Toronto’s fall real estate market has seen deep-pocketed baby boomers and ambitious young millennials contend for condo units – albeit in vastly different neighbourhoods and price segments.
In late October, Gay MacLeod of Chestnut Park Real Estate Ltd., had six contenders vying for a three-bedroom condo with a list price of $2.795-million.
The three-bedroom, three-bathroom unit in Granite Place sold for $3.585-million, or $790,000 above the asking price.
Ms. MacLeod says the building on St. Clair Avenue, just west of Yonge Street, is coveted by downsizing baby boomers from such nearby neighbourhoods as Moore Park, Deer Park and Forest Hill.
The building, which sits atop the escarpment running through midtown Toronto, provides views over the downtown core to Lake Ontario.
“It seems to be where that demographic is gathering.”
The unit which spurred so much competition offered 2,442 square feet of living space, two balconies and south-facing views.
Ms. MacLeod says two of her clients were recently shocked when they lobbed an offer at $800,000 above the list price for a unit in Scrivener Square, only to lose out to a buyer that paid $1-million above asking.
Scrivener Square, which sits just off Yonge Street in the Summerhill area to the south, is another sought-after complex, she says.
The unit there, listed with an asking price of $2.4-million, sold for $3.4-million.
Ms. MacLeod says she and other agents estimated fair market value at about $2.7-million or $2.8-million, but well-heeled boomers are selling large houses and then paying whatever it takes to secure a unit.
“They want what they want. They don’t want to be shy about battling for it,” she says of that cohort of buyers.
Real estate sales in the Greater Toronto Area rose six per cent in October compared with October, 2017, according to the latest figures from the Toronto Real Estate Board.
New listings shrunk 2.7 per cent last month compared with the same period last year, while active listings remained flat.
The lack of listings helped to push the average price for the GTA to $807,340 for a 3.5 per cent gain from October of last year.
Seasonally adjusted sales in October slipped one per cent from September, while the average price edged up one per cent from September.
The average detached house in the GTA eked out a 1-per-cent price gain in October from the same month last year. The average condo price in the GTA rose 7.5 per cent in the same period.
TREB’s director of market analysis, Jason Mercer, points out that year-over-year sales growth has outpaced year-over-year growth in new listings for five months running.
Al Daimee, a real estate agent with Royal LePage Signature Realty, says sales of houses in the segment above $1.5-million are sluggish.
He partly blames a Bank of Canada interest rate hike and wild swings in the stock market during October, which may have caused some buyers to pause.
“Some people are afraid to jump in because they don’t know what the future holds.”
Properties selling for prices under $800,000, though, are disappearing quickly.
“The entry-level is on fire.”
Mr. Daimee says first-time buyers who lined up a preapproved mortgage in late August or September are keen to buy before the three-month period runs out.
The October rate hike has spurred some house hunters to move quickly before the additional increase in January that many economists are predicting.
Mr. Daimee recently sold a one-bedroom unit at the Hudson with 26 offers. The 561-square-foot unit at 438 King St. West was listed with an asking price of $499,900.
Mr. Daimee set the asking price low in order to draw attention but he says the response was much more frenzied than he expected.
About 80 parties booked showings, he says.
“The requests to bully offer were pouring in the first few days.”
The sellers decided to send the bullies away and stick with the scheduled offer date. The unit sold for $115,000 above the asking price, or $614,900.
Mr. Daimee believes much of the demand in that price range comes from the cadre of young millennials who have a good income, but fear being priced out of the market in the future. If they buy now, he says, they can lock in a mortgage with a fixed interest rate for five years. Investors were also out in force, he adds.
“The competition is pushing prices to the max.”
Mr. Daimee says the unit in the Hudson has clear view to the west that is not likely to be blocked by future development.
“That had a guaranteed clear view – that’s what drove a lot of the action.”
Mr. Daimee also recently sold his own condo unit in the King West neighbourhood in September in order to buy a house in Cabbagetown.
He was prompted to make the move after the gap between condo prices and single-family dwellings narrowed.
After his condo fetched $1.725-million, he paid $2.138-million for the semi-detached Victorian.
Because he will no longer paying monthly maintenance fees for the condo and the house has a basement rental suite, Mr. Daimee says his monthly expenses will actually dip after the trade.
Mr. Daimee expects November to be another busy month in the condo area.
“There are 25 buyers left for that one-bedroom we just sold.”
Ms. MacLeod expects the competition for midtown condos to continue because there is a concentration of large, high-priced houses in the surrounding area.
At Granite Place, she set an asking price close to what she considered market value. She looked at the price a similar unit fetched a few weeks earlier and shaved $100,000 from her listing price because the other unit was renovated more recently.
She was not surprised to receive multiple offers, but the final price was higher than she anticipated, she says.
“There’s such demand and it’s an aggressive demand. They’re retired CEOs and they’re used to being able to get what they want.”
Ms. MacLeod says the buyers in this segment figure this will be their last residence and they’re not worried about overpaying. They’re more concerned about maintaining marital harmony than any future profits, she explains.
Meanwhile, the large detached houses that those buyers are parting with are not snatched up so quickly.
“They’re taking longer to sell,” she says.
Looking towards the final weeks of 2018, she expects condo owners to continue listing their units if they want to sell. Homeowners may be more likely to wait until spring if they haven’t listed by now, she says.
Typically the market slows in November and December, she says, but some sellers will continue to list if the timing suits them.