Record prices in the Toronto-area condo market don’t appear to be fazing investors – whether they are living in town or buying from afar.
Robin Pope of Pope Real Estate Ltd. saw a diminutive studio apartment arrive on the market recently and immediately thought of his client working in New York.
She already owns one Toronto condo unit and was looking to invest in another. The asking price of $470,000 for a unit in a solid building near King Street East and Church Street appeared fair to Mr. Pope, who toured the unit on her behalf.
Some sellers set a low-ball asking price and then hold off offers for a week, but that wasn’t the strategy in this case. Offers were welcome any time.
Despite their quick move to offer the full asking price, competing bids soon landed while the seller was on a flight from Dubai. Mr. Pope’s client raised her offer to $501,000, but the amount still fell short.
The sale price of $515,000 for 460 square feet set a new milestone for the building, Mr. Pope says, who points out that the seller wasn’t even trying to spark a bidding war and still received four offers.
Mr. Pope says the deal is one illustration of the current tempo in downtown Toronto.
“The market is insane. It’s really, really busy.”
In another case, a couple looking to move up to a larger property began their search immediately after Labour Day. Mid-week they sent Mr. Pope a list of five properties they’d like to look at and he set up appointments for Saturday.
“We booked five places and within two days every one of them was sold.”
According to the latest figures from the Toronto Real Estate Board, growth in sales of existing units downtown has slowed from its previous blistering pace.
In August, condo sales in the Greater Toronto Area rose 2.2 per cent in the central 416 area compared with the same month last year. In the 905 region, sales jumped 8.2 per cent in August compared with August, 2018.
But with demand still strong, the average price of a condo in the 416 rose to $619,307 to mark a 5.7-per-cent increase in August compared with the same month in 2018.
In the 905, the price rose to $478,755 for an 8.5-per-cent jump from August of last year.
“The condominium apartment segment continued to lead the way in terms of price growth, followed by higher density low-rise home types and finally detached houses,” according to TREB.
Mr. Pope says condo units currently being sold before or during construction are fetching more than $1,600-a-square foot for their units. High-profile projects on King Street West, Front Street West and University Avenue have all been selling in that range, he says.
“People are gobbling that stuff up and they’re all investors.”
Some buyers are still trying to negotiate a deal.
Mr. Pope recently represented a couple who were selling one condo unit and trading up to a larger property.
In August, they listed their one-bedroom condo near Bay Street and Wellesley Street with an asking price of $589,900.
Mr. Pope says the unit was sharply priced and offers were welcome any time. A few agents called and suggested their clients might be willing to offer $560,000.
Mr. Pope asked the agents if they had reviewed the comparable sales in the building with their clients.
“I talked them out of the idea that we would sell at a discount.”
The unit sold for $589,000 and the sellers were then able to look for a move-up property.
After a short search, they found a stacked townhouse near Dundas Street East and Broadview Avenue.
The asking price of $669,000 was significantly below the amount that others in the building had sold for, Mr. Pope says.
“They just listed at that price to create that frenzy of showings,” he says. “It’s kind of irrelevant what they’re asking.”
Mr. Pope’s clients made a bully offer of $787,500 for the two-bedroom unit with a rooftop terrace.
That amount was $28,000 more than the last sale in the building, but the condo had a skyline view and other attributes that the other units lacked.
With the deal, the clients were able to increase their living space to about 950 square feet from 710 square feet.
Mr. Pope says another client relocated to a new job in the tech sector in Vancouver recently and looked at buying real estate in White Rock, B.C. But she contacted him after learning more about the local market and deciding that she would rather buy an investment property in Toronto.
Mr. Pope says the tech executive believes that the Toronto real estate market looks more stable.
“That’s what one person is thinking,” he says, as an example of investor sentiment.
At Bank of Montreal, senior economist Sal Guatieri notes that Canada’s economy picked up in the spring despite a simmering trade battle between the United States and China.
Housing is a relative bright spot for this country’s economy, he says, with existing home sales rising for five straight months to the end of July.
“Prices in Toronto have already hooked up and risk flaring up again if supply fails to catch up with sturdy underlying demand driven by immigration and employment,” he says.
Mr. Guatieri also cautions that the most serious threat to Canada’s economy would be an escalating trade war that hammers global growth and resource prices.
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