Another flurry of new listings arrived on the Toronto-area real estate market this week following the Thanksgiving long weekend.
The most striking trend to emerge in recent months has been the return of sellers to the housing market, says Robert Hogue, assistant chief economist at Royal Bank of Canada.
The Toronto-area market has tilted in buyers’ favour, he notes, as September marked the sixth consecutive month that new listings increased.
High interest rates, poor affordability and growing economic uncertainty pose serious obstacles for buyers at this point, Mr. Hogue points out.
The most recent data from the Toronto Regional Real Estate Board shows sales in September dropped 7.1 per cent in the Greater Toronto Area compared with September, 2022.
New listings surged 44.1 per cent in September compared with the same month last year.
The average price rose three per cent to $1,119,428 last month from September, 2022.
“It is a tough market. There’s a lot of buyer hesitation still,” says Andre Kutyan, broker with Harvey Kalles Real Estate Ltd.
Mr. Kutyan recently showed a house to a couple with stable employment who are looking to sell their $2.5-million property in order to move up into the $3.5-million range.
The couple agree the house is exactly what they’re looking for, in the school district they prefer, but they’ve decided to wait to see what happens with prices.
“They don’t feel any urgency to buy,” says Mr. Kutyan. “It either has to be really special or a deal.”
He recently sold two properties far above asking with competing bidders because both are “unicorns” that are difficult to replicate.
Near Yonge Street and Eglinton Avenue, Mr. Kutyan listed a “holdout” property that remained in the same family for 50 years as high-rise towers rose up around it.
The challenge was that the four-bedroom house, on a corner lot at 93 Broadway Ave., is dwarfed by a condo development which wraps around the property on two sides.
“She didn’t sell to the developers when they came knocking on her door,” says Mr. Kutyan of the long-time owner.
Mr. Kutyan hired an urban planner to explore the potential for the 32- by 90-foot lot, then set the asking price deliberately low at $1.495-million. He held an offer date two weeks later to allow potential buyers more time to assess their options.
The listing specified that the only appointments allowed would be to walk the lot because Mr. Kutyan figured the house would be torn down.
The house was in rough shape, he says, and the homeowner wasn’t keen on allowing house hunters inside.
He was surprised when some prospective buyers wanted to see the interior because they were considering renovating and living in the house. The owner agreed to a short window for appointments.
On the offer date, the property drew eight bids and sold for $2.65-million, or $1.155-million above asking.
Mr. Kutyan says the property attracted some interest from developers in the area because of the potential to transfer the lot to the city for parkland, which would count toward their obligations for their redevelopment of other sites.
Other prospective buyers considered projects that ranged from turning the existing house into four units with a laneway suite, to tearing it down and replacing it with a four-storey apartment building. Some business owners considered transforming the structure into a restaurant or professional offices.
Mr. Kutyan says one bidder topped the others in dollar value but the offer came with conditions.
“I advised her to take the firm offer – it’s not worth the risk at the high end.”
Mr. Kutyan says it’s hard to determine if the seller left money on the table by not selling earlier. She had spurned some conditional offers over the years when potential buyers left letters in her mailbox.
Such buyers often dangle an extremely generous price to get their foot in the door, then ultimately negotiate the price down or walk away when the conditional period is up.
The seller plans to move into a condo or apartment in the area.
At another unusual property, Mr. Kutyan figured potential buyers would be willing to compete for an East York house with a sprawling lot that backs onto a ravine.
The four-bedroom, detached house in a cul-de-sac at 7 Hale Court had also been in the same family for 50 years. The rare feature was a large pool that sits closer to the edge of the ravine than would be allowed by current regulations.
Mr. Kutyan set the asking price below market value at $1.295-million and an offer date one week later.
“It’s a hard property to price – there are no recent comparables,” he says. “I priced it significantly lower on purpose.”
A “bully” stepped up with a bid before the offer date but the seller turned that down.
The same buyer returned on offer night with an improved, firm bid at $1.86-million and beat three other competitors.
Mr. Kutyan believes that setting an offer date can still be an effective strategy in the current market when properties are unique.
“Others in the area have been sitting – they price too high and the house becomes stale,” says Mr. Kutyan.
Davelle Morrison, broker with Bosley Real Estate, says some houses are sitting a little longer in the east end of Toronto, where she does much of her business.
“It’s called ‘analysis paralysis’,” she says of jittery buyers.
Sellers with asking prices around the $1-million level are setting offer dates, but in many cases the house is still on the market the following day, she says.
That price segment often attracts a cohort of buyers trying to move up to a house from a condo unit, she points out. If they’re attempting to sell the condo first, they may be competing with a lot of other listings.
“The condo market is really flooded right now,” she says.
Ms. Morrison says the current dynamic can also work in the favour of first-time buyers: one couple saved up a down payment and lined up financing to purchase a condo unit around the $1-million mark.
Ms. Morrison suggested they consider a semi-detached house in the east end for the same amount. They couple purchased a property near Coxwell and Sammon avenues.
“They got a really pretty house that they didn’t have to compete for.”
The condo market is seeing a rush of supply as investors sell their rental units in the face of rising carrying costs.
“I think the interest rates have really beaten people down.”
She’s seeing prices reduced as a result.
“The new term is ‘price improvement,’” she says.
One cadre that may be spurred to buy this fall are those looking in the $3-million-and-up range, says Mr. Kutyan.
Last month Toronto’s city council approved an increase to municipal land transfer tax rates for properties in the luxury tier. Rates will rise on a sliding scale which tops out at 7.5 per cent for properties above $20-million.
Mr. Kutyan says he has seen an uptick in showings at some of his carriage trade listings since the new rates were approved.
Ms. Morrison believes many people remain unaware of the policy change so she’s alerting buyers and sellers.
“I don’t think a lot of people are onto this ‘mansion tax’. I’m telling people, be afraid – it could kick in January 1st.”