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Demand for downtown Toronto condos heats up

Special to The Globe and Mail

For people vying to get into Toronto’s real estate market in January, it seems that patiently waiting for the quintessential three-bedroom house was not part of the plan.

Once again, sales of condo units outpaced those of homes low to the ground.

Real estate agent Geoffrey Grace of ReMax Hallmark Realty says some condo bidding wars attract as many as 15 to 17 contenders.

Some of Mr. Grace’s clients have been looking in the Queen and King Street West areas, where the fervour is particularly strong.

The demand for condos in these areas has just blown up, with prices keeping pace, Mr. Grace says.

In one case, a unit in a building near King West and Niagara Street sold for $25,000 more than a unit with the same layout sold for just the week before. The unit that sold for less was one floor higher and also had parking, which Mr. Grace estimates should have been worth $40,000 right there.

His clients missed out on the first unit when a bidding war erupted after it was listed with an asking price just below $500,000. When the second one landed on the market, he took his clients to see it immediately – with a cheque and a written offer in hand.

“If you like this, we have to make an offer right now,” he advised them. His clients decided to pass but as he was driving back to the office, Mr. Grace received a call from the listing agent informing him that a bully offer had arrived.

Over the past three weeks or so, suites in the stretch between Spadina and Strachan Avenues have been selling for an average of 108 per cent of their asking price, he estimates.

According to the latest numbers from the Toronto Real Estate Board, sales in the Greater Toronto Area market jumped 11.8 per cent in January compared with the same month last year.

Condos changing hands in the resale market soared 26.7 per cent in January compared with a year earlier. The action was equally split between the 905 and 416 area codes.

Detached houses, meanwhile, only saw sales increase 7.8 per cent and most of that action took place in the 905; sales of detached houses in the 416 actually dipped 5.5 per cent. Townhouses and semi-detached houses also lagged condo suites in sales.

The momentum in prices sheds some light: The price of a detached house soared 26.3 per cent in January compared with January, 2016. The price of a condo apartment in the same period swelled 14.5 per cent.

New listings across all types of housing shrivelled 17.6 per cent last month compared with a year earlier.

Mr. Grace says rules surrounding mortgage insurance and financing are making it harder for some buyers in the segment above $500,000.

House prices have shot up so much, he says, that $500,000 to $650,000 has become a condo range. Not so long ago, buyers could find a pleasant starter home in that tier, but now they don’t want to settle for houses that come with that price tag.

“If you’re looking at a house, it’s going to be a rundown two-bedroom on a major street.”

A condo in that price range, on the other hand, is going to be a nicely finished suite – possibly within walking distance of downtown.

Mr. Grace sat down with one client in his late 20s to talk about his goals. He advised the young man to invest in a property with three units a little farther out from the core. Live in the basement and rent out the other two, he recommended. That way the mortgage and expenses would be covered by the rent and the client could move up to one of the other units when he felt more financially comfortable.

The young man agrees the plan makes financial sense, but he can’t resist the appeal of a two-storey loft with concrete and glass.

“He just didn’t buy into the lifestyle,” Mr. Grace says of the landlord-in-the-basement idea. “It’s a really boring, unattractive strategy.”

On another note, in last week’s column I reported on a talk given by Royce Mendes, senior economist at Canadian Imperial Bank of Commerce, in which he laid out some of the risks to Canada’s real estate markets. One of those risks concerns household-debt levels in this country. To clarify, Mr. Mendes believes Canadian households are as indebted as their U.S. counterparts were before that country’s housing market slid into decline in 2008. He says the quality of the debt in Canada is better, however, because the United States saw a lot of credit flowing to people who didn’t have access before

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Move over Toronto, Mississauga has its own condo boom

Rogers family’s M City project promises to be a defining landmark for city’s downtown

Just west of Toronto, the City of Mississauga is experiencing its own condo boom, with such projects as the Absolute Towers, Pinnacle Grand Park, Limelight, and many more.

It may well be an affordable alternative to buyers who can’t find what they’re looking for in Toronto.

Mississauga is Canada’s sixth largest city, and it’s about to get larger. The city issued 3,700 building permits last year, with a construction value of $1.3 billion dollars, and it doesn’t look to be slowing down. A report titled Our Future Mississauga was presented to council last June and addresses the city’s strategic master plan.

In it, there’s talk of density, of highrise development, transit and waterfront development, both residential and commercial. There’s a lot in play here, and a clear goal of these initiatives is to establish a distinct downtown region.
The big news is the recent announcement of M City, a 1.5-billion-dollar mega-project spearheaded by Rogers Real Estate Development. The mammoth, master-planned community will consist of 10 towers with upwards of 6,000 residential units. The 14-acre property was originally purchased in 1963 by the Rogers family to be the site of a transmitter tower.

Soaring 60 storeys from the corner of Burnhamthorpe Road and Confederation Parkway, M City’s flagship tower promises to be a defining landmark for Mississauga’s downtown core and the city’s tallest building.

Urban Capital Property Group was selected to lead the development of the first phase of M City. Partner and urban planner Mark Reeve tells Metro that this is the Rogers family’s first endeavor into condos, and the site has been sitting vacant for a number of years.

“What really triggered some interest in doing something with the property was the city’s initiative with their Downtown 21 plan.”

“The development is oriented around a two-acre central park concept with a parkway link to the north end. There is a green belt system that wraps the downtown core that this development fits into and contributes to.”

Reeve says that M City is much more affordable than anything you’ll find in downtown Toronto.

“The project has a range of product types and sizes to meet a broad segment of the market. We’ll have a starting price point of just under $200,000 for a one-bedroom unit, but we’ll have larger, family-oriented, three-bedroom units as well.”

Sales are estimated to commence in March and there’s a presentation centre currently under construction.

toronto-real-estate-2015

Kitchener house prices linked to GTA spillover effect, says CMHC

Commuter reach now extends past Kitchener-Waterloo and Guelph into St. Catharines-Niagara

CBC News Posted: Jan 24, 2017 3:28 PM ET Last Updated: Jan 24, 2017 3:28 PM ET

High house prices in the Greater Toronto Area are spilling over into nearby markets, especially those within commuting distance, according to the latest report from Canada Mortgage and Housing Corp.

The average house price in Kitchener-Waterloo is now just under $500,000.

But the GTA effect on housing markets may be expanding farther afield than Kitchener, Guelph and Hamilton.

Historically, prospective homebuyers who have found themselves priced out of the GTA have migrated to Hamilton, Barrie and Guelph to buy single-family homes, according to CMHC.

And market valuations in these nearby cities are linked to prices in the GTA, the report shows.

Prices

Prices in the GTA and surrounding areas tend to move together, a CMHC graphic shows. (CMHC, based on the Canadian Real Estate Association seasonally adjusted prices)

The federal housing agency now notes that recently people have been moving even farther out, especially to the St. Catharines-Niagara region.

As the price of low-rise homes in the Toronto area has soared, house prices in nearby communities like Hamilton, Barrie and Guelph have also been driven up, said Jean-Sebastien Michel, principal of the market analysis centre at CMHC.

According to CMHC, Hamilton – roughly 70 kilometres from Toronto – is the Ontario market that’s most sensitive to housing prices within the Greater Toronto Area.

The report estimates that a one-per-cent change in GTA house prices could increase or decrease Hamilton prices by two per cent after three years.

cmhc-ontario-gta-price-shock-2017

Source: CMHC, based on CREA and Statistics Canada (Canada Mortgage and Housing Corp.)

A $10,000 change in GTA house prices could translate to about $17,000 in Kitchener and Guelph after three years, the report calculates.

Tim Hudak, CEO of the Ontario Real Estate Association, says the lack of supply is the main factor behind soaring detached home prices in the GTA.

“The best way to ensure young families and first-time buyers have a shot at buying a home is by putting more homes on the market,” Hudak said in a statement.

“One way to increase housing stock is to allow developers to build more ‘missing middle’ housing types, like townhomes, duplexes and stacked townhomes. Increasing the housing stock is necessary to give buyers more options at affordable levels, in areas that make sense for them to be in.”

With files from The Canadian Press