Even though the professional shingle I hang may be best described as that of a Realtor, I've had a healthy obsession with almost every facet of housing and home since I was a kid. I'm fascinated with how the specificity of time, place, and culture shapes Canadian shelter. In fact, it's one of the reasons I started this site, so I could better understand how the places we live are shaped by history, the environment, and the socio-economic, geopolitical, technological and cultural forces which influence the what, why, when and where we build, in addition to the planning, spatial, sensory, aesthetic and material preferences favoured by the decision-makers.
I've witnessed this through a fairly specific lens, crafted as much by personal design as the forces of chance. Having the grace and good fortune of an entrepreneurial career now entering its 28th year in the concept, sales and marketing of new and resale Toronto real estate - which I operate as Urbaneer.com under the tutelage of Bosley Real Estate Lt.d, Brokerage - I remain amazed by which Canadian housing, once primarily considered a place to protect and nurture us from the ravages of everyday living, is now equally regarded as a product constructed and commodified predominantly for profit, and promoted as a vehicle to represent the status-markers of its occupants who have been stylistically informed by an influential omniscient media. Not that shelter has never been free of these truths, but in a market reality where your phone can bleep a notification that a property fitting your criteria in a location you covet has just come to market and that the Seller will consider a bully offer in advance of the offer date (of which a handful will be submitted within hours), the adrenaline rush to seek, conquer and win contributes its own intangible premium. This is particularly evident in the current market in Toronto. With Toronto's eternal imbalance of low housing supply and omnipresent buyer demand - bidding wars - which tend to appear during the seasonal cycles of real estate when conditions are particularly ripe, have re-emerged with a vengeance this spring.
One aspect that's really important to understand, dear readers and in particular those of you who do not reside in Canada, is that while our friends at Better Dwelling recently shared that Canadian Real Estate Enters A National Seller’s Market, As Sales Jump, the acquisition prices of Canadian real estate can vary dramatically. Furthermore, whenever you see a statistic that shares what the average price of a property is in Canada, be aware that the high costs of housing in Toronto, Vancouver and Montreal skew the values up. For example, according to the Canadian Real Estate Association, the average price of a Canadian home that sold in February was $540,000 (a figure that rose by 15.2 per cent in the previous 12 months), but when one excludes sales in Toronto and Vancouver, the average house price in Canada averages at $410,000.
There are many places to live in Canada which are affordable and have a superb quality of life. If this is of interest to you, Maclean's is an amazing Canadian publication who shared in August 2019 an informative overview on Canadian Housing called The Best Communities In Canada which included their assessment on the Best Communities In Canada With Affordable Real Estate 2019.
In the interim, in this post originally published on Urbaneer.com - I explore some of the inertia behind bidding wars, the seasonality of the Canadian real estate market, and an analysis of what is currently happening in the Toronto real estate market.
So many associations with spring involve movement and energy - “spring forward”, “spring into action” and having a “spring in your step” - for example. Which is why it’s not surprising to discover that spring is traditionally the very busiest time of the year in Toronto real estate. And - when you take an already hot market - plagued with ongoing supply and demand issues, coupled with imminent policy changes to Canada's mortgage stress test that will increase many buyers’ purchasing power - you’ve got prime conditions for the all-familiar blind real estate bidding war.
And we Toronto realtors are already seeing it in full force. According to the latest stats, January 2020 saw tightening market conditions that resulted in the largest month-over-month price increase since October 2017.
Why Spring = Bidding Wars
The Toronto real estate market is pretty busy year-round - outside the occasional lull of summer respite, the few weeks we celebrate winter Festivus, and when extreme weather conditions interfere - but spring is traditionally just that much busier.
Have you seen my post The Seasons To Real Estate? In this piece, I explain how the spring market begins in January and usually extends through May or June. People emerge from hibernation after the winter and begin enacting their housing plans - whether buying a personal residence or investment, preparing their dwelling for sale or even tackling maintenance, upgrade and renovation projects. If this is you, here's How Urbaneer Will Help You Make The Right Real Estate Purchase - and - Urbaneer's Guide To Preparing Your Home For Sale. - and - Dear Urbaneer: Should I Move Or Renovate?
In Toronto, the year starts with two buyer pools of dwell hunters. The first pool is the new arrivals to the Toronto real estate market, who just recently made the decision to proceed with a purchase over Holiday and New Year. For most of this group, the first six weeks of the year means mortgage pre-approvals, maxing their RRSP contribution so it can be withdrawn as an interest-free loan for their purchase, ensuring their real estate deposit is sitting in their chequing account ready to be converted into a bank draft within 24 hours (in Toronto, a sum that is at least 5% of a property's purchase price), and selecting their realtor to guide them through the process. (Hint: If you're in Toronto --> Pick Me! Pick Me! I'm Steve Fudge, and I sell Toronto real estate.)
The second pool is the existing group of dwell hunters who’ve been at it for a while, ranging from multiple months to multiple years depending on their circumstance. For example, are you a first-time buyer relocating to Toronto seeking an affordable condo for immediate occupancy because you've been sleeping in your friend's den for the past 6 weeks? Or perhaps you are a pair of established career-pathing executives patiently resigned waiting for the perfect family home to come for sale in your coveted neighbourhood, so you can lock down your long-game family home to nest in for the next 20 to 30 years?
This second pool of buyers has probably lost a potential purchase or more. This is usually because they didn't act quickly enough, or because they're still uncomfortable with submitting the proverbial one-dollar-more-than-you-have bid with an hours-long condition - or more likely no conditions at all. It might be because they've been scorched in enough crazy competitive bidding wars where the final sale price was such an eye-popping sum they're now questioning whether it's worth the heart-breaking motivation-killing fatigue-inducing endurance-quest necessary to survive in order to ultimately leverage a massive debt on a game piece on the Toronto real estate monopoly board! No matter the reason, this second group of buyers enters the spring market highly motivated.
Let it be said, it's now a New Year, optimism inevitably prevails (we're Canadian, after all), and this group has had the winter to recharge and retool their strategies. With months to think, research and plan under their belt, and the exposure to the shocking reality that no Toronto buyer ever feels there's sufficient product that matches their housing wishes, wants and needs, the majority of these dwell hunters are now highly motivated and adding more energetic hunger and thirst to the already crowded buying masses.
The first six to eight weeks of the spring market is dominated by the last year's seasoned dwell hunters who lead the charge snapping up the new listings. This year, the pace that listings have come to market for sale has been slower than usual, which set the bar for bidding wars early. This intensity during the beginning of the season - if it follows convention - has laid the foundation for the remaining seven thru twenty-weeks of the season which, until the first heat wave prompts us to get outdoors and play, will crescendo to a fevered pitch. Meanwhile, the roiling synergy of those 'In It To Win It' will work towards understanding how to navigate the oscillating market dynamic, gain confidence in bidding aggressively - including gambling with a bully offer play - while being slayed by the soul-crushing Fear of Missing Out.
Every buyer hopes that as spring unfolds, there will suddenly be a massive explosion of new listings, but the truth of Now is that the decades-long mismatch between supply and demand will continue throughout the spring and very possibly - will grow exponentially - compared to other times in the year. This is both because more and more buyers tend to enter the dwell hunting pool as the season progresses, while more and more of them actively compete for the limited product, during a 20-week momentum that feeds and fuels the demand longer than any other time of the year. The fall market by comparison, which starts just after Labour Day and quiets mid-December, runs for a more modest 14-week run. By virtue of the real timeline, the momentum of the market cycles 30% longer fueling more sales and greater price jumps.
2017 All Over Again?
Just before the implementation of the Ontario Fair Housing Plan in April 2017, the market was scorching hot, at a frenetic pace, and insane bidding wars were commonplace. Every property sale was garnering a precedent-setting sum and almost every day I raised my eyebrows at the leaps and bounds prices were rising. The bubbling prompted this Dear Urbaneer post Does It Still Make Financial Sense To Invest In Downtown Toronto Real Estate? (the answer still to this day remains 'No' if you're looking for an income-generating return on investment, and 'Yes' if you're prepared to break even from day one - given the sheer expense of maintenance, repair and management - until you eventually sell the property decades after your purchase for a tidy price appreciation profit). After the government intervention was implemented - and for the next 18 months - the Toronto real estate freehold market cooled - with house prices stabilizing or dropping depending on the distance one was from the downtown core and how homogeneous the housing stock or location. I documented some examples of the price changes in my August 2017 post called The Wackadoodle Toronto Real Estate Market.
During this time dwell hunters became more cautious and prudent, while sellers had to re-align their expectations around real estate values. But to the surprise of many, although the Mortgage Street Test resulted in most buyers being qualified to borrow less capital, this financial limitation didn't stop the first-and-second-time buyers and investors, in particular, from redirecting their attention away from the expensive freehold market to focus on the more affordable ubiquitous downtown condominium market, where prices have skyrocketed ever since. It was an unexpected byproduct of the intervention which I share in Here’s What’s Happening With The Toronto Condominium Market.
But now, the engines of both the freehold and condominium markets are firing on all cylinders and well, you know what they say - history has a way of repeating itself. And so our living breathing truth in the Toronto real estate trenches is that the market feels a whole lot like spring 2017 again, which means everyone needs to anticipate some serious bidding war activity for the well-priced property. Supply remains constrained, buyers are synchro energized - with a new tool in their property buying kit - the ability to spend more with the imminent loosening of the mortgage stress test criteria.
This article 'Toronto’s Housing Market Heats Up: ‘It Is Like 2017 All Over Again’' shares how bidding wars have returned this year in force - and this was before the mortgage stress test changes were even announced. The piece Expect Relaxed Mortgage Rules To Heat Up Toronto Real Estate describes how the mortgage changes will impact the market. It also brings forth another important point - if people are able to spend more because policy permits, they will spend more, meaning dwell hunters’ hard budget caps tend to soften when faced with securing a property or continuing the search, especially when each new precedent-setting sale sets the bar for the next similar listing. Hence the bidding wars.
This recent example Toronto’s Heated Market Is Rippling Outward agrees the imminent mortgage stress test changes have already supercharged the market and that the impact is reaching to the far corners of the region. The note of caution? The current conditions could change if listings suddenly flooded the market, or if interest rates were to rise.
Let me share some examples of what's actually transpiring in the current Toronto's Real Estate Trenches:
- Some Recent Freehold Bidding War Sales -
Being newly renovated, this detached 3-bed home attracted a lot of attention! All new hardwood floors, recessed lighting, landscaping - not to mention the beautiful skylights - set this home apart in East York just north of The Danforth. The drawback of only having 2 bathrooms (one of which was a 2-piece in the basement!) didn't seem to bother the competitive buyers vying for a family home offered under $1million.
Danforth/Main - E03 - List $849,000 Sold $1,101,000 - 12 Offers
Well-situated near the intersection of Danforth and Pape, this classic, well-styled home is prime real estate for lovers of The Danforth. With 3+1 bedrooms and a whopping 4 bathrooms, it was the perfect homestead for a large or growing family, and close to excellent schools. One couldn't beat perks like 3-car parking, nor a finished basement with walk-out and income suite potential! Knowing they had hot commodity on their hands, these Sellers didn't look at bully offers and held back receiving offers for 7 days to incite competition - and, boy, did it work!
Danforth/Pape - E03 - List $1,499,000 Sold $2,020,200 - 17 Offers
This sale had all the signs of a flip, with the Sellers owning it for two years while undertaking a substantial renovation during that time. It was transformed from a tired 3 bedroom to a luxe 2 + 1 bedroom (with potential to convert it back). The basement was completely gutted and redone, expanding the living space with a well-appointed bed and bath. I loved the little accents and hints of the home's character, like the exposed brick, the bathroom tile, and claw foot tub, artfully integrated with a modern spacious kitchen and oodles of storage! When this impeccably-styled home with private fenced backyard came to market - off Queen East in Leslieville - it's presentation, and demand location assured the sellers the competition would be fierce! It's one example of How Toronto Real Estate Near Queen Street – East & West – Is Climbing In Value.
Leslieville - E01 - List $1,189,000 Sold $1,435,200 - 16 Offers
While this detached home south of Bloor just west of Christie didn't look like much from the outside, it's interior upgrades and $999,000 price point drew enormous attention. Significantly renovated including the upgrading or replacement of all of the major building components over the past 3 years, this property was positioned as a potential 3 unit income property, which a big draw for both investors and end-users seeking an income-supplement! Being in the Palmerston-Little Italy neighbourhood also boosted it value, which is truly one of the most sought after enclaves of the central west downtown core of Toronto!
Palmerston Little Italy - C01 - List $999,000 Sold $1,540,000 - 31 offers
If you were looking for proof that West Queen West is still a hot commodity - this is it! This 120-year-old row house was definitely appearing it's age, literally untouched for decades, and making it prime picking for the large pool of investors and renovators looking to lock down a Triple AAA location. Judging by the amount of interest this sale garnered, Buyers were undeterred by its sorry state! Sometimes it really is just about location, and potential!!
Queen Street West - List: $1,099,000 Sold: $2,000,000 - 28 Offers
For fans of Roncesvalles Village, this ageing beauty represented a great opportunity. An over-sized 2.5 storey merchant class residence, local Buyers squeezed in their smaller semi-detached houses were drawn in by the potential to renovate to their taste and keep their laughing barking brood in the neighbourhood. Equally appealing this was to investors with deep pockets, who could transform the vacant dwelling into a luxury rental. The drawback? Along with the price of admission, the Buyer wanting to elevate this into a turn-key property is going to have to pony up close to $1million to upgrade it. I hope the new Buyer keep some of the stately charms of this Edwardian Residential Architecture In Toronto!
Between Roncesvalles and High Park - W01 - List $1,298,000 Sold $2,300,000 - 36 offers
This stunning 2-bedroom home in Carleton Village had been renovated with impeccable taste, a great condo alternative and an example of The Popularity Of The Open Concept Space Plan. The selected finishes and fitting from this 2015 top-to-bottom renovation made it the dwelling appeal larger and present more luxe than I expected! The Sellers took a risk elevating this property in a transitioning neighbourhood just north of The Junction - albeit sufficiently north one has to cross a major rail corridor while navigating the former brownfields of Davenport Village. The Sellers did very well by this!
Davenport Old Weston - W03 - List $849,900 Sold $1,215,000 - 22 offers
- Some Recent Condo Examples -
Located south of Bloor East off Sherbourne, this reputable glass condo tower has the original James Cooper Mansion to house its amenities. Completed in 2012, this central address is part of the transitioning St Jamestown neighbourhood as more new rental and condominium towers are being constructed. Just south of Rosedale, north-east of the Church/Wellesley Village and steps east of one of the city's epicentres. Yonge & Bloor, the one-bed suite itself was rather compact and unremarkable, but the staging showed off its function and it featured a stellar south city vista! With a low list price, its stylish presentation and price point possibility was enough to draw multiple buyers!
Bloor Sherbourne - C08 - List $620,000 Sold $725,000 - 14 Offers
Elegantly updated this 1bed+den penthouse-level suite just north of the St. Lawrence Market on the edge of Moss Park made the most of its floor plan. Well-presented, contemporary and having reasonable condo fees, this walk-to-your-work in the Financial District swingles suite offered at a reasonable Toronto affordable price prompted Buyers to peg this as a winner!
Shebourne Richmond East - C08 - List $525,000 Sold $610,000 - 29 Offers
If there's one dwelling which will turn the heads of Toronto's urban dwellers, it's a loft! With an open concept plan, high exposed concrete ceilings, and sliding doors, this space nails the demand for a bright, airy aesthetic. And the only thing that could make a concrete 'n cool soft loft even cooler? A super trendy location like West Queen West just steps to The Drake, which remains an internationally recognized so hip it hurts livable neighbourhood! So it came as no surprise to learn this listing garnered many many many multiple bids!
West Queen West - C01 - List $549,000 Sold $711,000 - 32 offers
There is a smaller pool of product when it comes to freehold or condominium townhomes, and given they're well-suited to busy professionals with kids (now or imminently), they're in fairly high demand! This particular townhome was located in New Toronto on Lake Shore West, and featured 3 beds, 2.5 baths, and two-car garage! While it required a refresh in finishes and fittings, at the list price it was a sure-fire bet it would attract multiple offers. For those willing to live outside the proverbial 'city limits', this was a winner, though the Buyer was forced to pay a new precedent value to secure it.
New Toronto Condo Towne - W06 - List $699,800 Sold $835,000 - 16 offers
Navigating The Bidding War Battlegrounds
The secret to success in real estate remains constant - no matter the season. Approach with caution, make data-driven decisions and exercise patience rather than panic.
Address your goals realistically. Know your financial capacity specifically. Pursue with intention.
Your strategy must be fluid enough to respond to market dynamics, but not so elastic that emotions and the proverbial heat of the moment pushes you towards a decision that may not ultimately yield the results you desire. Get your ducks in a row and be ready to act, but be ready to walk if what you believed the potential opportunity actually doesn't meet your essential needs. Buying Toronto real estate is as much about patience and faith as it is about executing your plans.
If you're actively looking for a property to purchase, these Urbaneer posts may be helpful
You may also enjoy these pieces by Urbaneer's Steven Fudge:
~ Posted by Steven Fudge, the purveyor of houseporn.ca and proprietor of Urbaneer.com, a division of Bosley Real Estate Ltd., Brokerage.
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