What this west-end bidding war says about Toronto’s housing market
The house that was for sale along Perth Avenue and Junction Triangle is nothing extra-ordinary. It is a simple house that is more or less the same as those lined up along the area. However, its recent sale got everyone into frenzy. These include the entire neighbourhood and the real estate players in the Toronto area.
Houses priced below the $800,000 price range are a good buy in a tight market where demand outstrips supply. With recession, low priced houses are lapped up easily the moment they are offered for listing. The said house, with its tasteful renovation, and in a neighbourhood that is becoming upscale, is considered as one of the first “good buy” for the year.
The bidding during the open house last weekend attracted more than 400 people. These bidding veterans checked on the highly sought after property: up to date renovation in the kitchen and bathroom areas, appliances made of stainless steel, and proximity to — schools, transport, and the city central area.
The deadline for submission of offers was 7p.m. on Tuesday night. There were 32 offers that were submitted and the winning bid was $848,625, which was more than the asking price of $639,900. This bid was over by $210,000 or 33 percent higher than the listed price.
The owner and co-listing agent, Mike Gryspeerdt, was overwhelmed by what happened. He lived with his family in the house for 12 years and did not expect the bidding frenzy that ensued. He was shocked by what happened and apologized to everybody when he faced frustrated house hunters and real estate investors.
Realtors within the area, though prohibited by the organization (Real Estate Council of Ontario) to speak out against competitors, felt that the property in Pert Avenue was priced very low. Similar prices along the area ranges from beyond $700,000.
Everyone agrees that the house was listed low since a similar house on Perth Avenue sold for $730,000. This sentiment was relayed by buyer representative, Maggie Lind. The house should have been priced higher since it has add-ons like —designer kitchen, top of the rank basement music studio, and high efficient improvements all over the house.
Gryspeerdt, believes that the number of bids represent a high record for Toronto. It may be because the Junction Triangle area is considered as prime property with a good neighbourhood to boot.
Realtors in the area say that what happened in Perth Avenue represents the many problems that face the real estate market. This is in contrast to the best efforts made by Finance Minister, Jim Flaherty.
The most pressing problem is the lack of inventory listing of properties that are for sale in the area. The Toronto Real Estate Board (TREB) noticed the sudden drop in real listing of homes for sale since the start of recession in 2008.
The listings for homes dropped down by 17 percent in 2012. The figures dropped down further by 14 percent in 2013, says TREB. The average listing is 16,000 homes, including the slow months of December.
The predicament now is on where to go — if prices move up that will be considered drastic. People are not buying that, what they are doing is staying put and doing some renovations. It can cost $100,000 to make the next move.
TREB cites that other problems that befuddle real estate brokerage are the doubling of land transfer taxes in Toronto. In addition, the real estate brokers themselves are to be blamed since they insist on keeping the five percent commission — thereby pushing fees and house prices sky high.
Another problem that faces the industry is the tight mortgage credit. It has become difficult to buy a $1 million plus house with less than 20 percent down payment. Hence, buyers are now opting for the lower priced homes, say mortgage broker Steve Garganis.
There were also buyers who waited it out, with the expectation that prices will drop in the last two years. They realized that it did not. However, in condominiums, prices are going down since supply is more than the demand.
Sales have gone down in the last two quarters of 2013, but have not affected prices. The average price for a detached home is $894,654 in Toronto by middle of January. This figure represents a 21.1 increase from the previous period, per TREB.
Semi-detached homes had gone up by 14 percent, or an average of $581,475.
Semis were up almost 14 per cent, to an average of $581,475.
Other factors that compound the problem are newbie realtors with less than five years’ experience. They lack the professional expertise to neither gauge the market nor rein in prospective buyers. This was the assessment of the Toronto board with some 37,000 realtor members.
Realtors who have been long in the business, oftentimes say that every bid contributes to price movements in the overall house prices. The recent sale of the said Perth Avenue home will serve as the benchmark of prices for realtors coming up with their new price listing.
The public oftentimes blame the realtors and agents for under listing, but realtor David Fleming says, “Realtors are not doing a good job of informing their buyers.”
Every sales agent looking at Perth properties should always think that prices can go beyond $800,000. And they do, says Lind – the broker for the winning bidder. Though she refused to discuss about her client, all she can say is that they are “ecstatic”
She further mentioned that the property that her client bought is a fabulous house, and would not need further renovation.