TORONTO -- Stoked by former stock market players seeking a more stable investment, and fanned by an influx of foreign money and first-time buyers, the Toronto real estate market is about to begin its second boom in two years.
"The prices being fetched are just staggering," Toronto real estate agent Michael Halsall said. "And we're also seeing a big increase in asking prices."
Halsall was told he was fooling himself last fall when he suggested that the city's red-hot 1987 house-price market was about to repeat itself.
"People said I was being greedy, that it was impossible to have two markets like that back to back," he recalled.
But in recent weeks, Halsall and other housing bulls have been vindicated. According to the Toronto Real Estate Board, the average price of a metropolitan Toronto home rose in January to $160,071 in U.S. dollars. Although that figure is 6 percent below the peak of the boom last May, it represented a one-month rise of 3.8 percent. That, suggested a bullish Terry Martel of Terry Martel Real Estate Ltd., is just the beginning.
By June, he said, "values will probably rise another 10 percent and then taper off to about 5 percent over the remainder of 1988." He said he expects buying pressures to subside by June in the wake of higher prices and the summer doldrums.
One curious feature of the current market is that the number of sales in January -- 2,742 -- was down 25 percent from last year's 3,639. In the first 15 days of February, sales volume hit 2,540 -- well behind the pace of February 1987, which saw 5,604 homes change hands. Last February, however, still ranks as the real estate board's third-biggest month ever.
Meanwhile, one west-end Toronto home, Halsall says, was listed last summer for $537,200. No one bought, so the owner took it off the market. Early this month, it was listed again for $549,050 and, in three days, brought its owner $558,135 -- $9,085 above the asking price.
Another home that had been bought for $177,750 at the height of the 1987 market has just been sold again for $220,410.
"The boom is for real," Martel said. "And it's hotter than the one in 1987. Never before have I seen multiple offers on almost every property that comes onto the market."
Here is some of the evidence:
A two-bedroom home on Douglas Avenue in the uptown Yonge and Lawrence area attracted 21 bids earlier this month between the morning of the day it was listed at $177,750 and nightfall. It sold that same night for $199,080.
A three-story, single-family home in the comfortable west-end enclave of High Park drew 25 prospective buyers between Feb. 3, when it was offered for $295,855, and Feb. 10, when it changed hands for $330,437 -- $34,582 more than the asking price.
The action comes in a market whose prices were already in a class of their own. According to the Canadian Real Estate Association, the average price of a house sold in Vancouver last month was $113,245, and in Montreal, just $76,161.
Real estate board president Edward Hou of Edward Hou Realty Ltd. last week tried to play down the Toronto action, saying that in 94 percent of recent home transactions, the property changed hands at less than the asking price. Halsall's rebuttal: "If that's so, you'll also find that 95 percent were overpriced when they came to market."
What's behind it all? "The very same things that sent prices up 35 percent in 1987," said Toronto housing economist Frank Clayton of Clayton Research Associates Inc.
Almost 3,500 individuals, many of them seeking jobs, are moving into Toronto every month from other parts of the country or from abroad.
Once they arrive, they discover that there is little new rental construction and that less than one apartment in 1,000 is available.
Discouraged, but still looking at relatively moderate 11.5 percent mortgage interest rates, many decide to buy whatever is available and worry about how to pay for it later.