It’s Official: Every Property In Toronto Has An “Offer Date”

I know what you’re thinking: “That can’t be true.”

And it is, even though it isn’t.

Because for any property that comes onto the market without an actual offer date posted on MLS, the offer date, is now.

The offer date is asap, because properties are selling in mere minutes.

We’re one month into 2017, and this is the craziest market I have ever seen…

Push Button - Act Now, 3d rendered image , isolated image , computer generated image.

I was going to try to avoid delving into the “big picture” here once again, at the risk of that getting old, but it’s just unavoidable given where we are.

Because with what’s going on out there in this market, this is about the big picture in Toronto.

What’s going on, you ask?

In short: it’s insane.

Perhaps this line has lost all meaning, given the last few years, but here it is again: I’ve never seen anything remotely like what we’re experiencing.

If you thought that a 17.2% increase in the average Toronto home price, from 2015 to 2016, was significant, then try this on for size: Every property in Toronto went up 3-4% as soon as we turned the calendar to 2017.

And some might argue that 3-4% is conservative.

Because there are properties out there – both houses and condos, that literally went up 10% in value from December 31st to January 20th.

That is where we are in the market.

That is, “what’s going on.”  Well, in short.

So at the risk of jumping around too much here, let me go back to the “big picture” discussion again, for a moment.

We talked a lot on TRB throughout 2016 about the lack of available inventory in Toronto, the massive decline in active listings, the fact that many people are “trapped” in their homes and not selling, and that overall, there is far less supply than demand.

“Less supply than demand” sounds like a massive understatement.

This isn’t like a popular vote that goes 51/49, one way or the other.

We’re talking drought.

To put things in perspective, take Wednesday’s new listings.

If you’re looking to buy a 3-bedroom home for under $1,000,000 on the east side, and by “east side” I mean anywhere from the DVP, to O’Connor, to Victoria Park, to Lake Ontario, guess what the “selection” is like out there?  Today, we saw four houses listed in E01, E02, and E03 that were under $1,000,000, and I would guess that only one of those four houses, once offers are reviewed, will sell for under $1,000,000.

One house.

One.

And how many people do you think are looking for a 3-bedroom house, under $1,000,000, “on the east side” right now?

Maybe…….a thousand?

It’s just crazy.

And once you get out into the marketplace and see what’s going on, it gets even crazier.

I predicted back in August of 2016, accurately, as time has now shown us, that we would start seeing “offer dates” on condos.

The fall showed us that the rare, sought-after properties would have “offer nights,” not so much out of greed, as people would like to believe, but rather out of necessity.  Listing a $449,900 hard-loft in an 80-unit building, where nothing has come up for sale like it in 12 months, with offers any time, would be short-sighted, given the demand.

The bears, the haters, and the eternally-frustrated will say, “Oh yeah?  Why is it short-sighted?  Why not just ask what you want, and be happy if you get it?”

Honestly, if you’re asking that, then I can’t help you.  So I won’t even address it.

As the fall market went on, we started to see more and more condos with offer dates; some condos that weren’t even really all that popular six months earlier.

But as soon as January started, the market changed in a way I’ve never seen it change before.

EVERYTHING had an offer date.

And as I said somewhat cynically, and truthfully, at the onset – those properties that didn’t have a set time and place for offers, in the traditional sense, were basically taking offers one split second after the listing hit MLS.

Mind you, I’m not talking about the “junk” out there.

I use this term often on my blog – the junk, and I’m referring to pre-construction, assignment sales, units in occupancy, re-lists, tenanted piles of garbage, and over-priced jokes.  Some of those are interchangeable.  And then on top of all of that, we have location, and I’m sorry – as hot as the market is right now, I don’t think a condo at 4K Spadina Avenue qualifies as a “hot listing.”

So eliminate the junk, and honestly folks, just about every condo out there is selling within 72 hours.

Many of them are selling in mere hours, and that is what’s so crazy about this market.

We’re used to this pace with houses; we all know the drill.

A house is listed for sale on Wednesday, and offers are reviewed next Tuesday evening.

In recent years, the bully offer has taken over our world, and suddenly there’s no guarantee you’ve got six days to see the property and make up your minds; suddenly, you need to see the house on the very day it hits the market, just in case a bully offer comes in, and the offer date is moved up.

Probably 30% of “hot listings” for houses in the central core are selling via bully offer right now, and that just throws the housing search into utter chaos.

But condos?

Really?

Offer dates on condos was one thing.

But bully offers on condos?  Really?

A colleague of mine has, in the space of two weeks, with the same client, shown three King West condos, all with offer dates, all of which sold via bully offer.

Imagine the client?

Losing in three bidding wars – that’s rough.

Losing in three bidding wars – all within 48 hours of the listing, since a bully offer moved up the “offer night?”  That’s tough to swallow.

And the condos that are listed with no offer date are selling even quicker.

Last week, another colleague of mine spotted a new listing at 66 Portland Street that hit MLS, let’s say, around 11:00am.

He called his client, told her about it, and booked a viewing for 3:00pm that day.

So picture this: he’s driving downtown to meet her for 3pm, and when the light turns red and he comes to a stop, he checks his messages.  And there at the top of the pile is an absolute dream-crusher: “66 Portland SOLD FIRM, no more showings.”

“The goddam property sold while I was on my way there in my car!” he told me once he returned back to the office.

“How the F*** are people supposed to buy in this market?”

I listed a condo this week in a building where exactly 4 of the last 51 sales, over two years, have gone over the list price.

My first showing was booked for 11:00am, and by 11:07am I had a registered offer.

I had a 1:00pm showing, and by 1:45pm, I had a second registered offer.

We have an offer night set for next Monday.  (And folks, I’ve told you for years that I hate the “offer night,” but it’s a reality of the market – so don’t shoot the messenger here, plus, we’ll talk more about this in a blog post to come next week)

But even with the pretext of an offer night two people rushed to get their clients in to see the unit, and registered offers just to get their foot in the door.

Whatever price this unit fetches will obliterate any record in the building.

To be fair, I listed it how I always list units – fixed up, cleaned up, staged to perfection, and marketed to the max.

But even the crummy condos with no photos are getting offers; offer(s), plural.

Often in this market, it seems, we’re in a race to see who can get in to see the property first.

Where there’s no offer date, you’re looking to submit something at full price, and push the listing agent to take it before competition ensues.

And where there is an offer date, you’re looking to submit a bully offer that catches the market off guard; some buyers have yet to see the property, and some have seen it, but can’t act quickly enough to get their offer on paper.

Reading all of this, you’re probably experiencing a wide range of emotion.

Shock?  Yes, if you’re not in tune with the market.

Fear?  That’s natural, if you’re a buyer, or about to become one.

Frustration?  No doubt about it, but buyers and sellers are just as frustrated in a depressed market.

Concern?  Sure, what red-hot market doesn’t come with concern.

Anger?  Yeah, that’s fair too.  Just remember that it’s an open market, made up of buyers and sellers, and supply and demand is to blame, not greedy sellers, and evil agents.

Confusion?  Yes.  Absolutely, now we’re hitting the nail on the head.

This is absolutely, positively, the most confusing market any of us have ever seen.

We have properties with offer dates, properties without offer dates, bully offers, listings that say “no bully offers” that still receive bully offers, since there’s nothing to stop somebody from submitting one, and listings that say “no bully offers” that actually sell via bully offers, since it’s up to the seller in the end.

The prices are continuing to increase, it seems, as fast as last-year.

And January left us with the lowest inventory, I’m guessing, in the past ten years.  The TREB numbers should be out by Friday, so we’ll know for sure.

Folks, buying and selling real estate is emotional, so the short list we’ve compiled above is not surprising.

But we’re in the most complicated market I have ever seen, and we’re learning new lessons daily.

So if you’re a buyer in this market, just remember: every property that hits the open market has an offer date.

The tough part is figuring out when that date is, and how you’re going to use it to your advantage…

 

32 Comments

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  1. Tommy says:

    Based on what is happening, supply is definitely NOT the issue. External influence is. Some regions in the GTA saw 55% increase in home values (we’re talking $500k in one year in Aurora). Demand is not being driven by domestic buyers.

    20k more condos sold in 2016 over 2015. Really? Especially when many of those condos are like the ones at 1 Bloor East – $550k for a one bedroom one washroom? LOL

    So long as there is international interest, prices will rise above and beyond the reach of locals. No amount of supply is going to stop that. Should something be done to stop it? I’m not so sure. Places like London and NYC have allowed foreign investment for decades and have done just fine.

    Supply takes time anyway. There is plenty of land in the GTA but much of it is not serviced land which takes years to get underway.

    Buckle up for wild swings up and DOWN in the market, depending on what happens in the global economy.

  2. steve says:

    This does NOT sound like a healthy market …..

    1. Geoff says:

      who said it was? it’s unhealthy. That doesn’t make it stop existing.

  3. crazyegg says:

    Hi All,

    TREB announced that 113,000 properties were sold in 2016 in the GTA on the MLS. They are expecting similar numbers for 2017.

    Is this correct? This works out to 310 properties changing hands. PER DAY.

    I think we are all in agreement that there is a shortage of listings in Toronto so the sales must be coming from elsewhere (i.e. outside of the City of Toronto).

    Does anyone have the sales numbers for just the City of Toronto?

    Regards,
    ed…

    1. Appraiser says:

      @crazyegg,

      Here are the numbers: City of Toronto TREB MLS sales for 2016 – 42,817 consisting of 24,497 condos and 18,320 freehold properties.

      In comparison, sales for 2015 were 19,765 condos and 17,412 freeholds, an increase of 13%. Clearly condos are responsible for the vast majority of the uptick, yet freehold sales also improved year over year, despite the perceived dearth of listings. The most important statistic in my opinion is the dramatic decrease in the number of days on market from 29 days to 20, a 31% plunge.

      You can’t build inventory when there are fewer new listings and they are selling faster than ever.

      1. crazyegg says:

        Hi Appraiser,

        Thanks for the numbers!

        Wow. That still works out to 115 properties sold PER DAY in the City of Toronto (not GTA). I find that mind blowing still.

        But you raise the bang on point which explains everything: Days on market has plunged.

        NET/NET: People are still listing their houses in greater numbers than ever. And people are buying them (at higher prices) FASTER than ever.

        Regards,
        ed…

  4. Kyle says:

    Another corollary from this is that rental prices are going to keep rising. Next stop Offer Dates, Bully Offers and bidding wars on every rental.

  5. Appraiser says:

    It’s all about demand, which is off the charts. Oh, and let’s dispense with the notion that people aren’t moving and are therefore “stuck” where they are. There were 113,000 sales on TREB in 2016 – an all-time record. Much more needs to be done about the supply side of the equation. More and tighter mortgage rules that penalize first-time buyers and highly qualified applicants, along with misguided taxation schemes that affect demand only, are NOT the answer.

    1. mike says:

      How would you go about increasing supply?

      Reducing demand through the taxation and lending rules is pretty much the only solution unless we want to start filling in the lake.

      1. Appraiser says:

        @mike,

        Filling in the lake is nothing new.

        “Most of the land that currently exists below Front Street is the result of landfill.”

        http://www.blogto.com/city/2011/ 07/that_time_toronto_filled_in_the_harbour/

        1. mike says:

          Yes, but when that was done there weren’t the same kind of environmental legislation’s. I’m pretty sure if you tried to fill in the lake now you’d have everyone screaming.

    2. Joel says:

      I completely agree withe you there. More supply is the answer to this along with a shift in what Torontonians are willing to live in. We need to see a shift to families in multi unit buildings.

      1. jeff316 says:

        Only a culture change will solve the problem. But I don’t see that happening soon.

        1. Mike P says:

          The shift to condos for families can happen if builders start offering functional floor plans with good sized bedrooms – not the sardine cans currently being built and a dent in the wall being called and marketed as a den.

          1. Steve says:

            The other problem being the absence of public schools within proximity to all these condos .

    3. Kyle says:

      Agreed, supply is the issue. There’s a derth of available inventory. Knocking out a buyer or two from the fifteen to twenty that show up at a bidding war isn’t going to help.

      The only way prices are going to slow down is with a sufficient increase in inventory. And short of a black swan event or some draconian new laws, the only way inventory is going increase is if this City commits to intensification by loosening up and speeding up the planning and approval process. But given that the average project spends 15.9 months getting approvals, it’s doubtful that any new supply relief will be coming any time soon.

  6. Libertarian says:

    As per the comments below, I agree that Wynne will probably do something, but I doubt that it’ll be a tax on foreign buyers. They’ll probably wave LTT for first-time home buyers. They might even wave it for others, such as low income, or families with kids. Eventually, at the municipal level, we’ll copy Vancouver and waive property taxes. Whatever happens, be confident that the three levels of government will do something stupid. That federal gov’t program to teach people financial literacy should either pick up the pace or be dismantled, because it obviously isn’t working.

    1. mike says:

      I’d have to disagree with you on the elimination on the LTT for first time buyers. Governments are too dependent on the money that LTT bring in; its an easy consumer tax.

      Governments are also well aware that eliminating taxes rarely translates into lower prices for consumers. I think that would be especially true in real estate where a lot of people tend to bid every single dollar they have. That extra 5% would just go back into the price of housing.

      1. Libertarian says:

        I agree with your statement about “that extra 5% would just go back into the price of housing.” That was my point – Wynne will try to get millennial voters by making it easier for them to afford to buy a house. I don’t think that Wynne will do anything to make housing more expensive. She’s going to do the opposite – make it seem less expensive. It’s the same reason she came out last week against tolls in Toronto. She’s bribing voters with taxpayer money. I don’t want taxpayer money supporting the real estate industry.

        1. mike says:

          Millennials don’t vote though, old people vote.

          As witnessed by the toll road debate. Millennials tend to live in the core and are less likely to own a car but old people live in the ‘burbs, drive, vote and complain a lot.

          Putting in a foreigner tax will make it look like the government is doing something but if they remove one tax you’re going to have people complaining about it, especially if its for one demographic an not another.

          Remember, if you’re a senior and you’ve lived in your house, paid off your mortgage and decide to sell and buy something smaller you’re going to have to pay the LTT. The minute they have to pay a tax that someone else doesn’t they will pull out the, “I live on a fixed income after working and paying taxes for all those years”.

          1. jeff316 says:

            Mike’s got it.

    2. Libertarian says:

      Whatever happens, I’m sure the gov’t will do something stupid (as I wrote in my original post). As the others have suggested, maybe that something stupid will be to fill in the lake, or scrap the greenbelt act, or maybe even both!!

      Since that would fix the supply side, why don’t they fix the demand side while they’re at it. No more investors for residential real estate. Investors can buy all the commercial real estate they want, but when you buy residential, it has to become your primary residence. It you already own, you have to sell either property within 90 days. That’ll cut demand in half. Even CMHC came out last week and said prices are rising so fast that it’s entering speculative territory. That’s because everybody wants to be the next McGivillary (or whichever infomercial/seminar/book pushing get-rich-quick schemer you prefer).

  7. Ralph Cramdown says:

    El Predicto says we’ll see a few more months of this, then the premier will cave and bring in a 15% foreign buyers’ tax.

    1. jeff316 says:

      Yup. Election coming up.

      1. Julia says:

        I honestly home she does. Many of the homes sold in my area ( Allenby in North Toronto) are either being bulldozed and some god awful ‘modern’ autrocity is built in their place replete with tacky crystal fixtures or are being rented out as is. I for one would rather see home owners who care and take part in the community be my neighbours vs renters.

        1. Geoff says:

          so people who rent aren’t part of your community?

          1. Julia says:

            Renting, for the most part, is still a temporary solution for most people. This may be changing given how expensive housing is getting, but at this point in time, most people rent until they buy. And if that is the case, then, no I dont think those people have the same level of care and interest in their area as home owners.

    2. Kyle says:

      Be careful what you wish for. If most of the Toronto buyers out there are Canadians such a tax will do nothing to reduce demand, while on the supply side, sellers may get spooked and even fewer of them may decide now is the time to sell.

      1. mike says:

        Vancouver realtors said the foreign tax wouldn’t work out there but it did. Realtors are the one saying that GTA homes are not being bought by foreign investors (only 5% as they say). If that is indeed the case, foreign buyers tax might not work but it certainly won’t hurt anything and earns a lot of political credit with voters.

        1. Sevyn says:

          I don’t think Wynne will implement a 15% tax on foreign buyers because truthfully we do not have a lot of foreign buyers. If that rule comes into play – I don’t think the market will stop rising, it all has to do with supply and demand period. That is it. SUPPLY VS. DEMAND. Until there is more inventory – nothing will change drastically. I think for the next 2 years the market will be crazy – but definitely by 2019/2020 it will slow down. More rules will come into place, interest rates will increase, banks will scrutinize more, there may even be job losses and people will be forced to stay in their homes and the others will be ‘stuck’ in their homes for the most part. Parents won’t have any money to fork out to their children anymore. Renting will become a natural thing to do – just like New York and Europe. People will start to downsize and in about 10-15 years will things go crazy again. It is a cycle – just like anything else. ECONOMICS my dear…. Economics. Also keep in mind – when there is no more land to build on – what will happen then? It is only a matter of time everything WILL even off… give it two more years (wink).

          1. mike says:

            But see that’s the point; putting in a forigne buyers tax might not do anything to the market but it doesn’t harm any voters. And if it doesn’t drop the prices even better because then it looks like the government is getting rid of those mean old foreigners without killing the value of voters home equity. It’s a win-Wynn situation.

            Then there is the fact that if there happens to be foreign buyers they are contributing to the tax base of a government that is badly in need of capital.

            It’s hard to argue politically why they wouldn’t put in the tax. The great thing about government is that things don’t actually need to work, as long as people perceive you to be doing something. Take south of the boarder as an example, will a wall stop illegal immigration? No. Will Mexico pay for a wall to keep rapists, criminals and drugs out of the US? Nope. Are illegal Mexican migrants raping and robbing Americans? Not according to any meaningful statistics. But people perceived there to be a problem with foreigners (even though there is no evidence of such), they feel that while a wall won’t stop people with ladders, tunnels or sledgehammers at least its something. And most people never believed that Mexico would actually pay for the wall but don’t care, as long as they get a wall and they don’t have to pay for it their happy. Ontario voters are not much different.

          2. jeff316 says:

            Yeah mike is totally right on this one. It doesn’t have to work as intended. If anything, it’s almost the best scenario if they implement it and it doesn’t work. The question is, will the NDP beat Wynne to the punch? They need a wedge issue and this is more perfect for them than it is for the Liberals.

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