National Post (Latest Edition)

Record-breaker

There are no signs of cooling in toronto’s sizzling real estate market

- Courtney Shea

It was the kind of story Toronto real estate nerds go nuts over: A house barely larger than a breadbox hit the market in late July listed at a cool — or rather a scorching — $999,999. “Loads of potential and great investment,” is how the listing described a detached bungalow in Little Italy that was neither spacious nor nice to look at. But it did have a few things going for it: a location on a pretty street—euclid

Avenue—in a desirable neighbourh­ood, proximity to plenty of urban amenities, and a two-car garage, the holy grail in the heart of downtown. When you look at it that way, a million smackers may have smelt like a deal six months ago. But what about the global pandemic that was supposed to — finally — throw a bucket of water on Toronto housing prices?

It’s a question people can’t stop talking about, right up there with “When’s the vaccine coming?” and “Will there be a second wave?” In the first quarter of 2020 the GTA housing market was mad hot, but then the world ground to a halt in March. And for a few weeks, real estate froze right along with it. In early spring, based on overall uncertaint­y and lack of mobility caused by lockdown, year-over-year-declines were steep (57 per cent in April and 53 per cent in May), and the future looked precarious. On the flip side, there was talk that buyers who had long been priced out of Toronto might finally be able to squeeze their way in.

The people who did that were the ones who acted quickly. by the end of may, Trreb reported that average home prices had not just matched but surpassed 2019 levels at $863,599, leaving some to wonder. whether COVID-19 might actually be good for the market.

Heather Hadden, an agent with Chestnut Park, was working with five active clients when the pandemic hit. All of them decided to hit pause on their house hunt in the short term, but five weeks later all five were back at it. Last week Hadden’s clients bid on a detached family home in the rockcliffe-smythe area that had six other offers. “We’re back to bidding wars,” she says.

market analysts point to three key factors to explain the current frenzy: Lending rates have hit record lows, government interventi­ons have propped up the economy and supply is almost non-existent. “There are buyers who are coming into the market thinking maybe they’re going to get a deal because of COVID-19,” but if you are looking for a family home, says Hadden, “that’s not happening.” The statistics back her up: both July and August saw increases in year-over-year sales and average house prices; in August new listings in the 416 had more than doubled since the same period last year. Pent-up demand—buyers who were holding off and pushed what is normally a booming spring real estate season into summer — has played a role, but it’s fall now and a cool front has yet to blow in. A two-bedroom in Corktown recently listed for $990,000. A laneway home in the Summerhill neighbourh­ood just listed at $1.295 million on a lot that’s less than 900 square feet. “We priced this property as close to market value as we could because we weren’t sure what we were going to see with the fall market,” says listing agent Susan Froese mchardy of mchardy Gallagher real estate, who believes the home will go for asking or a bit over. It’s small, sure, but now more than ever, a great alternativ­e to condo living.

In a report released in early September, the Canada mortgage and Housing Corporatio­n revealed that Canadian homeowners have deferred about $1 billion in mortgage payments each month. many of those deferral programs were offered for six months. “Significan­t mortgage delinquenc­y” may be coming, according to the CMHC, which previously predicted that Toronto housing prices could fall by as much as 18 per cent in the coming months.

but Jason mercer, chief market analyst of Trreb, believes threats of a looming mortgage default cliff have been exaggerate­d. “If you think about the strong uptick in home sales, those purchases would have been undertaken with a mortgage, which suggests those individual­s are in good shape,” says mercer.

The Canadian bankers Associatio­n reports that more than 76,000 Canadians have skipped one or more mortgage payments since the pandemic. “In those early days there were a lot of individual­s who, presented with the opportunit­y to take advantage of a deferral, did that in order to give themselves some financial flexibilit­y,” says mercer. “but if you look at previous economic downturns in Canada, there is not necessaril­y a correlatio­n between deferring and defaulting.” mercer says that a precursor to any sort of protracted decline in housing prices would be an inversion of the current relationsh­ip between supply and demand, particular­ly in detached family homes. “during tougher economic times, people tend to focus on whether people are buying or not because that’s a measure of consumer confidence, but when we’re looking at the Toronto market, you can’t ignore the lack of supply.”

mercer does concede that Trreb’s prediction­s are predicated on continued economic recovery, which is, of course not guaranteed. Still, at this point, the economic impacts of COVID-19 have targeted mostly minimum wage and shift workers who couldn’t afford the Toronto real estate market even before the pandemic. Hadden says the vast majority of her clients are high-earning profession­als who have been able to transition to remote work far more readily than people working in hard-hit industries like retail, food service and manufactur­ing. “I’m telling people to buy now because house prices will probably be up 5 to 8 per cent by January.”

unless we get hit with a second wave, go back into lockdown and see the economy tank. If COVID-19 has taught us anything it’s that the future is uncertain.

For now, though it’s a seller’s market. The house in Little Italy did not go for a million dollars. It went for $1.8. The buyers, according to the listing agent, plan to tear it down and build their dream house in a great neighbourh­ood with zoning for a two-car garage. “We’re spending more time than ever at home,” says Hadden. “People want to love where they live.”

 ?? PHOTO courtesy Birdhouse MEDIA ?? The sellers of this Summerhill laneway house are asking $1.295 million for a dwelling that sits on a lot just under 900 square feet.
PHOTO courtesy Birdhouse MEDIA The sellers of this Summerhill laneway house are asking $1.295 million for a dwelling that sits on a lot just under 900 square feet.
 ?? PHOTOS Courtesy birdhouse media ?? The Summerhill home is expected to see near or above listing price in part because of its neighbourh­ood appeal.
PHOTOS Courtesy birdhouse media The Summerhill home is expected to see near or above listing price in part because of its neighbourh­ood appeal.
 ??  ?? The Summerhill home features an eat-in kitchen with high ceilings and tons of natural light, main floor laundry, lots of storage and living room with built-ins.
The Summerhill home features an eat-in kitchen with high ceilings and tons of natural light, main floor laundry, lots of storage and living room with built-ins.

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