Toronto’s real estate market is still full of vigour but signs are emerging that some buyers are growing weary. In cottage country, meanwhile, sales are just waking up.
In the Greater Toronto Area, bidding contests are still common even in neighbourhoods far from the core. But if there’s one defining theme in the spring of 2015 it’s the prevalence of bullies who would rather make one bold move than risk waiting around for the scheduled offer night.
A two-level condo unit at 40 Oaklands Ave. in the Summerhill neighbourhood didn’t make it to the deadline before selling last weekend for $1.450-million, or $225,000 above the asking price of $1.225-million.
When a “pre-emptive” offer came in for Unit 303, real estate agent Kara Reed of Chestnut Park Real Estate Ltd. contacted the agents of other prospective buyers who had visited the property. That brought two more bidders to the table.
The bully bidders prevailed with their offer at 18 per cent above the asking price for the former home of the venerated author, the late Robertson Davies.
The seller is Ingeborg Vorst of Toronto-based NES Designs Inc. She purchased the unit just over a year ago and worked with architect Andrew Thorpe of Toronto-based RAW Design to transform the corner suite.
The low-rise building near Avenue Road and Dupont was designed by architect Macy DuBois of the DuBois Plumb Partnership. In 1983, the project was awarded a Governor General’s Medal in Architecture.
Ms. Vorst paid $755,800 for the unit, which had – in contrast to this year’s flurry – languished on the market for 87 days.
Ms. Reed says it has been a trend in the building for designers to come in and remake some of the dated, older suites. “It really took that kind of vision,” she says. “Buyers are coming in and making them stunning.”
Ms. Vorst says the renovation involved completely opening up the unit, which has three bedrooms, three bathrooms and two terraces. Ceilings were smoothed and ducts, pipes and concrete were all exposed. A new staircase of steel and tempered glass connects the two levels. The kitchen now has white lacquered cabinets and Ms. Vorst says she used antique barn boards to create bookshelves as an homage to Mr. Davies.
Ms. Reed says prospective buyers were intrigued by the connection with Mr. Davies, who was one of the country’s most influential novelists and a founding master of Massey College at the University of Toronto. “That was a nice bonus, but it didn’t have any bearing,” she says of the history – the buyers purchased the unit because they wanted to live near their grandchildren.
Meanwhile, the “wealth effect” some Toronto homeowners feel from dizzying real estate prices seems to be spilling over into sales in Muskoka’s cottage country.
Paul Crammond of Chestnut Park’s Port Carling office says 95 per cent of buyers in Muskoka are from the GTA.
Some people are feeling extremely confident after seeing their Toronto houses rise in value, he says.
Others, he says, have been discouraged by trying to move up in desirable Toronto neighbourhoods. They’re giving up and looking outside the city.
“They’re going to put that extra money into a cottage instead.”
So far this year there seems to be a shortage of listings on the big three - lakes Joseph, Rosseau and Muskoka, he says.
Mr. Crammond notes that the combination of a late spring and early Victoria Day Weekend have prospective sellers rushing to open up the cottage, rake the leaves and set out the Muskoka chairs.
A few high-priced properties changed hands in January, he says, as buyers cycled back to look at cottages they were considering in the fall. In some cases they may have even tabled offers, he adds, but couldn’t negotiate a deal.
In the depths of winter sellers and buyers are often more willing to budge because they don’t want to start over in the spring.
“I think there was probably movement on both sides,” he says. “They say ‘let’s just try to compromise a bit and get this done’.”
One point of land that found new owners this winter is located on Lake Rosseau, near Windermere.
The cottage, with 1,400 feet of waterfront, had been in the same family for more than 100 years and changed hands at around the $4-million mark.
“We’re not seeing those huge tracts of land so often any more because most of them have been cut up,” he says.
Another factor that could come into play this summer is the relative depreciation of the Canadian dollar against the U.S. currency, Mr. Crammond adds. Expatriates in particular are often keen to buy in cottage country if they are living in Europe or the United States and being paid in U.S. dollars. Compared with previous years, the decline in the loonie could amount to a 25 per cent or 30 per cent discount, he points out.
Mr. Crammond says Toronto residents are so tired of wrangling with the city’s traffic that minimizing their time in the car once they get to cottage country has become a top priority. Prospective buyers ask how far they’ll have to drive to play golf, go out for dinner and buy groceries.
“They’re also very aware of where their childrens’ friends are on the lake.”
Some don’t want to be more than a 10-minute drive from their golf club.
That’s how focussed some of the buyers are.”
Mr. Crammond says buyers are also increasingly reluctant to take on a major renovation or building project.
“They want to be able to move in and enjoy everything about the cottage pretty darned quickly.”
Mr. Crammond says some cottage owners who live in Toronto assume they’ll be facing a very heated market when it comes time to sell the cottage.
“They’ll say, ‘We don’t want to look at offers for a week.’ ”
Agents have to explain to those sellers that multiple offers are extremely rare. Recently, Mr. Crammond listed a cottage for sale on a Friday and it sold on Sunday, but that’s an unusually quick sale, he says.
“It can take months – even years – to sell a property up here, even when the price is right.”
Meanwhile, a fixer-upper in Leslieville had the neighbours talking last week when it received 13 offers and sold for $720,000, or $181,000 above the asking price of $539,000.
Agent Cameron Weir of Keller Williams Advantage Realty says the house at 322 Logan has parking for two cars and a coveted location. He knew the asking price would likely bring in a handful of offers but he was surprised at the spirited competition. “It was a really close race,” he says.
The house was dilapidated, with plaster falling from the ceiling in the living room, a shabby kitchen and a musty odour. “I literally had my table set up outside for the open house,” says Mr. Weir.
He says the house was sold in full “as is” condition, meaning the agents made no attempt to fix it up in any way. About 120 people turned up at the open house and another 45 parties booked showings and every single person said it would need to be completely gutted, he says. “We knew what we had.”
Mr. Weir says he believes the buyers intend to renovate the house and live in it. Buyers are having such a difficult time finding single-family houses in downtown neighbourhoods that they are willing to make the investment, he adds.
Still, some cracks are beginning to appear in buyers’ resolve – particularly in the entry-level price range, says Sohail Mansoor, an agent with Royal LePage Signature Realty. “That’s where we’re seeing a lot of that frustration.”
Mr. Mansoor says this is the time of year when a lot of house hunters need to take a break. In some cases they’ve spent months repeating the pattern of looking at a new listing, waiting a week to make an offer, then losing out. “It can be emotionally draining to have this constant cycle.”
Some house hunters change strategies by switching from single-family homes to condos. Others begin looking farther out in the GTA.
This week, Mr. Mansoor chatted while he drove to Ajax to help his clients review offers for their three-bedroom detached house with an asking price of $539,900. During the drive, he already had three offers on the house and thought a fourth might arrive by the time he arrived at his destination.
Another listing at 85 Lake Promenade in Etobicoke didn’t receive any bids on the night set aside for reviewing offers earlier this week.
That house, with an asking price of $2.1-million, is fully renovated and backs right onto Lake Ontario.
Mr. Mansoor says the location and price narrow the buyer pool compared with the family home in Ajax or a semi downtown, so he wasn’t shocked that they didn’t ignite a frenzy. “Multiple offers are unpredictable,” he says.
He says many agents set an asking price far below market value in order to spark a bidding war, but he didn’t use that tactic. “The strategy of underpricing a property and expecting multiple offers is a risky move that can backfire,” he says.
He’s seen cases where a house gets five or so offers in one night, but they are all low-balls.
Sellers who price too low and don’t receive offers will sometimes pull the property off the market and list again at a higher price.
That strategy can infuriate potential buyers and their agents, he says.
In the case on Lake Promenade, the homeowners are very level-headed, he says. They also know that having a house right on the lake will appeal to many people and the right buyer is sure to turn up, he says.
“They understand the market. They weren’t blindsided by it. There’s no panic.”