For people vying to get into Toronto's real estate market in January, it seems that patiently waiting for the quintessential three-bedroom house was not part of the plan.
Once again, sales of condo units outpaced those of homes low to the ground.
Real estate agent Geoffrey Grace of ReMax Hallmark Realty says some condo bidding wars attract as many as 15 to 17 contenders.
Some of Mr. Grace's clients have been looking in the Queen and King Street West areas, where the fervour is particularly strong.
The demand for condos in these areas has just blown up, with prices keeping pace, Mr. Grace says.
In one case, a unit in a building near King West and Niagara Street sold for $25,000 more than a unit with the same layout sold for just the week before. The unit that sold for less was one floor higher and also had parking, which Mr. Grace estimates should have been worth $40,000 right there.
His clients missed out on the first unit when a bidding war erupted after it was listed with an asking price just below $500,000. When the second one landed on the market, he took his clients to see it immediately – with a cheque and a written offer in hand.
"If you like this, we have to make an offer right now," he advised them. His clients decided to pass but as he was driving back to the office, Mr. Grace received a call from the listing agent informing him that a bully offer had arrived.
Over the past three weeks or so, suites in the stretch between Spadina and Strachan Avenues have been selling for an average of 108 per cent of their asking price, he estimates.
According to the latest numbers from the Toronto Real Estate Board, sales in the Greater Toronto Area market jumped 11.8 per cent in January compared with the same month last year.
Condos changing hands in the resale market soared 26.7 per cent in January compared with a year earlier. The action was equally split between the 905 and 416 area codes.
Detached houses, meanwhile, only saw sales increase 7.8 per cent and most of that action took place in the 905; sales of detached houses in the 416 actually dipped 5.5 per cent. Townhouses and semi-detached houses also lagged condo suites in sales.
The momentum in prices sheds some light: The price of a detached house soared 26.3 per cent in January compared with January, 2016. The price of a condo apartment in the same period swelled 14.5 per cent.
New listings across all types of housing shrivelled 17.6 per cent last month compared with a year earlier.
Mr. Grace says rules surrounding mortgage insurance and financing are making it harder for some buyers in the segment above $500,000.
House prices have shot up so much, he says, that $500,000 to $650,000 has become a condo range. Not so long ago, buyers could find a pleasant starter home in that tier, but now they don't want to settle for houses that come with that price tag.
"If you're looking at a house, it's going to be a rundown two-bedroom on a major street."
A condo in that price range, on the other hand, is going to be a nicely finished suite – possibly within walking distance of downtown.
Mr. Grace sat down with one client in his late 20s to talk about his goals. He advised the young man to invest in a property with three units a little farther out from the core. Live in the basement and rent out the other two, he recommended. That way the mortgage and expenses would be covered by the rent and the client could move up to one of the other units when he felt more financially comfortable.
The young man agrees the plan makes financial sense, but he can't resist the appeal of a two-storey loft with concrete and glass.
"He just didn't buy into the lifestyle," Mr. Grace says of the landlord-in-the-basement idea. "It's a really boring, unattractive strategy."
On another note, in last week's column I reported on a talk given by Royce Mendes, senior economist at Canadian Imperial Bank of Commerce, in which he laid out some of the risks to Canada's real estate markets. One of those risks concerns household-debt levels in this country. To clarify, Mr. Mendes believes Canadian households are as indebted as their U.S. counterparts were before that country's housing market slid into decline in 2008. He says the quality of the debt in Canada is better, however, because the United States saw a lot of credit flowing to people who didn't have access before.
A new real estate report from Royal LePage analyzing trends in the last quarter of 2016 suggests that the GTA will become the hottest housing market in the country in 2017, surpassing Vancouver.