People are finding all kinds of unconventional ways to get into Toronto’s frenetic housing market. With listings scarce, potential buyers are trying to expand their options.
At 29 Glenlake Ave., near Bloor and Dundas Street West, one traditional old High Park house had been converted into three units.
It was listed for sale with an asking price of $899,000 and sold last week for $1.15-million.
Agents Carmen Krasevac and Andrea Morrison of Royal LePage Real Estate Services Ltd. had booked 48 showings and held two open houses during the week the property was on the market, so they knew buyers were eager, but they were surprised at the outcome.
“We had eight offers,” Ms. Krasevac said. “You just never know where the market will take the product.” Ms. Krasevac says the seller, who lives in one unit and rents out another, was ecstatic with the outcome.
The selling price was much higher than any of them anticipated.
Ms. Krasevac is also a bit surprised that the buyers plan to convert the house back to a residence for their family because the units were so nicely finished. But with single-family dwellings so hard to come by, the usually harder to sell multi-unit houses are now much more palatable.
Ms. Krasevac adds that lots of investors were looking at the property.
“We could certainly use twice as many,” she says of the duplexes and triplexes on the market.
Tam Boyko of Keller Williams Realty Solutions Inc. recently sold a three-unit property in Long Branch to one family that plans to divvy it up among the generations.
The property with an asking price of $985,000 sold conditionally for just below that amount the second day on the market. Even after the “sold” sign went up, prospective buyers continued to call about the building, which is just two blocks from Lake Ontario, she says.
The property at 31 Muskoka Ave., is a legal duplex and also has a lower-level apartment. The grandparents will live in the top unit, a couple will take the main floor and a younger family member will live in the basement unit, she says.
“This one is an exceptionally nice one because it has a really beautiful lot,” she says.
Ms. Boyko says some of the prospective buyers were thinking about living in one unit and renting out the rest, while others were looking purely for an investment.
Ms. Boyko says multi-unit properties like that are rising in value very quickly.
“They’re very versatile buildings,” she says. “It’s a really hot area.”
At 432 Markham St., just south of Harbord, Freeman Real Estate Ltd., represents the seller of a large, red-brick Victorian divided into three units.
Real estate agent Elden Freeman says he has been booking four or five showings a day for the Little Italy property with an asking price of $1.849-million.
At an open house on Sunday, Mr. Freeman spent time with a couple expecting their second child. They were contemplating living in one unit and renting out the others until they could gradually take over the entire house.
Mr. Freeman says it’s a good way for first-time buyers to get into the market, or for move-up buyers to purchase a house in a better neighbourhood that they otherwise couldn’t afford.
The gross income currently generated by the rentals adds up to about $95,000 a year, says Mr. Freeman.
Mr. Freeman adds that some lenders are currently offering residential interest rates for investment properties.
Toronto-Dominion Bank also reported this week that real estate buyers in Canada are becoming more creative as they find non-traditional ways to purchase property.
A recent online survey conducted for the bank by Environics Research found that 25 per cent of Canadians who bought a house in the past two years or plan to do so in the near future are going it alone. Four in 10 people surveyed also said that buying a property with friends or family is a great way to get started.
Michelle Snow, associate vice-president of retail products at TD, says co-purchasers have to do a lot of talking beforehand to figure out how mortgage payments will work and other issues.
“The real estate market may move fast but that doesn’t mean you have to rush your decision,” Ms. Snow said.
This week the Real Estate Council of Ontario cautioned home buyers against getting too carried away in nerve-wracking. RECO released results of a study in which 51 per cent of respondents say they were swayed by emotion when buying a house.
The same homebuyers ranked price, function, structural integrity and neighbourhood quality very highly while they were house hunting, but they admitted to being swept up in the frenzied market when it actually came time to buy, says Joe Richer, registrar of RECO.
Younger buyers are particularly susceptible: 64 per cent in the 18 to 34 age bracket acknowledge that emotion got the better of them.
In fast-paced markets such as Toronto, where its common for lots of competing buyers to vie for one property, 15 per cent of the respondents admitted to going beyond their budget to secure a house. In the younger set, that figure swelled to 25 per cent.
“When you’re in a hot market, it’s so easy to be caught up and say ‘we really, really want this place,’” Mr. Richer said.
Mr. Richer says RECO commissioned the Angus Reid study after hearing anecdotally about consumers who were having difficulty navigating the market. RECO, which oversees the real estate profession in Ontario, also sets up shop at bridal shows and other conferences where potential house hunters are gathering information.
The regulatory body is launching a public education campaign called Be Home Smart in order to further protect consumers, says Mr. Richer.
He says consumers do seem to be well-informed about financing and the ins and outs of making a purchase but they can be surprised by items such as closing costs.
The survey found that 43 per cent of homeowners reported closing costs were higher than anticipated. For the younger 18-to-34 contingent, that figure jumped to 54 per cent.
Mr. Richer also finds it interesting that men and women differ in their strategies: About 73 per cent of women surveyed would ask a real estate professional for advice, while only 63 per cent of men would. Of the men who participated, 37 would feel just fine going with their own research and gut instinct; only 27 per cent of the women would go with a hunch.
To conduct the online survey, Angus Reid drew on 505 randomly selected Ontario adults who own their house. The margin of error is plus or minus 4.4 per cent, 19 times out of 20.
Mr. Richer says that calls to RECO’s complaint line also suggest that younger people are the ones most likely to end up outspending their budgets, but often the calls are coming from their parents. He suggests that young buyers would likely do well to seek that advice from the older generation before they jump into the market.
In many cases, he adds, the calls are coming from the parents who are worried about their children – possibly because the parents helped out with the down payment.
“Parents really, really want to help their kids,” he said
Agents also expect listings to swell when Toronto comes out of the deep freeze. More listings should ease some of the pressure to compete in bidding contests.
Ms. Boyko points out that sellers are often reluctant to list until their houses and gardens are looking their best. They’re also afraid to put their own houses on the market before they’ve found another property to buy.
She expects that a rush of new listings will arrive with better weather.
“I think it’s going to go completely crazy in minutes,” Ms. Boyko said.