It was past one a.m. on a recent morning when an exhausted homeowner was signing off on the last offer standing.
Her house at 3 Ross St. in Toronto had just sold for $1.31-million – 58 per cent above the asking price of $829,000.
"I think we shattered some ceilings," says Daniel Freeman of Freeman Real Estate Ltd., who helped the seller sift through the 28 bids on the boardroom table.
Everyone expected the house would sell for more than asking – especially after more than 100 parties turned up for showings – but the final price was far beyond expectations. The homeowner spent more than five hours meeting agents and reviewing offers through two rounds of bidding.
"She was overwhelmed," says Elden Freeman, who always asks buyers' agents to present offers in person at the firm's offices. "It tired everyone out."
Contests for single-family dwellings in the centre of the city have been particularly fierce in 2014. Every week seems to bring a new example of extreme bidding.
Listings for single-family houses for sale in Toronto have been even more scarce than usual for the time of year.Mr. Freeman thinks the house on Ross drew so many competitors – from professors to student landlords – because it's well-located near the University of Toronto. It is also renovated, but not overly-so, he says. "It's a beautiful house and we had the whole history going back to 1888."
He says the seller is also pleased that the buyers plan to live in the home with their children. The final price set a new high for the street and quite likely for the surrounding neighbourhood as well, he adds.
During a phone interview, Mr. Freeman was also receiving updates on the offers coming in for a house on Glenholme Avenue in the Cedarvale area. The tally was up to nine by the end of the call.
The action on Ross was not the only sale to get the neighbours talking in the past week or so.
On Crawford Street near Harbord, a semi with an asking price of $839,000 sold for $1-million. And on Robert Street, a three-storey rowhouse started out at $899,000 and sold for $1.16-million.
In the near term, Mr. Freeman thinks that listings will become much more available when March break is over and the weather improves. "It's been a really hard winter. People have been putting off [listing] because it's been so harsh."
Mr. Freeman says he has been encouraging sellers to list this week because there will be fewer rival properties for sale. Sellers stand to receive another 10 per cent by listing earlier in the year, he says, because the competition is so hot. He points to Ross Street: "There's another 27 people who didn't buy that property. And they're still looking."
Still, many sellers and agents insist on waiting until after March break because so many people are away. "We know that every Tom, Dick and Harry agent is going to list next week," he says.
Jimmy Molloy, an agent with Chestnut Park Real Estate Ltd., also believes that many sellers are waiting for spring. "When this snow melts, I think it's going to be crazy."
He is working with a client who made an offer on a house in Rosedale with an asking price of $4.195-milllion. He lost to another buyer who paid $4.7-million. The house, on Chestnut Park, came on the market at about noon one day earlier this month. "It was sold by 6:05 p.m."
Mr. Molloy says that even in that $4-million price range, the market is hemmed in by the scarcity of listings. "My buyer has money burning in his pocket and there's nothing for me to show him."
In part, homeowners are afraid they won't be able to find another house to buy if they sell their existing house, he says. Others don't want prospective buyers tracking snow and salt into their nicely-finished house.
Mr. Molloy would like to see the eye-popping offers settle down to sustainable increases. "The 10 per cent changes in prices are not healthy."
Agents point out that the houses which sell for huge percentages above asking had an artificially-low asking price to begin with. Mr. Molloy says that houses that have unrealistically high asking prices just languish. "If you put the house on at the wrong price, it doesn't go."
The condo market has also shown some signs of rejuvenaton. Agents have been talking about the recent launch of One Yorkville near Yonge and Bloor. Mr. Molloy says units in the high-rise project were about 75 per cent sold earlier this month. He thinks many of the units are being purchased by investors who will rent them out.
He likens new condo buildings to apartment buildings with multiple owners. "They're all in the rental business."
Buyers, he says, are optimistic about the city's prospects "People feel very confident and very proud of Toronto," he says. "If the Leafs won a Stanley Cup, how much do you think houses would be worth in Toronto?"
While all this was going on in the market recently, economists at Toronto-Dominion Bank were finalizing a report TD economists that could cause some jitters.
Derek Burleton and Diana Petramala forecasting that condo prices may fall 8 per cent in the city by the end of 2015. They also warned in the report this week that developers in the new condo market are finding it more difficult to compete with condos on the resale market because the established units are larger and cheaper.
They add that, while the condo market is likely to bear the brunt of the housing slowdown, there will be knock-on effects to other segments of the market.
The economists note that the price of a single family dwelling spiked 12 per cent in the GTA in January compared with January of 2013.
They emphasize, however, that sales in this segment have been running at levels well below their historical average. Because relatively few new single-family homes are being built, the prices in the resale market are climbing.
The economists note that a downturn in the condo market could keep some of those owners from taking a step up to a single-family home.
In general, though, they expect prices to continue to rise for single-family dwellings, but at a more modest rate of two or three per cent.
Mr. Freeman believes that the rivalry for single-family houses under $1-million has been partly fuelled by mortgage insurance rules which require anyone buying a house above that level to have a down payment of 20 per cent or more. Since the buyer pool shrinks the higher the price echelon, Mr. Freeman thinks that a higher number of buyers is now competing in the range just below $1-million.
Mr. Molloy is predicting there will be a calming once more listings come on the market in the spring. When people who have been thinking about selling begin to see signs on lawns, they will be more willing to list their houses in turn.
"It's self-correcting," says Mr. Molloy of any exuberance. "Melting will be the best thing that will happen in the real estate market in 2014."