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Tag Archives: condo unit

Erratic Toronto real estate market leaves sellers and buyers scratching their heads

Carolyn Ireland – The Globe and Mail

Of all the zany things happening in Toronto’s real estate market last week, perhaps the most mind-boggling was the melee that erupted over a pleasant yet unremarkable condo unit near Yonge and Davisville.

Seven parties leapt into the competition and pushed the sale price to $420,000 – or 8% above the asking price of $389,000.

David Fleming of Bosley Real Estate Ltd., is one agent who was staggered by the deal. He wrote about it in his Toronto Realty Blog.

Mr. Fleming says there’s too much choice in the condo market right now for it to make sense for buyers to compete over a run-of-the-mill unit.

“I would never in this market tell a buyer to get involved in a bidding war on a condo,” he said in an interview.

“A nice house in Riverdale maybe – but not a condo.”

But that’s just one deal and Mr. Fleming says it could be an outlier. The point is that the market is extremely erratic at the moment.

Comment: Except for the other article mentioning other condos going in bidding wars. It is not an outlier, it seems that the better ones are being fought for. Because there are few good ones out there. There are the little investor units, they trade them amongst themselves. But the ones for normal people to live in, they are hard to find.

The numbers from the Toronto Real Estate Board show that sales edged up 2.4% in the Greater Toronto Area in the first half of January compared with the same period last year. The average selling price rose by 4% in the same period.

But the market was – and continues to be – choppy and weird. Some properties stagnate for weeks and then sell at a significant discount of the asking price, while others sell overnight for more. Mr. Fleming raises another example of a house in the west end that had an asking price just less than $550,000, which is a segment of the market that draws lots of buyers.

Comment: All depends on the property. Crappy ones listed high because sellers are greedy are the ones that sit. Good ones that are priced right sell fast, sometimes for over asking. If you take out the junk – and the deliberately under priced – then you find a very normal market where things move quickly.

His clients were primed to make an offer on Tuesday, which was the night set aside for reviewing bids. But before they had the chance, the house was sold late last Friday when a bully offer landed in front of the sellers.

So-called bullies usually offer an amount so substantial that the sellers are tempted to snatch at it. But in this case, Mr. Fleming points out, the bully got the house for $580,000. It’s a great deal for the buyer, he figures, but the sellers left a substantial amount of money on the table.

“I would have bought that house at that price and I’m not even in the market.”

His clients, he says, would have offered $610,000 or $620,000.

“That was frustrating. My clients are crushed.”

Comment: But because of the past 6 months, the sellers likely did not expect to see a lot of bids. The bully offer looked good so they took it. The listing agent should have paged all the other agents, though, to see who might have brough another offer.

Elli Davis, an agent with Royal LePage Real Estate Services Ltd., cites the example of a house in Moore Park that received two offers and sold for $2.375-million. That marks a $176,000 premium above the asking price.

Mr. Fleming also had a buyer interested in that one, but the house sold within a day of coming on the market – before they even got over there to see it.

“Here I was telling him that I didn’t think the property would move.”

Comment: I hear you, I have done the same thing.

Mr. Fleming says lots of listings are sitting. He can’t imagine another condo unit getting seven offers in the current market.

“There are a million cookie-cutter condos out there that no one cares about.”

Comment: And yet, for whatever reason, people go crazy for certain ones.

Ms. Davis says she tallied eight deals in January, 2012, but so far this year she has only recorded four. Still, she hopes to make up the difference by the end of the month.

“I’ve got a few in the works. Buyers just seem to be taking a little bit more time.”

Ms. Davis says some buyers are speculating that prices may fall and wonder if they should wait. But others are willing to move if they see the right property.

“They want that security that the market isn’t going to totally fall out of bed.”

Comment: I always tell people that the best time to buy was yesterday. Prices are not going to fall, they simply aren’t. Maybe a 1% here or there, but the end of 2013 will see prices higher on average than 2012. Even if it is only $1 more, it will be more. And interest rates are going nowhere but up. If you wait, you will pay more, guaranteed. Everyone I have ever had try to wait out the market has seen a $275,000 condo go to $325,000 in 6 months. When your budget is $300,000 that does not work in your favour.

She’s advising sellers to set a realistic asking price instead of setting an eye-catching price in the hope of sparking a bidding war. But she also cautions against asking too much. Prices have softened a bit since last spring, she says.

“If you’re way too high, people will ignore you and buy something that’s not.”

Comment: Which is why so many properties are sitting and then selling for cut rate prices.

Mr. Fleming says the lack of snow in January may have helped the market because house hunters had no trouble tramping around. And even the arctic temperatures this week didn’t deter the buyers of 76 Langley Ave. in Riverdale. The home, priced at $949,000, sold Tuesday night for $1,129,000. “So much for the impending real estate crash,” he says. But the volatile nature of the market makes it difficult for agents to predict how the spring will shape up.

“One day you might get five offers on a house and the next week a house down the street gets zero.”

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

Laurin Jeffrey is a Toronto Realtor 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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