Action in the Toronto-area real estate market is a little more sporadic in early March as some pockets and price ranges remain high-octane while others are cooling off.
Real estate agents at Engel & Volkers in Ontario are reporting that the number of property showings is tapering off.
“It goes in spurts,” Anita Springate-Renaud, broker with Engel & Volkers in Toronto, says of the market dynamic. “It will be really busy, then quiet, then busy.”
Andre Kutyan, broker with Harvey Kalles Real Estate Ltd., says bully offers are nearly ubiquitous in the $3-million to $5-million range in sought-after neighbourhoods.
“Nobody is waiting for offer date,” he says. “These buyers are getting very aggressive and their agents are getting aggressive as well.”
Mr. Kutyan is seeing the aggressive tactic in price ranges from $1.2-million in Scarborough up to $4.5-million in Lytton Park.
At 620 Lonsdale Rd. in Forest Hill, Mr. Kutyan listed a four-bedroom Tudor-style house with an asking price of $2.695-million. Mr. Kutyan chose an asking price below market value and set an offer date.
Within hours, a bully stepped up with a bid intended to pre-empt the competition. Mr. Kutyan informed interested agents and their clients that the contest was moving up and two more bidders came to the table. The house sold for $3.325-million.
In Ledbury Park, a three-bedroom house at 604 Woburn Ave. with an asking price of $1.598-million had two bullies competing and sold within 48 hours for $2.275-million.
In Scarborough, Mr. Kutyan listed a four-bedroom backsplit with an asking price of $879,000, knowing that the house would likely sell above $1-million.
The house at 81 Clappison Blvd. in the Port Union area had not been updated since 1977.
“It hasn’t been touched in years,” he says.
Mr. Kutyan received a bully offer that night and began the process of notifying other agents. By the next morning the house had sold for $1.25-million, with four bullies vying for the property.
If the bully does not come with a big price upfront, most sellers would rather wait to see what the scheduled offer night brings, he says.
“I’m going to wait unless I see something silly.”
At 215 Cortleigh Blvd., near Avenue Road and Lawrence Street West, Mr. Kutyan decided against entertaining bully offers but the traditional, five-bedroom house drew seven offers when it was listed with an asking price of $3.495-million and sold for $4.251-million.
The Toronto Regional Read Estate Board reports that sales in the Greater Toronto Area dropped 16.8 per cent in February from the peak set in February, 2021. Nevertheless, that result marked the second best for the month on record.
New listings dipped 6.6 per cent last month compared with the same month last year.
The average selling price in the GTA jumped to $1,333,544 in February to mark a 27.7-per-cent gain from February, 2021.
Bank of Montreal senior economist Sal Guatieri is watching the impact of the Russian-Ukraine war on what he labels “Canada’s manic housing market.”
The war is unlikely to juice the market the way previous crises – such as the 2014 oil price crash and 2020 pandemic – have, partly because those events triggered interest rate cuts, he points out.
The Bank of Canada recently raised its key interest rate by 25 basis points and is not ruling out the possibility of launching a 50-basis-point missile if needed, Mr. Guatieri notes. (A basis point is one-100th of 1 per cent.)
While Canada’s housing market faces its biggest test since rate hikes and mortgage rule changes in 2017, he adds, job growth and immigration will provide a cushion.
“But the main threat to the market is if prices continue to defy gravity and rise at current, unsustainable rates before rate hikes have a chance to bring the market gradually back down to earth,” he says.
Ms. Springate-Renaud says buyers looking in the $1-million to $1.5-million range seem to be the most weary of frantic competition. Some people in that bracket have moved to the sidelines, leading to a drop-off in showings and fewer bids on offer night.
“I think people get so discouraged,” she says.
Ms. Springate-Renaud worked with one couple who have bid and lost on 10 or so houses in the past year. Up to 21 rival bidders had shown up to the table on offer night, she says.
The couple finally secured a deal by bidding on a house in Mississauga that needed some work. The competition was less intense, with a relatively calm four offers.
“Let’s stop looking at the really, really pretty ones,” she recommended. “Sometimes it’s just a tweak in what they’re looking at.”
She also sees plenty of unrealistic sellers, however.
“A lot of sellers say, ‘the market is crazy, I’m just going to put my house up at a ridiculous price.’ Buyers are savvy. You’re just going to end up shooting yourself in the foot.”
Sellers need to understand that the market averages do not apply to every property, she adds.
“You won’t always get five offers – you might only get two – some only get one.”
Mr. Kutyan says the condo tranche has a different dynamic from that of single-family homes because it offers buyers more units to choose from in more neighbourhoods. He has seen listings in the $1-million to $1.2-million range fail to sell on the night reserved for reviewing offers. In some cases, no bids were registered at all.
He says some sellers hear about the insanely competitive freehold market and think that condos are in similar demand. That’s often not the case, he says.
He has seen sellers of condo units fail to draw an offer, then relist the following day at a sharply higher price.
He has submitted offers on behalf of buyers, only to have them spurned – even though the two sides are not far apart.
A couple of weeks later the condo is still on the market and the seller is still holding out.
“You want to hit your head against the wall when you’re dealing with people like this,” he says of those sellers. “They are completely detached from what is happening in the market.”
With spring arriving, Mr. Kutyan says he is rushing listings to market as quickly as he can during the period between Family Day and the start of the public school March break.
“Whether it’s the clients or the agents, you don’t have your full audience,” he says of the holidays. After public and private school breaks, he’ll rush out another batch of listings before the Easter and Passover celebrations.
Russia’s war on Ukraine is roiling financial markets, with a limited spillover into real estate so far, Mr. Kutyan says.
One client was ready to make an offer on a house in the $6-million range in Hoggs Hollow, he says.
“At the last minute his portfolio dropped and he pulled out,” he says.
The client, who works in medicine, sorted out his finances the next day but the house was lost, Mr. Kutyan says.
Bay Street clients are often highly leveraged, he says, and their fortunes are tied to the action in the equity and bond markets.
“I find the finance guys are the most volatile and unpredictable,” he says. “Their appetite to buy changes based on what their portfolio is worth.”
Mr. Kutyan advises buyers to make sure some of their assets are liquid so that they can have at least a 5-per-cent deposit on hand when they are preparing to buy a property.
“It’s very important – especially if you’re going to go into a bully offer. I don’t want to leave any loose ends.”
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