The coronavirus pandemic has brought a strange reversal to the Toronto-area real estate market: houses in the surrounding suburbs and cities are selling more briskly than condo units downtown.
In previous downturns, the outer regions cooled more quickly than the resilient core, says Christopher Bibby, a real estate agent with Re/Max Hallmark Bibby Group Realty.
“Nobody is selling downtown,” he says. “More than anywhere else, people downtown are staying inside.”
Mr. Bibby points out that residents are respecting the pleas from public health officers to stay home during the COVID-19 health crisis and people are apprehensive about heading out in the urban density of the core. In the suburbs, house hunters drive to single-family homes that are separated by expanses of lawn.
Ryerson University’s Centre for Urban Research and Land Development says data so far points to a housing market that appears to be weakening faster than most forecasters had expected.
Sales in the Greater Toronto Area plunged 69 per cent in the first 17 days of April compared with the same period last year, according to the Toronto Regional Real Estate Board. Condo sales in the GTA dropped 72 per cent in the first 17 days of April compared with the same period in 2019.
The average home price fell by 3.7 per cent in the first half of April in Toronto compared with the same period last year, while prices in the 905 area code remained relatively flat, on average, the Centre points out.
In the same period, new listings fell by 60 per cent in the city and 65 per cent in the 905, which may explain why prices held up better in the outer bands, the report suggests.
Condo apartments in the city of Toronto, by contrast, saw new listings drop 50 per cent, while sales tumbled nearly 70 per cent.
“Looser market conditions contributed to a 9.1-per-cent decline in the average sales price for condos in Toronto – the biggest price decline across all segments and regions," the Centre’s report says.
Mr. Bibby has heard from agents in Barrie and other cities in Ontario who are still doing deals at a quick pace.
He points out that condo buildings have more common areas and prospective buyers will encounter more door handles and elevator buttons. Some buildings are shut down all together to non-residents.
Buyers appear to be busy searching online, he says, but for most, seeing a space in person is essential.
When physical distancing rules are relaxed and the market opens up a little bit, he expects some condo investors will decide to take some money off the table.
“I think it’s inevitable there will be some opportunities.”
Anita Springate-Renaud, a real estate agent with Engel & Volkers Toronto Central, is working with first-time buyers who are looking in the Ajax area, east of Toronto.
“They’re still pretty busy,” she says of Durham Region, which also includes Pickering, Whitby, Oshawa and other areas.
Her clients have been looking for approximately one year for a detached house in the $600,000 to $650,000 range. They lost out on one property in February when 10 offers landed on the table.
Today properties are more typically selling with two or three offers, Ms. Springate-Renaud says.
In the Upper Beaches area of Toronto, Ms. Springate-Renaud recently sold a detached house after 12 days on the market.
The house at 60 Normandy Blvd. sold for $1.385-million after being listed with an asking price of $1.399-million.
Ms. Springate-Renaud says she created a “virtual open house” but the buyers also visited in person. The agents supplied gloves and masks and followed strict guidelines.
Some homeowners are wondering about the right time to list, she says, and her advice to sellers is to hold off if they can. She says most sellers will prefer to wait.
“At this point, the only person you want in your house is someone who’s qualified – who’s genuinely going to buy.”
Andre Kutyan, a real estate agent with Harvey Kalles Real Estate Ltd., says he is advising owners to hold off listing if they can afford to wait.
For those who can’t, properties are changing hands – in various price ranges.
Mr. Kutyan says potential buyers are circling luxury properties, but many seem to be looking for signs that sellers are in distress.
A couple of his listings in the $10-million to $12-million range in the Forest Hill area have drawn queries from prospective buyers asking if his clients might be willing to take 25 per cent less. Mr. Kutyan says the answer is no.
“Nobody’s under duress to do something,” he says. “They’re not going to give away their homes.”
He notes that a property in the area has recently sold with a $22.3-million asking price after being on the market since May, 2018.
“When I hear of something like this selling in the middle of a pandemic, there are people not afraid of transacting,” he says.
Another home on nearby Dunvegan Road with an asking price of $12.6-million also changed hands in April.
Mr. Kutyan says it’s somewhat surprising that the $10-million and up range is seeing some action while the $3-million to $5-million range is almost completely dead.
One reason may be that the buyers at the very high end are less likely to be buffeted by economic forces.
“The higher up you go in the echelon of buyers, the percentage of their net worth they’re spending on their home is smaller and smaller,” he says.
He adds that, in times of uncertainty, affluent areas such as Forest Hill tend to endure.
Meanwhile, Mr. Kutyan says he is currently working through various scenarios with buyers and sellers who have already signed an agreement.
One buyer had to obtain a second mortgage to complete a transaction, and another pair purchased a property at the end of February and have now asked the seller for an extension to the closing date because they haven’t been able to sell their existing house.
“Most of my time in the past three weeks has been spent holding hands.”
Mr. Kutyan says it’s hard to predict when listings will come back strongly but he expects some homeowners will be forced to list their homes or investment properties because they are in financial trouble.
Mr. Kutyan knows of one condo owner, for example, who refinanced the unit in January to secure a lower interest rate on the mortgage and also draw some equity to pay for the renovation of his new house.
The condo unit was already renting for less than he is paying for the mortgage and expenses each month. Then the tenant moved out and the unit is sitting vacant.
In April, the owner approached his bank to see if he could defer a few mortgage payments on the condo unit but the bank would only allow him to defer for one month.
The bank is not interested in helping him out any more than that, Mr. Kutyan says. He knows of others facing a similar squeeze.
“Some are on the edge with their credit.”
Looking ahead, Mr. Kutyan thinks it will be a long time before public open houses come back – if they ever do. The industry may adopt some new ways of doing business permanently, he believes.
As for the direction of the market when it does come back, he says it’s impossible to forecast if the momentum will be up, down or sideways.
“If someone doesn’t have a job, I don’t care what the interest rate is, they’re not going to buy a home,” Mr. Kutyan says. “Some people may not be able to afford the homes they have.”
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