Bidding wars, bully offers trickling down to condos as house hunters look for alternatives

Susan Pigg – Toronto Star

When Toronto realtor Sohail Mansoor listed a 30-year-old, two-bedroom condo on Maitland Place for $419,900 earlier this month, even the buildings security guard warned that the price was too high.

Fellow realtors wondered why Mansoor would hold back considering offers for a week — a common strategy for whipping up bidding wars in Toronto’s frantically competitive house market, but almost unheard of for condos.

“Its very difficult to find a good-sized two-bedroom, two-bath condo downtown for under $450,000, so I knew there would be a lot of interest,” says the veteran agent.

Just two days after the beautifully renovated 15th-floor unit at Wellesley and Church Streets. was listed, Mansoor got a bully bid of $435,000, some $15,000 over the asking price, aimed at snagging the suite before the official deadline for offers.

“This is the new reality, especially for larger units that show well, are priced well and have reasonable maintenance fees, says Mansoor. “And I think that is a trend that’s going to continue, given that house prices are becoming unattainable and 18 to 20 offers seem to be the norm now.”

As real estates spring market heads into high gear, realtors are seeing a startling surge in demand for hard lofts, unique condos and townhomes as more house hunters realize all that concern about a bubble may be just a lot of hot air.

Comment: All that concern about a bubble IS a lot of hot air.

Bidding wars continue unabated in many areas of the 416 region and even beyond. Just this month, the frenzy reached a new fever pitch in Riverdale — probably the hottest area of the city right now — as a semi and a detached house on Victor Avenue, one listed for $949,900 and the other for almost $1.2 million, each sold for $300,000 over asking price.

Realtors are keeping a close eye on three others, with offer dates set for this week, that are also expected to draw a flurry of bids and push the average house price even further out of reach in Riverdale and, by extension, the GTA.

Some of that frenzy of fear seems to be spilling over into the condo market as house hunters search for the next best alternative.

“Were seeing a lot of competition on unique properties, like lofts, because there are only so many of them and developers aren’t building anymore, says condo realtor Ryan Wykes.

Comment: Other than the couple of churches being converted of late, but they are small and tend to sell out quickly.

He points to an 825 square foot, one-bedroom-plus-den condo in the Toy Factory Lofts in Liberty Village that was listed earlier this month for $519,900, with a 10-day holdback on offers.

Two bully bids were registered within days — one for $555,000, a new square-foot record for the building.

Comment: Condo fees are LOW at the Toy Factory, like stupid low. So a big unit has fees of $350/month. And it has great location, looks amazing, easy to see why people love them.

“Were seeing prices on townhouses skyrocketing and any two-bedroom condo or bigger selling in the next year is going to see such competition,” predicts Wykes.

“We haven’t seen activity like this in three years, since the summer of 2012 when (the federal government) announced they were going to tighten up the mortgage lending rules and everybody rushed to buy.”

In February, realtor Andrew Harrild was surprised to get five offers within 24 hours for a clients 1,300 square foot, one bedroom plus den loft in the sought-after, brick-and-beam Broadview Lofts in South Riverdale.

It was listed for $739,900 and sold for $756,000.

Comment: Another gorgeous building in a great area.

“There are people out there now who want to get into the market, but are looking to hedge themselves in some way in case there is any future correction by getting themselves into something unique that you don’t see everyday,” says Harrild.

Whats surprising is that the condo sector, on the surface, doesn’t suffer from a supply and demand problem: There were 52,464 units under construction as of the end of 2014 and a total of 285,217 units proposed to be built in the next 10-plus years, although not all will go ahead, according to market research firm Urbanation.

The number of house listings, however, has sunk to new lows, especially within an easy commute of the core, as homeowners opt to stay put rather than take on the high costs of a move. The average sale price of a detached house in the 416 region officially surpassed the $1 million milestone in February and bidding wars continue to hurtle house prices higher.

Most of the condos coming on-stream, however, are small, cookie-cutter one-bedrooms or one-bedroom plus dens, mostly targeted to investors as rental apartments. They don’t tend to make viable alternatives to houses, says Harrild, adding that buyers have gotten much more savvy about looking for bigger units or two-bedrooms that offer some hope for living in the long term.

Newer isn’t always better:

There are some significant dollars and sense benefits to buying older condos, according to statistics from condo research firm Urbanation.

Projects built in GTA before 2000
Average selling price: $374,000
Average size: 1,141 square feet
Average price per square foot: $328
Average maintenance fees: 64 cents per square foot
Annual price growth in Q4 2014, year-over-year: 7%

Projects built in GTA after 2000
Average selling price $395,000
Average size: 812 square feet
Average price per square foot: $486
Average maintenance fees: 61 cents per square feet
Annual price growth in Q4 2014, year-over-year: 0.2%

(Note that total maintenance fees are substantially higher on old condos — an average of $730 per month, vs. $495 on newer condos, largely because the older units have more square footage.)

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Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto real estate agent with Century 21 Regal Realty.
He did not write these articles, he just reproduces them here for people who
are interested in Toronto real estate. He does not work for any builders.
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Summary

Article Name

Condo market feels heat as house prices soar

Description

As real estates spring market heads into high gear, realtors are seeing a startling surge in demand for hard lofts, unique condos and townhomes as more house hunters realize all that concern about a bubble may be just a lot of hot air.