Eager buyers keep housing market hot
By Susan Pigg – Toronto Star MoneyVille
Financial consultant Jose Jimenez has been on his own gut-wrenching roller coaster ride the last few weeks — and not because of the stock market fluctuations he monitors daily.
Jimenez, 35, has been trying to buy his first home.
“In a way, I’ve been rooting for the markets to tank a bit and hoping that might encourage other people not to buy right now, but that doesn’t seem to be the case,” says Jimenez, whose wife is expecting their second child.
In fact, whipsawing markets, fears of a double-dip recession and global economic uncertainty seem to have made housing look as good as gold.
Canadian home sales were up 12.3% last month from July, 2010 and are expected to grow slightly the rest of this year because of low interest rates, the Canadian Real Estate Association said Tuesday.
“We anticipate that, going forward, the housing market in Canada is going to be an oasis of stability compared to what is expected to be further volatility in financial markets,” Gregory Klump, CREA’s chief economist, said in a telephone interview.
Almost 285,000 housing units have sold across Canada so far this year, just 1.6% below sales for the same period last year, and that’s expected to hit 450,800 by the end of 2011, according to CREA forecasts.
That’s despite dire predictions earlier this year from some housing analysts that the real estate bubble is overdue to burst and send Toronto prices toppling by as much as 25%.
Jimenez is keenly aware of all those numbers but has a few more pressing ones on his mind: His second child is due in September, his 2-year-old daughter Sadie will start school in a couple of years and Jimenez and his wife, Sydney Richardson, just want a house they can make a home.
Richardson is now worried the couple are “doomed” to have to raise their children in their two-bedroom Beach apartment after losing out Monday in a six-person bidding war — their second in just a few weeks — on a renovated three-bedroom Beach semi that was listed for $699,000.
The couple offered $703,000, only to be outdone by a so-called “bully bid” — a down-to-the-wire offer almost $100,000 over asking price.
Comment: Wrong. A bully offer is one that comes in before the offer date. An offer that comes in at the last minute is just rude – but effective in that the other bidders are not expecting it. Neither practice is considered to be good behaviour.
Last month they were braced to offer $70,000 over the $550,000 asking price for a Rhyl Ave. house but found themselves up against 13 other potential buyers. The house sold for $120,000 over asking.
The couple has talked about putting things on hold until the real estate market calms down, but their biggest fear is that day will never come.
Comment: Not any time soon. And even if it does, the house that was $699,000 today will be $819,000 by the time the bidding wars end. Does not matter either way if you cannot afford it.
While Sonya Gulati, an economist at TD Economics, anticipates sales will be a little more subdued in the fall, she said first-time buyers and immigrants are still being drawn into the market by interest rates that are expected to remain low until 2013.
“On the one hand, they are incredibly brave given all the economic uncertainty out there,” says Gulati, “but you need a place to live and a house is a long-term purchase so people seem to think it makes sense despite the market gyrations.”
Real estate agents say they are seeing more and more home buyers, banking on low interest rates, taking on mortgages of $300,000 to $500,000.
A veteran Beaches real estate agent blames lack of supply for many of the bidding wars, but expects that could ease in the fall as more baby boomers look to cash out on their biggest asset at peak market.
Comment: But baby boomers are not cashing out, they are staying in place and renovating. That is part of the problem, why listings are down and bidding wars are so common.
Domenic Polsoni is so confident real estate is a sure bet, he recently traded in his Milton home, and gave up one car to help finance the move to a more expensive house in the Dufferin St. and Sheppard Ave. area.
“People have been saying for years that the real estate bubble is going to burst, but I can’t imagine that will happen. We survived a major hit in 2008, people held their breath and then everything just seemed to march along.”
Jimenez fears getting caught up in the current real estate “panic.”
“But this is the neighbourhood where we want to raise our kids. Even if we were to take a short-term loss, I wouldn’t be too worried about it in the long run.
“I think we’d definitely get the value back from it, not just in the sale price, but in the life we will have had bringing up our family in that neighbourhood.”
Contact the Jeffrey Team for more information – 416−388−1960
Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.
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