Business
Excerpted from the Totonto Star
Condo sales, prices up — but rents starting to ease
Up to 20,000 new units are set to hit the GTA this year, making it a buyers’ and a renters’ market
By: Susan Pigg Business Reporter, Published on Tue Apr 15 2014
It could be the year of shrinking condo rents but surging condo “for sale” listings if the first quarter of 2014 is any indication.
Condo sales were up nine per cent in the first three months of this year over last, with 70 per cent of the 4,454 transactions taking place in the City of Toronto, according to figures released by the Toronto Real Estate Board Tuesday.
Prices in the first quarter were up 5.6 per cent, year over year, to an average of $351,213 across the GTA and $376,226 in the City of Toronto.
Realtors say they’ve seen more demand for condos the last few months as the supply of lowrise houses close to the downtown and transit lines has fallen so far below demand, bidding wars are driving prices for houses out of reach of many buyers.
Condo for-sale listings, on the other hand, appear to be headed in the other direction — up. And given that as many as 20,000 new condo units are expected to reach completion this year, more units are likely to hit the market by the end of this year, potentially driving down prices and even rents as owners look to rent or sell into an oversupplied market.
“. . . We could see stronger growth in listings in the second half of 2014 as some investors choose to list their units for sale. If this occurs, buyers would benefit from more choice in the marketplace and thus could have more negotiating power with regard to price,” said Jason Mercer, TREB’s senior manager of market analysis.
Already there are some signs that rents may be softening for investors choosing to offer up their units to the growing number of young people, and downsizing baby boomers, looking to live and work in or close to the downtown core.
Condo rental transactions were up 17.8 per cent in Q1 of 2014, year over year, but the total number of listings surged by 27.7 per cent as more investor-owned condos came to completion.
As a result, the rent for a one-bedroom unit in the GTA declined by 1.6 per cent, to $1,573 per month in the first quarter. Rents can run closer to $1,800 in the downtown core. One-bedroom units accounted for 60 per cent of all condo rentals.
Two-bedroom units, which are seeing some increase in demand among young people looking to share the hefty rents, saw rents increase 1.9 per cent in the quarter to $2,155. Two bedrooms accounted for 60 per cent of all condo rental transactions in the first three months of 2014, according to the TREB statistics.
Photos View photos
zoom
The towering brick house on Galley Ave. has the dubious distinction of being among the best — and absolute worst — houses for sale in Toronto right now.
It’s grand in both size and location: a five-bedroom, three-storey detached house within an easy stroll of sought-after Roncesvalles Village.
Realtor Chander Chaddah, who listed the home for $649,900 and has set a 4 p.m. Wednesday deadline for offers, is brutally frank with anyone thinking they’ve tripped across a big bargain.
“Please leave the kids at home when coming for a visit,” Chaddah warns right on the MLS listing. “Not for the faint of heart.”
The furnace hasn’t worked in years. Windows are missing. The roof needs replacing. The wiring is knob and tube.
Yet hundreds of curious folks — many of them desperate to get a toehold in the Toronto market — have fought back their shock the last few days and scaled the steep stairs to the third floor, past the peeling faux-wood wainscotting, the soot-smeared kitchen and the bathroom where plastic, duct tape and thumbtacks lost their battle long ago against a badly leaking roof.
(It could have been much worse if it wasn’t for kindly neighbours who got the elderly resident help and then filled two massive renovation bins with mouldy contents before she and her daughter put it up for sale.)
The house needs a gutting and about $400,000 in renovations to remove the layers of soot spewed from kerosene heaters used to keep the place warm in winter.
Realtors are warning clients the house could go for $750,000 to $800,000, given that spiffed-up neighbours have sold for well over $1 million.
“We may get more than a dozen offers here,” says Chaddah, in the wake of a 32-person bidding war that recently drove a Junction Triangle home to $210,000 over the $639,900 asking price.
“There are two types of houses that have the potential to blow the roof off in this market — the (renoed showcase) Martha Stewart house and the other end of the spectrum, Galley Ave., which is raw and needs everything.”
What makes homes like this particularly unpredictable is that they will draw two competing buyers: “End users” willing to spend what it takes to put down roots in desirable neighbourhoods close to the core, and contractors searching for increasingly rare raw material in the city, rundown houses in need of saviours.
“There was a time when you could go in houses like this every week,” says Chaddah, a Toronto realtor for almost 30 years. “Now these houses are few and far between.”
The old real estate axiom “location, location, location” doesn’t mean what it used to in a Toronto market that’s become a magnet for young professionals and families looking to ease their commute to work.
“Now we’re seeing there really are no bad locations in Toronto. There are just some locations that are more desirable than others,” says east-end realtor Desmond Brown.
Designer Alex El-Asfahani and her contractor brother Oliver Wigington have turned their passion for properties in need of a complete gut and a critical eye into both a business model and a spectator sport via the Facebook site for their year-old company, ModernKind Inc.
So far, they have bought, renovated and sold two east-end homes — one on Ivy Ave., the other on Ashdale Ave. — and are finishing a third home, on Logan Ave., which will go on the market in April.
“We don’t like to think of ourselves as flippers, what we do is transform houses,” says El-Asfahani, who believes breathing life into overlooked homes breathes new life into whole neighbourhoods, too.
She admits it is a risky strategy — one that makes even her realtor nervous: “I’m just looking for houses that have soul. I think we’re at the point in the city where the dream home … is eroding because there are fewer and fewer homes that can offer all that in (what’s considered) a great area.”
But renovating is no bargain, El-Asfahani stresses, part of the reason she and her brother post many of the gritty ups and downs of their renos on Facebook.
They paid over $600,000 for the Ivy Ave. house, in the Greenwood and Gerrard St. E. area, when you factor in land transfer and other upfront fees. It cost well over $265,000 to rebuild from the inside out.
But it drew so many interested buyers, many of whom had never been to the east-end neighbourhood before, it sold for a price that shocked even their realtor — $912,000 — a record for the area.
