No cooling in sight for sizzling home market, says real estate association
The Toronto area’s hot COVID housing market is helping lead record home sales across the country and throwing heat at smaller Ontario centres — a trend that’s expected to continue through the year.
On Monday, the Canadian Real Estate Association (CREA) reported that Kitchener, Barrie, Hamilton and Niagara saw February home prices soar between about 25 and 30 per cent year over year — and it predicts a 16.5 per cent national price increase this year with no cooling until 2022.
In the GTA, where resale homes rose 15 per cent year over year in February, and suburban detached houses were up nearly 30 per cent that same month, realtors are reporting fierce buying competition and clients struggling with fatigue of bidding wars and bully offers.
It’s tough on both sides of home transactions in the current environment, said Toronto Royal LePage Signature Realty agent Sohail Mansoor, who recently sold his own Riverdale semi. The two-storey home listed for $1.7 million and elicited more than 100 viewing appointments. Within a week there were 16 offers culminating in a $2.24-million sale.
“That just shows you it’s not just at the lower price points,” he said.
Two years ago, sales were concentrated in the $1-million range. Now, even at closer to $2 million, there is huge demand, said Mansoor.
Re/MAX Integra chief strategy officer Christopher Alexander noted unprecedented competition last week when a $6-million Etobicoke home attracted 12 offers. At least one of them was $300,000 above the asking price.
“I have not heard of activity like this in such a high price point,” he said.
“It’s a very challenging market right now unless you’re a seller. Even for sellers it’s challenging because if they’re going to move within the city they’re in the same position as everybody else,” said Alexander.
Depending on how well the vaccine rollout goes, he said Toronto home prices could be on a similar trajectory as last year when the spring market was pushed to summer following the first pandemic lockdown.
Alexander predicts a resurgence in downtown real estate, he doesn’t think the people who moved out of the city will come rushing back — and that’s not necessarily a bad thing.
In Kitchener-Waterloo, where prices rose 26.8 per cent year over year last month, Alexander said prices are catching up to the value of the city’s reputation as a tech hub, its burgeoning industry and quality of life.
But locals there aren’t necessarily thrilled, said Faisal Susiwala of Re/MAX Twin City in Kitchener. The GTA exodus predates COVID-19 but has accelerated since the pandemic made a persuasive argument for letting people work from home, he said.
Susiwala said he catches flack on social media when he posts news of sales above asking prices.
“There’s a lot of resentment,” he said. But there’s another side — people who sacrificed to own their homes are realizing gains from their investment.
Susiwala said he has joined the Brampton Real Estate Board to encourage realtors there to get their clients to consider Kitchener. He said his clients hire him to get the best possible price for their homes so he goes where the money is and that’s the GTA.
For $600,000 to $700,000 you can buy a three-bedroom townhome in Kitchener — about 35 per cent less than the GTA price, said Susiwala, who runs Google ads that say, “Drive 35 minutes, save $350,000.”
But market conditions will change, he said: the number of homes listed on the local market is already up significantly this month.
Mansoor suggested that in Toronto, buyer fatigue comes in waves. House-hunters who have been looking since 2020 have probably faced the disappointment of losing a bidding war.
“They’re probably kicking themselves because we’ve seen a very quick escalation of prices since October or November of 2020,” he said.
It’s the first-time buyers that are feeling the greatest pinch as prices accelerate, he said. One couple that was financially equipped to begin their home search in November waited, he said, until they were mentally ready to search for the right home. Now, houses in their range of $900,000 to $1 million have jumped between $150,000 to $200,000.
“Some buyers are saying, ‘What happens when COVID is behind us and immigration restarts and schools are back to full capacity and people are back to the city?’” he said.
There are people bracing for the market to continue climbing, said Mansoor. Others believe that interest rates will rise and buying activity will slow.
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