‘Whole other level of insanity’ in 2016
New report says scarce supply, high demand is increasing prices
What’s the difference between the spring of 2016 and the Toronto housing market a year ago?
“It’s busier, it’s crazier and it’s more expensive,” according to Toronto realtor David Fleming of Bosley Real Estate.
“This year has a whole other level of insanity because there are so few listings compared to the demand that’s out there for those listings.”
The average Greater Toronto Area selling price in March was $688,181, which is 12.1 per cent higher than the same period last year, according to the Toronto Real Estate Board.
That climb is being fuelled by a scarce supply of homes and some positive economic developments, said Cam Forbes of Re/Max Realtron Realty.
“There’s just a lack of supply and inventory. The inventory has been at historically low levels for, really, 10 years almost. This year, the inventory is even lower than it was last year,” said Forbes.
“Homes available for sale at the end of March was 26 per cent less than was available at March last year.”
Potential sellers know they can get a good price for their homes, but they are also aware they’ll pay more to buy something else. Some are hesitant to list their homes, believing prices will appreciate further, says the Re/Max 2016 Spring Market Trends Report, released Thursday.
It pegs this year’s first quarter year-over-year increase at 14 per cent to a GTA average selling price of $675,492.
Higher oil prices that have flattened western markets such as Calgary are actually a positive in the GTA, said Forbes.
The Toronto area is influenced by two wealth factors, the housing market and the stock market, he said.
“Consumers show more confidence when the price of their house goes up and house prices have gone up quite a bit year over year,” said Forbes.
The performance of the stock market this year has also helped consumer confidence, he said.
House hunters, discouraged by bidding wars on properties with meaningless list prices, are sometimes dropping out of contention altogether.
Fleming is sympathetic to buyers who want to go slow or take a break. But he warns that hesitation is almost certainly going to be costly.
“Waiting does not help anybody in this market and it doesn’t matter what type of property you’re looking for,” he said. “The market’s going up 1 per cent a month. You can’t wait. Your $600,000 house in January is going to be $640,000 in the September market.”
Re/Max realtor Grethe Nielsen wishes list prices would disappear altogether.
“Listing prices today mean nothing,” and buyers know that, she said. “They know the market — they know what properties are worth. They know what the house will sell for down the street. Even if it’s two months ago that house sold for $1.4 million, they know they might have to pay $1.6 million and they’re OK with that.”
In eight years, Royal LePage broker April Williams, who works out of Liberty Village, says she’s never seen a spring like this one.
“I’m looking at houses selling for $300,000 or $400,000 over asking. Insanity is pretty close to what it is,” she said. “It’s like the Wild, Wild West out there right now.”
Bully offers, once frowned upon as an attempt by aggressive buyers to push aside other bids set for a predetermined date, are increasingly the norm.
“Now agents will disclose whether their clients will accept a bully offer,” said Williams. Her job has changed too. “You are a psychologist, you do more research, you are providing more information. You always have to make yourself available,” said Williams. “You really have to compromise your time so people don’t miss out on a house.”
Compromise is inevitable for buyers too. She tells them not to expect more than 80 per cent of their wish list.
Often that means expanding their search area, dispensing with free parking and finished basements or looking at semis instead of detached homes.
The pace is breakneck, said Royal LePage agent Brian Elder, who specializes in the downtown market.
“Historical data is a week old now as opposed to months old. There’s constantly new levels set for pricing,” he said.
The Internet creates a more informed buyer, but the market conditions mean emotions sometimes override reason.
“You’ve got people out there that are on the seventh offer on a house they’ve fallen in love with,” Elder said. “It’s not to say they’re overpaying, but it sets a new precedent.”