As the year comes to a close, the luxury real estate market in the Greater Toronto Area (GTA) faces challenges from all corners, be it scarcity of listings or economic headwinds. Industry experts weigh in on how to navigate these turbulent times.
Specialist Developers Stand Strong
Jordan Morassutti, co-founder of North Drive Investments Inc., believes that specializing gives a developer the edge needed to weather market storms. North Drive is recognized for its award-winning boutique condo projects, such as 10 Prince Arthur and 36 Birch. Their focus now shifts to One Roxborough West, a 12-storey mixed-use development in Toronto’s Summerhill neighbourhood.
Morassutti argues that the current market conditions necessitate deep expertise. “Being a specialist is really going to help us get by, creating a category of one,” he says.
Brokers Acknowledge Challenges
Luxury real estate brokers confirm that properties above the $4-million mark are facing issues. However, unique homes still sell quickly when priced right, says Cailey Heaps, CEO of Heaps Estrin Real Estate Team. The recently announced increase in municipal land transfer tax for high-value properties adds another layer of uncertainty to the market.
A Shift to Buyer’s Market
Janice Fox of Hazelton Real Estate highlights that despite low inventory, the market is transitioning to favor buyers for the first time in years. Jason Mercer of the Toronto Regional Real Estate Board concurs, citing higher borrowing costs and economic uncertainty as contributing factors.
Rental Market Evolves
Mitchell Abrahams, president of The Benvenuto Group, observes a rise in quality rental projects. This change offers an alternative to potential condo buyers, allowing them to invest their capital in other high-return ventures.
The Road Ahead
Both Don Kottick, CEO of Sotheby’s International Realty Canada, and Mercer anticipate a more balanced market moving forward. “Borrowing costs are expected to trend lower in the second half of 2024 and record population growth will continue,” says Mercer, suggesting a more optimistic outlook for the GTA luxury real estate market.
Frequently Asked Questions
1. How will the new municipal land transfer tax rates impact the luxury real estate market in Toronto?
The new tax rates, effective January 1, 2024, are expected to bring added costs to high-value property transactions. While this could potentially slow down sales in the short term, experts believe that unique and appropriately priced properties will continue to find buyers.
2. What advantages do specialist developers have in the current market?
Specialist developers, who focus on niche areas like luxury real estate, have a distinct edge. Their deep understanding of the market allows them to create projects that meet the specific demands of their target audience. In uncertain times, this specialization can be a key differentiator.
3. Is the luxury rental market a viable alternative to buying?
Yes, the luxury rental market is becoming increasingly appealing, especially in Toronto. High-quality rental projects offer an opportunity to live in desirable locations without the commitment of property ownership. This allows residents to keep their capital invested in high-return ventures, offering a potentially more lucrative and flexible lifestyle.
