Toronto homebuyers, brace for another spring of bidding wars.
Real estate listings remain so tight that half of detached homes in the “coveted” $600,000 to $900,000 price range in high-demand Toronto neighbourhoods are selling over the asking price — and the peak spring season hasn’t even begun.
“Bidding war fatigue” has already forced some would-be buyers to retreat from a market that could be even hotter this spring than last, according to a new report from ReMax that points to unusually strong activity this early in the year.
So much for that soft landing predicted by some economists after a decade of gravity-defying price gains across the GTA.
“But it’s almost like there is a stalemate in the market. I’ve got people telling me they’d like to list their home, but they’re afraid they won’t be able to find somewhere else to live.”
While listings in Toronto for the first two months of this year are up 11 per cent over the same period last year, demand far outstrips supply, the ReMax report notes. And that’s despite global economic uncertainty.
Low supply is a particular problem in Toronto and Winnipeg. But it’s also starting to be felt by first-time buyers in London-St. Thomas, Hamilton-Burlington, Ottawa, Saskatoon, Regina, St. John’s and Halifax-Dartmouth, says the ReMax Market Trends Report, released Thursday.
(Saskatoon and Regina have benefitted from the potash boom, while St. John’s and Halifax are enjoying prosperity from offshore petroleum. These were considered have-not locations in the past.)
Some 12 of 15 Canadian cities studied reported that sales activity in January and February exceeded that of the same time last year. More than half reported double-digit increases, with a 12 per cent jump in sales in the Greater Toronto Area during what’s normally the calm before the storm of spring buying.
House prices across the GTA jumped 10 per cent in the first two months of this year over the first two months of 2011 to hit an average of $487,254.
Bidding wars are now “commonplace” in what the report calls “blue-chip areas” of Toronto: Leaside, Riverdale, The Beach, Leslieville, Bloor West Village and High Park, as well as in the Cricket Club area of North York, the North Toronto area of Lytton Park and the Cedarvale area near Vaughan Rd. and Bathurst St.
Sales have been especially brisk among properties listed over $1.5 million, with sales up 53 per cent, it says.
Lake, a realtor for the past 26 years, says most of the frenzy is driven by low interest rates.
“I find it shocking what people will pay, but it just goes down to basic supply and demand,” she says. “Money is so cheap right now we don’t know where this is going to stop.
“I’ve been around long enough that I’ve seen high interest rates. But young people today don’t seem to have that same understanding that interest rates do go up.”
It’s no fun out there for a lot of agents either, who must try to keep clients’ emotions and bidding urges in check. Lake says she had one client walk away two months ago from a $20,000 deposit on a property after getting swept up in a bidding war and then having second thoughts the next day.
“I’ve said to myself that it has to stop sometime. But I honestly don’t know when it’s going to stop unless interest rates go up.
“Which is why I tell my agents: it’s a good test for you to buy and sell your own house every four or five years. It reminds you of the emotional turmoil of putting your house on the market.”