The First Four Weeks…


7 minute read

September 26, 2014

Today marks the end of the fourth week of the “fall real estate market” in Toronto, which started the day after Labour Day.

Through the first four weeks, I’ve noticed several trends; some new, some same old, same old.  And if I look back at my blog post called “Predictions For The Fall Market,” I’d hate to say it – but I was right about a few things.

I’d hate to say it, of course, because sadly the biggest trend seems to be prices rapidly increasing, AGAIN…


The last thing I want to do is come off like a “cheerleader.”

Real estate cheerleaders are the worst, but at the same time, they’re no better than “eternal bears.”

I honestly believe that of all real estate bears, there are two distinct types, and they’re made up as follows:

1% are very intelligent, very astute and informed individuals, who back up their predictions and prophecies with statistics, empirical evidence, and data.

99% are frustrated, begrudged would-be buyers who have been “timing” the market for years, and who are praying desperately that the market collapses so they can “buy cheap” and say they were right all along.

I suppose too much of anything isn’t a good thing, and whether you’re a real estate cheerleader, or an eternal bear, neither is a good thing.

But having said that, it’s my job to inform you that despite our prayers, hopes, and dreams, prices in the Toronto real estate market seem to be UP, again, this Fall.

All through the slow month of August, I kept telling my buyer-clients, “Just wait – September and the busy fall market are just around the corner.”

Now that we’re four weeks into the fall market, I’d like to pause for a moment, and try to look at the trends, which of course headlines with what we just talked about…

1) Increasing Prices

Is 10% growth, per year, in any way sustainable?

Of course not.

But that seems to be what we’re on pace for, and then some.

Everywhere you look, prices are up, across the board.  Look at condos, look at houses, look at low end, and look at high end – prices are up, and there’s no doubting that.

Again, I’m not cheerleading here.  I’m just pointing out what I’m seeing in the fall market.

Prices are up the most, as usual, in the market for single-family homes, specifically sub-$1M.

Those $950,000 house from the spring are now pushing high-$900’s, and in some cases, they’re topping $1M.

I was in a 12-offer melee last week, where my clients paid $1,006,000 for a house, which might sound crazy, but consider that there were two offers of $999,999 (clearly buyers with 5% down), and suddenly you realize that there are people lined up to pay a markup from the spring 2014 market.

Condos are up as well, and the players know it.  One of my buyers made an offer on a condo, priced at $379,900, where the identical model sold in March for $365,000.  We tried to go in low, and the listing agent simply said, “That was March, man.”

2) Bully Offers

I wrote about this at great length last week, but it’s worth mentioning again that bully offers are becoming “the new normal.”

It’s not just that bully offers are happening frequently that is worth mentioning, but rather buyer agents, listing agents, buyers, sellers, managers, brokers, and TREB are all scrambling to try and figure out how to deal with this.

I’ve seen listings this week that read, “No Bully Offers – As Per Seller’s Instructions,” so some listing agents are trying.  But we all know that if an offer is submitted, it must be presented.  So you can say, “No bully offers,” but that won’t stop buyer agents from trying.

We’re in a period now where every buyer wants to submit a bully offer on every property, and so it’s almost ineffective.  But then again, there are houses where you just know that the property will get a bully, and thus you have to be ready and willing to jump into the fray after only 24-36 hours of the house being offered for sale.

Through my ten years in the business, this fall 2014 market has shown me more incidents of bully offers than any market before it.

3) “Uncomfortable Prices”

This touches on point #1, but in a different way.

A client of mine made an offer last week on a house listed at $718,000, and with 8-9 offers (who really knows exactly how many there are, anymore), he wanted to offer $750,000.

He used an interesting word; one whose opposite has a lot of meaning in this fall market: comfortable.

He said, “I feel comfortable offering $750,000,” and I told him that this is exactly why his offer stood no chance.

In the fall 2014 market, when you’re making an offer in a multiple offer situation, especially those with 8+ offers, you have to be uncomfortable with the amount of money you’re offering, in order to be successful.

I know, I know – many of you are reading this, and already getting your comments ready below.  You’re going to say that “this market is out of control if you can’t be comfortable with the price you’re paying,” or maybe you’ll even slam me for suggesting my clients do something they’re not comfortable doing.

But when there are eight, nine or fifteen offers on a house, you are NOT going to get the property, unless the price you put on paper makes you squirm.  I’m not saying you have to do it; walk away if you want, there’s nothing wrong with that.  But if you DO want the house, you have to pay up.

I asked my client in the above situation, “What’s a number that makes you cringe?”  He said it would be $770,000, and I told him to proceed accordingly.  We offered $762,000, then when we were one of four offers, “Sent back to improve,” he made a huge jump to $775,000, and the property sold for $780,000.

It was still less than I thought it would sell for, and I had a feeling we were in 4th place out of four offers, after the first “round.”  But alas, the sale price was way, way too uncomfortable for my buyer, and thus another buyer ended up with the house.

4) Wins & Losses

Almost every buyer in the market for single-family homes is going to lose their first offer.  It’s inevitable.

You simply can’t convey to the buyer how hot the market is, until they see what somebody else paid for a house, as per point #3 above regarding the “uncomfortable” prices.

I’ve sold seven properties so far this fall, but I’ve lost on six offers as well.

I’ve both won and lost with bully offers.

I’ve lost against a bully offer.

I’ve lost in multiple offers on condos.

I’ve won in multiple offers on condos.

I’ve won in multiple offers on houses.

I’ve lost in multiple offers on houses.

You name the type of offer situation, and I’ve been in it.  And I’ve probably both won and lost in almost all of them.

Buyers are seeing this as well, and feeling the ups and downs of winning and losing.

5) Multiple Offers On Condos

Twice, so far this fall, I have lost in multiple offers on a condo.

Both went over the asking price, and one was already on the market for 14 days when we submitted our offer in competition!  What the hell, eh?

And of those two offers, neither one was submitted on an “offer night,” but rather it just so happened that the property garnered enough interest to solicit multiple offers.

That is the sign of a hot market, if I’ve ever seen one.

I have a listing in the King East area for $399,900, and we’ve had 13 showings booked in 36 hours since we listed.  There were three showings tonight at 6:30pm, and the agents were literally lined up to go in and see it.

Condos are selling, and they’re selling in multiple offers.  It’s nuts out there, folks.  It really is.

6) Hold-Backs On Condos

I predicted this in my early-September blog post, but I don’t think it was hard to see this coming.

So many condo owners are reading media reports about the red-hot market, and how there are “offer nights” on properties.  They’re not distinguishing, however, between HOUSES and CONDOS, which is like calling ground-chuck and beef tenderloin both “meat.”

As a result, many condo sellers are asking their listing agents to “hold back” offers, and the market has reacted so far with mixed results.

As I said back in September – I won’t bother showing a condo that has a “hold back” on offers, if it’s nothing special.  I don’t need to get mixed up with a crazy seller, who has even crazier expectations on price.  If the unit is rare, and sought-after, then I’ll take my clients through.  But I’m still skeptical, even in a hot market.

7) Pre-Construction Is Dying……It Seems

There’s been a lot of press in the last couple of months about the perils of buying in pre-construction.

In the summer, we learned about the farce at “Centrium Condos,” where the developer ran off with millions in buyer deposits.

Last week, The Toronto Star wrote about the $29 Million lawsuit against Great Gulf Homes.

I haven’t seen a pre-construction sale go up on the “board” in my office in months, and that really pleases me.

I’ve been writing about the disaster that is the pre-construction condo industry now for about six years, and it seems people are finally catching on.

I’ll tell you a story – second hand, but still good nonetheless, about a “pre-delivery inspection” that went on at the new condo at 88 Colgate Avenue in Leslieville.

A colleague of mine, who did NOT sell the property to his client in pre-construction, went along for the PDI, just to help.

There were no appliances in the unit, the kitchen cupboards were white instead of brown, and the backsplash was on vertically instead of horizontally.

The buyer freaked out, and started to cause a scene.  One of the developer’s representatives (not sure of his position), came to the unit to try and smooth things over, but the buyer persisted, started making threats about calling his lawyer and not closing, and then the developer’s rep unleashed a classic line, “Buddy, read your f*cking contract,” he said.  “By law, all I owe you is electricity, and running water.”

True that.

More and more people are hearing stories like this, reading bad press about pre-construction, and sticking to the sidelines, and I’ve witnessed a slight weakening in position from the developers.  A colleague of mine purchased a unit (for himself and his wife) in High Park and asked for a free parking space, a free locker, no interest portion of his occupancy fee, and free maintenance fees for the first two years.  And you know what?  The developer accepted.

I still don’t advise the purchase of pre-construction, but it seems like prospective buyers are starting to get their backs up, and it’s about damn time!

8) Investors Are Everywhere

I’m currently working with three clients looking to purchase entry-level condos to rent out, and hold for the long term.

All three of these buyers contacted me in early September.

Everybody wants a piece of this market, and would-be investors are afraid of missing out on future gains.  Perhaps, they’re also frustrated by having already missed out on past gains, hene the rush to purchase that I’m seeing by many of these folks.

I’ve long maintained that the best yield comes from the cheapest condos, and the $250K bachelors and junior-one-bedroom units are very attractive right now.

You’re either encouraged by this blog post, or frustrated.  It all depends on where you sit in this real estate market; just like how the bulls and the bears find their voices.

I welcome your comments below.

Have a great weekend, everybody!

Written By David Fleming

David Fleming is the author of Toronto Realty Blog, founded in 2007. He combined his passion for writing and real estate to create a space for honest information and two-way communication in a complex and dynamic market. David is a licensed Broker and the Broker of Record for Bosley – Toronto Realty Group

Find Out More About David Read More Posts

Post a Comment

Your email address will not be published.


  1. Jeff

    at 10:21 am

    As a buyer, I am starting to lose my desire to own a house. I would draw the analogy to flying in North America. Every year, the security procedures get more cumbersome, airports more inconvenient to get to and get around, and the grim nickel-and-diming on the flights themselves grows. It’s gotten to the point where I often to feel like it’s worth it to get on an airplane any more. It’s the same with the house search. The amount of money and stress now associated with getting a property is off the charts. Even if one has the funds, timing and manipulation are now required as well. Makes me wonder why I’d want to stop renting my downtown loft.

    1. Geoff

      at 2:19 pm

      Oh yeah, what can you get in Paris anyway that you can’t get in Milton….

  2. Izzy Bedibida

    at 10:45 am

    Wife has been keeping track of a new “dream bungalow” (well finished and maintained house) in the Wilson/Jane/Keele aria, and since July the price has dropped almost $60K, and it looks like houses in the aria are taking longer to sell without bidding wars/bully offers/sell in a few days. It was the same with her moms semi in the Bloor/Lansdowne aria last spring. She did not get the expected bidding war/bully offer/sell in a few days like the media portraid would happen.
    These outliers may be the first sign that things may be slowly starting to slow down, and or/the price ceiling of most consumers has arrived.

    1. Kyle

      at 11:08 am

      There’s a difference between market prices and asking prices. Whether there are bidding wars or bully offers on a property has much more to do with the latter.

  3. Lulu

    at 10:53 am

    The desirable hood still see bully and multiple offers, but other sub area, you can see lots of property either not selling or sold under asking or under asking a big amount, seller stand firm on their asking price and the house sit on the market for 60-90 days is not uncommon and when they see it is not happening, they finally have a price cut or take it off the market and wait. I think price is soften and inventory is start to picking up. As buyers if they can wait, just wait and see.

  4. Tom

    at 11:09 am

    Hi David, something that I’ve always wondered….

    What proportion of average re-sale prices do you think constitutes recent renovations? For example someone buys a Leaside bungalow in 2013 for $900k, does a complete gut-job for $350k, and then sells in 2014 for $1.4M. Does this show up in the market data as a $500k gain? I’m assuming it does because I can’t see TREB being sophisticated enough to collect the data. But in this case that $500K gain is very misleading and should actually be a $150K gain. Get enough of these cases & you’ve got yourself some severely distorted statistics?

    I realize my sample figures may be off but what about my logic? I suppose one could counter-argue that only a very small proportion of resales have had significant (say $100K+) renovations, but that doesn’t pass the smell test to me, especially in the $1M+ market.

    1. Geoff

      at 2:24 pm

      I’m not even sure that’s monitorable. I also don’t think it’s that misleading: Bought at $900K, sold for $1.4M.

      what you’re getting at really is that houses in urban areas are not products, they’re commodities. Commodity prices vary depending on the demand and condition of that commodity. A house on a corner lot may be worth less than a house that’s not on a corner, but that doesn’t make the statistics distored.

      1. Tom

        at 3:01 pm

        That’s not at all what I’m getting at, and obviously I’m of the opinion that “Bought at $900K, sold for $1.4M” is VERY misleading.

        1. jeff316

          at 3:27 pm

          It’s only misleading if you’re making the assumption that nothing has ever been done to the house in between. Which is a silly assumption.

          1. Tom

            at 4:31 pm

            What I’m saying is very misleading is calling it a $500K gain, which is silly indeed. And yet when that transaction gets compiled into the resale statistics, the way many people read those statistics, it implicitly gets viewed as a $500K gain.

            I fully realize the data’s not there, but personally I believe these instances of large scale renovation/rebuilds are a material enough part of resale statistics that it should be discussed a lot more than I see it being discussed.

          2. Kyle

            at 5:21 pm

            I think it comes down to one’s interpretation of what the monthly numbers mean. I personally don’t consider it misleading. I consider it a known limitation. Happens all the time in certain neighbourhoods, depending on what the make up of houses sold in that month were (See example below). And so long as one’s aware that there could be the presence of this “noise” in the data, then It’s only misleading if one tries to read more into the data, then the data warrants. To actually understand if there was a gain among similar houses you have to dig in deeper to the data such as what Mr Pasalis does in the below example.

            “Caribou Park is an area of low-rise, detached houses lying south of Lawrence Avenue and east of Bathurst Street. In the first eight months of 2013, the average price came in at $876,000. During the same period in 2014, it swelled to $1.4-million.

            Drilling down into the data, Mr. Pasalis found that a number of small bungalows on Lawrence and Bathurst changed hands during the earlier period. He suspects that builders purchased many of them in the $600,000 range, knocked them down and replaced them with larger houses. When those arrived on the market in 2014, they helped to push the average price to $1.4-million.”


          3. jeff316

            at 2:29 pm

            If you go and buy a bungalow, and make it a two story home it’s no longer a bungalow and therefore isn’t worth what the bungalow was worth.

            I mean, these real estate guys can’t seem to win. When prices go up because of appreciation, it’s unsustainable. When prices go up because of interest rates, it’s phony. When there is a hold-back on offers, it’s manipulated. When they go up because of renewal and investment, its misleading.

        2. Appraiser

          at 10:40 am

          Sorry @Tom, but your line of reasoning is irrelevant. It matters not what the original sale price or what the renovation costs were. The property in question is now worth $1.4M, which is not misleading in any way.

          End of story.

  5. CC

    at 9:09 pm

    Does the situation of a bully offer with an offer night work pretty much the same as a regular offer without an offer night?
    Just curious, as I’m not in Toronto.

  6. Steve

    at 5:20 pm

    Nobody really knows when and what the market will do exactly, but logic would dictate that nothing travels upwards forever. However, new hot neighbourhoods are emerging along with the old standards and are creating surprising new high prices. Trouble is, some sellers are not in tune with what/where is in demand and often force their broker to list at unrealistic asking prices. Result, the inevitable 3 month dead listing followed by the lower asking re-listing at a later date.

    Still, the trend is to move into the city, so the buying frenzy can create the illusion that real estate is a no-lose proposition. Seller, ask yourself, “Is my neighbourhood hot?”. Buyer, ask yourself, “Is this neighbourhood about to take off?”.

    1. Christian

      at 7:12 am

      Not necessarily true. With real estate it just depends what time interval you’re looking at. If you go back 50 years and compare it to today’s prices, well you might reconsider your statement. If you break that interval down into smaller ones, you might see peaks and valleys, so I would say you are right.
      As for where the market is heading: nothing right now indicates that anything would drastically change in the next year or two. With yearly 34k new households created in the GTA and only about 15k condos completed there is enough demand to keep pushing prices up.

  7. we buy houses for cash

    at 10:33 am

    “Predictions For The Fall Market” ya its true right now. But it also depends on real estate with time.

Pick5 is a weekly series comparing and analyzing five residential properties based on price, style, location, and neighbourhood.

Search Posts