The high-end condo segment has been one of the hottest in Toronto real estate for a couple of years, but the dynamics are shifting.
Serious buyers are attentive but they are not as quick to make decisions, says real estate agent Christopher Bibby of ReMax Hallmark Bibby Group Realty Ltd.
“People are cautious. And strategic.”
Mr. Bibby says sellers also need to understand their unit may be on the market for weeks.
“We’re not seeing overnight sales.”
Mr. Bibby, who specializes in unique lofts and luxury condo units in the downtown core, says a good sale takes six to eight days. That tempo has slowed from the days when desirable units would vanish from the market within hours of listing.
“Things aren’t flying,” Mr. Bibby says.
But despite a more relaxed pace, some units are still selling at record prices, he says.
At 80 Cumberland St. in Yorkville, Mr. Bibby recently sold a unit with an asking price of $1.35-million.
Potential buyers booked 38 showings within the first two days.
After six days on the market, the unit received two offers but sold $30,000 below the asking price, at $1.32-million.
“The mindset of every single person going in there was, ‘We’re going to negotiate – we’re not going to pay,’” Mr. Bibby says. “The buyers want to feel good walking away.”
Still, the 1,130-square-foot unit set a new record as the first in the building to break $1,000-per-square-foot in price.
Sales of condo units in the Greater Toronto Area dipped 5.7 per cent in February compared with the same month last year, according to the latest numbers from the Toronto Real Estate Board. The average price of a condo unit in the GTA rose 6.1 per cent last month compared with February of 2018.
One emerging trend Mr. Bibby is seeing is the decision by well-off homeowners to purchase a unit now with the aim of downsizing in three or four years.
“That’s actually a very new thing.”
Mr. Bibby says some are homeowners who are anticipating retiring or becoming empty nesters in the future. But the scarcity of large and desirable condo units is prompting them to buy now and rent out the unit for a few years.
“People assume there may be a year or two years of minor turbulence, but anyone who’s thinking long-term doesn’t care.”
The hottest units are those of 1,100 square feet and up with two bedrooms and two bathrooms. They tend to be in older buildings because the units are larger than in many new towers.
In the Ramsden at 980 Yonge St., Mr. Bibby listed a unit with an asking price of $1,049,000. An identical unit in the building across from the Rosedale subway station sold last year for $990,000.
Mr. Bibby set the asking price at his estimate of market value today. He also advised the sellers that the psychology of buyers has changed. Today, they are looking for a win in negotiations.
“You have to be flexible – you have to give something up,” he warns.
The sellers at the Ramsden were fortunate because competing buyers tabled offers. The unit sold slightly above the asking price at $1,055,000 and set a new benchmark for price-per-square foot.
But the initial bids were lowball offers with conditions attached, says Mr. Bibby, who doesn’t set a deadline for reviewing offers.
Circling buyers watch to see if a property fails to sell on a scheduled date, he says, and will then call the listing agent to try some hardball negotiating tactics.
“People would love to see your offer date come and go.”
In East York, Vicki Schmidt of Justo Inc. decided against setting an offer date for a detached two-bedroom bungalow which they listed for sale in February at 238 Dewhurst Blvd. N.
Justo chief executive officer Daphne De Groot says the firm will sometimes advise owners to set an offer date but it very much depends on the property and location.
The house was listed with an asking price of $1,048,000 and sold after eight days on the market for $1,039,000.
Ms. Schmidt says the team decided on that strategy after seeing eight other properties arrive on the market. Those listings – priced between $999,000 and $1.2-million – all set offer dates.
Ms. Schmidt says the seller was happy to forgo the stress of an offer date because she had tried that strategy in the past and it had failed. She adds that many buyers are feeling cautious and they don’t want the pressure of competition.
“It allowed us to get buyers who were waiting for a bid date and getting frustrated when they lost it. Ultimately it worked in our favour.”
The Bank of Canada held its key interest rate steady last week and suggested that the Canadian economy has slowed down more than policy-makers anticipated, notes Stephen Brown, senior Canada economist at Capital Economics.
Still, central-bank officials think growth in gross domestic product will rebound in the second half of the year, Mr. Brown adds. Officials see continued strong employment gains driving consumer spending higher and think that last year’s increase in tax incentives for capital spending will push up investment as soon as this quarter.
Mr. Bibby says he is also seeing a rising desire for security in some home and condo owners.
Some condo owners, for example, are listing $1-million units now rather than risk losing value in the future. Even a 10-per-cent dip would impact their plans for retirement, he says.
Last fall’s stock market turbulence left many people feeling rattled.
“I’m seeing people take money off the table. I find there are a lot of people just focusing on preservation of wealth.”
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