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If you’ve noticed the blog has been quiet these last couple of weeks, there’s a good reason for that: it’s pure madness out there. Before I get into my latest observations, I wanted to share this video.
This is what it feels like to be a Buyer in Toronto right now:
The Year of the Bully Offer
While bully offers (a.k.a. pre-emptive offers) have always been part of the Toronto real estate market, 2016’s bullies appear to be fiercer and more aggressive than ever before, and interestingly enough, 2016 Sellers seem more willing to accept bully offers than usual.
Bully offers are a frustrated Buyer’s attempt to take control over the offer process: rather than getting in line with 10 (or 22) other Buyers on ‘offer night’, the Bully attempts to circumvent the process by offering an attractive offer to the Seller within hours or days of the property hitting the market. Bully offers are usually only valid for a short period of time, so that other Buyers don’t have time to put together a competing offer and the Seller is pressured to make a quick decision. It’s a great strategy as a Buyer to get the house you want, though ponying up the kind of $$ it takes to win a bully offer can be stressful (and at times, risky). In the past few weeks, we’ve regularly seen houses sell on the first or second day on the market with prices $250K or $300K over the asking price.
The problem: We’ve seen a lot of Sellers accept bully offers, that in our opinion, they shouldn’t have. Sure $100K over asking can seem like a lot of money at the time (and it is), but in a market as crazy as Toronto’s is right now, not exposing your home to the market is tantamount to leaving money on the table. I can think of at least 4 examples in the last 2 weeks where we had Buyers who would have paid more than what the Sellers accepted in a bully offer. If you’re a Seller in this market, make sure you’re working with someone who understands the rapidly changing market value in Toronto and the risks of accepting a bully offer.
True Story: This sale will be remembered as one of the fastest BREL real estate offers ever: 1,080 seconds from first seeing the house to having a firm sale in place. Since 2016 is the Year of the Bully Offer, it was really no surprise when we got an email at 10 PM telling us that a property that one of our clients were scheduled to see the following day had received a bully offer. The Sellers were planning on reviewing it at 11 PM that night AND the offer was expiring at midnight. The problem? We were across town in Leslieville and our clients were in their PJ’s. And none of us had seen the house yet. As we raced across town, our team member Giulia started preparing the paperwork on spec. We arrived at the house at 11 PM (by which time a second offer had been received – and it was expiring in 20 minutes). If we wanted to play, we had 20 minutes. It was GO time!
As our Buyers made their way through the house, I read the home inspection out loud to them. It was like a bedtime story, only different. Brendan, meanwhile, pulled up the comparable sales (which was easy really, given we’d seen nearly all of the houses and had even bid on a few of them). 11:15: our Buyers decide to submit an offer. 11:18: thanks to our paperless technology, the offer was signed and submitted. 11:20 PM – we are declared the winner. Sold!
Lessons learned: In a market like this, Buyers need to be ready and available at a moment’s notice. Be ready to act fast. Paperless technology is a must.
Also to Note: Don’t be too envious of these Buyers and their 1080 second purchase. They’d been looking for a home for 5-6 months and had lost a few bidding wars already. So no, they didn’t really navigate the Toronto real estate market madness in 1080 seconds total. But they did score a killer house in record time.
Last month, I talked about how we were seeing higher than usual activity in the condo market. Well, that trend has certainly continued. As of writing (April 25, 2016), 595 condos were sold in the C1, C8, E1, W1 MLS districts (also known as central Toronto, roughly Leslieville to Roncesvalles) in April.
Of those 595 sales:
- 41% sold at or above the asking price
- 20% sold above the asking price
- 7% sold 5% or more above the asking price
When I restrict the sales to those over $600,000, there were 112 sales.
- 45% sold at or above the asking price
- 24% sold above the asking price
These are INCREDIBLE statistics for Toronto and a sign that the condo market is the healthiest we’ve seen in years. This trend is indicative of what we’ve long suspected: house buyers are moving into the condo sector.
Advice for condo Buyers: If you’re looking for an unusual space (for example, a loft, boutique building or a condo with a terrace), you need to be prepared. Go see those properties the day they get listed and be prepared to make an offer. While you’re ‘thinking about it overnight’, don’t be surprised if it gets sold out from beneath you (or worse, you end up in a dreaded bidding war).
Remember when I wrote about townhouse being a great alternative to houses last year? I wasn’t wrong. The townhouse market is ON FIRE and we’re regularly seeing townhouse bidding wars and over-asking prices of $50 or 75K over asking. It’s not a huge surprise I suppose…as more and more people get priced out of the traditional house market in Toronto, it’s only natural to turn to the next best thing: the townhouse.
Advice for central Toronto house hunters with budgets under $700K: Consider a townhouse. You’ll get a much nicer property and the maintenance is lower. Also: I predict the days of townhouses as an affordable alternative are probably numbered.
Up-and-Coming Neighbourhoods Have Arrived
For several years now, we’ve been touting the benefits of living in “up-and-coming” neighbourhoods: the Junction, , the Junction Triangle, Wallace Emerson and the Upper Beach. Sorry, folks but the days of affordability in those neighbourhoods are almost over. Case-in-point:
- $1.2 mill for a semi in the Junction? It happened.
- Almost $900K for a 2-bed home with no parking in the Junction Triangle? We lost that bidding war (and so did 19 others).
- Average sales at 15% over-asking in the Upper Beach? Yep.
- A sold price that was $600,000 over-asking for a house in Wallace-Emerson? Believe it.
I know you’re wondering what ‘the next best neighbourhood’ is…stay tuned for a full blog on our predictions. BUT: be prepared that we’re moving further away from the central core.
Want to talk real estate? We’re here. We live it every day. And we tend to spot trends before others. So get in touch!