A lack of listings leads to lively bidding for Toronto homes

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Lively bidding for a small house in Leslieville last week caused a buzz around the neighbourhood when the house sold for $96,000 above the asking price of $499,000.

One neighbour on Berkshire Avenue looked around at his own nearly identical bungalow and called listing agent Christopher Stevenson to pepper him with questions about the sale down the street at number 21. By the end of the conversation, the owner at number 75 had decided to enlist Mr. Stevenson to sell his house too.

Mr. Stevenson, an agent with Sutton Group-Associates Realty Inc., says lower interest rates and a few high-profile sales have combined to bring a little bit of fresh vitality to the Toronto market. Still, lots of properties are changing hands without frenzied bidding wars and agents say new listings are trickling out slowly.

The Toronto Real Estate Board reported this week that sales jumped nearly 15 per cent in the first two weeks of February in the Greater Toronto Area compared with the same period in 2014. The average price climbed 10.3 per cent but new listings edged up only 3.5 per cent in the first half of the month compared with the same period last year.

Bidding contests such as the one for the semi-detached bungalow at 21 Berkshire Ave. have contributed to the price gains. Listed with an asking price of $499,000, it sold one week later on the night set for reviewing offers, for $595,000, after about 75 showings.

The sellers received four strong offers, Mr. Stevenson says, but the winning bid was far ahead of the others. He learned from the buyers' agent that the couple had lost out on nine or 10 properties in past bidding wars.

"I think they decided 'enough fooling around' and they made sure they got it."

Mr. Stevenson plans to contact the agents of the three parties who lost out on the house and let them know that a similar house is coming.

He says 75 Berkshire Ave. is "the same but different." The floor plan has been altered in a slightly different way because the owner at number 75 kept the original layout of the kitchen and living room and combined two bedrooms into one. At number 21, one bedroom was also enlarged and opened up.

Mr. Stevenson says he wasn't surprised that 21 Berkshire sold for more than the asking price but he was anticipating a selling price closer to $550,000 or maybe as high as $565,000.

He chose the $499,000 asking price because he figured that price might also draw people who are looking at condos.

"I think that keeping under $500,000 was key," he says.

The sellers had purchased the house for $429,000 a couple of years ago. They invested about $11,000 in a small renovation on the main floor.

"You can imagine how happy they were," he says of the outcome.

Mr. Stevenson plans to list number 75 at $499,000 as well. He will also set an offer date seven days after it arrives on the market on Monday. He says he's not varying the strategy because there are still potential buyers out there who were drawn to the first house.

"The seller liked it, obviously, because it worked."

He says the sale at number 21 seemed to stir some optimism in other potential sellers and also investors who wanted to know about the potential for rental income in such a house.

Numbers reported by the Canadian Real Estate Association this week show that confidence is faltering in several real estate markets across Canada. Sales in Calgary, Edmonton and Saskatoon tumbled more than 20 per cent in January compared with January of 2014. Activity is slow in Ottawa, Montreal and the rest of Quebec.

Douglas Porter, chief economist with the Bank of Montreal, says the Canadian housing market is cooling notably – even outside of Alberta where the volatility in energy prices has caused a sudden reversal of fortune.

Toronto and Vancouver are resisting those headwinds, with rising sales and prices in both cities in January, notes Mr. Porter.

"We suspect that with borrowing costs still plumbing the depths and many provincial economies holding up, any housing correction will be a specific regional affair," he says.

Mr. Stevenson is sensing a lifting in the bidding war ennui that seemed to settle over the Greater Toronto Area market in the dwindling days of 2014. Some house hunters felt priced out of the market altogether and wanted to save up some more cash.

"There are some discouraged people," he says.

Since the Bank of Canada's surprise rate cut in January, however, he has noticed a renewed vigour on offer nights.

"I think the interest rate announcement put a little bit of spark back in people."

Still, another Leslieville house on a nearby street was listed around the same time with an asking price of $649,000. It didn't sell on offer night and was quickly taken off the market and relisted for $675,000.

"I think they listed too high for the offer date approach," Mr. Stevenson says.

Elli Davis, an agent with Royal LePage Real Estate Services Ltd., says she would be glad to see new listings pick up.

"I'm used to having much more to sell."

Real estate agents who find more of their listings among the single-family houses of popular Toronto neighbourhoods say new properties are scarce. Ms. Davis sells mostly in the mid-to-upper tiers of central Toronto.

"My phones are not as busy as usual," she says.

But a swell in inventory may be coming: over the Family Day weekend, Ms. Davis signed up three additional properties. She's preparing to list a small house in Rosedale and a three-storey in Forest Hill with asking prices just below $2-million. The third is a condo unit in Yorkville that will have an asking price of $1.795-million. All will arrive on the market within a couple of weeks.

One unit that she had listed near Yonge and St. Clair did not move in the fall. Ms. Davis took it off the market for a while, had it painted and staged, and it sold within a week when it was listed again in January.

She adds that many of the older condos being sold this winter are on the market because an owner is moving into a retirement home.

"That's a demographic that's very busy right now."

At the same time, the buyers are often couples who are selling a big house and downsizing to a condo.

In one case, she sold a condo in the Governor's Hill building near Yonge and York Mills within a week in the depths of January. The 3,000-square-foot unit sold for the full asking price of $1,629,000, she says. Ms. Davis says older buildings such as Governor's Hill are sought-after because they offer large units and buyers often consider they are getting better value for their money than they do in a newer building.