The Toronto area’s high-priced housing market is climbing again, with double-digit sales gains this summer expected to continue through the fall, according to two real estate company reports.
Sotheby’s International Realty Canada says the fall luxury market will run “at full throttle” now that the Toronto region has shaken off the malaise of “a very dark period” following the Ontario Fair Housing policy and new mortgage rules.
“We expect the market is going to continue to get stronger. After we turn the clock to 2019 you’re going to see year-over-year comparisons continuing to be very strong,” said CEO Brad Henderson.
He expects upward pressure on prices to continue in the Toronto area, gaining in the range of 3 to 4 per cent through the fall.
The Toronto Real Estate Board reported year-over-year price increases of nearly 5 per cent across all re-sale home categories in July and August.
The company defines luxury as homes more than $1 million, which is actually below the City of Toronto’s August average detached house price of $1.24 million. The number of single-family homes that sold for more than $1 million in the City of Toronto in July and August rose 12 per cent. Across the Toronto region, sales climbed 20 per cent. The number of sales may have been hampered by a shortage of listings, particularly in the $1 million to $2.5 million price range, said Sotheby’s.
Henderson predicts high single-digit or low double-digit year-over-year growth in 2018, particularly in the more costly downtown areas where buyers are again competing for properties.
“A lot of people are wishing they had bought towards the end of spring this year because now as the demand is continuing to rise and price pressure is continuing to rise with it, they’re finding prices are starting to move in the upward direction. It’s moving away from what people might have thought was a buyers’ market,” he said.
It isn’t the kind of bidding frenzy common in early 2017. Back then five or 10 offers on a house was common compared to two or three offers now. But Henderson said it is enough to prompt the two or three people who didn’t win that bidding war to bid higher on the next one in order to try and secure the property.
Even the relatively small super-luxury category — defined by Sotheby’s as homes $4 million and up — is gaining ground, with 72 sales in that range moving this summer. That is a 35 per cent increase in sales in the Toronto region and 50 per cent above last year in the City of Toronto.
High-priced condos also saw significant sales gains in the summer as buyers favour urban lifestyles with a 28 per cent rise in sales over $1 million in the Toronto area and 21 per cent in the City of Toronto.
Re/Max reported that entry-level detached houses priced between $600,000 and $900,000 also saw 22 per cent sales growth since June. It suggests that the shortage of inventory for those homes in the City of Toronto could push some buyers to expand their search to the 905-area communities, where the housing recovery has been slower. Move-up buyers ready to cash in their equity are expected to take advantage of softer conditions at higher price points, says the report.
The Toronto Real Estate Board warned earlier this month that tight market conditions could lead to accelerated price gains as there is a shortage of homes to buy in some Toronto neighbourhoods.
A shortage of new construction homes in the Toronto area is contributing to the tight re-sale housing market, said Henderson.
The Toronto activity is in direct contrast to Canada’s other high-priced housing market in Vancouver, he said. That city’s “fragile recovery… got knocked on its back,” by an expanded foreign buyers tax and a speculation tax, said Henderson. Vancouver sales in homes over $1 million dropped 24 per cent year-over-year this summer and $4 million-plus sales were down 33 per cent.