February 20, 2014
The Toronto market is hungry, but houses are in short supply
Listings famine has buyers on edge
Real estate agent Ira Jelinek has what many agents and buyers are looking for: a listing for a detached house in a desirable Toronto neighbourhood.
At an open house on Saturday, he offered a plate of chocolate treats and a stack of colourful brochures as he welcomed a steady stream of potential buyers to 442 Winnett Ave. The agent with Harvey Kalles Real Estate Ltd. had already fielded two bully offers after listing the house two days earlier with an asking price of $549,000. "We're not interested," he told the potential buyers, who didn't want to wait until Thursday night when the homeowners would be accepting offers.
His goal was to get the listing on the market while so few properties are available. "Some buyers are just waiting eagerly," he says.
Listings have been in short supply all across the city. The drought is pushing up prices in the Greater Toronto Area.
According to the Toronto Real Estate Board, the average price in the first two weeks of February jumped 7.8 per cent to $547,107 from the same period in 2013.
At the same time, listings shrunk 6.1 per cent from a year earlier. Sales edged up 1.3 per cent in the first half of February compared with the first half of February, 2013.
But the shrinkage in listings is an improvement from January, when the number of properties listed for sale in the GTA dropped 16.6 per cent from the same month last year, TREB president Dianne Usher points out,.
Mr. Jelinek's listing was just in time, it seems, because a spate of "for sale" signs appeared immediately following the Family Day weekend.
On Tuesday, he saw the highest number of new listings arrive in one day that he has seen in months.
The house on Winnett, near Eglinton and Bathurst, is on a lot 25 feet wide and an extra-deep 133 feet long. Thirtysomething couples, renovators and builders looking for a tear-down were all walking through, he says. "There's a lot of potential. You could rent it out, knock it down, or top it up."
A modern, newly-built house on the lot near Cedarvale Park would likely sell for between $1.3-million and $1.5-million, he says. He expects multiple offers.
Mr. Jelinek says the Polar Vortex effect during January likely didn't have a big impact on the market. He's had to cancel a few showings during blizzards but the bigger problem is that the sellers just weren't listing. "Where am I going to move to?" is the common lament among those who already own houses, he says.
Rochelle DeClute, of DeClute Real Estate Inc., says her firm launched three listings on Tuesday. "We could easily use 10 more," says Ms. DeClute, who specializes in the Beaches.
She adds that bullies – prospective buyers who refuse to wait for the scheduled offer date – seem more prevalent this year.
One of the houses her team listed this week is just steps to Lake Ontario and has been in the same family for more than 90 years. When the firm started letting other agents know that the property would be coming to market, two of them asked if the sellers would consider a bully offer. "Nobody has even shown it yet," Ms. DeClute says. "It is a tight market for inventory – that's for sure."
Another house in the Birch Cliff neighbourhood east of the Beaches was listed for sale in early December but the DeClutes and the sellers decided to take it off the market after seven days because things were slow. They brought it back at exactly the same price on Jan. 28 and sold it on Jan 29, above the asking price, with two offers. "That is a good indicator of how things are shaping up so far," she says.
Drilling further into the numbers, Ms. DeClute finds that the drop in listings hit some neighbourhoods harder than others. In Mimico, Long Branch and New Toronto combined, listings fell 35 per cent in January from a year earlier; Pickering saw a drop of 31 per cent. Oakville, by contrast, saw listings swell 7 per cent in January compared with January, 2013.
Ms. DeClute says quite a few homeowners are thinking about putting their property on the Multiple Listing Service right after March break. That would mean a surge in listings around March 18.
The resale condo market is also getting more lively as confidence rebounds, agents say. Some units are sparking multiple offers.
Robin Pope of Pope Real Estate Ltd. recently took a client to see a condo unit in the Spire tower at Church and Lombard. The client, who had already purchased two condos in the west end, liked the nice, bright unit and the asking price equivalent to about $560 a square foot. "It was very well-priced. That's a really good building. I thought it was a bargain," he says.
Mr. Pope checked with the listing agent and, sure enough, an offer had already been registered. He suggested offering the full amount and a quick closing for the unit with an asking price of $339,900.
His client told Mr. Pope she wanted to think it over while she went off to a cooking class. "You can't wait until after cooking class – we need to do something right away," Mr. Pope told her.
The client agreed and her bid of $340,000 trumped the first offer. The deal, conditional on review of the condo's status certificate, was firm within 48 hours.
"It was kind of nice. I like swooping in like that – I feel like a hawk," Mr. Pope says.
He says the first bidder likely expected to buy the unit below the asking price but market psychology has changed since the fall when market watchers were expecting a more severe downturn in the condo market. After a time of nervously sitting on the sidelines, buyers have jumped back in, he says.
Last week, Mr. Pope sold a condo near Bathurst and King for $15,000 more than a similar unit went for last fall. The buyer's agent tried to negotiate a lower price but Mr. Pope's client held firm at $279,900. "If the buyer didn't have confidence in the marketplace, he wouldn't have paid that."
The agent thinks that the intense competition for single-family houses so far in 2014 – with some contests drawing more than 20 bidders – also makes the condo market more vigorous. "It can't be all bad if people buy houses like that," he says of the mindset. "There's a huge demand to live in the city's core. I don't see an end to that."
Mr. Pope says that preconstruction sales by condo developers have also picked up lately. That doesn't mean that the floodgates are open, he says, but he expects to see modest growth in sales.
Builders with good projects and enticing amenities are continuing to sell as buyers have so much to choose from, he says. "For a developer in Toronto, you're going to have to raise the bar."
Those cutting back to offer low-price and low-quality units may struggle, he says. "I think it's going to be hard for them to compete in this market."
Mr. Jelinek also says that the condo market is more spirited than he was expecting.
"I notice the sellers are sticking to their price," he says, recalling with a chuckle that he too was pessimistic back in 2013. "All the naysayers are going to be proven wrong again."