New life returning to Toronto’s downtown condo market

The Globe and Mail

May 5, 2021

Reporter: Carolyn Ireland

Momentum in the Greater Toronto Area real estate market has swung back to the city core as buyers feel more optimistic that urban life is undergoing a renaissance.

“It was so surprising and so fast,” Manu Singh of Right at Home Realty Inc., says of the change in sentiment.

The roll-out of vaccines has drawn buyers off the sidelines, he says, while low interest rates are encouraging people to act quickly.

GTA condo resales surged 104 per cent in the city of Toronto in the first quarter from the same quarter in 2020, says Shaun Hildebrand, president of research firm Urbanation Inc.

Mr. Hildebrand points to the 30-per-cent jump in suburban home prices as one reason the spotlight has swung back to urban properties.

Resale inventory dropped to one month of supply in the first quarter, Urbanation says, from a bloated five months of inventory in the third quarter of 2020. The average price of a resale unit remained 4.7-per-cent lower in the first quarter than in the same period last year.

Mr. Singh recently sold a unit with two bedrooms and one bathroom at 3 Market St. The living and bedroom areas of the fourth-floor unit overlook the historic St. Lawrence Market.

After Mr. Singh set an asking price of $829,000, the unit sold for $810,000 six days later.

The seller was satisfied with a deal at less-than-asking, he says, because the unit was vacant and the buyer offered to close the deal in fewer than 30 days with no conditions.

The feature that appealed to most of those booking appointments was that the above-ground parking and the locker are on the same floor as the unit, giving residents less concern about long elevator rides or passing though common areas during the pandemic.

He notes that many of the buyers shopping for units this spring are people who already live in downtown Toronto condos and want to trade up.

At 1 Roxborough St. E. in Toronto, a buyer recently paid $11.6-million for a three-bedroom, four-bathroom unit, says agent Paul Johnston of Right at Home Realty. He sees the sale as a sign that people are feeling optimistic about the resilience of Toronto.

One year ago, he says, the outlook for condos was dire after sales in the Greater Toronto Area plummeted 72 per cent from April, 2019.

“We all went to the same spot,” he says of the darkness that descended on the real estate industry at the time. “What will happen? Will we be Detroit?”

The 4,000-square-foot penthouse unit in the boutique Hill and Dale project on the edge of Rosedale was on the market for a few months with an asking price of $12.8-million. The unit had one previous owner after being completed about one year ago, he says. It has three terraces – including one with a private rooftop pool.

Mr. Johnston notes that buyers’ mindsets are changing as they reconsider their lives in the city and try to shake off the stagnation they have been feeling during the pandemic.

“People need to make a change – whether it’s more space or different space,” he says.

Many Toronto residents who had been thinking about leaving the city for a small town or the countryside moved up their plans when the COVID-19 pandemic hit.

“People who were on the fence for 10 years decided to do it. There was this massive surge in the suburbs and outside the GTA. That seemed to be at the expense of Toronto.”

Some people who didn’t flee the city entirely have bought second homes or cottages and are now giving up their large houses in the city. For that cohort, not having the upkeep of a single-family home can be appealing.

One family recently paid $1.6-million pre-construction for a three-bedroom penthouse at Junction Point, a building designed by architectsAlliance on the site of a former tire shop. The buyers are making the move from an architecturally significant house in a nearby neighbourhood, Mr. Johnston says.

“It’s a recalibration of needs – not having the upkeep of a single-family home. When they’re in Toronto, they want something that is just simpler.”

That ease also appeals to people who have the means and freedom to travel, and are planning to do so more often after being grounded for a couple of years.

“I think part of that enthusiasm is wanting to simplify their Toronto life.”

Another sub-set plans to buy in Toronto and stay in the city. Many of these buyers are drawn to the largest units in small, design-driven buildings. By contrast, investors often buy micro-units in tall towers.

One downtown resident recently paid more than $2.2-million for a three-bedroom suite in a boutique building which is still under construction at 1181 Queen St. West.

The buyer had originally purchased a smaller suite in the project, Mr. Johnston says, but traded up in order to have more space and a 600-square-foot outdoor terrace.

“That’s pretty glamorous – but it’s also not what you find in neighbouring buildings,” he says, adding that the buyers want to dive into the cultural scene on Queen West when venues open up again.

“Being an urban dweller is still a really compelling option,” he says. “The restaurants are just going to be packed.”

Elise Kalles, a broker with Harvey Kalles Real Estate Ltd., has sold large Yorkville condos to buyers seeking privacy and outdoor space over the course of the pandemic.

Ms. Kalles has a two-bedroom, three-bathroom suite listed with an asking price of $9.98-million at Museum House, overlooking the Royal Ontario Museum.

The suite takes up an entire floor and provides gallery walls for hanging artwork. A private elevator provides access directly into the suite.

In a heated market, buyers will sometimes purchase a condo sight unseen in lower price segments, she says, but not in the luxury niche.

“They want to visualize themselves in the space,” she says of potential buyers. “They want to know if it flows the way they imagine.”

Despite the resurgence, Mr. Singh cautions that high COVID-19 case counts and rapidly-changing restrictions are making buyers and sellers edgy. Buyers put their searches on pause after the latest stay-at-home order was announced, he says, but showings picked up again after a few days.

“We have a few listings that were on deck but, because of the stay-at-home orders, they elected to wait,” he says. “Psychologically the listing side of things gets impacted more. If anything, it’s taking supply out of the market.”