So last week, a family member of mine scored a real win, when talking the state of today’s Toronto real estate market. She had a fixer-up, a big century-old home in the Beaches, steps from the beach and the water, and Kew Gardens. Lights out fantastic location.
They had just finished the basement, adding three feet of head room, and were into a renovation of the main floor of the house, for rental purposes. That was before a dream house opportunity in Picton came up. Closing date on the new house all of a sudden became a big issue. No one wants to get into a bridge financing scenario. But they had a hard close date on the new house and had to move their Beaches home fast. Their agent, being a savvy one, under-listed their home at just under $1.3 million, to spark a bidding war. More on what happened in a minute.
Toronto real estate market: Hyper-competitiveness means you better get aggressive, fast
Some impressive numbers have been coming out of the Toronto real estate market of late, boding well for a strong Fall on the sales front. The big story is the condo market. According to the Toronto Regional Real Estate Board, condo sales around the Greater Toronto Area in Q3 were up dramatically compared to the same period in 2020 (10.6 per cent increase). At the same time, condo inventory has been absorbed at a higher rate, listings are down. So a sellers’ market is once again the story.
“The condo market has seen a dramatic resurgence compared to a year ago. In 2020, first-time buyers sat on the sidelines due to economic uncertainty. This year, however, improving economic prospects have seen many of these buyers accelerate their search for a property. This trend will only continue as population growth resumes next year, and limited changes to supply are expected,” said TRREB President Kevin Crigger in a news release.
The average sale price was also up year-over-year – 8.9 per cent, at $689,831. But what about the luxury market? If your definition of luxury property is north of $1 million, in the eye es of many that’s a stretch these days. A prominent developer told us in Toronto now the starting line for luxury real estate is $2.5 million. Debate amongst yourselves.
Sotheby’s listing: 403WA Horseshoe Lake, Seguin
Sotheby’s Fall luxury market report paints a rosy picture
Consumer optimism is up, the economic outlook is bolstered with steady job gains and downtown living is revitalizing, after 18 months of lockdowns and Covid-19 uncertainty. According to a Sotheby’s International Realty Canada study, the GTA and the Toronto real estate market in particular is primed for continued pricing acceleration. The primary culprit? An inventory shortage for both conventional and luxury housing.
It was an active summer period, the study said. Residential real estate sales over $4 million rose 12 per cent in July and August, year-over-year. Six ultra-luxury properties (over $10 million) sold in the same two months, compared to four in 2020. And that condo market, but in the luxury bracket? According to the study sales of condos over $4 million were up 40% in July and August, year-over-year. Luxury single family home sales were up 15 per cent over those two summer months, compared to the same period in 2020.
Residential sales over $4 million between September 1–15 reflect underlying consumer demand for premier real estate leading into fall, as sales increased 33% year-over-year.
Gap between luxury and conventional housing trends widen
So if you find your dream home, and you want to buy, get ready to drop the gloves. Part of the reason the real estate market levelled off a bit for the later summer months was buyer fatigue. People were losing bidding wars in the red hot market last spring, got exhausted and bowed out. They took a breather. Well, now they’re coming back. So you need to put your game face on and get your elbows up.
Sotheby’s listing: Oakville, 2306 Millward Ave., @canada_sir
Toronto real estate market: The land of competitions and bidding wars
So if you’re going to win a bidding war, talk to the experts, right? The underlying message here is to find a reputable real estate broker with real experience who has your best interests as their priority. They can guide you through the multiple offer process.
“For condominiums get the status certificate reviewed by your lawyer and/or a home inspection completed prior to offer night,” says Alexandru Bejinariu, a broker with RE/MAX Regal Homes in Toronto. “To differentiate from the competition offer a large deposit, minimum 5 per cent. Obtain a mortgage approval for the subject property. This isn’t enough however. At this point your agent is your greatest asset having to determine the value correctly and account for the surplus the market can bear. Then they’ll propose quite accurately a price that will trump your immediate competitors and leave you the winner.
“Sometimes, especially when a buyer is positive they found the property of their dreams they can submit a pre-emptive offer which itself must be appealing enough to forego an offer night altogether. The strategies vary considerably from property to property and between the individuals involved. In practice there is no secret technique; yet ingenuity, experience and market knowhow will drive home a successful transaction for a buyer.”
Sotheby’s listing: 71 Madison Ave., Toronto
Says Katherine Minovski, Broker, Residential & Commercial, Sales & Leasing, Royal LePage: “First of all, never pay more than you’re willing to go or can afford. Second, select an agent that puts your interests first before their own. Explain your maximum budget to them and it’s their job to look for something in your budget, and help you win it. An agent must do the work, look at the comps, prior to presenting a property, and wasting anyone’s time.
Minovski says real estate agents focusing on larger commissions rather than their client’s interests is a bigger issue than you might think.
“Better agents can help with this housing crisis,” she says.
Other helpful tips on how to win big
That scenario with my family member that I was talking about before? She had a real estate agent worth her salt. Anticipating a full-on bidding war on a unique real estate investment opportunity in a desired neighbourhood in the city, a buyer came in with a bully offer. In two days it was sold, for $1.7 million. That was the price the sellers and their agent wanted. With money down too. Anyone who was swimming around the property got eviscerated in one swoop.
Some will put through a pre-emptive offer to try and avoid a multiple-offer scenario. Others will wait for offer night, others will look for off-market, exclusive listings. Each buyer needs to take the approach that they’re most comfortable with. But, as Michael Kalles, President of Harvey Kalles Real Estate Ltd. says, this isn’t a new norm. These strategies have always been part of the industry.
Go with these tips (and listen to your broker)
- Expect a bidding war. If it doesn’t happen then you’ll be pleasantly surprised. Homes are selling quickly now, and don’t be left in a situation where your offer is not taken seriously.
- Get pre-approval for a mortgage before you jump in
- Talk to your broker about this one, but look at other ways to ingratiate yourself to the seller, ways that go beyond price point. Work with the closing date, in terms of flexibility, so it benefits the seller. Maybe the seller wants to take appliances with them. Anything that gives you an edge if it’s a situation where there are multiple bids that are close.
- Be first to the table with an offer. That’s going to make a positive impression on the seller’s agent.
- Waive conditions or stipulations, like home inspections. Talk to your agent about this. Submitting a clean offer might give you an edge in a bidding war, but it leaves you open to potential liabilities. With home inspections, for example, you submit an offer but if a home inspection shows serious issues you can walk away from the deal with no legal ramifications.
In the end, your broker will know the Toronto real estate market. As Kalles says, they will understand valuation, and be experienced in offer negotiation. You real estate broker will have good contacts with the sales community and have better access to off-market properties. Plus they will know builders and have early access to pre-construction sales events.
TOP IMAGE: Sotheby’s listing, 1322 Stanbury Rod., Oakville