The winter months are traditionally slower for home sales in Canada but that certainly hasn’t proven the case for Toronto in 2017. The latest release from the Toronto Real Estate Board revealed that the average selling price for January was up 22.3% year-over-year to $770,745.
Addressing the figures, TREB President Larry Cerqua said that rather than be scared off by the price boom, those making their first step onto the housing ladder are predicted to make up the majority of sales this year.
“As we move through 2017, we expect the demand for ownership housing to remain strong, including demand from first-time buyers who, according to a recent Ipsos survey, could account for more than half of transactions this year,” he said. “However, many of these would-be buyers will have problems finding a home that meets their needs in a market with very little inventory.”
Be First in the Offer Line
While the price of Toronto real estate continues to see double-digit gains among all major home types, a lack of inventory is a real concern for the industry. Supply can not keep up with demand, and this has led to a situation where the majority of buyers now need to make offers almost immediately upon viewing a property.
For sales agent Doug Vukasovic of Zoocasa, it means many of his clients don’t have the luxury of time when it comes to a purchase that could reach seven figures.
“It’s extremely hot right now,” he says. “Houses and condos are selling incredibly fast. I was just viewing a condo that came on the market at midnight and they already had an offer on the property by 11am the next morning.”
Drop the Conditions
Another phenomenon of Toronto’s molten-hot market is buyers having to downgrade their expectations. Salaries in the city are not keeping up with property inflation and the average mortgage doesn’t buy what it once did. It means freehold homes are now outside of most budgets, allowing condos to have the highest sales growth figures. Finding a property is easier said than done, however, and speed is vital, as Vukasovic outlines.
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“At the beginning of the month I had a client who was looking for a condo in the city,” he says. “They needed to find something relatively quick because their current landlord was selling their place. You need to make sure you are set up on the MLS Collaborate system. That allows you to immediately see when a property becomes available.”
Time is of the Essence
The MLS Collaborate system is the latest development to assist buyers in a market that doesn’t have precedent. What is happening in Toronto right now confounds even professionals with years of experience. It makes tools like Collaborate invaluable for buyers.
“We received an email showing a new one-bedroom condo listing at 6 p.m., then saw the property at 8 p.m. – we had an offer to the agent that same night, which was an irrevocable offer for 1 p.m. the next day,” he says. “The reason you do that is to limit the amount of people that are walking through the property and submitting offers. You want to try and create a very small window for the seller to make a decision.”
It’s a strategy that may have proven effective 12 months ago, but present-day Toronto is different kettle of fish. Bidding wars are to be expected nowadays, and so it proved with this property.
“In this case, the seller had another four people in the next morning and they all made an offer too,” says Vukasovic. “We went in with a higher offer and gave a deadline of 5 p.m. that day. The seller accepted it at 3:30 p.m. – the original listing was $399,000 and it sold for $425,000. It is absolutely the norm right now. I would say 95% of inventory is set up for bidding wars, that’s based on what I’m seeing in the marketplace.”