The Globe and Mail has published an article about a recent trend where home sellers are moving into rental properties rather than buying. There have been many shifts in the real estate market as of late, and everyone must adapt to remain relevant. Although I was not interviewed for the article, a photo of a property I just leased out for a client was featured.
Toronto Homeowners Cashed Out to Capitalize on High Prices – And Many Aren’t About to Dive Back In
THE GLOBE AND MAIL
PUBLISHED: WEDNESDAY, APR. 26, 2017
Justin Wheeler didn’t expect he’d start leasing in his 30s. He’s owned a house in Cambridge, Ont., for 10 years and raised a young family there. But he changed his mind after people started flocking to Cambridge to escape Toronto’s expensive real estate market, driving the average price of a house up more than 30 per cent in a year.
“In a couple years, we were going to sell. And then we saw people selling their houses for crazy amounts of money, so we said, ‘Screw it.’”
Last month, Mr. Wheeler sold his house for well over asking price – at twice what he paid. He thinks it’d be “crazy” to buy while the market is so high, so he’s searching for a bigger house to lease while he waits for it to fall.
Toronto-area realtors say interest in leasing high-end rental homes has surged as more and more owners do exactly what Mr. Wheeler did: Cash out and lease while they wait to buy in a cheaper market. Ashley Gollogly, a local realtor, says this is setting Toronto’s high-end leasing market “on fire” – and helping to drive its prices up.
“[It] has always been crazy, but I think in the last six months it’s gotten more so just with the ones that have been selling their houses and taking a break from the market.”
With housing prices in Toronto at record highs, more people are looking to lease – and the increased demand is driving leasing prices higher. Realosophy Realty, a brokerage that collects statistics on housing in Toronto, found 403 new listings of high-end homes – defined as properties asking $4,000 a month and up – in the first quarter of 2017; a 35-per-cent increase from the same period last year. Of those listed, 219 were actually leased out – a 53-per-cent year-over-year increase.
A search of online realty sites turns up homes in the Greater Toronto Area that come with Victorian-style furniture, whirlpools, outdoor kitchens – and price tags as high as $25,000 a month.
Andy Taylor, of Sotheby’s International Realty, represents a Yorkville brownstone listed at $23,500 a month. It has 3,000 square feet of living space, has three bedrooms and no garage, but Mr. Taylor says there’s a market for furnished rentals in great locations, even at this price. So far, he’s seen interest from executives moving to Toronto and from people who sold their house.
Years ago, such leases were popular with businesspeople and athletes who relocated their families after finding temporary jobs in the city. Now, people who have just sold a home – often for a price they never dreamed they would get – are pushing into the leasing market flush with cash.
“People don’t want to take all their money they’ve made in appreciation of their family home and sink it back into real estate,” says local sales representative Jimmy Molloy, of Chestnut Park Real Estate Ltd.
Ehson Rahmati, of World Class Realty Point, who sells and rents condos in the GTA, sees the same story playing out in high-end condo rentals. Interest in large condos increased “tremendously” last year and in March, he says.
“A lot of people obviously are moving out of their houses, so a lot of these smaller condos won’t cut it for a family. So a lot of the bigger two-bedroom, three-bedroom penthouses or just bigger units are being rented.”
The Canada Mortgage and Housing Corp.’s Rental Market Report for the fourth quarter of 2016 found the average price for condos with three or more bedrooms increased by 16.35 per cent last year. In comparison, the average price of a one-bedroom apartment increased by 7.30 per cent.
It’s not just Ontario’s recent moves aimed at curbing the housing market that have some convinced that the market is set for a slowdown, and soon. For Ms. Gollogly, it was the election of Donald Trump. For Mr. Wheeler, it is his conviction that the Bank of Canada will raise interest rates.
Penny Brown, a realtor with Sotheby’s International Realty Canada, has noticed a couple trends: People are insisting on closing sales quickly, as if the market could crash any day; people are downsizing while they’re still young; and people are moving into nearby cities such as Cambridge or Hamilton to work remotely.
While selling and leasing might offer the chance to cash in on a rising market, the sellers still need a place to live and may find leasing too expensive.
Terri Roberts lives in a Markham house worth three times what she originally paid. She wants to sell, and rent in the city so her two children have access to the perks of Toronto and to reduce her daily commute. So far, she and her realtors haven’t found a three-bedroom place that’s within her budget and in a neighbourhood that she’s comfortable living in.
“It’s frustrating. Very frustrating.”
Mr. Wheeler is having similar troubles. Although his house sold at a good price for Cambridge, a declining number of listings has made leasing as competitive as buying. And although he’s convinced banks will raise interest rates in the future, leading to a market collapse, he admits there’s no way to tell when that might happen or what the effect on the Cambridge real estate market might be.
“At this point, [the sale feels] good, but who’s to say it’s not going to get even worse and I’ll have gotten out too early? That’s the gamble you take.”
Tight Market Conditions Continue in March
April 5, 2017 — Toronto Real Estate Board President Larry Cerqua announced that Greater Toronto Area REALTORS® reported 12,077 residential sales through TREB’s MLS® System in March 2017. This result represented a 17.7 per cent increase compared to the 10,260 sales reported in March 2016. For the TREB market area as a whole, annual sales growth was strongest for condominium apartments and detached houses.
The number of new listings also increased on a year-over-year basis, at 17,051 – a 15.2 per cent increase compared to March 2016. The strongest growth in new listings was experienced in the detached market segment. While new listings were up strongly compared to last year, the rate new listings growth was still lower than the rate of sales growth. As a result, GTA market conditions continued to tighten.
“It has been encouraging to see that policymakers have not implemented any knee-jerk policies regarding the GTA housing market. Different levels of government are holding consultations with market stakeholders and TREB has participated and will continue to participate in these discussions. Policy makers must remember that it is the interplay between the demand for and supply of listings that influences price growth,” said Mr. Cerqua.
Strong competition between buyers continued to cause high levels of price growth in all major market segments. The MLS® Home Price Index (HPI) Composite Benchmark Price was up by 28.6 per cent year-over-year. For the TREB market area as a whole, the average selling price was up by 33.2 per cent, with similar annual rates of growth in the low-rise and condominium apartment segments.
“Annual rates of price growth continued to accelerate in March as growth in sales outstripped growth in listings. A substantial period of months in which listings growth is greater than sales growth will be required to bring the GTA housing market back into balance. As policy makers seek to achieve this balance, it is important that an evidence-based approach is followed,” said Jason Mercer, TREB’s Director of Market Analysis.
Done Deals: Open House Valuable Marketing Tool for German Mills Home
Special to The Globe and Mail
Published Thursday, Apr. 06, 2017
83 SIMONSTON BLVD., THORNHILL, Ont.
ASKING PRICE: $1,685,000
SELLING PRICE: $1,641,000
PREVIOUS SELLING PRICE: $379,000 (October, 1998); $357,500 (February, 1998)
TAXES: $5,589 (2016)
DAYS ON THE MARKET: 18
LISTING AND CO-OP AGENT: Elli Davis, Royal LePage Real Estate Services Ltd.
The Action: For over two weeks late last year, this four-bedroom home with an attached double garage hosted 19 private showings and a public open house. “A lot of people think open houses are a waste of time, but I decided to do it that weekend and strangely enough, [the buyers] came in, loved it and came back,” agent Elli Davis says.
What They Got: Various updates to this roughly 35-year-old residence keep it looking contemporary, yet classic. For instance, hardwood floors and mouldings grace an open dining space, entertaining area with a gas fireplace and rear family room with a walkout to the patio and garden beds lining the 60-by 138-foot lot.
For more casual activities, there is a lower level gym and recreation area with another fireplace, plus a guest room.
Cooking and cleaning is convenient with four bathrooms, including one in the master upstairs, and an updated kitchen with an island, marble floors and stone counters.
The Agent’s Take: “The appeal was the school district and Bayview country club, and it’s close to the Don Valley Parkway and 407 [highway],” Ms. Davis notes.
Done Deals: Rosedale Condo Appeals to Luxury-Loving Downsizers
Special to The Globe and Mail
Published Thursday, Mar. 23, 2017
33 JACKES AVE., No. 602, TORONTO
ASKING PRICE: $2,550,000
SELLING PRICE: $2,450,000
TAXES: $20,192 (2016)
DAYS ON THE MARKET: 60
LISTING AGENT: Elli Davis, Royal LePage Real Estate Services Ltd.
The Action: On a short street between Yonge Street and Rosehill Reservoir is a boutique building where this two-bedroom-plus-den suite had about four dozen showings spread out over two months late last year.
What They Got: In the 1980s, this mid-rise building was designed with only 28 large luxury units, with direct elevator access, an on-site pool and fitness and recreational amenities.
This 2,964-square-foot suite with a den faces the park. The living room has a hidden dry bar and the dining area is finished with herringbone hardwood floors. A remodelled Bellini kitchen with Miele appliances, granite and marble finishes also has treetop views from a balcony with a second walkout from one of two bedrooms.
Three bathrooms, laundry machines and two lockers and parking spots are notable conveniences. Monthly fees of $3,202 go toward water, heating, concierge and valet parking.
The Agent’s Take: “It’s a beautiful building – still very popular,” agent Elli Davis said. “Typically, there are four [units] per floor, each two-bedroom and dens, 2 1/2 baths, which is very sought after for boomers selling larger homes in Rosedale and Forest Hill.”
“It’s easy, one-level living with direct access to lots of services and TLC,” Ms. Davis said.
Sales Up and Listings Down in February
March 3, 2017 — Toronto Real Estate Board President Larry Cerqua announced that Greater Toronto Area REALTORS® reported 8,014 residential sales through TREB’s MLS® System in February 2017. Despite the fact that February 2016 had one more day due to the leap year day, this result was up on a year-over-year basis by 5.7 per cent compared to 7,583 sales reported last year.
“The February statistics tell me that many Greater Toronto Area households continue to view home ownership as a great long-term investment. The high demand for ownership housing we’re seeing is broad-based, with strong sales growth for most low-rise home types and condominium apartments. This makes sense given the results of a recent consumer survey undertaken for TREB by Ipsos, which found an even split between intending first-time buyers and existing homeowners who indicated that they were planning on purchasing a home in 2017,” said Cerqua.
While the demand for ownership housing grew over the past year, new listings entered into TREB’s MLS® System in February were down on a year-over-year basis by 12.5 per cent to 9,834.
The MLS® HPI Composite Benchmark Price was up by 23.8 per cent compared to February 2016. Similarly, the average selling price was up by 27.7 per cent year-over-year to $875,983. Annual rates of price growth continued to be strongest for low-rise home types, particularly detached houses. Growth rates for condominium apartment prices were also in the double digits, likely a result of strong demand from first-time buyers.
“The listing supply crunch we are experiencing in the GTA has undoubtedly led to the double digit home price increases we are now experiencing on a sustained basis, both in the low-rise and high-rise market segments. Until we see a marked increase in the number of homes available for sale, expect very strong annual rates of price growth to continue,” said Jason Mercer, TREB’s Director of Market Analysis.
Strong Start to 2017
February 3, 2017 — Toronto Real Estate Board President Larry Cerqua announced that Greater Toronto Area REALTORS® reported 5,188 residential transactions through TREB’s MLS® System in January 2017. This result was up by 11.8 per cent compared to 4,640 sales reported in January 2016. Annual rates of sales growth were higher for condominium apartments than for low-rise home types.
January 2017 picked up where 2016 left off: sales were up on a year-over-year basis while the number of new listings was down by double-digit annual rates for most major home types.
“Home ownership continues to be a great investment and remains very important to the majority of GTA households. As we move through 2017, we expect the demand for ownership housing to remain strong, including demand from first-time buyers who, according to a recent Ipsos survey, could account for more than half of transactions this year. However, many of these would-be buyers will have problems finding a home that meets their needs in a market with very little inventory,” said Cerqua.
The MLS® Home Price Index (HPI) Composite Benchmark price was up by 21.8 per cent on a year-over-year basis in January. Similarly, over the same period, the average selling price was up by 22.3 per cent to $770,745, with double-digit gains in the average prices for all major home types.
“The number of active listings on TREB’s MLS® System at the end of January was essentially half of what was reported as available at the same time last year. That statistic, on its own, tells us that there is a serious supply problem in the GTA – a problem that will continue to play itself out in 2017. The result will be very strong price growth for all home types again this year,” said Jason Mercer, TREB’s Director of Market Analysis.
Done Deals: Opening Bid Shuts Down Competition
26 McNairn Avenue, Toronto
ASKING PRICE: $1,388,000
SELLING PRICE: $1,630,000
PREVIOUS SELLING PRICE: $998,000 (2013); $845,000 (2009); $512,000 (2003); $467,000 (2001); $356,000 (1996)
TAXES: $6,632 (2016)
DAYS ON THE MARKET: One
LISTING AGENTS: Elli Davis and Shawn Venasse, Royal LePage Real Estate Services Ltd.
The Action: Around Yonge Lawrence Village late last year, house hunters often encountered bidding wars over residential real estate as soon as anything surfaced. Before that could happen at this detached house on a 25-by-121-foot lot, one of the first 10 visitors devised a strong pre-emptive offer to make it theirs within 24 hours.
What They Got: Much like the classic brick façade of this two-storey residence built in the 1930s, the interior preserves traditional elements, such as a fireplace in the living room and wainscoting around the dining area.
Contemporary additions include tile floors, marble counters and stainless-steel appliances in the galley kitchen, which opens to a family room with a skylight and walkout to a deck, patio and fenced-in backyard.
The basement is completely open with a recreation area, while the top floor is divided for three bedrooms, including one with a tandem sitting room and a master with a walk-in closet and semi-ensuite, which is the largest of two bathrooms.
The Agent’s Take: “It retained the old charm, but had nice new details,” agent Elli Davis says. “It had a large family room addition at the rear of the house, which really was the selling point of the house.”
Although this home has a garage for a vehicle, it’s also a short stroll to amenities on foot. “It’s in a great location north of Lawrence, south of York Mills, you can walk to the York Mills subway and Yonge Street shops,” Ms. Davis notes.
Done Deals: Older Condo North of Yorkville Offers Plenty of Privacy
Special to the Globe and Mail
Published Thursday December 8, 2016
225 DAVENPORT ROAD, No. 101, TORONTO
ASKING PRICE: $699,000
SELLING PRICE: $675,000
PREVIOUS SELLING PRICE: $481,000 (2006); $200,000 (1992)
TAXES: $3,357 (2015)
DAYS ON THE MARKET: 48
LISTING AGENT: Elli Davis, Royal LePage Real Estate Services Ltd.
The Action: Just a few blocks north of Yorkville, the Dakota residence often has a few vacancies. Although this one-bedroom-plus-den unit was among the smaller set, it had private outdoor space, so it was visited by 30 buyers and sold for $675,000.
What They Got: On the ground floor of a nearly 30-year-old mid-rise is this over 1,100-square-foot suite with a private patio, laundry facilities, storage locker and parking, plus monthly fees of $1,183 toward utilities, a gym, recreation room and rooftop deck.
The layout is fairly modern with a living area against a wall of windows, a central dining space and U-shaped kitchen behind a granite-topped peninsula and breakfast bar.
Private quarters entail a den and master bedroom with a walk-in closet and four-piece ensuite, which is the larger of two bathrooms.
The Agent’s Take: “[The building] is about a five-minute walk to Bloor Street and Yorkville, so it’s very well located to shops, subway and all that Toronto has to offer midtown,” agent Elli Davis states.
“It’s an older building, built in the eighties, so it’s not as glamourous as some of the new ones, but the price is very reasonable compared with the new ones.”
Plus, older suites such as this offers more space than newer counterparts, inside and out. “They don’t make one-bedrooms very often any more that are that size,” Ms. Davis notes. “It has a magnificent patio because it’s on the main floor, where you can barbecue, garden and be outdoors like in a house, yet have the condo lifestyle.”
Record Sales in 2016
January 5, 2017 — Toronto Real Estate Board President Larry Cerqua announced that 2016 was a second consecutive record year for home sales. Greater Toronto Area REALTORS® reported 113,133 home sales through TREB’s MLS® System – up by 11.8 per cent compared to 2015. The calendar year 2016 result included 5,338 sales in December – an annual increase of 8.6 per cent.
The strongest annual rate of sales growth in 2016 was experienced for condominium apartments followed by detached homes.
“A relatively strong regional economy, low unemployment and very low borrowing costs kept the demand for ownership housing strong in the GTA, as the region’s population continued to grow in 2016,” said Mr. Cerqua.
The annual rate of growth for the MLS® Home Price Index (HPI) in the TREB market area accelerated throughout 2016 – from 10.7 per cent in January 2016 to 21 per cent in December 2016. The overall average selling price for calendar year 2016 was $729,922 – up 17.3 per cent compared to 2015. The pace of the annual rate of growth for the average selling price also picked up throughout the year, including a climb of 20 per cent in December.
“Price growth accelerated throughout 2016 as the supply of listings remained very constrained. Active listings at the end of December were at their lowest point in a decade-and-a-half. Total new listings for 2016 were down by almost four per cent. In 2016, we saw policy changes and policy debates pointed at the demand side of the market. If we want to see a sustained moderation in the pace of price growth, what we really need is more policy focus on issues impacting the lack of homes available for sale,” said Jason Mercer, TREB’s Director of Market Analysis.
October Home Sales Up Year-Over-Year
November 3, 2016 — Toronto Real Estate Board President Larry Cerqua announced that Greater Toronto Area REALTORS® reported a record 9,768 sales through TREB’s MLS® System in October 2016 – up by 11.5 per cent compared to October 2015. For the TREB market area as a whole, the largest annual rate of sales growth was in the condominium apartment market segment. Detached home sales were up by 10 per cent year-over-year, driven predominantly by transactions in the regions surrounding Toronto.
“The record pace of GTA home sales continued in October, with strong growth observed throughout the month. As we move through November and December, we will be watching the sales and listings trends closely, in light of the recent policy changes announced by the Federal Minister of Finance. TREB will once again be conducting consumer survey work, in order to report on home buying intentions for 2017,” said Mr. Cerqua.
The MLS® Home Price Index Composite Benchmark was up by 19.7 per cent on a yearover- yeaThe MLS® Home Price Index Composite Benchmark was up by 19.7 per cent on a yearover- year basis in October 2016. Similarly, the average selling price for all home types combined was $762,975 – up 21.1 per cent over the same time period. Double-digit increases were experienced for all major home types for the TREB Market Area as a whole.
“New listings were up slightly in October compared to last year, but not nearly enough to offset the strong sales growth. This meant that seller’s market conditions continued to prevail as buyers of all home types experienced intense competition in the marketplace. Until we experience sustained relief in the supply of listings, the potential for strong annual rates of price growth will persist, especially in the low-rise market segments,” said Jason Mercer, TREB’s Director of Market Analysis.