Semi home prices soars 62% in two years

Realtors say it’s a sign of the high demand for Toronto properties and a lack of listings.

Thestar.com
Jan. 18, 2017
By Tess Kalinowski

In a sign that Toronto’s real estate market is off to a hot start this year, a home on Palmerston Ave. north of Bloor St. near Bathurst St., has sold for 62 per cent more than the sellers paid two years ago.

The three-bedroom semi went for $1.375 million on Tuesday. In December 2014, it sold for a mere $851,750 - $523,250 less.

The home had been “beautifully renovated” before his clients bought it, said listing agent Bruce Cram Re/MAX Hallmark Realty.

It is in move-in condition with a trifecta of appealing features: three bathrooms, a garage and a basement apartment.

Homes on Palmerston, in the Seaton Village neighourhood, have been selling in a similar price range but the profit realized in such a short period is exceptional.

Cram said the sale exceeded his expectations. The absence of competition was likely a contributor to the buyers’ offering nearly $400,000 more than the $999,000 list price.

“This week, if you wanted to buy a move-in condition home, you had to buy this one,” he said.

There is also a disconnect, said Cram, between sellers and buyers. Consumers want to take advantage of low interest rates and strike before any new mortgage rules and restrictions can be introduced.

“Sellers seem to think you need to wait until the spring to sell. But buyers are ready. Buyers aren’t waiting for the spring. Buyers are waiting for the right opportunity,” he said.

Sales that appear exceptional are seldom one-offs, said Gurinder Sandhu, managing partner, Re/MAX Hallmark Realty.

“Prime neighbourhoods are getting prime prices,” he said.

Another home on the same Seaton Village street close to the subway, U of T and the shops along Bloor St., listed for $999,000 in November, and sold for $1.355 million a few days later.

“Toronto has really become the darling of global real estate,” said Sandhu.

“There’s political certainty, there’s economic certainty and, when you look at all the uncertainty around the world, all of a sudden Toronto becomes that much more in demand,” he said.

Foreign investment is a factor in the demand for Toronto property but it probably accounts for less than 10 per cent of sales, said Sandhu.

“The numbers are still in the mid single-digits from what we can tell. The foreign demand we have is more from immigration, people that are choosing to raise their families in Toronto,” he said.

Also fuelling prices are buyers using the equity in their existing homes to move up in the market, with millenials tapping into the equity of their parents, he said.

People see prices going up and they feel a need to get into the market instead of being priced out, he said.

But at least one Toronto realtor is more hesitant.

John Pasalis of Realosophy looked at the Palmerston listing. He said it was smaller and less spacious than a nearby home that sold last summer in the same price range.

“If this is getting $1.4 million what does that mean for anyone who wants to buy in this neighbourhood,” he said.

Nobody should want to see real estate prices appreciate 20 or 30 per cent in a year.

“When you see appreciations of 30 per cent a year it generally doesn’t end well. That’s a concerning thing,” said Pasalis.

Vancouver prices were going up 20 per cent a year for a long time and only slowed when the government put a tax on non-resident buyers last summer.

“My instinct is that Toronto’s going to keep going like this until there’s some outside policy decision,” he said.

A similar foreign-buyers tax in the Toronto region would be an easier policy for the government to sell consumers than an across-the-board requirement that all mortgage holders qualify under the Bank of Canada five-year fixed interest rate of 4.64 per cent.

The government implemented that requirement for all insured fixed and variable mortgages in October.