Sarah Laird knows some sellers are unloading their condo units in Toronto’s uncertain market, but the owner of a unit on the city’s waterfront doesn’t intend to get sucked into the panic.
Still, Ms. Laird is clear-eyed about the challenges the condo segment is facing right now: Like many owners, she is trying to figure out the best strategy for selling in a market with surging inventory and hesitant buyers.
Ms. Laird has twice reduced the asking price on her one-plus-one-bedroom unit at Pier 27 since listing the unit on Sept. 30.
Her current asking price is $699,000, after starting at $788,800, then reducing to $749,800 two weeks later.
In August, two comparable units in the building at 39 Queen’s Quay E., sold for $810,000 and $820,000 respectively.
“Six weeks and the market changed drastically,” she says.
Ms. Laird and her partner work in the technology sector in the city’s core. The couple had planned to look for a house together in the spring – then the coronavirus pandemic brought the real estate market to a standstill and they put their plans to purchase on hold.
When the market picked up again, they listed her partner’s condo at King and Church streets in July. His unit lacked parking and outdoor space, but within two weeks it had sold.
“That gave us a bit of false confidence,” Ms. Laird says.
By comparison, Ms. Laird’s unit has parking, a locker and views of Lake Ontario from the balcony. She had been leasing in the boutique building for about one year before she offered to purchase the unit from the owner.
“I loved the feeling of being right on the water and still being able to walk to everything,” she says.
When it came time to sell, she had the unit staged and polished, and hung artwork by a local artist.
Despite the effort, the unit had about six showings in a month, she says.
Real estate agent Manu Singh says his feed is laden with suspensions, terminations and price reductions.
“I’m just seeing a ton,” says the agent with Right at Home Realty Inc., in Toronto.
During the summer, buyers were keen to pick up one-bedroom units while interest rates were so low, he says.
Heading into the fall, Mr. Singh figures many people were holding off on making decisions to see if people would return to their workplaces and if there would be a second wave of Covid-19 infections.
“I think people have come to realize that, for the forseeable future, it’s going to be work-from-home.”
As a result, the market for one-bedroom or smaller units has softened. Renters have returned home to live with their parents, he says, immigration is down and the short-term rental market has dried up with rule changes and a lack of tourism.
In the past two months, Mr. Singh says, the market has been changing weekly as many investors decide to sell. He has been aggressively shifting strategies to keep up.
At 650 Queen’s Quay W., he listed Penthouse 18 for sale in September with an asking price of $599,000. He used the common tactic of drawing attention with a low asking price, then holding off offers for seven days.
At 39 Sherbourne St., he tried a similar marketing plan for unit 702, with an asking price of $499,000.
In both cases, bids landed on offer night, but they were lowballs that the sellers did not accept.
“We saw the market shifting beneath our feet,” he says. “My investors were caught.”
Mr. Singh relisted the Queen’s Quay penthouse for $649,000 and sold it for $625,000 after 25 days on market.
The Sherbourne Street unit was relisted for $528,000 and sold for $515,000 after 32 days.
In both cases, the units were vacant, but he used “virtual staging,” which portrays the space as it would look with furniture in online images. Mr. Singh thinks this relatively new digital tool is pivotal in attracting potential buyers who are more hesitant to visit in person during the pandemic.
“This way, only serious buyers book an appointment,” he says.
Mr. Singh is watching to see if condo listings in downtown Toronto continue to rise at a time of year when they would typically begin to decrease.
“That would signal to me that investors are starting to freak out.”
He expects year-over-year price growth – which was still at a healthy 7.7 per cent for condos in the 416 area code in September – to decrease and possibly flatten. If supply remains high and demand weak, prices will likely fall, he says.
“This is the calm before the storm,” he says. “It’s a lagging indicator. It takes a few months for prices to adjust.”
The market for higher-priced units with two-or-more bedrooms is holding up, adds Mr. Singh, because the size allows for two people to work from home.
Buyers in the condo market are behaving very differently in different segments: Samantha and Cheryl Graff of Harvey Kalles Real Estate Ltd. recently listed a unit for $998,000 and sold it five days later for $1.3-million.
Suite 504 provides 1,300 square feet on the top floor of a boutique building at 30 Glen Elm Ave., in midtown near Yonge Street and St. Clair Avenue, says Samantha Graff.
Three bids landed from couples in three stages of life: One offer came from first-time buyers, another from two people moving from a smaller condo, and the prevailing offer from empty nesters who are downsizing.
“It has that home feeling as opposed to a new condo feeling,” says Ms. Graff, explaining the unit has a fireplace, two balconies and treetop views.
Cheryl Graff says the agents did not think they were pricing the unit at a dramatically low number. The sale price was much higher than they expected.
“Sometimes you just don’t know who is going to come to the table,” she says.
As for Ms. Laird, she says most of the people who have viewed her waterfront condo appear to be investors looking to take advantage of desperate sellers, but she doesn’t feel that pressure.
The couple has not yet purchased a house and they will take the unit off the market rather than cave to lowball bids, she says. She notes the unit is already priced well below what similar units traded for in August.
She figures the flight to the suburbs is temporary and that many people – especially young professionals – will still want to live close to downtown. She and her partner would too if they weren’t planning to start a family.
“The plan right now is not to take any sort of predatory offer that would just be taking advantage,” Ms. Laird says. “We kind of do believe that things will start to return.”
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