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Premium Homes

Premium prices for high end turn key homes on premium lots in premium locations. There are not too many homes in the city that have it all and it appears that the ones that do are getting record prices. Last week a home in Baby Point was listed for $8.5 mill and in 3 days attracted 3 bids selling for $9.6 mill. It had a fabulous ravine lot with a large tableland. The house was beautiful and the landscaping was spectacular. This is for sure a record price for the area and shows that if you do it right buyers appreciate it. The cost of building and renovating is so high now and takes so much time that turn key is worth paying up for in some buyers eyes.

Luxury Cottage Rentals

Luxury cottage rentals readjusting post pandemic. When the pandemic started and no one could travel demand for cottage rentals surged. Demand was so high that prices more than doubled. Many who never wanted to own cottages because they wanted to travel bought cottages so prices surged. Now stuck carrying these cottages with higher carrying costs due to inflation and increasing interest rates, cottage owners are trying to subsidize with renting. Also, people are travelling. Hence less demand for rentals, more supply and readjustment of prices.

We will see how many cottages come for sale as those who are not really cottage people decide that owning a cottage is just too much work and too expensive. It’s not for everyone.

Foreign Investors

Will the hot housing market be less hot without foreign buyers. The Liberal government has announced that it will ban foreign investors from buying homes in Canada for two years in order to cool off the hot housing market. In addition the government announced higher taxes for those who sell homes within 1 year. There are many exemptions to this rule and one may surmise that foreign buyers will use loopholes. This rule could potentially affect condo sales especially new construction where foreign buyers have often put their money. Toronto and Vancouver are 2 places that may be affected as foreign buyers like to put their money in these cities. Canadians do need housing for their own. We will see how these rules work to help.

Early Spring Market

Beginning of spring market in Toronto appears to be busy. We are seeing more homes come out. World instability has perhaps pushed those who were thinking of selling to sell. Potentially rising interest rates may also push buyers to buy. Inflation is definitely on its way up and will have to be addressed. Here is the thing – we have no idea what will happen. Any attempts at forecasting are speculative at best.

Real Estate Teams

The concept of having a real estate team has grown in popularity in the past number of years. There are many reasons why it makes sense to hire a team. Firstly, there is always someone there to service the client for whatever need they may have. Agents who are good are busy and it is really hard to be everywhere at the same time. A team who has specialized people for each category is able to move fast and efficiently. There is someone handling home preparation, staging, social media, and advertising. A team can handle all of a clients real estate needs whether it is buying, selling or leasing. We become a group of consultants who are able to service families of different generations with all their needs.

On the other side, younger less experienced agents are able to be mentored by more experienced agents. It is a win win for everyone to hire a team.

House of Cards

Over thirty years ago my grandmother told me that a good friend of theirs who had been very successful in buying and selling real estate said: “Toronto is built on mortgages. If I don’t have a mortgage I’m not making money.” So many years ago he was before his time. Today, the concept of making money on having a mortgage has never been more true.
In many cases buyers are not really thinking about paying off the mortgage when they buy. They are thinking more about borrowing (and in most cases borrowing a lot) to live where they want, then possibly upgrading, and then eventually selling when they need. Or, homeowners are taking equity out of their homes to invest and making money off other investments. Older parents in expensive homes are taking equity out in order to help their kids buy real estate. It appears that everyone has a mortgage. The low cost of borrowing and low inventory are driving prices up in a sharp line. The question is – how sustainable is this and is this a house of cards that will eventually topple over.

Living Outside of Toronto

Desire to live out of the city does not appear to be waning. With the world slowly opening up, outlook on life has changed for many. Those able to work remotely and who had places to work out of the city opted to work there for extended periods of time. A good number decided that they actually liked it and preferred living in country serenity with outdoor activities –  therapeutic for those with stressful jobs. Hence popular areas like Collingwood/Thornbury continue to see growth and increasing prices. That doesn’t appear to be ending. The world has definitely changed. Hopefully those quiet country oasis continue to be just that.

Lack of Inventory

Lack of inventory sparks big bidding wars on homes. A couple of weeks ago we listed a house for $998,000 which was in keeping with sales in the area. The house was very nicely renovated with an addition. There was significant  attention paid to detail and renos were very tasteful. In general the house showed 10 plus. 23 buyers wanted to buy it. In the end the home ended selling for over $420,000 over list and there was a fight for it with the top bidders. We believe that a few factors came into play:
1. Pent-up demand by first time home buyers many of whom have lost in bidding
2. Renos are now very costly and time consuming. Pandemic has doubled cost of renovating and lack of supplies have made it a very frustrating process.
3. it’ s not that easy to find a nice house.
We believe that the market will continue to reflect these factors.

Development Policies

Development related policies coming to City of Toronto. With housing a major issue in Toronto here are a couple of policies and changes coming.
Areas within and 10 minute walk of a transit station (500-800 metres) will have established minimum density targets. The broad intent of this policy is to support transit-oriented development so that jobs and residences can be located and built near supportive public transportation infrastructure.
A policy that allows for the City of Toronto to require affordable housing set-aside rates in new higher density development applications within the areas that are close to transit. This new policy represents a significant new financial obligation that private developers will need to satisfy in the fastest-growing neighbourhoods in the city.
Sometimes the impact of these new policies is not clear. They could lead to other problems.

Real Estate in 2021 & What to Expect in 2022

Many of our clients have asked us what to expect in 2022. The world has experienced so much uncertainty in the past couple years and yet real estate remained one of the most certain things that people had. Home ownership was security in an uncertain world. In 2021 we saw a big surge in demand and prices in real estate throughout Canada. Needs of people changed and we saw a lot of movement. Towards the end of 2021 product dried up but demand didn’t,  hence prices spiked up. We saw a big increase in demand and prices in the luxury market as those who often spent a lot of time travelling opted to stay home.

Here we are going into 2022. A couple of weeks ago we thought that we saw the worst of the pandemic behind us. How quickly things can change in such a short period of time. Before the appearance of Omicron, 2022  was looking like more of the the same in real estate with low supply and high demand. Interest rate hikes were looming due to inflation and there was some question how this would affect real estate. And now – who knows. We have stopped forecasting and are dealing with day to day. We are not seeing a change in demand – in fact demand may even increase. We may just have another very busy year. Unpredictable at this point…