It’s the same story I’ve been telling for the last two years: there’s nothing on the market, no matter what you’re looking for.
If this continues, the very first ‘nice’ Riverdale home of 2012 is going to have eighty offers on it…
Did you hear about the house that received over thirty offers last week? It might have been forty, but at that point, it doesn’t really matter.
It was really just a builder’s lot (albeit one with a house that needs to be torn-down), but it was right near the water, and it sold for 150% of asking price.
The funny part is – the listing agent double-ended the sale. Now, what are the ‘chances’ that with forty offers, he came out on top with the highest one? He must have a crystal ball….or….well…
This sale is an outlier, or an anomaly, or whatever you want to call it. But I don’t think this spring is going to see any decrease in prices if we continue to see such low inventory on the market.
Simply put, there is nothing on the market right now, and when I say “nothing,” I mean it primarily as an exaggeration but for some buyers – it rings completely true.
And keep in mind – I don’t care what statistics say. People love to jump on here and say, “Actually, David, TREB statistics show a such-and-such increase in new listings from January this over January that.” I truly don’t care. Numbers are just numbers, and I’m the one grinding it out every single day in the real estate trenches. Some properties are listed 5-6 times as Realtors change prices and/or strategies, and some new condo developments flood the market with hundreds of crappy units that nobody wants to buy. The statistics can be misleading. I’m talking about QUALITY listings that are in demand, and I’m not seeing any.
How many times per day do I check “New Listings” on MLS? Fifty? One hundred? We’re on here all the time, and it’s the same story: “Man, there’s just nothing out there right now!” We commiserate with each other, and pray that the real estate Gods will send us that renovated 3-bedroom, 3-bathroom house in Bloor West Village, or that 1,200 square foot hard loft on Queen Street West.
Yes, there are hundreds and hundreds of new listings every week. And yes, TREB statistics will show that the market is “active.”
But if you’re asking me, or any other Realtor who has at least a dozen active buyers waiting for the ‘right one,’ there is just nothing out there right now, and it’s been like this for some time.
We’re often at the mercy of the market. The amount, quality, location, or style of new properties listed for sale is 100% unpredictable, unless, you have some sort of intervention in the market place.
For example, if the government decided in 2012 that there would be a new tax credit in the amount of $50,000 for home renovations, then certainly this would change the amount of new listings coming onto the market! More people would renovate their existing homes instead of purchasing new ones, and the supply of new listings would diminish.
Similarly, if the federal government said, “Well, you’ve got the municipal land transfer tax, and that provincial land transfer tax as well, but we’d like our cut so we’re implementing a third, federal tax to boot,” then it might make buying houses and condos less affordable, and we might see even fewer new listings.
You could surely come up with a scenario on the flip-side as well. If Rob Ford offered a lifetime supply of free Toronto Maple Leaf tickets to each property-owner that listed before January 31s, the market might be flooded with properties.
But barring these examples, those both realistic and utterly imaginative, the supply of available properties for sale is very difficult to predict. And even ‘if’ we knew that since interest rates are rising to 11.5% that tons of homes are going to be listed for sale, we still couldn’t predict where.
As I type this blog post, I’m looking to my left on the wall next to my desk and seeing my list called “ACTIVE BUYERS.” Almost all of these buyers are looking for something extremely particular, and would buy tomorrow if the property is available.
Michael is looking for a King West loft, that is NOT in “Freedville,” and that is a better representation of what “soft lofts” are supposed to look like. He needs parking, a second bathroom, a den for a home office, and a view that is anything other than an alleyway or a neighbour twenty feet away. We only started looking three weeks ago, but so far nothing has fit the bill.
Ken & Stacey are looking for a Leslieville house in the $700,000 – 800,000 price range. There’s nothing out there right now. We’ve been looking since November of 2011, and while we came close on a couple things last year, nothing jumped out at us. They’re considering Riverdale as well, which is a step up in price but opens more doors, and so far in 2012 we haven’t seen a single thing worth looking at. Nothing. Nadda. And I email them every week to say, “Sorry guys – nothing this week!
Doug & Dierdre are looking to upsize their condo at Spire by either finding something larger in the same building, or moving into a neighbouring building like Vu or Mozo. We’ve been looking since July of 2010, and while one unit at Spire fit the bill, it was taken off the market abruptly as we were making our move last August. Since then, we haven’t seen a similar unit at Spire, and we haven’t seen anything in their price point that is 1,000 – 1,300 square feet that we could make a move on. Doug & Dierdre are on MLS every day and nothing gets by them, so suffice it to say that THREE of us are searching and still coming up empty. Until a 30th storey, 2-bedroom, 2-bathroom 1,100 square foot unit hits the market at 33 Lombard Street, we’re just sitting idly by.
Chris & Danielle are looking for a semi-detached house in Bloor West Village, but they’d consider High Park or Swansea to open their open set. We spun our wheels in early 2011, lost in multiple offers four times, and finally found a place for them to rent. But now they’re actively looking again, and there’s just nothing out there to show them. This side of the city is certainly more active than the east end (Riverdale, Leslieville, Beaches), but save for 2-3 properties since January 1st, there is no volume, and they’d have to overpay for a house that they only sort-of like in order to find a home.
I could go on, and on, and on from there as well, but I think you get the picture.
Every one of these dozen active buyers would buy a property tomorrow if exactly what they were looking for were to hit the market. Some of my active buyers have been active for 6-8 months, and that’s a reflection of how little choice today’s buyer has.
I met a young couple at their King West condo on Saturday who are looking to buy a house to grow into with their young child, and they asked me, “Do you expect that we’ll find ourselves in a bidding war, or with multiple offers?”
As much as it pains me to say it, I simply replied, “Yes.”
Until we see a slew of inventory hit the market, the demand will continue to outpace supply
I explained to this couple, “If you found the perfect home just south of The Danforth that met all your needs and was exactly what you drew up in your heads, wouldn’t it be a little bit, well, naive of you to assume that you were the only person in Toronto that was interested?”
You can’t argue with that logic.
If one 3-bedroom, 3-bathroom house hits the market on Logan Avenue at $699,000, you’re going to have forty interested buyers, and likely 3-5 offers.
If ten 3-bedroom, 3-bathroom houses in the same general area were to come onto the market at the same time, then the demand would likely be met, the sale prices wouldn’t be nearly as high, and there may even be a couple of homes that linger on the market for a few weeks.
But that second scenario hasn’t happened since I’ve been in the business, and I see no way for it to happen unless there is extreme external influence in the market place.
I keep hearing about all the active listings in Toronto, but I’m just not seeing it translate into quality properties that are in demand.
So as I said at the onset of this blog post, the next high-quality property to hit the market in areas where there is no inventory (Leslieville, Riverdale, Beaches, Leaside, and Swansea come to mind) is going to sell for more than fair market value in multiple offers.
The only question that remains is: will it be one of those stories where we say, “You won’t believe how many offers there were on this house last night..”?
Time will tell.
And as much as I’d love to see a more balanced market, it’s not going to happen until inventory increases dramatically.