Where will the mar­ket head af­ter this sum­mer’s slump?

Our panel of ex­perts share their pre­dic­tions for the fall mar­ket and weigh in on why some pock­ets of Midtown re­main white-hot while other ar­eas, such as York Mills, have seen a no­tice­able de­cline in sales

North Toronto Post - - News -


BRAD De­vel­oper, Devel­op­men­tLAMB Lamb Corp. TIM CEO, HUDAK On­tario Real Es­tate As­so­ci­a­tion BARRY CO­HEN The #1 Re/Max sales­per­son in Canada BRIAN GLUCK­STEIN Prin­ci­pal of Gluck­stein-De­sign JEN­NIFER KEESMAAT Chief Plan­ner & Ex­ec­u­tive Di­rec­tor, Plan­ning,City of Toronto

POST: What are your pre­dic­tions for Toronto’s real es­tate mar­ket come fall?

BARRY CO­HEN: The GTA’s hous­ing mar­ket is ex­pected to show signs of im­prove­ment come fall. List­ings are fore­cast to match or fall short of last year’s lev­els as some sell­ers con­tinue to hold back, if only ini­tially. The new buy­ers are and will re­main cau­tious, es­pe­cially af­ter a par­tic­u­larly chal­leng­ing sum­mer. How­ever, once in­ven­tory lev­els come down and those who have been sit­ting on the fence make their moves, the mar­ket should firm up.

While prices may con­tinue to cor­rect in the short term, prices should level out and sta­bi­lize in months to come, and I wouldn’t be sur­prised to see a slight uptick in av­er­age in the fall. One should keep in mind that val­ues tra­di­tion­ally fall dur­ing the sum­mer months, and the 33 per cent gain re­ported in the spring was un­sus­tain­able and had nowhere to go but de­cline.

From an eco­nomic per­spec­tive, the fun­da­men­tals are strong. Un­em­ploy­ment rates are low, and job se­cu­rity is good, which was not the case dur­ing the ’89 cor­rec­tion.

JEN­NIFER KEESMAAT: Mak­ing pre­dic­tions about the di­rec­tion of the mar­ket in the short term is al­ways chal­leng­ing. But I do agree with Barry that the fun­da­men­tals for Toronto re­main very strong. Un­em­ploy­ment is low, and [the city’s] an­nual Toronto Em­ploy­ment Sur­vey iden­ti­fied a new record in terms of the num­ber of jobs within Toronto. We can also con­sider other fac­tors that un­der­pin the city — a con­tin­u­ing in­flux of prom­i­nent in­ter­na­tional com­pa­nies, high rank­ings on liv­abil­ity in­dexes and a grow­ing global aware­ness of Toronto. Toronto in 2017 is a dif­fer­ent city than it was when it en­tered the last ma­jor mar­ket down­turn in the 1990s. So while we may see (and even welcome) short-term cor­rec­tions in the real es­tate mar­ket, I am pos­i­tive about the long-term tra­jec­tory for Toronto. With that said, it is para­mount that we plan and in­vest for this fu­ture to en­sure that the city achieves its full po­ten­tial in the com­ing decades.

BRAD LAMB: I be­lieve that the Toronto real es­tate mar­ket will con­tinue to see price in­creases and vol­ume in­creases over the fall; how­ever, the za­ni­ness from Oc­to­ber 2016 to March 2017 is over. We’re back to a more sane mar­ket­place where price in­creases will likely be five to eight per cent per year. There is ab­so­lutely no rea­son why av­er­age prices will fall go­ing for­ward. The spring 2017 shock took place af­ter the pre­mier made moves to cool ex­plod­ing de­mand. Those pol­icy moves will be mea­sured and ab­sorbed by buy­ers. They will re­al­ize that fun­da­men­tally noth­ing has changed, real es­tate prices will once again march for­ward. As long as the econ­omy is ex­pand­ing, jobs are be­ing formed, the un­em­ploy­ment rate re­mains low, va­cancy rates re­main low, com­mer­cial va­cancy rates stay low and in­ter­est rates stay low, not much can cause prices to fall. Peo­ple don’t stop buying goods and ser­vices (in­clud­ing homes) dur­ing times when the over­all econ­omy is good.

TIM HUDAK: Cur­rently, we’re see­ing con­sumers tak­ing a wait-and­see ap­proach to the mar­ket. Prior to the gov­ern­ment’s in­tro­duc­tion of the Fair Hous­ing Plan, real es­tate prices were ris­ing. The gov­ern­ment launched a cou­ple ini­tia­tives, for in­stance a for­eign buy­ers tax, that had a psy­cho­log­i­cal im­pact and has home­buy­ers on the side­lines watch­ing what’s hap­pen­ing.

But de­spite the de­cline in sales, many Toronto bro­kers I’ve spo­ken with are see­ing a come­back in sales and mul­ti­ple of­fers on prop­er­ties. It would not sur­prise me if Toronto’s mar­ket took a sim­i­lar tra­jec­tory to Van­cou­ver’s af­ter a for­eign buy­ers tax was im­ple­mented there. There were a few months of slower sales, fol­lowed by a re­turn to a ro­bust mar­ket.

BRIAN GLUCK­STEIN: I think the mar­ket will be steady and pur­chasers will be thought­ful in their buying. There won’t be that same frenzy. I don’t see any ma­jor down­turn this fall. POST: Why are some pock­ets of Midtown, such as Casa Loma and For­est Hill, still white-hot while oth­ers, such as York Mills and the 905, have ex­pe­ri­enced a no­tice­able sales slump?

“The 33 per cent gain re­ported in the spring was un­sus­tain­able and had nowhere to go but de­cline. ”

CO­HEN: Lo­ca­tion, lo­ca­tion, lo­ca­tion is the short an­swer. These mar­kets have held up rel­a­tively well to mar­ket in­flu­ences, in large part due to their close prox­im­ity to the city’s core. If you look back, these are the ar­eas that first ex­pe­ri­enced tight mar­ket con­di­tions, low in­ven­tory lev­els and bid­ding wars. Ar­eas like Oak­wood Vaughan also of­fer up some of the most af­ford­able sin­gle-de­tached homes in the cen­tral core, in and around $1 mil­lion.

Ar­eas like York Mills, Sun­ny­brook, Bri­dle Path have seen sales drop ap­prox­i­mately 32 per cent year-over-year (239 ver­sus 349), but it’s im­por­tant to note that the av­er­age price in this com­mu­nity has climbed 28 per cent year-to-date and cur­rently sits at $3,104,428 — that’s the high­est av­er­age price in the GTA’s 60 plus neigh­bour­hoods.

This area has also been a favourite with for­eign buy­ers and that’s had an im­pact on the mar­ket as well.

KEESMAAT: First, this is a level of de­tail that I must re­fer to my real es­tate col­leagues. From a city plan­ning per­spec­tive, more broadly, we know that neigh­bour­hoods near tran­sit and walk­a­ble main streets are more re­silient in terms of how they hold their value in gen­eral. Ar­eas that ap­peal to end users, as op­posed to in­vestors, will on the whole prove to be more sta­ble neigh­bour­hoods.

It would be prob­lem­atic to draw long-term con­clu­sions from what I view as short-term anom­alies. Rather, how Toronto grows — such as whether we make the tran­sit in­vest­ments re­quired to sup­port a rapidly den­si­fy­ing city — will de­ter­mine which neigh­bour­hoods thrive.

LAMB: Great neigh­bour­hoods with a short­age of prop­erty will con­tinue to boom. Other less de­sir­able neigh­bour­hoods that have a larger po­ten­tial sup­ply of prop­erty may not see the same in­creases. For in­stance, both neigh­bour­hoods of For­est Hill and Casa Loma are very small in terms of the num­ber of homes they con­tain. They are also very de­sir­able places to live due to their prox­im­ity to the city and the ex­cel­lent na­ture of the homes.

GLUCK­STEIN: I think there are peo­ple com­ing from other ar­eas of the city who want to be closer to the down­town core, in a walk­a­ble neigh­bour­hood close to shops and res­tau­rants, while still main­tain­ing a quiet, green neigh­bour­hood feel. POST: Why are con­dos seem­ingly avoiding this cor­rec­tion?

KEESMAAT: Con­dos, par­tic­u­larly those in de­sir­able lo­ca­tions with walk­a­ble ac­cess to tran­sit and ameni­ties, re­main a de­sir­able hous­ing choice. In com­par­i­son to low-rise hous­ing op­tions, they pro­vide lower cost ac­cess to some of Toronto’s most de­sir­able neigh­bour­hoods. Many fam­i­lies are now mak­ing the con­scious choice to live in con­dos, es­chew­ing the bur­den of a long com­mute re­quired to find a com­pa­ra­bly priced low-rise al­ter­na­tive. While this does not mean con­dos are im­mune to a price cor­rec­tion, I do be­lieve that this form of hous­ing is here to stay as Toronto con­tin­ues to tran­si­tion into a denser city.

I also hope that the great work my team has been ad­vanc­ing re­lated to de­sign­ing neigh­bour­hoods and con­dos as a first choice for fam­i­lies is en­cour­ag­ing more in­ter­est. This sum­mer has seen the launch of some spec­tac­u­lar new parks — Grange, Ber­czy and Tril­lium. In­vest­ing in pub­lic space is mak­ing the propo­si­tion of condo liv­ing even more de­sir­able, as a new gen­er­a­tion trades back­yards for a more ur­ban ap­proach to ev­ery­day life.

Whereas in the past con­dos were viewed pri­mar­ily a s starter homes, as the char­ac­ter of our city shifts, the role con­dos play in the hous­ing mar­ket is shift­ing too.

CO­HEN: For many first-time buy­ers in the Greater Toronto Area, con­do­mini­ums rep­re­sent the first step in home own­er­ship. The ur­ban life­style is es­pe­cially pop­u­lar with younger pur­chasers, many of whom are at­tracted to af­ford­able units within the down­town core that are close to work and play. De­mand, how­ever, is not lim­ited to first-time buy­ers. Empty nesters and re­tirees are drawn to units in the cen­tre core that are within walk­ing dis­tance of shops and res­tau­rants. Fam­i­lies are drawn to con­do­minium town­homes and apart­ments in more sub­ur­ban set­tings. Con­do­mini­ums al­low new Cana­di­ans to re­al­ize home own­er­ship at an af­ford­able price point. In­vestors also fac­tor into the mix, given that va­cancy rates in the city hover at ap­prox­i­mately 1.3 per cent (ac­cord­ing to the Canada Mort­gage and Hous­ing Cor­po­ra­tion). With de­mand com­ing from so many dif­fer­ent seg­ments of the mar­ket, it’s not

sur­pris­ing that con­do­mini­ums are hold­ing their own. In fact, apart­ment con­do­minium and town­home sales rep­re­sented 35 per cent of to­tal GTA res­i­den­tial sales be­tween Jan­uary and July 2017.

LAMB: Con­do­mini­ums are not avoiding a cor­rec­tion be­cause we haven’t had a cor­rec­tion. What we’ve had is a slight price set­back due to an out­side event caused by the gov­ern­ment. This is not a mar­ket-driven event. This is not some­thing that has hap­pened due to mar­ket forces. This is some­thing that hap­pened be­cause the pre­mier en­acted var­i­ous poli­cies to try to slow down the real es­tate mar­ket. Look to Van­cou­ver as to how that will ul­ti­mately work out. One year later Van­cou­ver has ex­actly the same is­sue as be­fore. Low sup­ply, higher prices. Buy­ers read the news. Some por­tion of buy­ers took a breather, hop­ing for a sub­stan­tial cor­rec­tion. This is why things cooled a lit­tle. They will be back in the fall or spring. They will likely pay more money for the same house. Con­dos are in a good po­si­tion be­cause they are typ­i­cally the af­ford­able op­tion. The On­tario Mu­nic­i­pal Board changes, and plan­ning de­lays have cre­ated a short­age of new units com­ing to the mar­ket. This short­age of new hous­ing will get worse be­fore it gets bet­ter.

HUDAK: Toronto is a very at­trac­tive des­ti­na­tion to live. We have 100,000 peo­ple, in­clud­ing new im­mi­grants, com­ing into the city on a yearly ba­sis. Right now con­dos are the most af­ford­able hous­ing op­tion for first-time buy­ers and young fam­i­lies.

Go­ing for­ward, gov­ern­ments should be fo­cus­ing on sup­port­ing the de­vel­op­ment of more “miss­ing mid­dle” type homes, such as town­houses, stacked homes and mid-rise build­ings, to give fam­i­lies more choice.

GLUCK­STEIN: I think it’s a com­bi­na­tion of two fac­tors. First­time buy­ers are get­ting into the mar­ket, and con­dos are still an ideal en­try point. As well, Toronto ap­peals to peo­ple from around the world as a safe haven to both live and in­vest in.

“What we’ve had is a slight price set­back due to an out­side event caused by the gov­ern­ment.”

TIM HUDAK CEO, On­tario Real Es­tate As­so­ci­a­tion BRIAN GLUCK­STEIN Prin­ci­pal of Gluck­steinDe­sign JEN­NIFER KEESMAAT Chief Plan­ner & Ex­ec­u­tive Di­rec­tor, Plan­ning, City of Toronto 2017 MID-YEAR ROUND­TABLE BARRY CO­HEN #1 Re/Max sales­per­son in Canada BRAD LAMB De­vel­oper, Lamb De­vel­op­ment Corp.

Post City’s real es­tate round­table was held in March of this year

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