In Toronto’s west-end enclave known as the Kingsway, many residents are familiar with one grand estate that has belonged to the same family since it was built nearly 100 years ago.
Because of that long tenure, real estate agent Leslie Battle of Royal LePage Real Estate Ltd. described 3 Kingsway Cres. as “a rare opportunity” when she listed the five-bedroom house for sale in November.
“It’s a very iconic property,” Ms. Battle says of the circa-1930 mansion, which backs onto a ravine above the Humber River.
With so few homes on the market and heavy buyer demand, she decided to list the property with an asking price of $6.2-million – and set a date for reviewing offers.
“One-hundred-foot frontages are extremely rare,” she adds.
On offer night, two bidders came to the table. Both said they had been passing by for years, wondering if the house would ever come up for sale. The buyers paid full asking price and the house sold after nine days on the market.
“If it’s a builder, the whole neighbourhood is going to cry,” Ms. Battle told the family. She received many calls from people who lived nearby.
She says the family understood that a builder might want to knock down the 90-year-old home but they are pleased that the new buyers plan to restore and renovate the five-bedroom house.
Inside, the house has rich wood trim and panelled walls, a grand staircase and a glass conservatory in the garden.
Ms. Battle says the property is unique, but what it illustrates to her about the broader market is the importance of the right price and strategy.
There are buyers for every house, she says, but agents need to know their market and their neighbourhood.
“It’s a very fast and volatile market, and you’d better know what you’re doing,” she says.
And while she does advise homeowners that the current low levels of inventory make this a very good time to sell, she doesn’t recommend listing a house that doesn’t show well. If the home is in need of repairs and cleaning, she works with the sellers to make sure it’s prepared.
“I would not throw a house on the market for the sake of it,” she says. “You only have one chance to hit a market.”
Shawn Lackie, a real estate agent with Coldwell Banker R.M.R. Real Estate, says having the right strategy is crucial in most areas and price segments.
Durham, east of Toronto, has been wildly popular in the past few years – but there, too, the market unpredictable. Sellers and their agents who set an asking price too high or use the wrong game plan will end up with a property that languishes.
Buyers, meanwhile, will pay tremendous premiums for some houses.
“There seems to be a lot more emotion in the purchase these days – it could be panic.”
Mr. Lackie says he’ll see a handful of properties sell below the asking price or with conditions attached to the offer and he’ll think the market is settling down.
Then another deal comes along that blows past expectations. He figures much of the fickleness comes down to timing and human idiosyncrasy.
“You’re always going to get a couple of people who are hyper-competitive. It’s not even so much about the house as winning the competition.”
Still, it’s common practice in the current market for agents to list properties with an attention-grabbing asking price, then hold back offers for a week or so with the intention of sparking a bidding war.
“The art of negotiation has sadly gone out the back door through all of this,” he says. “Everybody keeps pushing the envelope.”
Some properties sell for way more than expected and that keeps sellers’ expectations inflated, he says.
Mr. Lackie points to the rural community of Little Britain, Ont., where a house on a one-acre lot was listed with an asking price of $579,000.
“It had mould in the house, a leak in the basement – it was not well cared-for,” Mr. Lackie says. “They got $803,000 for it.”
In another case, a beaten-up bungalow on the main thoroughfare in Port Perry, Ont., sold for $705,000 after it was listed with an asking price of $599,999.
Mr. Lackie points to another deal where a house sold for $864,000 after the homeowner listed it with an asking price of $749,000 and held back offers for one week.
Soon after, a neighbour put his house on the market with an asking price of $849,000 and an offer date one week later.
“This hit the saturation point,” Mr. Lackie says. “They didn’t get offers.”
The seller reduced the asking price to $819,000 and ended up settling for about $800,000, Mr. Lackie says.
Mr. Lackie suspects the seller spooked buyers by setting the original asking price too high. The tactic backfired and the seller ended up with less than his neighbour, Mr. Lackie points out.
Mr. Lackie is convinced that prices will eventually level off – but he doesn’t know when.
“It’s just not sustainable,” he says of the dramatic run-up.
Mr. Lackie says banks are being careful these days because interest-rate hikes are on the horizon. They don’t want borrowers to become overburdened with debt.
“These people are right to the wall with their mortgage.”
As prices climb, parents are increasingly helping their adult children to buy a first house or move up to a better one.
“The bank of mom and dad is probably the leading financial institution in the country right now.”
Stephen Brown, senior Canada economist at Capital Economics, is surprised to see the national market going haywire again as 2021 winds down.
“The housing market started slowing in April, and our assumption was that, with borrowing costs rising, there would be a further loss of momentum in the final stage of the year. Instead, the opposite has occurred.”
Canadian Real Estate Association data show sales rose 8.6 per cent in October from September, while the average price jumped 2.7 per cent in the same period. That appreciation is equal to an annualized rate of 37 per cent, he points out.
This will make the Bank of Canada concerned that the renewed rise in house prices is because of “extrapolative expectations” – with buyers assuming the market’s strong run will continue indefinitely, he adds.
Mr. Brown says the central bank may raise interest rates sooner than his forecast of a mid-July hike as a result, but he also estimates that the economic hit from the devastating floods in British Columbia will reduce the chances of the bank becoming more hawkish any time soon.
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