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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