High-end real estate is showing signs of a rebound.
Last week in Toronto’s Beaches neighbourhood, two very large houses in choice locations found new owners.
Nothing remarkable about that if the house is listed for, say, $800,000, but both of these had asking prices in excess of $2-million. And both of these properties - one on the waterfront, the other backing onto a ravine - were listed last fall and languished on the market, say brokers Rick and Rochelle DeClute.
At the time, many agents were talking about the fear that seemed to have permeated the echelons above $2-million or so.
The DeClutes have been amazed how eager buyers in the upper tiers of the market seemed to be this February.
“That was surprising to see those two go in a week,” says Mr. DeClute.
The house on the water sold for just under $3-million after a total of eight months on the market.
The house on the ravine, says Ms. DeClute, is one of those Beaches landmarks with a lovely property and a separate coach house residence in the back. Ms. DeClute’s grandmother - the first of the three generations in her family to sell real estate in the neighbourhood - was once the owner.
The price had been reduced since the fall and this time it was on the market for a month before two buyers competed for it and it sold for just under $2.5-million.
“I was so surprised that it hadn’t sold sooner,” Ms. DeClute. “But that confidence level has certainly returned at the high end.”
Ms. DeClute says she was able to draw more than one bid because agents representing potential buyers had asked her to keep them in the loop if an offer was on the way.
“Real estate is emotional,” she says. “It becomes more appealing when someone else wants it.”
Real estate mavens can also gauge enthusiasm by the traffic at the open house and the number of agents’ business cards left on the hall table.
“Agents are well aware when interest is building,” she says.
Last summer and into the fall, the crisis in Greece was at its most dire and financial markets were tumultuous.
She gets the sense that wealthy buyers are more confident about the economy and financial markets.
As well, people buying at the high end in the Beaches are often trading up within the same neighbourhood and so they have seen great gains in the price of their existing house as well.
For the most part these buyers aren’t taking on mortgages, so they are not as swayed by low interest rates as first-time buyers are.
Speaking of first-time buyers, that segment of the market continues to be “absolutely crazy”, she says. Buyers in the middle price ranges outnumber the listings available.
The DeClutes point to another more typical Beach house that sold last week with six offers. The winning bid was more than $1-million.
“There wasn’t anything else out there,” says Mr. DeClute.
This lack of listings has been a lament for a few years now and the situation only seems to get worse.
I regularly invite readers to weigh in and one who made some very good points about the dearth of listings was Alison Baxter.
“I moved from Kingston Township to Toronto more than 20 years ago and to this day have not adjusted to the insanity of Toronto real estate,” she wrote in an e-mail. “Neither can I get used to the idea that a couple of hundred thousand dollars more or less on a mortgage is pretty much nothing in the scheme of things,” she says.
In Ms. Baxter’s opinion, the shortage of listings is driving the market more than the ultra-low interest rates.
The cost of moving from one desirable neighbourhood to another more desirable neighbourhood is immense, she points out. Moving from Leaside to Lawrence Park, for example, can’t be done for less than an additional $750,000 to $1-million.
“Because of bidding wars, no agent can tell the vendor exactly what his house will sell for, or what the house he wishes to purchase will cost. This uncertainty can potentially result in paying hundreds of thousands of dollars more or less than is budgeted for.”
She also points out that real estate fees, land transfer tax and City of Toronto tax can add up to about the same amount as a dream kitchen renovation, so homeowners feel they may as well stay put.
Ms. DeClute also points to the vicious cycle of homeowners hesitating to sell until they have bought their next house but having trouble finding that move-up house to buy. It also takes a leap of confidence to buy first.
Mr. DeClute had been experiencing that angst first-hand.
He and his wife recently bought a house facing the lake and listed their renovated Beaches Victorian for sale for $1.189-million. He decluttered, had the house staged and moved his family out for a week. This week, the work paid off - and bolstered the view that high-end buyers are getting their brio back: The DeClutes received six offers and the house sold for $1.327-million, or $138,000 over asking.