Investors, buyers and realtors alike have all been trying to regain their footing over the past month to adjust to the new condition of the real estate market. With talks of a buyer’s market on the horizon, we spoke with Re/Max luxury agent Barry Cohen and president of Heaps Estrin Real Estate brokerage Cailey Heaps about where the luxury market is headed in Toronto.
Is it a buyer’s market yet?
Barry Cohen: Although we are still in a seller’s market in the GTA, the market is definitely not as frothy as it was earlier in the year. Based on the last Toronto Regional Real Estate Board report for May, there was a sales-to-listings ratio of 47 per cent. That said, there are pockets of the city that still demonstrate exceptional strength, especially in the top end. Not surprisingly, demand continues to outpace supply in Rosedale and Forest Hill. (TRREB reported the average price for a home increased from $1,937,987 in April to $2,223,550 in May in Forest Hill South, and from $2,363,360 to $3,026,206 in Rosedale-Moore Park).
Cailey Heaps: We can’t generalize and say that the entire market is shifting, but we can say that segments of the market are shifting. We have to remember that the growth we have seen year to date is unprecedented so any “levelling off” is still above the 2021 selling prices.
How is the luxury market faring by comparison in Toronto?
Barry: Homebuying activity in the luxury segment continues to outperform the overall market. While year-to-date sales in the GTA currently sit at 33,610, down about 28 per cent from last year, sales of properties over the $2 million price point to date (January to May 23) are up almost 20 per cent, compared to the same period in 2021. At $3 million plus, sales are up 12.5 per cent. In fact, almost one in every two sales over $3 million sold at or above list price in the first quarter of 2022. Sales over $5 million are up about two per cent. That tells me that demand still exists in the marketplace.
The influx of new inventory into the market is a good thing. It keeps price appreciation in check and gives buyers greater choice. And despite the lower sales-to-listings ratio, it is still a seller’s market — just not as heated as earlier in the year.
Cailey: The ultra-luxury market is performing exceptionally well. I believe these buyers understand the long-term value of investing in some of Toronto’s best properties. These buyers understand how scarce inventory is for what they are looking for and are not willing to let opportunities pass them by.
Are you expecting a downturn in prices any time soon?
Barry: Housing values in hot pockets continue to be strong, while those in less desirable neighbourhoods are seeing some softening. We looked at 14 key luxury markets in the first quarter and compared average price in 2022 to the same period last year in our most recent Cohen Homes and Estate Report. Six markets experienced double-digit growth, four reported single-digit growth, two remained stable and two reported some softening.
Your best advice for sellers on the luxury market?
Barry: Price your home at fair market value and it will sell.
Cailey: Having a well-researched pricing strategy and exceptional marketing is of paramount importance. Ensure your agent does everything they can to tell the story of the home.
Your best advice for buyers?
Barry: Work within your budget.
Cailey: When you see a home you love, act. Toronto real estate has proven to be a sound investment over the years, so even if there is a market fluctuation, you ride it out. In my 20 plus years, I can safely say that no one who has bought real estate in that time frame has lost out — they have all grown their wealth through their real estate investments.