Toronto’s housing market slowly gaining steam

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The Toronto-area real estate market saw a mix of eager buyers and cautious bargain-hunters in June, and early signals suggest that some of that momentum is continuing into July.

The Toronto Regional Real Estate Board (TRREB) reported that sales in the Greater Toronto Area climbed 89 per cent in June compared with May as the market opens up again after the public-health response to contain the spread of COVID-19.

Compared with June, 2019, sales dipped 1.4 per cent.

The average selling price rose to $930,869 in June to mark an 11.9-per-cent rise from the same month last year.

John Lusink, president of Right at Home Realty Inc., is encouraged to see that listings at his firm’s 12 branches in Ontario were 14 per cent higher at the end of June than at the beginning of the month.

Mr. Lusink believes that charting the market’s progress from week to week and month to month is more relevant than measuring 2020 numbers against those in June, 2019, because the market has been so distorted by the pandemic.

“It makes no sense to try to compare to last year.”

He expects an uptick in new listings in July after agents advised homeowners to hold off selling during the early months of the pandemic. Now that buyers and sellers have become accustomed to virtual showings and extra cleaning and distancing measures for in-person showings, he expects owners will move ahead with the plans they put on pause.

“I think people who are listing need to list,” he says.

Mr. Lusink says some of the sales in activity in June appeared to stem from buyers trying to get into the market ahead of stricter requirements imposed by Canada Mortgage and Housing Corp. on borrowers seeking mortgage insurance from the crown corporation. The new rules came into effect on July 1.

“Once again the powers that be are dabbling in some sort of restraint policy.”

He sees indications that buyers are willing to move quickly at the low-to-middle range of the market.

“When something comes out on the market, they’re prepped and ready to go right away.”

TRREB data suggest buyers are rejigging some of their priorities surrounding where they want to live and in which type of home.

Sales of detached houses in the city core’s 416 area code, for example, dropped 10 per cent in June compared with the same month last year, while detached houses in the surrounding 905 region saw sales jump 10.4 per cent in the same period.

Sales of condo apartments in the 416 dropped 13.6 per cent last month compared with June, 2019, while sales of condo apartments in the 905 tumbled 22.3 per cent in the same period.

Mr. Lusink believes people moving to a new area are driving many of the transactions whereas move-up buyers still seem to be hesitant. Sales in Ottawa, for example, have been red-hot because of demand from new immigrants and people working in the city’s technology sector, he says.

Mr. Lusink believes condo sales have been held back by the rules around showings.

Some condo boards did not allow any visitors into their buildings, for example, which made it difficult or impossible for agents to show units to prospective buyers.

“They’re selling them virtually,” he says. “In some cases, people aren’t even going in to look.”

In some of the most coveted neighbourhoods in Toronto, Andre Kutyan, a real estate agent with Harvey Kalles Real Estate. Ltd., says he’s seeing an odd pattern of hesitant buyers who wait on the sidelines, then join the competition if another buyer moves first.

He has recently set offer dates for properties that didn’t draw bids by the deadline, only to sell with multiple offers a few days later. In other cases, houses sit on the market for a time, then sell in competition.

He sold four properties last month that drew multiple offers – sometimes at prices above what they could have had the same property for in May.

At 276 Strathallan Wood, for example, the four-bedroom house was listed with an asking price of $4.295-million before the pandemic shut down the market almost entirely.

Mr. Kutyan pulled the listing from TRREB’s Multiple Listing Service (MLS) in early March, then relisted the property with an asking price of $4.195-million in June.

One set of buyers appeared interested when the house in the popular Lytton Park neighbourhood first arrived on the market in February.

“They brought a home inspector to the second showing, which is an interesting move,” Mr. Kutyan says.

In June, the same prospective buyers were still around, but were only enticed to the table when Mr. Kutyan let their agent know he had a registered offer in hand.

“These are people who floated around for four months.”

The house sold to the first bidder for $4.176-million.

He thinks some of the fence sitters are trying to snag a deal. In other cases, they’re only convinced of the value of a house when someone else wants it.

“It’s a validation – that’s exactly what it is.”

At 200 Bloor St. West, Mr. Kutyan listed a one-bedroom-plus-den condo apartment with an asking price “aggressively below market value” at $749,000. He set an offer date, but no bidders turned up.

A couple of days later, Mr. Kutyan received three offers and the unit on the 19th floor sold for $850,000.

“That was the catalyst they needed to come to the table,” he says of the action spurred by the first bid.

At 473 Glencairn Ave., Mr. Kutyan listed an older four-bedroom home with an asking price of $1.795-million in March. The property was listed exclusively until things began to open up in June, when he put it on the MLS with a fresh price of $1.788-million.

After five days on market, the house sold for $1.8-million.

“It sat there for two months from the end of March until the end of May,” then sold for more than asking, he says in astonishment.

But there is one lesson from that scenario, Mr. Kutyan says – despite advertising and a sign on the lawn, the ultimate buyer didn’t know about the house until it showed up in the public marketplace.

“The time has come to make sure your house is on MLS.”

Looking ahead, Mr. Lusink expects listings and sales to rise at a slow and steady pace in the coming months. His head has been spinning in recent weeks, he says, from the number of bank economists and other forecasters predicting a drop in real estate prices by the end of the year.

TRREB has revised its forecast for sales in 2020 to a decline of 8.8 per cent compared with 2019. The organization is sticking with its forecast of a $900,000 average price by year-end, however. TRREB cautions that while it considers the updated forecast “realistic,” significant risks to the downside remain.

Right at Home is expecting a modest price increase of 3 per cent to 5 per cent in 2020 compared with 2019. Mr. Lusink warns, however, that all bets are off if Ontario sees a major outbreak of COVID-19 cases before the end of the year.

“I think the qualifier to all of this is how quickly and if people can return to their jobs,” he says.

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