Home sales in TorontoDEBORAH BAIC
It doesn't take much to provoke a bully in Toronto's spring housing market.
Houses for sale are scarce and potential buyers are in a combative mood.
"Buyers are more aggressive," says agent Rochelle DeClute of ReMax Hallmark Realty Ltd., who scrambled on a recent Sunday night to bring four potential buyers to the negotiating table.
Ms. DeClute had spent the afternoon greeting potential buyers at the open house in the upper Beaches neighbourhood. The sellers planned to review any offers at a set time later that week but one buyer pre-empted that plan with an offer that night - good for three hours only.
Ms. DeClute quickly contacted agents who had brought their clients to see the house and found three interested in making an offer. The so-called bully prevailed with a bid so far above the asking price that none of the other offers came close.
Ms. DeClute says bullies take a strong stance: "Maybe the sellers want to see offers on that date but I'm putting in my offer now and it's good for a very short time," she says in summing up the opening salvo.
In previous years, bullies often used the element of shock to their advantage because sellers and competing bidders were so disconcerted by the unexpected offer. Not only are such offers more common this spring, but people have become accustomed to them and they are more willing to join the fray, says Ms. DeClute. As a result, bullies are losing more often than they used to.
The Toronto Real Estate Board reports that listings in the Greater Toronto Area in March dropped 11 per cent from the same period in 2010. Sales slipped 11 per cent year-over-year. The average price, meanwhile, came in at $456,147 which is a 5 per cent jump from March 2010.
A blast of snow and colder-than-usual temperatures this March may have discouraged some sellers from listing sooner, agents say.
Meanwhile, tighter lending qualifications came into effect March 18th. As of that date, the federal government will no longer insure mortgages with amortization periods of longer than 30 years. Agents say the impending changes may have prompted some first-time buyers to move sooner in making a purchase, but the impact on the broader market was slight.
Real estate agent Geon van der Wyst helped one client to buy a junior one-bedroom condo unit near St. Lawrence Market just before the new rules came into effect.
"Typically they don't have a lot to spend," he says of the buyers affected by the new rules restricting how much they can borrow.
A bigger factor in Mr. van der Wyst's view is the lack of inventory.
He was ready to whisk his client off to see a four-bedroom detached house in Moore Park late last month when the agent representing the seller called to cancel.
"I didn't even get a chance to get a viewing in and there was a bully offer," says Mr. van der Wyst of Royal LePage Real Estate Services Ltd.
The "bully" offered nearly $200,000 over the asking price of $1.295-million and therefore muscled all rival buyers out of the way before a contest could even get started.
Mr. van der Wyst says he would like to see more listings because buyers become frustrated when they have to compete in a frenzied market. He already has a couple of clients who say they will just sit back if a house attracts more than one offer.
"I hope the market does settle down a bit to a little bit of a balanced market because I think buyer fatigue could set in."
Often the listing agent sets an artificially low price in order to draw attention but Mr. van der Wyst thinks more realistic prices would be better for the overall market.
Toronto-Dominion Bank senior economist Pascal Gauthier believes the real estate market nation-wide is settling into a comfortable zone after experiencing strong bouts of volatility over the past three years.
He expects sales to ease in most parts of the country as interest rates rise, but the activity should be strong enough to keep a floor under prices, Mr. Gauthier adds.
Asked whether the upcoming federal election will have an impact on the real estate market, most agents surveyed said no. Mr. van der Wyst was the exception.
"Yes," he quipped. "It will make it harder to see our signs."
Carolyn Ireland