Toronto Loft Conversions

Toronto Loft Conversions

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Modern Toronto Lofts

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Unique Toronto Homes

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Condos in Toronto

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Toronto Real Estate

Toronto Real Estate

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Tag Archives: new condo market

Move fast, bid hard: The new buyers’ rules in Toronto’s sellers’ market

Carolyn Ireland – The Globe and Mail

Real estate agent Christopher Bibby was on a plane making its final descent into San Francisco last weekend when his clients in Toronto found the house they had to have.

“We’ve been looking at houses all over the city for a year. The minute I leave, the perfect house comes through,” he says. “I don’t think we had even touched down and my phone powered up.”

Comment: I swear that is why I never go on vacation. Every single time something comes up or goes wrong and costs me money.

As the plane taxied to the gate, Mr. Bibby was already gearing up to make a bully offer on the house in Toronto’s west end.

The sellers were holding off offers for a week, but the clients weren’t willing to follow the schedule. That’s the way of Toronto’s real estate market in the spring of 2014: competition for detached houses in prime neighbourhoods has escalated into fierce combat.

“I find the freehold market to be extremely aggressive and buyers are willing to be very aggressive to get a house,” Mr. Bibby said.

Comment: They have to be. Those who hold back get trampled.

Toronto's sellers market
Many agents are advising their clients to remain on standby, ready to leave work or drop their plans to see a property as soon at it hits the market. In this case, Mr. Bibby couldn’t accompany them so he sent the clients with his business card.

“They got very excited. They said ‘if we wait it will be gone.'”

While his fiancée waited in line at the rental car counter, Mr. Bibby launched his opening salvo.

To add to the intensity, the couple was in California to make the arrangements for their wedding. During the day, Mr. Bibby put together an unconditional offer for more than $100,000 above the asking price around the $1-million mark. By the end of the day, the paper work was all signed and his buyers had their house.

Comment: That is the beauty of technology. Being able to do things remotely. Depending on where you are and what your clients have access to.

“In a way it’s almost exciting,” Mr. Bibby said. “[Buyers] have to fight back – there are no rules. We put on the pressure that we had to to get this done.”

Comment: But the buyers are not fighting back. These people still paid $100,000 over asking with no conditions. They may have beat other buyers, but they still had to play by the seller’s rules. Coming in early with a bully offer does not circumvent the seller, it only beats other buyers to the punch. Don’t fool yourself, it is still a very strong sellers’ market and buyers have no bargaining power besides throwing money around.

Mr. Bibby is philosophical about the timing and thankful that his fiancée is beyond understanding. She pretty much single-handedly chose the menu and selected the wines for their wedding celebration while Mr. Bibby kept disappearing to negotiate the deal.

Comment: Of course, he was doing a $1 million+ deal, he was making a nice pile of money. My wife is very understanding when I am making money as well 🙂

Meanwhile, he says, listings have started to increase for single-family houses in Toronto since the Ontario schools’ March break, but not nearly enough to meet the demand.

Comment: It may appear that way, but overall listings for the 416 are down 4.5% as of mid-April after dropping 2.8% in March.

The Toronto Real Estate Board reports that sales in the Greater Toronto Area rose 7.2% in March compared with the same month last year. Many agents think that the shortage of listings in the single-family tranche is dampening sales. Potential move-up buyers are reluctant to list their houses for sale because they are afraid they won’t be able to find another place to buy. That dynamic creates a vicious circle, with the number of listings remaining low.

Comment: Tell me it is not amazing that sales rise while listings fall. Imagine if listings were up 10-20%…

TREB president Dianne Usher points out that a shortage of listings spurs more competition for the few houses available and that in turn pushes up prices.

According to TREB, the average selling price in the GTA hit $557,684 in March to mark an 8% jump from the same month last year.

Mr. Bibby says a somewhat more balanced market means the eye-popping amounts over the asking price are slowly settling down.

Comment: But the market is not more balanced, it is actually even less so.

But he adds that many of his colleagues are exasperated with the bidding wars that are so common downtown – especially when listing agents set an asking price far below the market value of the house. In many cases 80% of the offers won’t make it past the first round.

As a result, many agents and buyers are rebelling.

Comment: Yes, that is just dirty pool. Pricing a $700,000 house at $499,000 just to get 25 offers instead of 10 is just mean. And a waste of everyone’s time.

“When they say ‘offers Tuesday,’ you know it’s not going to last until Tuesday. You treat it as offers any time.”

Mr. Bibby sells mainly condos and lofts in the downtown area. He hasn’t set an offer date on one of his own listings in years.

“If we price it well the bidding war will happen organically.”

Comment: Exactly.

At Capital Economics, economist David Madani takes the longer view and warns that a slowdown in sales of newly-constructed homes may be part of a long-term correction that will dampen economic growth this year and next in Canada.

Comment: Seriously? Why are we still talking to this guy? And he says this after new condo sales in Toronto jumped 68% last quarter. What slowdown exactly is he talking about?

Mr. Madani believes high prices and tighter household credit conditions principally explain the slowdown in new home sales, but he expects that softening investor sentiment is also partly to blame – especially in what he considers an overbuilt new condo market.

Comment: Uh huh… And resale condos were up 8.2% in the 416 as of mid-April, after rising 6.9% in March.

In Toronto’s condo segment Mr. Bibby finds that some units are selling within six to eight hours for the full asking price. Others take a week or two and buyers are able to negotiate. The most generic units sit for months.

Mr. Bibby recently sold a unit in the Abbey Lane lofts on King Street East near Sherbourne Street. The boutique building has a low turnover and most of the occupants are owners. When the loft arrived on the market, Mr. Bibby received three offers the first day and the unit sold for $579,150, or $14,150 above the asking price of $565,000.

In Liberty Village, a unit at 43 Hanna was listed with an asking price of $489,900 and sold for $500,000 after eight days on the market. The 840-square-foot unit is in the Toy Factory Lofts, which remains amongst the most popular amongst buyers.

Comment: I just tried to help buyers go after another Toy Factory Loft, a gorgeous one for $599,000. We missed literally by a few hours, getting in touch with the listing agent not long after they accepted another offer. And that was the 3rd day it was listed.

“The really interesting buildings in the smaller pockets – those buyers aren’t willing to compromise,” he said. “These unique properties are what get the buyers excited.”

As the spring unfolds, Mr. Bibby says that enthusiastic buyers will likely continue to watch for houses and condos with character and singular features and pounce quickly when they find them. For his part, he will step out of the fray for a time.

“There may be a rule during the wedding that my cell phone stays in the room.”

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.