It’s a tale of two housing markets in the Toronto area as Canada’s biggest city gears up for the crucial spring selling season: sales of big detached homes are slow, while condo deals are booming.
On one side are people like Karen Berends, who put her $1.5 million house back on the market in nearby Oakville this month after two failed attempts to sell in the past year. She reduced her asking price by about $51,000, but still there are no takers, and she’s kicking herself for not cashing out last spring when the market was in a frenzy.
“We could’ve walked away with a really good amount of money in our bank account if we had taken the money last year, but our head wasn’t in it at that point,” Berends told Bloomberg. “It’s been a complete 360 this time around -- it’s absolutely dead.”
Then there’s Beth O’Donoghue, a sales representative at Brad J. Lamb Realty Inc., who says the market is as hot as it’s ever been. Her clients recently lost out in three separate condo bidding wars in a week, including one with 11 offers. That’s convinced O’Donoghue, who’s invested in four new condos herself in the city in the past four years, to hold onto her assets for now.
One she bought in pre-construction for $420,000 and figures she could sell for close to $700,000. “If you would have told me three years ago when I bought this place that I would’ve made this much money on it already, I would have said you’re crazy,” she said.
Read more: Toronto’s most expensive condos breach the $1,000/sf mark
After a decade as one of the world’s hottest housing markets, Toronto is moving in two directions. Transactions have certainly cooled since May as the government introduced new rules to tame runaway prices. But the impact has been largely on big, expensive detached homes, with sales plunging 41% in February from a year earlier, and prices dropping 12% since hitting a record last year. Condo prices, in contrast, soared about 20% since last February.
The deviation is largely as a result of mortgage regulations that went into effect on January 1 as well as rising interest rates. The new rules have seemingly pushed buyers out of the detached segment and right into the condo market.
Real estate agents and economists are expecting some stabilization in the detached market as the spring selling season swings into full gear, but the price spikes of last year are probably history. The condo market is likely to keep chugging, bolstered by millennials in high-paying technology and financial jobs, strong immigration, and pinched supply, according to Bank of Montreal economists.
“Spring will probably take a little more time to get going than years past, but there’s so much demand in the marketplace as Toronto continues to attract people around the country and the globe,” according to Christopher Alexander, regional director at real estate firm Re/Max Integra.