I was interviewed about the effects of Toronto’s red hot real estate market on buyers. the lightning fast pace of selling properties can lead to buyer’s remorse, or other situations, that can end up with a buyer backing out of the deal. Despite these bumps along the way, a successful sale can still be accomplished, as Carolyn Ireland reports.
It’s a common refrain in the Toronto area that trading houses is done at such warp speed, buyers must just look at each other and say “what have we done?”
Actually they do.
Real estate agent Elli Davis recently sold a house for about $1.8-million soon after it hit the market.
“It was a nice offer, a very smooth offer – and then everything blew up,” says Ms. Davis of Royal LePage Real Estate Services Ltd.
The buyers seemed so shocked at their own bold decision that – within about 12 hours – they asked to be released from the deal. They didn’t have a problem with financing and there was nothing wrong with the house, Ms. Davis says.
“People sometimes move too quickly without thinking. They saw it, they liked it, they had second thoughts.”
Ms. Davis says the seller could have tried to hold the couple to the deal by threatening legal action, or the buyers could have fought for the return of their deposit, but a costly battle is an unhappy outcome for both sides.
She says it’s better if everyone can come to an arrangement. In this case, the buyers agreed to give up a chunk of the deposit. Then both parties signed a mutual release.
“They were smart. They lost a little money,” she says of the contrite couple.
Ms. Davis says the scenario would have been even more unfortunate if the deal had fallen apart weeks later or at closing. In this case, another buyer was waiting in the wings and they were able to make a deal.
The seller didn’t lose out financially but the whole episode was very stressful for all involved, she says. “It caused a lot of upset to a lot of people. People really have to be aware of what they’re doing. This is not like buying a dress and taking it back if you don’t like it.”
And there’s an update on another deal that soured: Last week, I wrote about a house in Oshawa that received 61 bids after it was listed with an asking price of $200,000 and an unvarnished description that included a warning to exercise extreme caution on the basement stairs. A few days later the top offer for $350,000 vaporized for reasons not made public. The house was quickly back on the market with the same asking price and a new offer date.
It turns out 37 parties showed up the second time around and the house sold for $327,000.
An agreement can go south for many reasons besides buyer’s remorse. Sometimes lenders won’t approve the financing or the appraiser won’t sign off on the transaction.
Meanwhile, Canadian homeowners who are struggling with a big mortgage, a home equity line of credit or other forms of debt may see another cut in interest rates soon.
The 2016 federal budget tabled by the Liberal government this week won’t provide fiscal stimulus in time to improve the dismal economic growth outlook for this year, in the opinion of Capital Economics.
Senior economist David Madani continues to predict that the Bank of Canada will still be under pressure to find ways to lift the economy. He expects a rate cut by the middle of the year.
“But with household debt already at record high levels, this task won’t be easy and has its own set of risks,” Mr. Madani says.
As for the coming weeks, agents are expecting the supply of listings to move from dire to tight, which is as good as can be expected in the Greater Toronto Area this decade. Many homeowners across all price ranges are decluttering now.
This week listings dwindled in anticipation of the Easter holidays. Many private schools in Ontario are also on March break. On Tuesday, Ms. Davis received a list of 10 properties inviting real estate agents to an open house. On some recent Tuesdays, the list numbered 60 or more.
Ms. Davis says she often chooses the quiet weeks to launch properties onto the market because there’s less competition. While people do travel, lots of potential buyers also stay in town, she points out “I’ve always been a contrarian. I like to put out listings when no one else thinks it’s a good idea.”
She says many properties are selling quickly with plenty of offers but others struggle for no apparent reason. Bullies – who show up with generous cheques in an effort to pre-empt the offer date – have become so ubiquitous that they’ve pretty much defeated the whole purpose of holding off offers to a set date and time, Ms. Davis says.
In hot markets such as Toronto’s, it’s common to hold off offers for a week so that more potential buyers have a chance to see the property. But bullies refuse to wait. Sellers can choose whether or not to look at the so-called pre-emptive bids.
She says she is often not setting a deadline these days in favour of saying “offers welcome any time.”
Record February Sales
Toronto Real Estate Board President Mark McLean announced Greater Toronto Area REALTORS® reported a record number of home sales through TREB’s MLS® System in February 2016. There were 7,621 transactions reported this past February – up 21.1 per cent compared to February 2015.
The number of new listings entered into TREB’s MLS® System was also up on a year-over-year basis, but by a lesser 8.2 per cent. The fact that the annual rate of sales growth outstripped the annual rate of new listings growth shows a tightening of market conditions compared to last year.
“Even after accounting for the leap year day, sales were above the previous record for February set back in 2010. Sales were up strongly from the 15th day of the month onward as well, despite the new federal mortgage lending guidelines coming into effect that require at least a 10 per cent down payment on the portion of purchase prices between $500,000 and $1,000,000,” said Mr. McLean.
Seller’s market conditions continued throughout the GTA in February. Strong competition between buyers resulted in a healthy growth in selling prices. The MLS® Home Price Index (HPI) Composite Benchmark was up by 11.3 per cent year-over-year. The average selling price was up by 14.9 per cent annually to $685,278.
“Recent polling conducted for TREB by Ipsos suggested that GTA households will remain upbeat about purchasing a home in 2016. Early sales results for January and February certainly support this view. With strong sales up against a constrained supply of listings, home prices continued to trend strongly upward,” said Jason Mercer, TREB’s Director of Market Analysis.
Strong Start to 2016
Toronto Real Estate Board President Mark McLean announced Greater Toronto Area REALTORS® reported 4,672 residential transactions through TREB’s MLS® System in January 2016. This result represented an 8.2 per cent increase compared to January 2015.
“It is clear that the handoff from 2015 to 2016 was a strong one. This is not surprising given that recent polling conducted for TREB by Ipsos suggested 12 per cent of GTA households were seriously considering the purchase of a home in 2016. Buying intentions are strong for this year as households continue to see home ownership as an affordable long-term investment,” said McLean. The MLS® Home Price Index Composite Benchmark Price for January 2015 was up by 11.2 per cent on a year-over-year basis. The average selling price over the same period was up by 14.1 per cent.
The difference in the annual growth rates for the MLS® HPI and average price was largely due to a greater share of high-end detached homes sold in the regions surrounding the City of Toronto this year compared to last. The MLS® HPI removes the impact of shifts in the share of different property types sold from one year to the next.
“Market conditions in January were tighter compared to a year earlier, with an annual increase in sales up against a decline in listings. This is why growth in the MLS® HPI benchmarks continued to be strong, especially for singles, semis and townhouses, where there has been a persistent lack of inventory,” said Jason Mercer, TREB’s Director of Market Analysis.
One of my recent sales was featured in a Globe and Mail Done Deals Video! 482 Lytton Boulevard was successfully sold in a matter of days. This video will give you an inside look at the home, and the story of the sale.
Done Deals: Large, Upscale Yonge-Bloor Condo Snapped Up In Days
1 St. Thomas Street, No. 16A, Toronto
ASKING PRICE: $2,625,000
SELLING PRICE: $2,615,000
TAXES: $16,084 (2015)
DAYS ON THE MARKET: Four
LISTING AGENT: Elli Davis, Royal LePage Real Estate Services Ltd.
Published in The Globe and Mail January 14, 2016
The Action: Early in the fall, the luxury One St. Thomas Residences had few vacancies other than this two-bedroom-plus-den corner suite. It was picked up for $2.615-million in a matter of days.
What They Got: New York architect Robert Stern designed this eight-year-old high-rise with luxury amenities, services and suites, such as this 2,497-square-foot unit with a formal dining room and living room with a gas fireplace and loggia with a second access point from a den.
• Appointments are upscale, such as hardwood floors, granite floors and Sub-Zero and Wolf appliances, as well as three bathrooms, a walk-in closet in the master and his-and-her closets in the secondary bedroom.
• A laundry room, locker and two-car parking complete the unit, which owes $2,474 monthly for water and use of common areas.
The Agent’s Take: “The building is beautiful – and newer – so it offers a pool, gym, concierge, visitor parking and valet parking,” agent Elli Davis says. “And it’s right on the Mink Mile on Bloor Street, so it’s a very sought-after building.”
The suite was staged to showcase its core features. “It’s quite original, but well kept,” Ms. Davis says. “It has a large balcony/terrace and two bedrooms and a den.”
Record TREB MLS Home Sales in 2015
The second best sales result on record for December capped off a record year for TREB MLS® home sales in the GTA. Toronto Real Estate Board President Mark McLean announced that there were 4,945 sales reported in December bringing the 2015 calendar year total to 101,299 – a substantial 9.2 per cent increase compared to 2014 as a whole. Strong annual sales increases were experienced for all major home types last year.
“Home ownership is a quality long-term investment that families can live in while the value increases over time. A relatively strong regional economy in the GTA coupled with low borrowing costs kept a record number of households – first-time buyers and existing homeowners alike – confident in their ability to purchase and pay for a home over the long term,” said Mr. McLean.
“If the market had benefited from more listings, the 2015 sales total would have been greater. As it stands, we begin 2016 with a substantial amount of pent-up demand,” continued Mr. McLean.
The average selling price for 2015 as a whole was $622,217 – up 9.8 per cent compared to $566,624 in 2014. The MLS® HPI Composite Benchmark Price was up by a similar annual rate of 10 per cent in December. GTA home price growth was driven by the low-rise segments of the market, but condominium apartment price growth was generally well-above the rate of inflation as well through 2015.
“TREB will release its official 2016 outlook later in January, but suffice to say that the demand for ownership housing is expected to remain very strong in 2016. Despite stricter mortgage lending guidelines and the possibility of slightly higher borrowing costs, on average, there will be many buyers who remain upbeat on the purchase of ownership housing,” said Jason Mercer, TREB’s Director of Market Analysis.
National Chairman’s Club represents the top 1% of agents in Royal LePage. It is an honour to be included in this group and I am pleased to announce that I placed #22 out of over 16,500 agents nationally.
Many thanks to my loyal clients and hardworking team for another successful year!
Record Sales in November 2015
Toronto Real Estate Board President Mark McLean announced that Greater Toronto Area REALTORS® reported 7,385 home sales through TREB’s MLS® System in November 2015 – up by 14 per cent compared to November 2014. This result also represented the best result on record for the month of November. Sales through the first eleven months of 2015 amounted to 96,401.
“Not only did we see a record sales result for November, but with one month left to go in 2015, we have already set a new calendar year record for home sales in the TREB market area, eclipsing the previous record set in 2007. Sales were up on a year-over-year basis for all major home types, both in the City of Toronto and surrounding regions. This suggests that the demand for ownership housing is widespread, from first-time buyers to long-time homeowners across the GTA,” said Mr. McLean.
The MLS® Home Price Index (HPI) Composite Benchmark was up by 10.3 per cent year over year in November. The average selling price for all transactions was also up by a similar annual rate of 9.6 per cent to $632,685. Annual rates of average price growth for November and the first eleven months of 2015 were similar, with the strongest rates of increase being reported for low-rise home types, including detached and semi-detached houses and townhouses.
“Demand for ownership housing has remained strong in the GTA throughout 2015, with sales generally increasing at a greater annual rate compared to new listings. This means that competition between buyers has strengthened in many neighbourhoods in the City of Toronto and surrounding regions. The end result has been upward pressure on home prices well above the rate of inflation in most cases,” said Jason Mercer, TREB’s Director of Market Analysis.
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Record Home Sales For October
Toronto Real Estate Board President Mark McLean announced that Greater Toronto Area REALTORS® reported 8,804 home sales through TREB’s MLS® System in October 2015. This is the best result on record for the month of October.
“It is clear that many GTA households remain upbeat about home ownership because owning a home represents a high quality, long-term investment. We will see a big, new record this year for home sales reported through TREB’s MLS® System,” said Mr. McLean.
“Despite the record October result, I must point out that the Government of Ontario could hamper home sales in the near future. The Wynne government is seriously considering allowing municipalities throughout Ontario to institute a second land transfer tax on top of the existing provincial tax. Recent polling has shown that the great majority of Ontarians oppose this tax and would consider delaying a move if they were forced to bear the additional upfront cost,” added Mr. McLean.
The MLS® Home Price Index (HPI) Composite Benchmark was up by 10.3 per cent year over year in October. Over the same period, the average selling price for all home types combined was up by 7.3 per cent to $630,876. Price growth continued to be driven by the low-rise market segments.
“Record sales coupled with a constrained supply of listings in many GTA neighbourhoods has underpinned very strong price growth throughout 2015. Even if we do see a greater supply of low-rise listings in the marketplace over the next year, market conditions will remain tight enough to see continued price growth well-above the rate of inflation,” said Jason Mercer, TREB’s Director of Market Analysis.