Observations From The Month Of September

Opinion | September 30, 2019


I had this whole “Monday Morning Quarterback” post planned for today, picking up on the theme of “The Friday Rant” from last week.

This was a really tough weekend for those of us expecting the absolute best from fellow agents, but then again, maybe I’m just dead wrong when I suggest that an agent calling my cell phone not once, not twice, but three times inside of 90 seconds, at 11:35pm on a Saturday night, and paging me through the office, is poor form.

I took the call, the fourth time, by the way.

Some over-excited agent, telling me he might bring an offer on one of my listings, which of course, he did not.

He’s lucky that it was me on the listing, and not any normal, rational person.  I was enjoying a fine mix of Diet Canada Dry and Crown Royal, while watching Saving Private Ryan for the 9,841st time, so I didn’t really mind the call, but I did wonder how this individual was so out of touch with social norms.

By the time I got to Sunday night, I was so frustrated with about a dozen agent interactions, that I realized writing about these interactions, while risking coming off as a total asshole once again, would actually just rile me up even more.  So I ditched the Debbie Downer attitude and stories, and figured I’d provide you all with some insight on the market so far this fall.

I came up with a short-list of about ten observations on the market, but decided on the following as the most salient points:

The Market Is A Yo-Yo

Everything I said about the fall market, during the summer months, came true.

“The market is going to shoot up like a rocket, the day after Labour Day!” I must have said a dozen times, in various forums.

And it did.  It absolutely did.

But a funny thing happened about nine or ten days later: it slowed down.

That lasted for about one week.

Then the market shot up again.

Then it wavered.

Then we saw some downright insane sales, which I’ll talk about in Point #4, and suddenly the market was alive and well again?

I don’t have statistics to back this up, and perhaps I’m not conveying my point effectively.

But what I mean with this first point is that the market through one month has been really up-and-down.  It’s been “spotty,” for lack of a better word.  I use that word a lot to describe how some areas, price points, and/or property types are red-hot, and some are tepid.  One “spot” in the market does better than another, which is obviously common in the real estate market where we’re dealing with dissimilar products, but it’s when those spots move around on you that the market becomes harder to read.

I haven’t lost my feel, for what it’s worth.

De Grassi?  $1,199,900?  I said it would sell for $1,550,000, and it sold via 15 offers for $1,540,000.  Picking winning lottery numbers is what we do.

But did I have listings that I thought would move quickly, that didn’t?  Absolutely.

Were there properties that did better, and properties that did worse, than I thought they would do on offer nights?  Absolutely.

This fall, there’s been a lot of both “I can’t believe somebody paid that,” as well as, “That’s all that property went for?”

There was a lot more consistency in the spring, and I’m not sure why this difference exists.

I had two listings this fall that “only received four offers, where I would have bet my bottom dollar they’d have received ten.

And as you might expect, I’ve had listings this fall that received 9 and 12 offers respectively that I never thought would generate that kind of interest.

For what it’s worth, the actual prices, weren’t that far off from expectations, so it’s not necessarily that the number of offers is helping or hindering the eventual sale price.  But the interest levels have wavered significantly.

Bully Offers Rule

There are two ways to view the activity level of bully offers:

1) The number of properties selling via bully offer
2) The number of bully offers being received

The latter, of course, is only known to the seller or the listing agent, so it’s not as good a metric for those looking on.

But having worked on a handful of listings already, however, I can tell you what the activity has been like.

Now keep in mind that for any listing in the city, you’re going to get a dozen phone calls from agents saying, “Would your sellers accept a bully offer?”  Do you know how many times I’ve had a listing where at least ten people called me to ask this, but zero actually submitted a bully?

It’s an epidemic.  Everybody wants to talk!  Talk, talk, talk, but where’s the action?

In terms of actual offers being made, I can give you some insight.

I had a 1-bed, 1-bath in Liberty Village which received nine offers on the scheduled offer night, and one bully offer.  That bully did come back on offer night.

I had a 1-bed, 1-bath in King East that received four offers on the scheduled offer night, and two bully offers.  One of the bullies came back on offer night, one didn’t.

I had a small house in the west end that received three offers on the scheduled offer night, but zero bully offers.

I had a house in Little Italy receive nine offers on the scheduled offer night, and two bully offers.  Both bullies came back.

And I’ve got a listing right now that’s received four bully offers so far, with offers still set to be reviewed next week.

The bully offers are busy!

Much busier than this past spring, although from the sell-side perspective, I can tell you that most bully offers aren’t very good.  That’s just my experience, through five listings that had “offer dates.”  I’ve seen some insane sales via bully offers, and I was just telling clients about one such house while we were on a tour on Saturday afternoon.  This house, listed at $1,199,900, had a ceiling of $1.4M in my mind.  I would have loved to see it at $1,325,000, and I think $1,350,000 would have been fair.  So imagine my surprise when I saw that it sold via bully offer for $1,500,000?

Bullies can be amazing, and bullies can be terrible.

It depends on the property, the price point, and the day of the week.

My sellers have yet to accept a bully offer this fall, but that doesn’t mean we’re not interested.  We just haven’t seen one worth taking, and so far every bully offer turned down has been beaten on offer night.

On the buy-side, I have only submitted two bully offers on behalf of buyer clients, and neither were accepted.  In one of those cases, we went back slightly higher on offer night, and came second-place, and in the other case, we are waiting until this week to go back and bid once more.

If you’re a buyer in this market, you ought to be making bully offers!  Worst-case scenario: your offer is rejected, and you gain insight as to pricing that the other buyers don’t have on offer night.  Best-case scenario: you own a home.

Big Money Is Moving!

I’m having the guys over next Saturday night for a much-overdue par-tay, and by par-tay, I mean one shows up at 9:30pm because he couldn’t get his kids to sleep, one cancels because his wife is sick, and then the other three guys sit around and tell stories from high school.

One of my buddies told me, “I’m coming next Saturday, and we need to set aside a HUGE amount of time to talk about Leaside!”

This is where that whole “giving out sale prices” thing comes into play, so why don’t I just tell this story without giving addresses?  Cool?

Two weeks ago, a house came out in Leaside for $3,550,000, which was a huge number.

My parents sold our family home in Leaside in 2008 for a then-record price of $2,400,000, but that’s only because it was on a 70-foot double lot, which was subsequently divided into two, and two houses were built in its place.  Since 2008, I’ve seen prices steadily rise to the point where a new-build on a 35-footer was now worth the same $2,400,000 that we sold for.

The market goes up?  Go figure!

Prices for new-builds on 35-36 foot lots steadily rose throughout the early 2010’s, and eventually the $3,000,000 price threshold was broken in 2015 for a new-build on a huge 50-foot frontage on Glenvale Boulevard in North Leaside.

The $3,500,000 threshold was broken in March of 2017 on Roxville Ave in North Leaside, and then there was an absurd sale for $3,900,000 for a new-build on a 40 x 150 on Southlea Drive in April of 2017.

That price wasn’t challenged again until May of 2019, when another house on Southlea Drive sold for $3,875,000 – this one on a massive 45 x 160 foot lot.

Where am I going with all of this?

Well, up until this fall, the $4,000,000 price threshold had never been broken, and it had really only been challenged twice before.

This fall, a house in Leaside came up for sale at $3,550,000.  At this price point, we rarely see “offer dates,” but we might see the “soft holdback,” ie. the seller requests 24 hours irrevocabilty on all offers.

I saw the house come out on MLS, and thought, “Wow, that’s a big number!”

Two days later, when I saw the sale price posted for $4,300,000 on MLS, I figured it was a mistake.

I mean, what was more likely:

a) The house sold for $3,300,000, on a $3,550,000 list, and somebody mixed up the “3” with a “4”
b) The house sold for $750,000 over list

I spoke to both agents in the transaction, and got the full stories.

I owe both agents and their clients their privacy, so I’ll leave it there.

But suffice it to say, there were multiple parties who wanted this house.  One bought the house, two didn’t.

The story doesn’t end there, however.

Would you believe that six days later, the house directly across the street came up for sale?

Not “across the street” metaphorically, I mean if one house was #248, the other one was #249.

This house came out at $3,699,900, and this time – you bet there was an offer date!

I had the popcorn all ready for offer night, and I planned on taking a folding chair to the house, sitting outside, and watching the show.

But this property didn’t last until offer night, because it sold via bully offer for a whopping $4,300,000.

It looks like both buyers vying for that first house ended up getting on the street when all was said and done.  So was that third party in the bidding, and where does he or she go now?

These two sales are still being talked about in real estate circles, and probably will be for some time.

Both houses absolutely obliterate the previous records for sale prices in Leaside, and these houses were on 36 and 39 foot lots respectively!  Compare that to the last sale, just under $3.9M, which was a 45-foot frontage.

I’d say the “big money” floating around out there is real, and the people with it aren’t feeling bearish about the market.

Buyers Are “Trying Things”

Here’s something I tell buyer agents when they submit a poor offer on one of my listings: “Remember, not every offer that’s made turns into a sale.”

Sometimes, I’m saying this because I’m trying to plan the seed of doubt in the agent’s head, and play off my belief that the agent cares more about getting a deal done than getting a better price for his or her client.  And sometimes, I really mean this, and it’s my nice way of telling the buyer agent that we’re way too far apart, and my client isn’t budging.

I have found myself saying this in the latter respect several times this fall, and it’s something that I’m not accustomed to.

For lack of a better description, buyers are “trying things” in this market where they might not have before.

I had a listing for a 2-bed, 2-bath condo, priced at $1,200,000, and showings were steady.  This isn’t a unit we expected to fly off the shelves, but we had interest, and we believed that our listing was exceptionally well-presented and would not have a problem moving.

About seven days into the listing, we received an offer for $1,100,000.

Some may say that this offer is very reasonable, and others might say it’s a lowball.

In 2019, and in the central core, I would argue that it’s the latter.

The buyer agent came to me with a long list of reasons why the condo wasn’t up to snuff (a “strategy” I don’t like), as well as all the changes her clients wanted to make to the unit.  I figured it was posturing, but either way, I told her that I would try to get a sign-back.

I told my client to come down to $1,185,000, and either the buyer would make a significant jump, or they would walk.

What’s that old saying about some percentage of deals that meet in the middle?  My client wasn’t going to accept $1,150,000, but as it seems, the buyer wasn’t going to move to that price anyways!

After our sign-back of $1,185,000 had expired, the buyer agent called me and said, “We’re going to let it sit for a little bit.  There’s just too much that needs to be done to the unit, and my clients don’t feel as though the seller is being reasonable.”

This is one of those situations where I know a deal isn’t going to be done, and personally, I blame the agent for not telling her clients to accept the market for what it is, but I digress.  I was willing to entertain her points, however, and told her, “What ‘needs’ to be done to this unit is a matter of opinion.  My seller could just as easily suggest that the buyers aren’t being reasonable.”

She said, “We’ll give it a week, and see if anything changes.”

I assured her that time would not heal this wound, and added, “Not every offer turns into a sale, remember.”

Three days later, we had the unit sold to a different buyer for $1,176,800.

I can’t blame that first buyer for “trying” their lowball offer, even if I think it was misguided.  But this is happening in today’s market, and it’s something that we’re not accustomed to seeing.

I had a listing in North York, also priced at $1,200,000, and we received an offer for $1,050,000.

Now that is a lowball!

The buyers made the offer through a discount agent who told them to speak with me directly, so I did.

Their reasoning?

“We figured, what the heck?  We have nothing to lose!  Maybe the seller wants to sell more than most people think.  Maybe we make this offer and it opens the door to a price we can both live with.  Who knows!”

That’s what I mean about buyers “trying things.”

This offer went the same place that the first offer from the previous story did: nowhere.  But I’m seeing a lot of buyers “throwing their hat in the ring,” so to speak, and that’s new this fall.

How come lists always have to be in 5’s or 10’s?

When I look back on the market over the last month, these are the themes that come to mind over and over.

We have an election coming up in October, and I think that might slow the market down a little.

Then comes the poor weather, and it gets dark at night sooner, and suddenly it”s not quite as fun to look at houses!

I’m expecting a busy October, but I’d also like to get a look at the September TREB stats and post my thoughts on that as well.  Perhaps Friday?

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4 Comments

  1. Not Harold

    at 2:05 pm

    I think everyone is seeing the spottiness of the market.

    I keep my eyes on some higher price brackets and houses that seem overpriced go for substantially more than asking while well priced ones languish. Perhaps its dynamics like that street in Leaside, or just people who have exceptionally particular preferences/social circles/whatever.

    So with that in mind, and especially if something is sitting a bit, why not try to get a deal? Especially if it’s a stretch financially, not exactly what you want, or there’s a lot of product in the specific niche? If you’re at all flexible it seems worth it to take a few chances. If none work out then bid more aggressively or change your targets.

    Just saw one Lawrence Park house come back on the market after failing to sell a year ago. Gorgeous but not sure that it’s worth what they want, especially with last years failed sale at about the same price. We’ll see, just like if people will get the 8 figures they want for certain North Rosedale houses.

  2. Joel

    at 5:50 pm

    I just looked up the house in Leaside. Based off of the listing photos I think the people that bought the second one are going to be happy that they lost out on the first.

    As for the buyers trying things, I don’t think (as you pointed out at the beginning) anyone is certain of where the market is and what it is doing. Buyers don’t want to lose out on a deal and with the mixture of some places being listed with offer and some places being listed with room to negotiate, it is hard for anyone to navigate the current climate. As that client said, might as well try!

  3. Jonathan

    at 8:20 pm

    Who is buying these $3.5 million houses in Leaside? Is it family money? Move up buyers who make serious cash? It’s a bit mind boggling.

    1. Derek

      at 8:33 pm

      Maybe Getting out in front of the future luxury home tax! 🙁

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