108 Sandringham Drive, TorontoArash Rahnamoon
Last week, a circa-1930 mansion on the edge of a North York ravine arrived on the real estate market with an asking price of $4,999,800.
Three days later, a young couple with three children toured the 10,000-square-foot house. The parents looked from the 18-foot peak of the cathedral ceilings on the second floor to their basketball-loving kids and made an offer the same day.
Three days after that, the two sides had reached an agreement and the house at 108 Sandringham Dr. sold for $4,975,000.
Ira Jelinek of Harvey Kalles Real Estate Ltd., who represented the sellers, says the first offer was rejected but the buyers came back to the table to sweeten the bid. The buyers plan to do some renovations, he adds, including turning a bedroom into a playroom where the kids can shoot hoops.
"This house suited them perfectly," he says. "They love basketball."
In a market with so few listings, Mr. Jelinek says, when buyers see a house that suits their needs, they put an offer on paper quickly – even in the $5-million range. In this case, the parents are move-up buyers who had already sold their house in the same neighbourhood.
Some other buyers are holding off while they find the right combination of property and price. This tends to be the time of year when house hunters will take a second look at any houses that have been sitting through the fall market.
"I've got five buyers like that," Mr. Jelinek says of clients ready to jump.
Last week, the Toronto Real Estate Board reported that sales in the Greater Toronto Area in November soared 16.5 per cent compared with the same month in 2015. The average selling price gained a whopping 22.7 per cent last month compared with November of last year.
Few industry watchers expect that pace to continue in 2017, but the Toronto real estate market has been defying expectations for years.
This week, the Bank of Canada left a benchmark interest rate unchanged.
Many economists were expecting the central bank to remain on hold.
Robert Kavcic, senior economist at Bank of Montreal, points out that the Canadian economy's 3.5-per-cent expansion in gross domestic product in the third quarter was stronger than expected. The latest data quashed almost all speculation of a rate cut, he notes.
Mr. Kavcic still expects the central bank to remain on the sidelines through to the middle of 2018. He notes that there is still plenty of uncertainty surrounding policy changes in the United States after president-elect Donald Trump assumes office.
Looking ahead, real estate agent Jimmy Molloy of Chestnut Park Real Estate Ltd. expects Toronto's housing market to remain "positive" in 2017. He doesn't see the case for a massive correction but he does expect the market to be less "unruly" next year.
"I think it's going to be a thoughtful, realistic market."
He also points to the thin supply of listings that has frustrated buyers and pushed up prices.
"The wildcard is the lack of supply," Mr. Molloy says. "The demand is definitely there."
Mr. Molloy recently listed a Victorian-era house for sale in Yorkville with an asking price of $4.45-million. It sold for $4.6-million after receiving two offers within 36 hours.
Mr. Molloy also expects to see a continuation of the emerging trend amongst domestic and foreign investors to favour low-rise properties in the 416 area code. In the past, overseas investors in particular favoured condo projects for rental properties.
But smaller buildings don't require the years of construction that high-rise towers do.
"I think people are seeing the value of having great residential real estate in detached or semi-detached property in the downtown core."
Mr. Molloy points to one overseas buyer who has put together a portfolio of five or so large houses on prime avenues such as Hazelton, Boswell and Elgin in Yorkville and the Annex.
Mr. Molloy would welcome a return to a more rational market.
"Unrealistic markets are not sustainable markets."
He expects buyers to begin thinking longer term about the market and predicts owners will be more likely to stay in one house for 10 or 15 years.
Still, Mr. Molloy doesn't expect interest in the city's real estate to diminish, even if the market calms down. Toronto's standing amongst global cities has improved, he says.
"We're certainly at a different level than we were 10 years ago." Mr. Molloy says entrepreneurs and developers are striving to create projects that appeal both to investors and people who want to buy units for their own use.
Mr. Molloy says such coveted neighbourhoods as Yorkville, Rosedale and Forest Hill in Canada's largest city have not achieved the status of London's Mayfair or New York's Chelsea, but they are definitely attracting investors.
"We're on a different tier now."
Carolyn Ireland