The Globe and Mail
Published Thursday, Oct. 01, 2015
Toronto residents continue to pay eye-popping prices to gain a toehold in their preferred patch – whether they favour a townhouse in Kensington Market or a château in the suburbs, Globe Real Estate’s exclusive fall home value survey confirms.
The data compiled by Realosophy Realty Inc. show how prices have changed in individual neighbourhoods for the first eight months of 2015 compared with the same period last year.
Realosophy president John Pasalis notes that sales have been strong in all segments of the housing market – from small condos in the city to huge, detached houses on sprawling lots in the 905 area code.
“The one thing that stood out to us this year is that condos actually did relatively well,” Mr. Pasalis says.
He reckons that so many buyers – especially those purchasing for the first time – have been priced out of the single-family market that they are buying condo units instead.
“House prices are increasing at a much faster rate than condos are,” he says. “The spread between them is significantly higher,” compared with previous years.
Some of the neighbourhoods that stood out for their price jumps are Riverdale, with an 18-per-cent increase and Banbury, with a 24-per-cent rise to an average price of $2,268,612. Riverdale is popular because it sits on the Bloor-Danforth subway line, Mr. Pasalis says. Banbury, near Bayview and York Mills, provides larger lots for developers looking to tear down older houses to build new ones. Vellore Village represents a more affordable segment of Vaughan, which is why buyers bid up prices there by 17 per cent to an average of $794,536. Similarly, buyers looking for a relatively affordable house in Markham pushed up Greensborough prices by 17 per cent.
Cachet, which is a more exclusive neighbourhood in Markham, saw prices swell by 21 per cent. Mr. Pasalis says buyers are tearing down houses a few decades old an rebuilding on huge lots. The average house there traded hands for $1,338,107 so far in 2015.
To understand the movement in a particular niche, Mr. Pasalis examines such elements as price growth, sales growth, average days on market and the selling price compared with the listing price.
Last week’s column was all about the phenomenal sales in the upper echelons of Toronto housing: The luxury market would be even more sizzling if more buyers could find what they’re looking for, Toronto-based real estate agent Barry Cohen says.
The alarm sounded for Mr. Cohen when one builder after another came to him with the same question.
“What should I build?” they would ask. “Am I building modern or traditional?
Mr. Cohen, an agent with ReMax Realtron, is used to working in the rarefied atmosphere of luxury real estate: His listing at 68 The Bridle Path last year had an asking price of $25-million.
With so many builders in a quandary, Mr. Cohen was noticing a dramatic shift in preference at the high end of the market. For years, in neighbourhoods such as the Bridle Path, Hogg’s Hollow and Banbury, mid-century bungalows have been bulldozed to make way for larger houses. The new dwellings tend to be luxurious and loaded with modern conveniences, but very staid.
Increasingly, buyers seemed to be passing them by in favour of more architecturally significant buildings, he says.
Mr. Cohen decided to delve into sales data to better understand the shift.
His research found that modern or transitional homes represented 11 per cent of sales in the residential real estate segment above $3-million in the second quarter. That marks an 83-per-cent jump compared with sales of similar homes in the second quarter of 2014, when modern and transitional accounted for only 6 per cent.
To conduct his study, Mr. Cohen looked at the centre core from Lake Ontario to Steeles Avenue. He drew the line at $3-million and above and went through every detached house sold and categorized it as modern or traditional. Those deemed “transitional” lean toward modern, he says.
He acknowledges that his study shows only a snapshot of the market but his sense is that the change is only gaining momentum in the third quarter.
Sotheby’s International Realty Canada reported recently that sales in the tier above $4-million soared by 72 per cent in the Greater Toronto Area in the first half of the year compared with the same period in 2014.
Modern homes would have accounted for a much larger segment of the luxury market had more builders recognized and moved on the trend when they first acquired their properties, Mr. Cohen says.
“That 11 per cent would have looked like 50 per cent had they not made their decisions two years ago when they bought.”
He says many more builders are going modern now. In some cases they are scrambling to find workers with the right skills. The houses are more difficult to build because a little bit of imperfection can’t be hidden behind baseboards and mouldings.
“It costs more to build modern. Builders are relying solely on the ability of the architects.”
The traditional stone house still appeals to the majority of buyers, he notes, but many are drawn to designs influenced by the West Coast. Materials such as wood, stone and steel are often used in houses with wide open spaces and lots of glass.
Mr. Cohen points to a listing he has at 29 Old Yonge St. in Hogg’s Hollow. The house, with an asking price of $7.38-million, provides 8,700 square feet, built – Los Angeles style – around a swimming pool.
The development company, Enirox, acquired the property several years ago.
Enirox chief executive officer Arash Kamali says his firm has been building modern for about 10 years now. He has noticed a strong surge in demand.
“The challenge is finding inventory.”
Tannaz Real Estate