Riley Boyko is witnessing the diverging fortunes in the Toronto condo market first-hand.
The real estate agent with Cloud Realty became a first-time buyer recently when he tussled with five other bidders to acquire a unit at Toy Factory Lofts.
After the one-bedroom unit was listed with an asking price of $649,000 and a date for reviewing offers, Mr. Boyko tried to submit a bully bid that would shut down the competition. The seller didn’t go for it, so Mr. Boyko went on to pay $812,500 to secure the deal.
Mr. Boyko knew the asking price was too low but he also knows that’s a tactic many agents use to generate buzz. He figured a fair price would be $800,000, so he looked at the number of contenders and added a little bit extra.
“When six people want one product, it comes down to ‘how badly do you really want it?’” he says. “That’s how prices move forward.”
As the bidding was heating up at the Victorian-era industrial building in Liberty Village, prospective buyers were bypassing condos in other downtown Toronto buildings without even a glance inside.
Mr. Riley says he has sold three lofts in the past month and all sold with multiple offers. At his listings for more run-of-the-mill condos, showings have dropped significantly, he says.
The Toronto Regional Real Estate Board reports that sales for all housing types for the year to Sept. 30 edged up 1 per cent in the Greater Toronto Area compared with the same period last year.
But looking at sales of condo apartments, that segment dropped 13.2 per cent during the first three quarters compared with the same period in 2019. The average price of a condo unit rose 10 per cent for the year to Sept. 30 compared with the same period last year.
Meanwhile, listings are rising and rents are falling, which means many condos are sitting on the market, Mr. Boyko says.
“If you’re an investor, you could pick up a condo for less than you would have paid in March, no question," he says. "But you will also rent it for less.”
Mr. Boyko recently listed a two-bedroom unit for sale at 125 Peter St. in the entertainment district. A similar unit sold for $900,000 in March but Mr. Boyko recommended that his clients set an asking price of $839,900.
The owner was competing with approximately 200 neighbouring sellers.
“This is the situation now,” he tells sellers. “You need to get ahead of where people’s heads were in March.”
Mr. Boyko paid a premium for his own loft because the interior of Douglas fir and exposed brick gives the unit at 38 Hanna Ave. the kind of character not available in a lot of downtown condos.
He’s advising clients who want to buy to aim for unique spaces in boutique buildings and residential neighbourhoods.
“I tell them to find something interesting and stay away from the generic, cookie-cutter stuff.”
Davelle Morrison, a real estate agent with Bosley Real Estate Ltd., has been rushing to get listings onto the market before Thanksgiving.
More people leave town or become preoccupied on long weekends, she points out, and therefore the buyer pool becomes smaller.
The spectre of a return to stricter measures to curb the spread of COVID-19 also hangs over Toronto and some parts of Ontario as the daily rate of new infections climbs. Last week Toronto’s medical officer of health recommended that the city’s residents stay home except for essential errands.
“We’re all telling our clients, ‘you don’t want to be on the market in a lockdown,'” Ms. Morrison says.
Opportunistic buyers, meanwhile, have been waiting on the sidelines for just such a scenario.
“They think that’s when they’ll get a deal,” she says.
Against that backdrop, Ms. Morrison is urging sellers in the condo market to be realistic.
“I’ve got clients asking, ‘why do you want to price my condo so low?’”
Ms. Morrison responds matter-of-factly that condo sales have slowed, and owners who want to attract attention have to set an asking price below what their competitors in the building are aiming for.
Ms. Morrison recently had that conversation with the owners of a two-bedroom-plus-den unit with 1,300 square feet of living space on Simcoe Street, across from Roy Thomson Hall.
A similar unit sold in the building for $857,000 in February.
Her strategy was to set an asking price of $848,000 and accept offers any time.
With five or six units in the building just sitting, she wanted to attract eyeballs with the price but not deter skittish buyers with the pressure of an offer deadline.
“Let’s just make it cozy and comfortable for buyers to come in,” was her recommendation. “That’s how you get attention and sell first.”
The tactic worked because two offers came in the first day, she says, but that success only prompted the sellers to get cold feet. They worried that they underpriced the unit and should have held off for a bidding war. They hesitated to accept an offer of $888,000.
Ms. Morrison advised them to seize the cash immediately because sellers typically obtain the best price the first day they arrive on the market. After that, buyers begin to use the number of days on market as ammunition.
“Every other day after this, the price is going to keep going lower and lower and lower,” she told them. “You’re just never going to get this again.”
Ten days later she saw the sellers again as they prepared to make an offer on their next property. By that time, they were relieved they had taken the money: none of the other units in the building had sold.
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