Many looking at semis and townhouses as only option

Susan Pigg – Toronto Star

House hunters are upping the ante – and downsizing their dreams – as real estate prices continue to climb further out of reach, especially in Toronto, according to the BMO Fall Home Buying Report.

Some 43% of buyers, most of them in Canada’s four biggest cities, have boosted the amount they plan to spend on a house by 21% just since they started looking – an increase of $83,556.

Comment: Buyers always start low and then raise their budget, trust me.

And many in Toronto, Vancouver, Calgary and Montreal are shifting their sights away from condos and detached homes to semis, according to the annual survey.

The numbers are even higher among house hunters in the GTA.

Some 57% have pushed up their price point in a desperate effort to try to keep up with escalating house prices, and by about 20% – a whopping $106,883 more than they originally set out to spend, says the survey of more than 1,000 people who hope to buy within the next five years.

Comment: Unfortunately, many of them don’t have a good idea of what prices are like before they start looking. Then they get a rude surprise.

On the up side, some 56% said that’s because they were able to save more for a down payment.

“The majority (55%) of potential home buyers have had to consider additional housing options or eliminate their first choice, citing reasons of cost, availability, and concerns surrounding the condo market,” notes the survey.

Detached homes have simply become too expensive, and some 76% of buyers surveyed fear the condo market is overdeveloped and too risky an investment. So they are moving to more affordable semi-detached and townhomes, instead.

Comment: Thanks to the media and their incessant – and WRONG – hysterical claims about the impending collapse of the Toronto condo market.

Those findings have already been playing out, to a large degree, in monthly sales figures from the Toronto Real Estate Board, a market which remains plagued by a continued shortage of enough listings to meet demand as more homeowners simply opt to stay put.

Realtors say the shortage of for sale signs in front lawns is contributing to one of the most frantic fall markets ever, with decent properties prices under $1 million going in a frenzy of offers.

Bully bids are now becoming the norm, with buyers jumping in with inflated offers before the official offer date. In fact, it’s not uncommon to have multiple bully offers on a property before the supposed offer deadline, a phenomenon that is only further driving up prices irrationally, realtors warn.

Comment: Actually, the bidding insanity has slowed considerably, with prices for detached homes way down since the height of the frenzy in the Spring.

In August, sales of detached homes were up just 0.7% across the GTA, year-over-year – about 1.7% in the City of Toronto – as buyers find themselves increasingly priced out of that sector of the market.

Semi-detached sales were up 4% over the same period last year – 7.4% in the pricey City of Toronto – while townhome sales were up almost 12% in the 416 region and 1.3% in the 905 regions.

According to the BMO survey findings, some 76% of buyers are concerned the condo market is overdeveloped “and that a condo will not hold its value compared to a detached, semi-detached or townhouse.”

Comment: Freehold properties are in shorter supply, with no new ones being built. So, yes, they will appreciate faster than condos. But that does not make condos a bad investment. The actual data shows sales and prices rising for condos, they are gaining value, no matter what the media says. Truth beats articles every day.

But that doesn’t seem to be playing out in Toronto, at least not yet, as first-time buyers, in particular, look to some kind of toehold in the market.

Condos sales were up 6.5% in August, year over year, according to TREB, and prices were up an average 4.4%.

Comment: Yeah, look at those condos not holding their value…

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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

House hunters spending more to get less: BMO survey

Description

House hunters are upping the ante - and downsizing their dreams - as real estate prices continue to climb further out of reach, especially in Toronto.