Welcome to my latest Tales From The Real Estate Trenches, where I occasionally post real time experiences on the Toronto real estate market.
As we step into the spring Market, which historically begins in January and progresses until the end of May or early June, it appears this year will be no different in the original City of Toronto, with the exception of the market having a bit of a late start. Stats show – as outlined in this post by Better Dwelling, that “Toronto real estate sales were recession like in numbers, but prices climbed higher. Toronto Real Estate Board (TREB) numbers show last month’s sales were the fewest for a February in a decade. The decline in sales were accompanied with a mixed change in inventory, and a rise in prices of 2.35% for the Greater Toronto Area”.
I can personally attest – as a realtor who has had to navigate the streets to show properties while we’re collectively being slammed by the bitter snowy icy plague I’ve come to accept as ‘Winteronto’ – that the drop in sales can be tied directly to our weather. Toronto in 2019 has been about constant snow shoveling, salting if one can find any salt, having a few sunny days of respite, and then another winter storm leaving a crust of snow on top of the ice one didn’t successfully clear. Just when one is being kissed by one of those perfect sunny blue-sky winter days where you can hear the children laughing while they toboggan, the next day delivers another effort of back-breaking snow shoveling. Now, just imagine you’re trying to get your house ready to come to market for sale amidst this climate. I can promise you that your effort to empty your garage, your basement, and even your closets of items to toss, donate, or give to your family and friends, is NOT going to happen as quickly as you might wish. After all, you have to shovel your walk every few hours on those snow days.
In my piece called The Seasons To Real Estate, I write how spring represents fresh beginnings, renewed optimism and opportunity. The spring Market begins in January with all the buyers whom have been active looking since the autumn who, for whatever reasons, did not secure a purchase. Now they return as fully keen house hunters. Already suffering from buyers’ fatigue from several months of searching, these buyers are highly motivated. The problem for them is not their lack of motivation, but the limited supply of property. While this group of ‘autumn buyers’ is aggressively searching, there is always a wave of new buyers in January, who have resolved to move in the New Year. This group uses the months of January and February to qualify their purchasing power and dip their toes into the housing search. During this time the autumn buyers begin snatching up the new spring listings by out-bidding the newer, less educated buyers. Now, as March unfolds, be prepared for both groups of buyers – who have now been sufficiently exposed to the dynamics of the market, and to property values, and are now aware of how the purchase process works – to compete head to head in hopes of securing their spot in a still limited supply of housing. It is during these months when supply is at its lowest relative to the double cohort of qualified buyers. And that horde of buyers is on high alert and watching their phones and tablets closely for that diamond in the rough.
Last year the intensity of our real estate market in the original City of Toronto started early with a roar, as I shared in these 2018 Tales From The Real Estate Trenches. On January 24th, 2018 35 Offers On 3 Downtown Properties Signals Rocketing Demand; on February 14th, 2018 Four Toronto Properties Went Into Bidding Wars In The Past 48 Hours; and on March 7th 2018, On Toronto’s East Side 42 Buyers Bid On 3 Properties Tuesday Night.
This year it looks like it may play out similarly, albeit with a later start.
Here’s four examples:
This property – a three bed three bath semi with a non-conforming lower level suite, laneway parking that swallowed half the rear yard, and located in Leslieville on a busy arterial road – was a flip these Sellers had purchased in July 2015 for $782,500. Given the list price was $849,000 – which was less than their acqusition, closing and selling costs – the strategy was to let the market establish the profit after nearly four years of ownership.
The end result? Listed at the beginning of February, it garnered sixteen offers and a sale price of $1,100,000.
Midtown Semi With Family Room Addition
This 3bed semi with a 1979 family room and basement addition had a deep lot with two car parking. It ticked a lot of boxes but came with a litany of required upgrades including knob and tube wiring and a dated interior – right down to the almond formica kitchen with requisite hole in the floor so you could see the unfinished basement. Crawling with couples in parkas holding Starbuck coffees and newborn babies at the weekend open house, I was anticipating a crush of offers. However, the open house was plagued by a flood in the basement addition caused by water ponding by a window well. It was a minor issue if you knew housing construction well enough, but it resulted in a lot of buyers heading for the hills. However, it still garnered two offers who battled it out.
Listed for $1,100,000 at the end of February, this house sold for $1,291,000!
Detached Character Dwell In Bloorcourt Village
This detached character house with two car laneway garage had a lot of charm which swept Buyers off their feet. Call this the Prince Charming of bricks and mortar. Despite it coming to market in a blizzard – which presumably stalled some Buyers from seeing it the first 48 hours it was for sale, this house was aggressively listed for the ‘too good to be true’ sum of $999,900. Even before the weekend open house, this property received five bully offers who pushed the value up within range of comparable sales.
Selling the last week of February, this darling sold for $1,400,000.
A Bloor Christie Semi With Questionable Changes
This listing bordered on the bizarre for me, which had me dissuading my Buyer from acting on a purchase. Located north of Bloor west of Christie, this semi is located in a pocket where many houses suffer for settlement issues because of Garrison Creek, which was improperly infilled years ago. Although the house had minor signs of settlement, I struggled why the basement had been substantially dug down. Yes, the basement originally had really low ceilings that rendered the space near uninhabitable, but a previous owner had dug it down well over five feet which made the lower level seem super skinny and tall. Although strange, what made it disconcerting to me was that half of the basement floors sounded hollow when you walked on them, and I dicovered the furnace was sitting a least a foot below the basement washroom floor level. It left me suspicious on the potential pitfalls my buyer might face in the future, as there was no way of seeing what might lay underneath. Add to that the lack of on site parking – because at some time an owner had sold the rear portion of the back yard and laneway access to a neighbour who had subsequently constructed a stone retaining wall and 2car concrete block garage. The garage looked like it belonged to the property but didn’t. I also found the cold rear porch wood frame addition – which was home to a 1970s washroom – came complete with a walk-out to the garden.
Was it just quirky, or a Nightmare In The Making?
Listed for 879,000, this house sold at the beginning of March with six bids, selling for $1,065,000.
Above, the walkout to garden from the washroom, the cold storage porch with original basement floor showing how much had been dug down, and the rear sloped yard looking up to the garage that wasn’t included!
The Take Away
An observation from me, to you. This year realtors are listing properties for sums which are lower than they might have listed last year, or prior. In this climate, if the objective is to create competition and have buyers blindly compete one has to set the list price really really low. This makes the sale prices seem shockingly high and suggest the market is roaring. This is only partly true. Yes, the demand for freehold houses in the original City of Toronto continues to outstrip supply, but the final sale prices are not necessarily exceeding the values they might have secured in the Spring 2017 Toronto real estate peak. At best they’re in line with them, although there are exceptions, which I’ll post about in the next week or two.
Also, the demand for freehold houses is most intense for properties worth less than $1.5mil. As you move beyond that price threshold, the competition is less fierce. Values are still solid, but a property may take more time to sell. This isn’t always the case for properties in Triple AAA locations (on the subway line, in neighbourhoods with great schools, and near village amenities), or if the property is in exceptional condition (there are a lot of Buyers who will pay a premium for top tier houses), has great proportions and character (vintage homes or a design pedigree are hot), or is large (a property that offers space a family can grow into over time appeals to buyers looking for that 25 year home). The best of the best will always get snapped up. But this doesn’t mean everything is selling with bully offers, in bidding wars, or for top dollar.
If you’re looking to buy a property in the original City of Toronto, as long as you’re not under undue pressure (like living in your mother-in-law’s basement), take a deep breath and trust the universe to manifest exactly what you’re realistically looking for. It will happen.
Here’s some of my past posts to help inform you on the dynamics of Toronto real estate:
The Spring market is also the busiest time in Toronto real estate, high interest rates and mortgage stress tests, or not. Despite the conflicting narratives of various media outlets, housing is always in demand – now, as much as it ever was. And although Toronto’s market has moderated over the last year, it’s important to apply context to the story in order to really grasp where the market is – and where it is going.
Take a breath. Understand the implications of your purchase in the present moment and for the years to come. The approach that Urbaneer takes? As with many things in life, patience is a virtue, and the best decisions are those that are calm, rational, and deeply researched.
Looking for some guidance?
Steven Fudge, Sales Representative
& The Innovative Urbaneer Team
Bosley Real Estate Ltd., Brokerage – (416) 322-8000
– we’re here to earn your trust, then your business –
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Tales From The Real Estate Trenches