These are halcyon days in the Toronto-area real estate market – with the exception of those days and nights reserved for offers on semis in Leslieville. Most everywhere else, there’s a pervasive calm.
“Toronto and Vancouver are now balanced,” Marc Pinsonneault, senior economist at National Bank of Canada, said as the latest Teranet-National Bank House Price Index was unveiled this week.
Mr. Pinsonneault says he’s not expecting market conditions to deterioriate significantly in the two major markets. “Sales seem to have stabilized lately.”
The national house price index, comprising 11 major markets, edged up 0.2 per cent in April from March. The Toronto index also rose 0.2 per cent in the same period.
Compared with April of 2017, the Toronto index rose a slim 1.9 per cent.
Prices have jumped in some pockets of downtown Toronto because inventory is very limited and lots of young families want to live in such neighbourhoods as High Park, the Junction and Leslieville.
But in surrounding areas, prices are flat or down.
One buyer and two bungalows illustrate the market dynamics. The buyer of side-by-side properties in Scarborough is an investor who purchased the second house at a 13 per cent discount to the price she paid for the first in March of 2017.
Real estate agent Patrick Devine of Union Realty Brokerage Inc., who represented the buyer, says the two houses are nearly identical but the pace of this year’s purchase was measured compared with the mayhem of 2017.
“It was right at the height of the market frenzy,” Mr. Devine says of the 2017 deal. As he sat in his car on Roseglor Crescent that evening, agents were still arriving at 9:30 and 10 p.m. with offers in hand. “It was pretty insane on offer night.”
Eleven or 12 parties were competing through the evening for the house with an asking price of $849,000 he recalls. After two rounds of bidding eliminated most of the pack, the two highest bidders were sent for a final round. Mr. Devine’s client prevailed with an offer of $1,039,000, or $190,000 above the asking price.
The investor has had no trouble renting the three-bedroom bungalow and its basement apartment in the family-friendly neighbourhood near Lawrence Avenue East and Brimley Road, Mr. Devine says. When the house next door arrived on the market with an asking price of $799,000 in April, she told Mr. Devine she might be interested in buying that one as well.
But this time the investor took her time. The second house is also fully-renovated with a basement apartment, he says. After 12 days, it was still sitting on the market so he called to arrange a viewing.
When he called, he was notified an offer was on the way. He and the investor had a quick look and prepared their own offer. The client purchased the house with an offer of $905,000.
Mr. Devine refers to the opening months of 2017 – when Toronto-area real estate prices were rising at a pace of 31 per cent or more a year – as a micro-bubble.
“A lot of people got caught by buying in March and April and trying to sell again a month later,” he says. “It was pretty dicey. Deposits were lost.”
This year, he says, buyers throughout most of the GTA are more cautious. While there are signs the market is stabilizing, many are wondering if prices have farther to fall.
“The entire market is sitting back. Prices may be going down. They may be creeping up.”
As for the investor, Mr. Devine says the rent she is able to charge covers her mortgage payment and taxes with some left over. “The rents are reflecting the condition of the home.”
The buyer considers the condition of the second house even better, he adds. “My client was thrilled that there were two offers and she paid $905,000. She feels she got a deal.”
Mr. Devine says other areas that were hot last year have cooled down. Houses listed for $699,000 are often selling around that mark, he says. Last year at this time, a house listed at $699,000 in the same area would typically go for $905,000.
By comparison, “$899,000 is the sweet spot where everything is selling over,” he says. People buying in that price range are typically paying around $1.1-million in hot neighbourhoods, he adds.
He’s somewhat mystified that the lower price points have cooled so significantly. His theory is that potential buyers who were looking to buy a house at around the $699,000 mark were pushed down to the $625,000 range when the mortgage rules were tightened at the beginning of 2018.
Many are holding off purchasing in order to save more money, he says. Others may be waiting to see if prices soften farther.
People looking to buy around the $1-million mark or higher are likely trading up from a condo or starter home, he says, and many have help from the older generation.
Last week, Mr. Devine and his Union Realty colleague Rick DeClute listed a semi-detached house at 75 Coady Ave. in Leslieville for sale with an asking price of $899,900.
Two bullies attempted to pre-empt the scheduled offer date this week but the sellers did not bite.
“They were intent on seeing an offer day,” Mr. DeClute says.