I was interviewed by Sunny Freeman of the Toronto Star about how the housing supply shortage is driving up real estate prices across the GTA. I discussed a recent sale that involved a “bully offer” and how these types of deals are shaping the landscape of the current real estate market in Toronto.
Hot Home Sales Setting Record Pace
By: Sunny Freeman
Toronto real estate agent Elli Davis just closed a “bully offer” for $300,000 over a $2.65 million listing price, a type of deal she’s making more often in the busiest market she’s seen in nearly 30 years.
The increasingly competitive Greater Toronto Area real estate market is on pace for another year of record-breaking sales and double-digit price growth as buyers bid aggressively for the few houses on the market. Sales in the first quarter of 2016 rose 15.8 per cent from the opening three months of last year, according to the Toronto Real Estate Board.
Davis, a Royal Lepage agent in upscale central Toronto, said a lack of housing supply is pushing more buyers to make hard-to-resist deals days before the seller is slated to accept bids. These are also known as bully offers.
“There were no conditions and the owner said ‘thank you very much, I’ll take it,’” she said of the home that went for $300,000 over asking.
The 10,326 homes sold in March was a 16.2-per-cent increase from the year earlier and accounted for nearly half the 22,575 homes that changed hands in the first quarter.
The average selling price across all housing types in the Greater Toronto Area rose 12.1 per cent year-over-year in March to $688,181.
The market could have experienced even stronger sales growth if it were not constrained by a deficit of new listings, said Jason Mercer, TREB’s director of market analysis.
“That’s why we’re seeing strong increases in selling prices, yet on the other side, if we did see more listings come online, they’d be absorbed in short order because of pent-up demand,” he said.
“I think the first quarter certainly suggests that we could be on track for another record year and likely the only thing that could slow that down is if we continue to see a dip in listings.”
The number of new listings was down compared to the same period last year, meaning there were more buyers competing for fewer homes. The number of homes listed for sale in the first quarter fell to its lowest level for a first quarter in at least 12 years, according to an analysis by National Bank.
A competition among buyers for fewer homes often results in bidding wars that drive prices higher. In March, the average detached GTA home inched closer to the $1 million mark, sitting at $910,375.
Davis said she is astounded at the prices. Nearly half of the 23 agents’ open houses listed for Tuesday in Toronto’s central core were for properties valued between $3.5 million and $16.8 million, she said.
Toronto is a seller’s market, with sales-to-new-listing ratios hovering around 70 per cent — the highest ratio since the 2008-2009 recession, said Robert Kavcic, senior economist at BMO.
He doesn’t see this abating any time soon as strong job and population growth in the GTA will continue to drive demand, while few new detached homes are being built.
“This has been more of a sustained gradual increase in demand and no new supply coming on board, so this is probably going to persist longer than back in 2009.”
Davis said the market is stronger now than it was coming out of the recession, adding she’s the busiest she’s been since 1989.
“We didn’t have a terrible winter, I think that helped, mortgage rates helped, and demand is high and supply is low,” she said.
“All those things together make a busy time.”
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.”
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.”
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!
Toronto is a Hot Commodity with Analysts Predicting a Record Year
I had the pleasure of being interviewed by Angie Seth, of Global TV News, about Toronto’s hot real estate market. You can watch the video below or view on the Global News site!
ASKING PRICE: $899,000
SELLING PRICE: $936,000
PREVIOUS SELLING PRICE: $605,000 (2007)
TAXES: $4,720 (2015)
DAYS ON THE MARKET: 28
LISTING AGENT: Elli Davis, Royal LePage Real Estate Services Ltd.
Published in The Globe and Mail, September 17, 2015
The Action: A great deal of traffic flowed through this detached, three-bedroom residence, but without an offer and with a number of other alternatives nearby, the price was dropped below $900,000 to attract more buyers.
The move put the residence on the radar of two potential buyers who made competing bids.
What They Got: Less than a 10-minute walk from High Park, this brick house with an attached garage displays traditional stained-glass windows and hardwood floors in areas such as the fireside living room, which has access to a sunroom with ceramic floors.
Since 2007, the original centre-hall plan was modified with a newly combined dining area and kitchen with a walkout to a deck and 57-by-75-foot lot, as well as a new roof, furnace and lower level recreation room with one of three bathrooms.
The Agent’s Take: “The location of it really helped sell it; it’s a very hot area,” agent Elli Davis says.
“It’s close to High Park and the subway.”
The seller’s improvements also increased the home’s value.
“Glenlake was a very nice house – a three-bedroom house – with a renovated kitchen and main-floor powder room,” Ms. Davis explains.
“[In one bedroom], the owner put in steps to a third floor, so it was more of a loft for storage or a play area.”
Real Estate Professional Magazine has released its 2015 Hot List: 150 sizzling players who are setting the industry on fire. REP Magazine asked the real estate community for their input on which of their peers are the most successful, most engaging and most innovative people. Elli is proud to be included in this group and featured in the article!
“Everyone on our Hot List has one thing in common – they’re all changing the face of the Canadian real estate industry.”
127 Castlefield Avenue, Toronto
ASKING PRICE: $1,295,000
SELLING PRICE: $1,385,000
PREVIOUS SELLING PRICE: $467,500 (1992)
TAXES: $7,993 (2014)
DAYS ON THE MARKET: Three
LISTING AGENT: Elli Davis, Royal LePage Real Estate Services Ltd.
Published in the Globe and Mail, July 31, 2015
The Action: Just a 10-minute walk from restaurants, shops, cinemas and a subway station on Yonge Street, this North Toronto home was scheduled for nearly a week of exposure. But the weekend open houses were cancelled after the owners accepted an offer from one of six visitors with mid-week private showings.
What They Got: A 27-by-134-foot lot anchors this three-storey structure with three bedrooms, three bathrooms, formal principal rooms and five decks, including one leading to a fenced yard from a fireside family room behind the double garage.
The basement offers a recreation area and a guest bedroom, while the second floor accommodates an eat-in kitchen and fireside living room with decks and a central dining area.
The Agent’s Take: “You could walk to Yonge and Eglinton, so it’s in a prime area,” agent Elli Davis says. “And it’s an older area, but this was a detached home that had been built in the eighties, so it was more contemporary.”
The set-up also suited a wide range of potential buyers, from large families to professionals wanting an urban setting. “It really had three full floors of living space, so it was very large, larger than you’d think from the street,” Ms. Davis says.
“It has a nice backyard and faced south, so you had a good view of the CN Tower from the second floor.”