Some pockets still warm as real estate market cools
Prices jump in Trinity Bellwoods, Leslieville and Old Mill, fall in Richview, Graydon Hall
By Carolyn Leitch – Globe and Mail
Blustery winter weather cooled the Toronto real estate market in the first three months of the year, but pockets such as Old Mill and Trinity Bellwoods stayed sheltered in their own hothouse micro-climates.
Meanwhile, most of the rest of Toronto saw more tepid price increases or – in some cases – outright declines.
Across the Greater Toronto Area, the average price increased 4.5% to $379,006 in the first quarter, compared with the same period last year, according to data from the Toronto Real Estate Board.
The number of single-family homes that changed hands dipped to 17,521 in the first three months of 2008, compared with 20,463 transactions in the same period last year.
Amid the art installations and retro lounges of Queen Street West, real estate prices in the urban Trinity Bellwood neighbourhood jumped 29.4% in the first quarter, compared with the same period last year.
To the west, prices in the Old Mill area near the banks of the Humber River rose 13.2% from the same time last year.
And to the east, Scarborough Village was the hot spot, with the average price up 11% over the average in the first three months of 2007.
Meanwhile, the chill that permeated the Toronto real estate market in the opening months of 2008 appears to have continued into the spring: The GTA resale housing market saw 3,955 homes change hands in the first half of April, down 5 per cent from the same period last year, the Toronto Real Estate Board reported.
On a seasonally adjusted basis, existing home sales in Canada’s major markets in the first quarter of 2008 declined by 7.1%, compared with the previous quarter, and by 10.6% from the same period the previous year, to 81,747 units, the Canadian Real Estate Association reports.
Changes in the average resale price in Toronto varied widely by neighbourhood.
Toronto pockets where the average price fell include Richview, with a slide of 14.3%, Armour Heights with a 33.8% tumble, Graydon Hall with a 41.2% decline and Lawrence Manor with a 21% fall. In the east end, L’Amoureux fell 7.23% while Leslieville jumped 21%.
Price changes were recorded across the price spectrum: In the tony market of Forest Hill, for example, the average price fell 25.1% to $825,439.
But with so few houses changing hands in the first quarter, one house can skew all of the numbers, says one Toronto real estate agent.
He says that houses that are in good condition and priced well are still selling quickly. But like many agents, he’s a bit mystified as to why more sellers aren’t putting their houses on the market.
Mr. Johnston says the changing market conditions and recent gloomy newspaper headlines may have people feeling skittish about choosing the right time to list their property.
“People aren’t quite certain, so they hold off.”
He advises clients to list at a price that they would be willing to accept because they might not get the bidding wars that pushed prices far above the asking price in previous seasons.
He points out that that strategy is always risky anyway, because other houses nearby could come on the market at the same time. Suddenly, if three houses are competing for buyers, the potential for multiple bids is reduced.
“Even in a strong, strong market, you never know.”
He expects the Toronto housing market to remain fairly robust. “Interest rates are low, the Toronto economy is strong and there are still people with money out there, so there’s really no reason for it to deflate just yet.”
Scarcity at the high end
Another Toronto real estate agent says she is not seeing a lot of houses coming up for sale at the high end of the range – $2-million and up.
“We definitely have buyers looking, but we don’t have a lot of product.”
She speculates that many of the hold-out sellers may be middle-aged homeowners who have bought condominiums in some of the high-end projects going up in Toronto. Since the buildings won’t be finished for a couple of years, those owners may be holding on to their houses until the new condo is ready.
Other potential sellers may be worried about the stock market, she suggests. If they are feeling uncertain about financial markets, they may decided to hold on to their solid, bricks-and-mortar asset.
She adds that prospective buyers who are shopping at the high end of the market are looking for houses that are renovated and fluffed. “If it’s all done up, it doesn’t last long.”
She says she advises clients who are selling to set a realistic asking price, no matter the market conditions. She recommends against setting an artificially low price in order to engender a bidding war. “You should never list your house at a price you wouldn’t accept.”
Taxes, blizzards to blame
Many Toronto real estate agents are quick to point out that there was a flurry of activity in the early part of the year as buyers scrambled to avoid paying the new Toronto land-transfer tax before it came into effect.
Then there was a lull when people who were miffed at the tax dropped out of the market.
Most people are over the tax now, because buyers will pay it if they can afford it.
The problems for Toronto real estate agents were compounded by the blizzards that regularly blew through Toronto and left mountains of snow on the streets. People who want to pop into an open house often pull their vehicles up on the sidewalk, he notes.
The better weather has brought increased activity but still not the kind of frenzy seen in the past.
Many houses have been listed with offers to be accepted at a set time and date. Even when bids roll in above the asking price, vendors sometimes reject them because they’re not far enough beyond the asking price. Those sorts of tactics are frustrating for potential buyers — especially if they’ve paid for a home inspection and find their bid rejected.
Prices can’t rise forever
A good recommendation is that sellers list their houses with the lowest asking price they would be willing to accept. If they see more than that, then it’s a bonus.
Many Toronto real estate agents are glad to see an end to the dizzying bidding wars of the past. They couldn’t keep going up the way they were – that was just out of control. One hundred thousand over asking was not uncommon in some of the more extreme contests.
Still, there are a lot of prospective buyers out there who are eager to own real estate. It’s a very interesting market for everybody because nobody can really put their finger on what is going on.
LEADING NEIGHBOURHOODS FOR 2007
Here’s a look at some of Toronto’s real estate hot spots, in terms of percentage change of average resale house prices, 2007 vs. 2006.
* Avg. 2006 price: $362.211
* Avg. 2007 price: $442,665
* Percentage change: 22.21%
Old East York:
* Avg. 2006 price: $398,662
* Avg. 2007 price: $457,346
* Percentage change: 14.72%
* Avg. 2006 price: $287,0591
* Avg. 2007 price: $322,605
* Percentage change: 12.38%
* Avg. 2006 price: $876,500
* Avg. 2007 price: $1,404,214
* Percentage change: 60.21%
* Avg. 2006 price: $1,390,375
* Avg. 2007 price: $1,970,910
* Percentage change: 41.75%
* Avg. 2006 price: $529,527
* Avg. 2007 price: $697,679
* Percentage change: 31.76%
* Avg. 2006 price: $231,796
* Avg. 2007 price: $280,070
* Percentage change: 20.83%
* Avg. 2006 price: $368,089
* Avg. 2007 price: $440,590
* Percentage change: 20.78%
* Avg. 2006 price: $414,338
* Avg. 2007 price: $485,096
* Percentage change: 17.08%
Source: Realosophy.com, Toronto Real Estate Board
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