Buyers in the Toronto-area real estate market appear to be moving with great speed this January as they pounce on the very rare listings that appear.
“People just aren’t wasting time,” says Davelle Morrison, broker with Bosley Real Estate Ltd.,
Ms. Morrison says the new year is typically quiet but the rare listings that do appear on the market are immediately swarmed. She has noticed a trend to houses selling with zero days on market.
In such cases, a “for sale” sign appears, a buyer gets in the first day and strikes a deal quickly in order to circumvent any competition. Often the buyer dangles a very high number in order to entice the seller to sign quickly.
“The inventory is incredibly low – it’s the lowest that we’ve ever seen,” she says. “The next question is going to be, how does this affect prices?”
Ms. Morrison says she knows of some potential sellers who are waiting in the wings but, unlike buyers, they are in no rush. One investor has a tenant in a condo unit and that sometimes makes showings difficult. Others are move-up buyers who would like a bigger home but won’t sell an existing home until they’ve found it.
“There’s not a ton of people looking to sell right now.”
In some cases, move-up buyers will sell their current home plus an investment condo in order to raise the funds they need for the next jump up.
For first-time buyers, Ms. Morrison recommends that they forgo their “Champagne tastes.”
“Accept, like and embrace the properties that are available to you on your beer budget,” she says.
Often buyers start out saying they want a house that’s move-in ready, she says, but they give up on that notion once they see how far their budget will take them.
People searching for a first house might look around Eglinton Avenue West and Weston Road, she says, where the Eglinton Crosstown LRT will improve access to transit, she says.
In the east end, the area around Danforth Avenue and Main Street also has some relatively affordable houses, she says.
In North York, areas around Dufferin Street and Highway 401 can be a good starting point, she says.
Prodypto Sarbadhikari, broker with Sutton Group Realty Systems Inc., expects the market to be busy in the coming weeks with buyers trying to purchase a property while they can take advantage of pre-approved mortgage agreements.
He says some house hunters have pre-approved mortgages with a low interest rate locked in and they want to find a house before the agreement expires.
Economists are forecasting that the Bank of Canada will raise interest rates in 2022.
Stephen Brown, senior Canada economist at Capital Economics, believes the central bank’s latest business and consumer surveys suggest the upside risks to inflation over the next couple of years have increased and raise the chance that the trend-setting committee will raise its key rate as soon as next week.
According to Mr. Brown, the standout development in the latest surveys is that the share of firms facing product and labour shortages surged again. Those intensifying trends put upward pressure on prices and wages.
“In light of these surveys, it looks inevitable that the Bank will raise interest rates very soon,” Mr. Brown says.
The economist had figured the Bank would be too concerned about the negative optics to raise rates during the Omicron wave of the pandemic and would instead tee up a hike in March or April.
“Given higher inflation expectations and signs of further upward pressure on wages, we certainly wouldn’t rule out a rate hike next week,” he says.
Mr. Sarbadhikari says low inventory and lofty prices are creating a challenging backdrop for any buyers searching for a single-family home.
Recently he worked with one client who sold a condo unit with the aim of moving up to a house in the $1-million range.
“I initially though there is no way we’re going to be able to do this,” Mr. Sarbadhikari says. “We really had to search.”
Mr. Sarbadhikari found some pockets of Scarborough with cute starter homes. He also discovered beautiful Victorian and Edwardian-era houses in the former village of Weston.
The area west of Jane Street and north of Lawrence Avenue West is not well-known to many urbanites, says Mr. Sarbadhikari, who was snapping photos on his cellphone as he walked along the tree-lined streets.
“I would send it to someone and say, ‘Guess where I am right now.’”
Prices in Alderwood, an area within Etobicoke, are still lagging nearby areas of Long Branch and Mimico, he says.
Alderwood, south of the Gardiner Expressway, has many homes on 50-foot wide lots. The area does not provide as many options for transit as some more pricey neighbourhoods, Mr. Sarbadhikari adds.
His client ended up purchasing a semi-detached house on Manchester Street for $1.035-million. The semi-industrial area is close to the GO Transit’s Mimico Station, says Mr. Sarbadhikari, and the view from the house is of the railway tracks.
“Previously people would have said, ‘Why would you want to buy here?’ Well, look at the Junction.”
Mr. Sarbadhikari points to the west-end Toronto neighbourhood, criss-crossed by railway tracks, which soared in popularity as cafes, craft breweries and artisanal cheese shops moved in.
Mr. Sarbadhikari points out that Royal York Road south of the Gardiner Expressway is drawing neighbourhood residents to Jimmy’s Coffee and the San Remo Italian bakery, among other cafes and shops.
“The Junction kind of proved you can have railroad tracks and people will buy there as long as you give them other things,” Mr. Sarbadhikari says.
Metrolinx, operator of the GO Transit network, has partnered with a private developer to rebuild the transit station and create a new community of high-rise and low-rise housing, parks and businesses.
Along the subway line, detached homes in family-friendly areas such as Bloor West Village are selling well above $2-million, says Mr. Sarbadhikari.
In December, Mr. Sarbadhikari listed a renovated three-bedroom house at 329 Armadale Ave., with an asking price of $1.999-million and a scheduled date for reviewing offers.
The following day, a bully offer landed. Mr. Sarbadhikari notified all of the parties who had expressed interest in the property and two of them submitted bids.
The house sold for $2.601-million.
On the strength of that sale, Mr. Sarbadhikari moved forward the listing of another property in the same neighbourhood. The four-bedroom detached house at 87 Colbeck St., was also listed with an asking price of $1.99-million.
“Because the first one came out and was so well-received, we moved up the schedule and pushed it out,” he says.
Three days later the Colbeck house sold for $2.38-million after another bully submitted a bid and sparked competition before the offer date.
Mr. Sarbadhikari says the price range around $1.89-million seems to be the magic number in Bloor West Village, but not every house sells above the asking price, however.
One property listed in the area with an asking price of $1.99-million did not sell on the offer night and later sold for $1.94-million.
Mr. Sarbadhikari says that he set asking prices slightly above the $1.89-million mark because the two properties he listed had prime locations and other appealing qualities.
“Where you can make an impact is understanding the appetite.”
Having a bully step up to pre-empt the offer date often results in an eye-popping price, he says. The bully needs to make it so attractive that the seller is willing to dispense with the offer date and turn away potential buyers who have yet to see the property.
“It should be a fairly good price to get that vendor to advance their date and reduce the competition,” he says. “There’s a premium for that. You’re asking a lot.”
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