Homeowners hoping to sell a house in the Toronto area for a jaw-dropping premium may be disappointed during the dwindling days of October.
David Fleming, a real estate agent with Bosley Real Estate, is envisioning deflated sellers sitting around the dining room table, wondering why their property didn’t inspire the skirmish they expected.
“The eight people that they expected to bid are going to turn out to be three,” Mr. Fleming says.
One reason for that bracing assessment is that a crowd of hopeful sellers listed their properties for sale as soon as Thanksgiving was over, Mr. Fleming says.
Another aspect is that the Toronto-area market is still capricious – even as the latest numbers show the overall market gaining strength in sales and prices, Mr. Fleming says.
“There are properties that are selling for numbers we never thought possible and others don’t sell for what we thought they would – or don’t sell at all,” Mr. Fleming says.
The latest numbers from the Canadian Real Estate Association (CREA) show that sales advanced for the seventh consecutive month in September. The MLS Home Price Index rose by 1.3 per cent last month compared with September, 2018.
“Home sales activity and prices are improving after having weakened significantly in a number of housing market,” says Gregory Klump, CREA’s chief economist. “How long the current rebound continues depends on economic growth, which is being subdued by trade and business investment uncertainties.”
Mr. Fleming says the relative vigour has encouraged more sellers and their agents to try the strategy of listing a property at a low asking price and setting a deadline for submitting offers, which often sparks competition and large premiums to the asking price.
In coveted first-time buyers’ territory, a lot of new listings came out right after the Thanksgiving long weekend, Mr. Fleming says.
“Everyone had the same thought – ‘We’ll wait until everyone’s back,’” he says.
Mr. Fleming says people who set an asking price of $799,000 or $899,000 when comparable houses have sold above $1-million are going to be lucky to break through that mark.
“You’ll be lucky to get $1-million, let alone the premium you expected for listing low.”
But Mr. Fleming adds that the GTA market has been swinging between hot and cold – almost from one week to the next – since after Labour Day.
“That’s what makes this market so tough – one week to the next can make a major difference in this market.”
He points to the example of a two-bedroom condo unit he listed in a prominent building downtown. He figured the unit – in the $750,000 to $800,000 range – would sell in a day.
The unit was sparkling clean and staged with attractive furniture, but it sat for two weeks so the seller agreed to reduce the price.
At the discounted price, the unit quickly received two offers and sold above asking.
“You end up getting two people bidding it back up somewhere between the old and the new price,” Mr. Fleming says. “That’s been the fall market in one listing.”
Mr. Fleming says one possible explanation is that another unit in the same building that came up for sale three days earlier – a unit he calls “ugly, gross and tenanted” – confused the market.
At the other end of the spectrum, some deals are leaving agents baffled by the intensity of the action.
Mr. Fleming points to one east end house that was listed with an asking price of $999,000. He estimated it would go for somewhere between $1.4-million and $1.5-million. The sellers received 22 offers and the house sold for just short of $1.6-million.
“There’s absolutely, positively nothing to justify that price,” he says.
Buyers are even tussling over properties farther up the price ladder.
In the popular family neighbourhood of Leaside, one house was listed with an asking price of $3.5-million and sold for $4.3-million – or $800,000 above asking.
Soon after, the house immediately across the street was listed with an asking price of $3.6-million. It sold for $4.3-million as well.
“These two sales in Leaside just rocked everyone’s world,” he says.
Mr. Fleming says those two sales suggest to him that at least some buyers are more confident than they were in the spring.
“I think those people believe the market is in its bull phase, not its bear phase.”
The fickle nature of the market means that some buyers and sellers are striking good deals while others are struggling, in his opinion.
“There are experienced agents out there getting burned and there are buyers and sellers out there getting burned.”
He has also noticed a new trend of house hunters submitting lowball offers, whereas they were waiting for price reductions if they thought a property was too expensive in the past.
“People are trying things,” he says.
Mr. Fleming represented one pair of buyers who had some luck when they decided to submit an offer on a detached house in the Eglinton West area.
The house had been sitting for a short while with an asking price of $790,000.
Mr. Fleming’s clients submitted an offer of $750,000 with no conditions – and the sellers accepted.
“We offered $750,000 just as an opening salvo,” he says. “I was shocked at how quickly they gave up.”
Mr. Fleming says the inconsistency makes it difficult for the average buyer who is just cruising the listings online to figure out what a house might sell for.
“On the one hand you’ve got properties selling in 20-offer melees and on the other hand you can offer less than the asking price and end up getting it.”
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