Buyers in the GTA have been rushing to buy before new mortgage rules come into effect on Canada Day.RIGHT AT HOME REALTY INC
“Fear of missing out” has returned to the Toronto-area real estate market – with first-time buyers in particular in its grip.
Manu Singh, an agent with Right at Home Realty Inc. in Toronto, says buyers in the Greater Toronto Area have been rushing to buy before the new rules come into effect on Canada Day.
“This hit the entry-level market big time,” he says. “People are making a push for that July 1st deadline.”
Other factors driving the action include parents who are wagering it’s a good time to help their children jump into a less competitive market, and buyers seeking to move outside of the city.
The new rules come from Canada Mortgage and Housing Corp., which is establishing tougher criteria for buyers who need mortgage insurance.
Unit 520 at 150 Sudbury St., at the Westside Gallery Lofts in the Queen West neighbourhood, sold for $560,000, or $61,000 above the asking price of $499,000.RIGHT AT HOME REALTY INC
CMHC will no longer allow borrowed funds for a down payment. It will also require borrowers to have higher credit scores and lighter debt burdens than in the past.
What the FOMO frenzy sidesteps is the reason for the higher bar: CMHC chief executive officer Evan Siddall has cautioned that the Crown corporation’s actions are needed to protect home buyers, reduce government and taxpayer risk, and support the stability of the housing markets while curtailing excessive demand and unsustainable price growth.
Mr. Singh has seen the shift in mood first-hand: He recently fielded three “bully” offers for a condominium apartment at the Westside Gallery Lofts in the Queen West neighbourhood.
Unit 520 at 150 Sudbury St. sold for $560,000, or $61,000 above the asking price of $499,000.
Mr. Singh says he listed the one-bedroom-plus-den with an ultralow asking price in order to attract lots of eyeballs. Condo sales in the area had slumped while the city was in lockdown.
Manu Singh, an agent with Right at Home Realty Inc. in Toronto, says he listed the one-bedroom-plus-den with an ultralow asking price in order to attract lots of eyeballs.Urbanis Property Group
“We did have some caution going into the listing because those weren’t moving,” he says. “They were just sitting on the market.”
The vacant unit was painted and cleaned, then Mr. Singh listed it with an offer date set for two weeks later. Typically offers are reviewed after one week, but he wanted potential buyers to have two weekends to see the unit.
He was surprised to receive a bully offer soon after the unit arrived on the market. The seller rejected that one, only to have another preemptive bid land three days later.
Once again Mr. Singh notified all of the agents and buyers who had booked showings or expressed interest in the unit.
This time, the original bully came back with an unconditional offer and the unit was sold.
“I’m seeing a lot of multiples,” he says of the action in that price range.
Condo sales in the area had slumped while the city was in lockdown.RIGHT AT HOME REALTY INC
He says condo units up to the $699,000 mark are selling quickly. Recent data show that 70 per cent of condo sales in Toronto in May were in the $400,000 to $699,000 range.
The agent says many of the buyers appeared to be keen to strike a deal before the end of June.
Looking ahead, Mr. Singh expects to see more listings. Many owners have been using the shutdown to declutter and paint, he says.
“Sellers are more comfortable that they will get some traction,” he says. “Also they’ve spent time preparing.”
For renters, meanwhile, the monthly cost of renting a condo unit has dropped significantly in Toronto, says Mr. Singh.
For renters, the monthly cost of renting a condo unit has dropped significantly in Toronto.RIGHT AT HOME REALTY INC
Mr. Singh manages rentals for one client with a two-bedroom, two-bathroom condo unit on Toronto’s waterfront. Last year Mr. Singh was able to lease the unit for $3,000 a month.
This year the unit came back on the market in a softer market so Mr. Singh set the monthly rent at $2,850. There was almost no action on the listing, he says, so he recently reduced the price to $2,750.
Mr. Singh says some landlords have become very cautious about who they’re willing to take on as a tenant since evictions have been halted during the pandemic.
Also, some buildings have recently introduced a rule that two unrelated people are not allowed to share a unit, Mr. Singh says. He says it has been common in the past for young professionals living downtown to split the rent with a roommate.
Mr. Singh says many buyers are looking outside of the city because Toronto buyers face a double land-transfer tax. In other parts of Ontario, buyers only pay the provincial land transfer tax, so suburban communities such as Mississauga and Durham have become particularly hot.
Shawna Tool, district manager at Right at Home Realty in Barrie, Ont., has sold properties this month to buyers craving space – especially outdoor space.
“My last three buyers have come from the Toronto area,” she says.
Ms. Tool says some buyers are looking beyond Barrie, where prices have steadily risen, to smaller communities such as Angus, Midland and Udney.
In Angus, she sold a three-bedroom house on a large lot. The house was listed with an asking price of $484,900 and sold for $480,000.
A four-bedroom house in Midland sold for the full asking price of $424,900, she adds.
One mother homeschooling her three children told her, “I just need a backyard,” Ms. Tool says with a laugh.
“The houses that have sold much faster and have gotten more attention are the ones that are sitting vacant,” she adds.
In Barrie, listings are swelling, she says, with 38 properties arriving on the market in 24 hours one day this month.
At the moment, it’s a seller’s market, says Ms. Tool, who was recently working with two sets of buyers trying to beat the July 1st CMHC deadline.
Mr. Singh says some city dwellers do covet more space and a backyard, he says, and for them the pandemic and the work-from-home culture it has ushered in may hurry their plans along.
Still, he believes downtown real estate will always be in demand.
“Cities have always bounced back,” he says. “In my particular database I don’t see people pulling the trigger and buying a cottage.”
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