was absorbed.
With such rich prices throughout the city, Mr. Pasalis observes that it’s increasingly difficult to uncover any patches of real estate where bargains remain hidden. Still, some areas will see values rise alongside improvements in the neighbourhood’s infrastructure or streetscape.
The area known as Wallace-Emerson in central Toronto, for example, has seen lots of new businesses arrive, particularly in the stretch along Dupont near Symington.
The east end of Leslieville near Coxwell and Gerrard has seen an influx of coffee shops and stores that have changed the commercial strip for the better, he adds.
Also, the Distillery and West Donlands areas are places to watch as the redevelopment of the entire area approaches completion, Mr. Pasalis says.
As long as interest rates remain low, the market appears likely to keep moving at a frantic pace: In the first three weeks of September, the number of houses selling above the asking price in Toronto jumped 40 per cent from a year earlier, when interest rates had edged higher over the summer and brought a chill to the early autumn market.