A digital real estate platform says competition for single family homes in the GTA has begun to simmer as the share of neighbourhoods in 'overbidding' territory increased last month for the first time since March.Carlos Osorio/Reuters
Sales of freehold houses have gained some traction in the Toronto-area real estate market so far this fall as buyers seem more willing to take on rival bidders.
The action has emboldened some agents to set an eye-catching asking price and hold back offers.
That tactic all but disappeared in the spring and summer as buyers recoiled from the notion of a bidding war.
Manu Singh, real estate agent with Right at Home Realty, represented one pair of buyers who decided to join the competition for a renovated row house in Little Portugal.
Mr. Singh figured the property with an asking price of $899,000 would attract six or eight bidders. He was shocked when it drew 18 offers and sold for $1.26-million, which was more than his clients were willing to bid.
He adds that some detached houses in west end neighbourhoods such as High Park, the Kingsway and Sunnylea have recently sold before his clients have had a chance to step inside.
In one instance, an older house on a 50-foot lot on Sunnylea Avenue East in Etobicoke was listed with an asking price of $1.8-million and offers any time.
Mr. Singh booked a showing for the following day for one couple searching for a teardown.
“Overnight it sold over asking,” says Mr. Singh, adding that the buyer paid $1.908-million.
“If they had held back offers, I bet that lot would have gone over $2-million.”
The market has been changing almost week-by-week, says Mr. Singh, who frequently drills into the sales data.
“We used to run the numbers monthly. With so much volatility and uncertainty, we run them weekly.”
Wahi, a digital real estate platform, says competition for single family homes in the GTA has begun to simmer as the share of neighbourhoods in “overbidding” territory increased last month for the first time since March.
In September, 13 per cent of the 284 areas Wahi analyzed were in overbidding territory compared with 8 per cent in August. A slim 1 per cent of neighbourhoods were selling at asking while a hefty 86 per cent were still in “underbidding” territory.
Wahi compares the differences between median list and sold prices to trace the trends in neighbourhoods and analyze which have a greater number of properties selling above asking or below.
Ira Jelinek, real estate agent with Harvey Kalles Real Estate, has seen brisk sales of single family dwellings from midtown to Whitby. In the core, sales in the $1.1-million to $2.3-million range have livened up.
In the Annex, for example, a three-storey house in need of updating drew 22 offers and sold for $1.8-million after it was listed with an asking price of $1.299-million.
Buyers who submit offers with conditions have no chance, Mr. Jelinek adds.
He urges clients to line up home inspections before the offer date and make sure their financing is in order.
“It’s very discouraging for a buyer,” Mr. Jelinek says of the revival of competition.
Still, while more properties are selling quickly, plenty of others are sitting for an extended period and selling below the asking price as burgeoning listings in the Greater Toronto Area have continued to outpace the gains.
In September, sales in the GTA rose 8.5 per cent compared with the same month last year, according to the Toronto Regional Real Estate Board.
New listings increased 10.5 per cent last month compared with September, 2023, and active listings grew 35.5 per cent.
The average “days on market” increased 35 per cent to 27 from 20 one year ago.
Townhouses in the suburbs saw the biggest rebound in September compared with the previous year with a 21.4 per cent jump in the 905 region.
In the 416 area code, semi-detached houses rose 13.2 per cent and detached houses 10.1 per cent last month from the same month in 2023.
Sales of condo apartments, meanwhile, edged up 2.2 per cent in the core 416 area code and dipped two per cent in the 905 in September compared with September, 2023.
The average price for all housing types in the GTA remained nearly flat at $1.107-million last month compared with $1.118-million a year earlier.
Olivia Cross, North America economist with Capital Economics, sees a continuing struggle in the Toronto market after measuring September’s performance against the August data.
Sales rose 3.3 per cent on a seasonally adjusted basis, but that increase was dwarfed by the nearly 10 per cent gain in new listings, she points out in a note to clients.
The sales-to-new listings ratio fell to nearly a four-year low, which in turn may signal falling house prices, she adds.
While Ms. Cross’s most recent forecast predicts prices will rise modestly over the rest of this year, the risks “are now skewed clearly to the downside,” she cautions.
Mr. Singh reckons the strange market so far will continue to buck seasonal trends in the remainder of 2024.
The fall market traditionally winds down in November and December, but those months may be busier than normal, in his opinion, because the Bank of Canada is widely expected to continue lowering its benchmark interest rate, and new mortgage rules in Canada are set to come into effect on Dec. 15.
Under the federal government’s plan, mortgage insurance will soon be available for buyers purchasing properties valued between $1-million and $1.5-million.
For those seeking insured mortgages, the new rules will also allow 30-year amortizations for first-time buyers and buyers of newly built homes.
Also, real estate markets on both sides of the border may slow in the lead-up to the U.S. presidential election, which will be decided on Nov. 5.
Mr. Singh points out that equity markets often rally following an election and many buyers in the $2-million to $5-million range fund their larger house, renovation or building project by selling shares.
Some of the buyers signing deals now are betting prices will rise with more rate cuts and the mortgage rule changes. They want to get in ahead of an upturn.
But there’s another camp gambling that prices have to come down.
“That’s what I’ve heard the last six months,” Mr. Singh says of many market watchers. “That’s all I’ve heard. They say, ‘the sellers are out to lunch.’”
The current market dynamics favour homeowners who want to sell a detached house and move to a condo, he adds.
“Downsizing is one of the few transactions that has worked really well,” he says. “You get a deal on the condo. You may not be at the peak for the house but you can still move that asset.”
He recently sold an older home in a traditional Mississauga neighbourhood and helped the seller find a condo on the waterfront in Port Credit.
The four-bedroom house at 6065 St. Ives Way was listed with an asking price of $1.699-million and sold for $1.5-million. The homeowner then purchased a two-bedroom condo unit at 65 Port St. E. for $1.11-million after it was listed with an asking price of $1.198-million.
Mr. Singh figures any improvement in the condo segment will lag a recovery in single family dwellings by about six to eight months because inventory has built up and the buyer pool has shrunk.
“Right now, no investors are buying.”