The Toronto-area real estate market may be mushy, but some buyers are coming to the table with steely resolve.
Boris Kholodov of Royal LePage Real Estate Services Ltd., Johnston and Daniel Division recently faced hard-ball tactics when he listed a house for sale in the midtown Summerhill neighbourhood.
“We had one exploding offer that was only good for a short period of time.”
Mr. Kholodov set an asking price of $3.6-million and stated that offers were welcome any time. He also asked that all bids be good for 48 hours.
This buyer refused to play by those rules. The offer came in at $825,000 above the asking price. The homeowner was given little time to ponder or round up competing bids.
“They gave us basically just the morning to decide,” Mr. Kholodov says .
While the seller considered the offer, Mr. Kholodov contacted the agents of the few potential buyers who had managed to see the house at 95 Macpherson Ave. One other couple scrambled to get a bid in, but it was not eye-popping.
The seller accepted the first offer.
“It was a difficult decision,” Mr. Kholodov says .
The house is extensively renovated, with automated blinds and underground parking for four cars, but those attributes are not what commanded such a premium.
“It was the only house available at the time on the market,” Mr. Kholodov says .
The seller found the decision tough because it’s tempting to think that the more people who see the house, the higher the bids will climb, Mr. Kholodov explains.
“At the end of the day, it was a fair and attractive offer.”
Prices have been rising in coveted Toronto neighbourhoods because inventory has been so limited. In the $2.5-million to $5-million segment, he says, buyers are looking for houses in move-in condition.
With the arrival of some warmer temperatures, listings are starting to swell. He thinks the market was held up in the first quarter by the adjustment to new mortgage rules in January, frigid weather in February and school holidays in March.
“Now that we have all of those things behind us, they have no more excuses. They want to sell. The time is now.”
The other reason a lot of people are not listing now is that they sold during the mania of early 2017. Mr. Kholodov says many downsizers were waiting for condo units to be completed. When they saw the prices in early 2017, they decided to sell sooner and rent for a while. He has dozens of clients who called him to say, “Let’s cash in.”
“I no longer get those calls,” he says. “I think we’ve exhausted that segment of the public that wanted to cash in. Those were the sellers who were supposed to list now or next year.”
The people listing today are more likely to be sincere sellers who want to move up or down, he adds.
Houses in the lower price brackets often trade more as a commodity because there are many similar properties, he says.
If a buyer is looking for a semi-detached home near Yonge Street and Lawrence Avenue, for example, there will be a new one arriving on the market every week, he says. They will all have three or four bedrooms and sit on similar lots.
“This is the type of product where, if you don’t buy one this week, there will be others.”
But in the higher price brackets, buyers are often particular about finding houses which have strong character, a corner lot, or a position close to a good private school, Mr. Kholodov says.
“There is a certain category that I would say is special. When they do hit the market, they attract many desperate buyers.”
This year, the business has become much more about brokering deals than putting a house on the market and seeing what happens, he is finding.
“I’m forced to approach homeowners and try to convince them to sell,” he says.
In one case, the sellers were thinking about selling, but they were not committed to selling so quickly, he says. In some cases, homeowners sell without their neighbours knowing until after they’ve moved.
“You’re not exposed to the whole world, which a lot of sellers prefer.”
A homeowner who sells privately is giving up exposure to a lot of buyers, Mr. Kholodov says, but that also gives the seller leverage.
The homeowner can say, “unless I’m very impressed with the number, I will stay put,” Mr. Kholodov explains .
In the popular Beaches neighbourhood and surrounding areas in the east end of Toronto, real estate agent Rochelle DeClute of Union Realty Brokerage Inc. is seeing a sudden spurt from buyers and sellers.
“I think everyone came out of the woodwork,” she says, with the first real stretch of spring sunshine.
When a vicious ice storm hit Ontario the previous weekend, Ms. DeClute’s firm cancelled some open houses at the request of the sellers. The ones that did go ahead had people trickling through.
“The weather was terrible but they all had a little bit of traffic.”
Fast forward to the most recent weekend and open houses were packed, she says. Internet hits on the DeClute site also jumped 30 per cent and homeowners are calling for evaluations.
In another twist, Ms. DeClute has been receiving more calls from realtors asking if her firm is taking on more associates. With fewer transactions taking place in recent months, many have seen their business shrink. She says some neophytes gain experience by assisting a busy, seasoned realtor. They can often make contacts and pick up listings that way. Now they are finding those opportunities have dwindled, she says.
“When the market’s changing, the clients are much more particular about who they’re using. They want to see a proven history.”
The mindset of buyers is much cooler this spring than last, she adds.
“Last year they were panic-stricken to buy,” she says. “There isn’t that fear and frenzy happening at all.”
Still, competition is intense around the $1-million mark, according to Ms. DeClute.
Derek Holt, vice-president and head of capital markets economics at Bank of Nova Scotia, warns that the Bank of Canada may still raise its benchmark interest rate this year. Mr. Holt is forecasting two more hikes in 2018.
The central bank “clearly signalled that it has more confidence in a firmer wage and inflation outlook,” he says.
Ms. DeClute says that buyers seemed more jittery about interest rates at the start of the year. New rules surrounding uninsured mortgages require the big banks and some other lenders in Canada to make sure buyers have the income to cover higher borrowing costs.
“People almost seem reassured by the new mortgage rules,” she says. “Because of the stress test, I guess they know they can handle it if [rates] change.”