It seems many Ontario residents are listening to Premier Doug Ford when he urges them to stay home. Then they settle in, look around and decide they need to find a better home.
The latest data from the Toronto Regional Real Estate Board (TRREB) show sales in the Greater Toronto Area hit a record high for the month of January with a whopping 52.4-per-cent gain from January, 2020.
Real estate has been deemed an essential service during the coronavirus pandemic, says John Lusink, president of Right at Home Realty Inc., but he still finds January’s frenzy somewhat confounding given the tighter restrictions on movement imposed by the provincial government in the same month.
“It’s a bit crazy in many respects how we’re still selling real estate during lockdown,” says Mr. Lusink, who points out that agents need to react quickly to frequent advisories and rule changes. “It’s hard to understand the pent-up demand.”
The average price in the GTA jumped 15.5 per cent from one year ago to stand at $967,885 at the end of January.
The blazing start to the year comes after a strong finish for 2020. TRREB president Lisa Patel points out that despite tumult through the early months, last year turned out to have the third-best annual sales tally on record. The average selling price also hit a new benchmark.
TRREB is also predicting that growth in sales and prices will remain robust in 2021, powered by a continued economic recovery, an improving employment picture and borrowing costs at or near a record low.
Mr. Lusink says job losses in hospitality, retail and other hard-hit sectors of the economy have not spilled over into real estate. In the spring of 2020, many lenders allowed mortgage holders to defer their payments. Market watchers were apprehensive that a so-called “deferral cliff” might form when those programs ended in the fall.
“Mortgage deferrals were really not so meaningful – not as much as many of us anticipated.”
Mr. Lusink says a steep decline in debt-service costs, combined with a high savings rate, likely allowed many consumers to weather the economic storm. As a result, they did not flood the real estate market with listings in most segments.
Also, the stream of people flowing out of Toronto has not resulted in an abundance of listings in the city. Mr. Lusink adds that established neighbourhoods such as Moore Park and the Beaches still see enough demand to quickly soak up the available inventory.
Mr. Lusink is finding that buyers are aggressive in segments with a scant supply of listings.
“In years past, you would always hear people say ‘I don’t want to get into a bidding war,’ ” he says. “Now it’s ‘get me in there – whatever we have to do, we do.’ ”
The strategy of setting an attention-grabbing asking price then holding off bids for a week or so has spread throughout Ontario, he adds.
“It’s no longer a big-city phenomenon.”
Ottawa and Barrie were two of the strongest cities for Right at Home, which has 12 branches around the province. Mr. Lusink says much of the demand in Barrie and other smaller communities surrounding the GTA comes from people leaving the city.
Cameron Miller, a real estate agent with Property.ca in Toronto, is seeing the longing for more space first-hand.
In Toronto, lots of movement is happening in the stretches of downtown that TRREB labels C01 and C08. Within those boundaries, traditional residential neighbourhoods such as Little Italy and Trinity-Bellwoods have become more crowded with new buildings and an increase in laneway suites in the past couple of years.
“People just want to move out of the city right now. Toronto is becoming very dense.”
At the same time, landlords who own duplexes and triplexes in such neighbourhoods are having trouble finding tenants during the pandemic. Changes to the city’s short-term rental rules also mean that landlords cannot easily earn income from Airbnb and other platforms.
“I am noticing an uptick in investor selling,” he says. “A lot of people are throwing in the towel.”
Some of Mr. Miller’s clients have been migrating east to Durham Region and west to Oakville and Burlington. People who are used to downtown living are exploring different areas and discovering that they can still find pockets of older homes and residential streets that offer some of the same attributes they enjoyed in their Toronto neighbourhoods.
“I had clients who didn’t even know what Burlington looked like before,” he says.
Once they started looking in that city west of Toronto, the couple found a century home close to downtown and the Lake Ontario waterfront, he says.
Buyers are drawn to places with a historic downtown, he adds, pointing to Unionville, Aurora and Oakville as locations with such character.
For those remaining in the city, Mr. Miller says competition is returning to the market for luxury downtown condos.
Mr. Miller says the last three bully offers he has placed on behalf of clients have all been outdone by other bids. Bully offers are a strategy some buyers use to circumvent the bidding process when they don’t want to wait for a scheduled offer date.
“My bully offer has been out-bullied,” he said of the most recent dust-up. “People are quite aggressive.”
Prospective tenants also compete in the rental market for units with a generous amount of space and unique character.
A townhouse with 1,300 square feet of living space at 25 Stafford St. in Toronto was available for lease with a monthly rent of $3,500. Mr. Miller says the owners received five offers and rented the unit for $4,000 a month.
Still, Mr. Miller notes that prices have fallen overall in the downtown condo market. In the 416 area code, the average price of a condo apartment fell 8 per cent last month compared with January, 2020, according to TRREB.
In March of last year, Mr. Miller evaluated a condo unit with two bedrooms and two bathrooms in 1,000 square feet of living space at 298 Jarvis St. for a couple who were thinking of selling. At that time, he estimated the unit would sell for $730,000.
The owners held off until last month. The property stayed on the market for just under 30 days before selling $650,000.
The pair are snowbirds who typically spend their winters down south and are willing to rent during the months they are in Toronto, he says. They were disappointed to leave money on the table but wanted the certainty of selling now in case the market softens further.
“They cashed out,” he says. “They want to live a rental lifestyle.”
Mr. Miller says listings appear to have plateaued and the high level of sales activity in January leads him to believe the condo market has hit bottom.