'Bigger homes, bigger problems': Behind this Brampton home's $1-million loss

It’s, perhaps, an extreme example of a trend that’s been playing out across the GTA in recent months. Homes with property values that skyrocketed at the height of the housing market in 2022 are now experiencing a deep price correction. In the city of Toronto, prices have fallen most dramatically in the condo market, but in suburbs such as Brampton, some of the biggest losses have been in sales of large homes.

Early real estate investors may be left unscathed by the downturn — GTA prices are still 35 per cent higher than they were in May 2016 — but buyers that purchased property just a few years ago and are selling now are taking significant losses. 

Broker Jasaman Singh, who sold the Brampton property, says he’s seeing “bigger homes, bigger problems.”

According to the listing history, the house in Brampton’s northwest sold for $1.056 million in 2020, and then sold for double that price just two years later, at $2.2 million.

Singh said the couple that bought it in 2022 only lived in the home for a year before separating and renting it out. But the rental income wasn’t enough to cover the mortgage, property taxes and home insurance.

They had been trying to sell since 2024, first asking about $1.6 million, and then dropping the price tag to $1.5 million last year, before finally selling the home this month for $1.25 million, the listing history shows.

“They could have sold (in 2024) for a much higher price, for sure, you know, but you’re not prepared for that much loss immediately,” Singh said, adding that he wasn’t working with the sellers at that time.

The home, which is shown in listing images with several mattresses in the basement, was not tenanted at the time of the deal, as the tenants agreed earlier this year to leave, Singh said.

It may have gone for more had the owners added some fresh paint to the property, Singh added, but they “didn’t have any money to spend.”

Generally speaking, Rates.ca mortgage and real estate expert Victor Tran explained that when homeowners sell at a loss, they’ve typically already made a plan to “fork out some of their own savings” to repay the bank.

Some do end up seeking a consumer proposal or filing for bankruptcy, but “it’s not like most people are prepared” to do so, he said. “They won’t be able to qualify for future loans for a while, right? It’s a huge red flag on their credit report.”

Prices of detached homes in Brampton have tumbled a staggering 36 per cent from the market peak in February 2022, falling from an average price of about $1.61 million to $1.023 million, Toronto Regional Real Estate Board data shows. However, this house dropped 43 per cent since its sale at the peak.

Broker Sona Bhalla, who works in Peel and Halton regions, said she used to see four or five power of sales in a year, but this January and February alone, she saw 10 to 15.

So, it’s not unusual for her to see homeowners being priced out of their mortgage as rates have risen from their pandemic-era lows.

Still, Bhalla believes the Brampton home’s dramatic price drop was exacerbated by the fact that the former owners overpaid in 2022, even in the context of that market.

She and Brampton mortgage broker Rakhi Madan both believe the house shouldn’t have sold for more than about $1.8 million at that time.

Bhalla said the buyers may have been misled by the listing at the time that said the house had 4,000 square feet. Square footage, she said, should only measure the above-ground area, which she said in the case of this property is less than 3,000 square feet.

“At that time, this square-foot houses were selling for around $1.6 million to 1.8 million,” she said.

It should have required something “extraordinary” like a ravine in the backyard or a walkout basement to have been worth more than $2 million at that time, she added.

Another factor in the high price, she believes, was that the house next door sold around the same time for what she said is a similarly overpriced $2.145 million.

“Believe it or not, I see it happening today also,” she said. “It’s less often now, but it still happens.”

The changing immigration landscape has also affected Brampton, she noted. Before federal changes to immigration policies, rental demand was much stronger and property owners could charge high rents, she said. 

“All the people who own the investment properties, they’re finding it hard now,” Bhalla said. “Sometimes people just cut their losses, and say, ‘it’s enough, let’s walk.’”

Madan pointed out that the home traded hands “at the absolute top of the top and absolute bottom of the bottom.”