Downtown condo market shows strange signs of life

I have also been in bidding wars on the last three offers I have submitted for my purchasers in Durham Region....

Susan Pigg January 22, 2013, The Toronto Star
Some Toronto realtors are seeing an unexpected surge in condo buyers scouring the market post Christmas and the return of a phenomenon not seen in months — bidding wars.
“I was shocked,” says ReMax realtor Peter Krpan who advised one couple, first-time buyers, that the softening condo market meant they could take their time and bid low on almost any downtown unit they wanted.
Instead, the couple found themselves outbid this month on their first choice, an 800-square foot condo listed for $324,000 on Queen’s Quay.
Their “backup” — an older, 660-square-foot condo on Victoria St. that had been on the market for 71 days — suddenly had three bidders and was gone before they could even put in an offer.

“I thought, ‘This can’t be happening. This isn’t in keeping with what we’ve been seeing the last few months at all,” says Krpan.
After a dramatic softening in sales and prices that started last spring and was exacerbated by tighter mortgage lending rules that left many first-time buyers on the sidelines, some Toronto realtors are seeing some signs of life in a market that, by December, was virtually dead.
Bidding wars have also broken out the last two weeks in some prime Toronto neighbourhoods where the inventory of houses for sale remains low, such as the west-end Junction Triangle and the east end Beach.

Even the well-supplied condo market is facing inventory issues, say veteran condo realtors. It’s not that there’s a shortage of units, per se, especially given the recent condo boom and the dramatic softening of demand just since spring.

It’s that too much of what’s for sale now are small, poorly laid-out units, aimed at investors, rather than the average buyer, realtors say.
“I think people who have been standing on the sidelines are realizing that we’re not having a crash. We’ve had a lot of clients come out of the woodwork the last couple of weeks,” says downtown realtor Joanna Kalbarczyk.

Kalbarczyk’s client, a young woman, paid over the $323,000 asking price for the older condo on Victoria St. that had three offers. She declined to say how much more because the deal is still being finalized.
Realtors, who have been anxiously awaiting the normally busy spring market, are hopeful this surge means the market is in pause mode — as it was in the nine months after the 2008 recession — rather than a continued decline.

But no one really knows.

Which is part of the reason ReMax has undertaken its first Canadian Homebuying Trends Survey, trying to gauge who’s buying and how that could impact the overall housing market.
The survey, released Tuesday, notes that “purchasing patterns have evolved, with a more conservative, fiscally-responsible purchaser moving to the forefront,” says Gurinder Sandhu, executive vice president and regional director of ReMax Ontario-Atlantic Canada.
First-time buyers are “experiencing a period of readjustment,” says Sandhu, in light of tougher lending rules from Ottawa that cut maximum amortizations from 30 to 25 years and put restrictions on the types of properties the Canada Mortgage and Housing Corp. will insure where buyers don’t have a 20 per cent down payment.

First-time buyers will account for about 30 per cent of purchasers over the next two years, notes the report.

While the report doesn’t break down local markets, it too confirms a significant shift to the downtown core over the suburbs in Ontario, as confirmed by a TD Economics report, also released Tuesday.
That report, by TD economist Francis Fong, notes that double-digit job growth in downtown Toronto from 2006 to 2011 has followed in the footsteps of all those folks who are now opting to live downtown, rather than in the suburbs, close to transit lines and amenities in what’s now become a vital, vibrant world-class city.