For Kimberly Ukrainec, the morning began much like any other as she made coffee on a recent Thursday in her two-bedroom condominium unit near Jarvis and Wellesley in Toronto.
But events quickly gained momentum as Ms. Ukrainec fielded three offers to buy her condo, monitored the ensuing face-off, and sold it to the highest bidder before entering into a contest of her own for a townhouse in Liberty Village. By the time she switched off her cell phone late that night, she had endured two skirmishes, sold one property and bought another.
Ms. Ukrainec's whirl about sums up the pace of Toronto's fall 2009 real estate market. Market dynamics have reversed since the early months of 2009 when buyers were scarce and sellers were nervous. Now, buyers are the ones who are anxious that they won't find somewhere to land.
“If I hadn't won that bidding war, I would have been in a panic every day,” says Ms. Ukrainec, a marketing manager.
Ms. Ukrainec was also astonished that her condo unit sold within two days. The quick deal allowed her to make an unconditional offer to purchase the townhouse.
Her real estate agent, Samantha Hewit of Royal LePage Signature Realty, says she often advises people to buy first because listings are so tight.
That scarce supply becomes a self-perpetuating problem because it discourages homeowners from trading up.
“People realize that if they list, they have nowhere to go.”
The more buoyant market is also giving sellers the confidence to once again dictate the date and time at which they will consider offers.
Sal Guatieri, senior economist at BMO Nesbitt Burns, says he and many others on Bay Street have been taken aback by the fast recovery in real estate across the country.
Low interest rates are driving the turnaround, he says.
“More startling than the rebound in sales is the sharp recovery in prices,” he adds.
Mr. Guatieri points out that real estate in the United Kingdom has just started to turn up, while in the United States the market appears to be stabilizing.
In Canada, the Vancouver and Toronto markets, which fell fastest during the correction, have seen the strongest rebounds.
Looking ahead, Mr. Guatieri expects sales to follow an upward trend, but at a cooler pace.
The current flurry is partly caused by the pent-up demand from all of the potential buyers who scattered last winter and spring. Eventually that excess supply of purchasers will be exhausted.
At the same time, interest rate cuts won't boost the market the way they have in the past because rates don't have any farther to fall, he points out.
While Mr. Guatieri is not expecting rates to rise soon, an eventual increase is sure to cool real estate sales.
“You won't get much further lift,” he says.
The economist says the annual rise in existing house prices between 2002 and 2007 was, on average, two to three times faster than the increase in family incomes during the same period.
When prices are outpacing incomes, many people simply drop out of the market.
Toronto could see a return to those days, he cautions.
“If home prices continue to rise sharply, affordability will take a hit.”
Real estate agent Paul Maranger points out that the number of listings in central Toronto shrank 38 per cent in August compared with the same month last year.
Mr. Maranger, Christian Vermast and Fran Bennett form the Trilogy Group of agents at Chestnut Park Real Estate Ltd. The team has been working with plenty of prospective buyers but there is a dearth of houses available to show them. Mr. Maranger says move-up buyers won't risk selling their existing property until they have signed a deal on a new one.
“A lot of people are not ready to move until they find the perfect home,” he says.
