Real estate agent Chander Chaddah had some dispiriting advice for his clients recently. The potential buyers wanted to submit an offer on a house for sale near St. Clair and Christie.
The house was tired but respectable and the asking price was about $900,000.
“I told them, ‘there's no point guys – it's going to be a bloodbath',” says Mr. Chaddah, broker at Sutton Group-Associates Realty Inc.
When the bids were tabled, the triumphant buyers had offered $200,000 over asking.
“And it needs another $200,000 in renos,” adds Mr. Chaddah, who says his clients couldn't have come close to competing in that contest.
The early spring market in Toronto has set a blistering pace.
“This is my sixth weekend without a day off,” says Mr. Chaddah, scrolling through his schedule. “And I'll put in 20 hours this weekend.”
As another measure of the market's temperature, Mr. Chaddah points to the sale this month of three houses by Toronto Community Housing.
“That was insane,” he says of the action around a semi on Crawford that backs onto the swimming pool at Christie Pits.
Potential buyers “were like flies to honey” when the three houses went up for sale on Crawford Street, he says.
Many house hunters thought they might snag a house for a juicy price, but the bidding was so intense that asking prices in the $400,000s were meaningless. That semi on Crawford went for about $750,000 while another a few doors north went for about $780,000.
Many industry watchers are questioning the sanity of buyers.
One who raised his eyebrows recently was the father of a young couple who outbid the pack to purchase a starter house near Bloor and Symington.
The property was listed for approximately $459,000, Mr. Chaddah recalls, and the couple prevailed with a firm offer of $540,000 or so.
They attached no conditions to their offer because Dad had promised to help with the money.
That all changed once the father found out how much the couple had bid, says Mr. Chaddah.
“He thought they overpaid so he wouldn't advance the financing.”
In the end, the sellers released the young couple from the deal and sold to someone else but not without some consternation all around, Mr. Chaddah says.
“Can you imagine the family dinners after that?”
Mr. Chaddah blames the big banks for this current market frenzy.
When one lowered its rate on some mortgages to 2.99 per cent last month, rival banks lowered theirs.
Mr. Chaddah believes the bankers wanted to stir up some business during the winter doldrums – even as they are warning consumers to rein in their debt.
“They say everybody has to be more cautious – then they open up the gas tank and pour this massive amount of gas on the fire.”
He says buyers then feel pressure to lock in a deal while that mortgage rate is available and they end up increasing their bid for the house, which wipes out any savings from the lower interest rate. Mr. Chaddah would like to see things calm down a bit because many buyers from years past, he says, have not been paying down their mortgage. If interest rates rise, they will struggle.
Like many, he's surprised that rates have remained low as long as they have. Now, he's not so sure that Canada won't be in for a long stretch of low rates.
For now, he'd like to see less intensity in the market.
The City of Toronto is still deciding how to handle the sale of hundreds of other TCH houses. Councillors were expected to discuss the plan today.
Mr. Chaddah's advice?
If the City wants to sell them, there is no better time, given the current mood.
He figures he won't have a weekend off until cottage season. But people are always gung-ho in the spring, he notes.
“By July, I'm crispy-fried."