A three-bedroom Scarborough bungalow is listed for $8.8 million, which could be a sign of hubris in a Toronto real estate market where prices soar higher than ever.
According to the Toronto Regional Real Estate Board (TRREB), the average selling price in the Greater Toronto Area (GTA) reached $1,242,793 in January, up nearly 30 per cent year-over-year. The average price for a detached home in the 416 reached $1,886,413, which is nearly $7 million less than what the Scarborough bungalow is priced at.
According to the listing at 2200 Warden, the 5700+ square foot home near Sheppard is sitting on almost an acre of land. That could attract real estate developers keen on building more missing-middle homes, which Toronto desperately needs. Developers are bracing for more opportunities to tear down older single-family units and build multi-unit homes in the GTA, just as the Ontario Housing Affordability Task Force is making proposals to cut through red tape, save costs and make room for more density as soon as possible and (fingers crossed) cool real estate prices.
Despite the possibilities, the speculative $8.8 million price tag remains a steep ask, especially since the market could face a downturn. According to TRREB, Toronto real estate sales were down 18.2 per cent year-over-year in January. New listings were also down 15.5 per cent year-over-year. Of greater concern is how rising interest rates will affect the market.
According to Peter Routledge, head of the Office of the Superintendent of Financial Institutions (a federal regulator), a “smart investor would think twice and look at other outlets.” Routledge was speaking on the The Herle Berly podcast, explaining how housing prices have been surging due to immigration, a lack of housing, low interest rates and a “speculative boom in housing over the last couple years.”
Routledge suggests that housing prices have maxed out, the speculative fever will abate and prices growth will slow.
“In some markets, where you had a really rapid increase in prices, you could see a fall of 10, 20 per cent even. That will be a return back to a little bit more sanity after a sudden build up in prices.”