Car­olyn Ire­land – The Globe and Mail

The forces guid­ing real estate are always local, but in the choppy Toronto mar­ket of 2013, the talk has turned to “hyper-local” strategies.

The var­i­ous lay­ers and pock­ets of the mar­ket are behav­ing so dif­fer­ently that buy­ers and sell­ers need to shift quickly – even as the Big Bank econ­o­mists see the over­all mar­ket waft­ing to a soft land­ing. Nation­ally, real estate prices have declined for five con­sec­u­tive months, the Teranet-National Bank house price index shows.

Van­cou­ver has had the great­est pull but Toronto is also one of the mar­kets drag­ging down the over­all index.

Com­ment: With Toronto prices ris­ing around 4% annu­ally, month over month, how can Toronto be drag­ging prices down?

But if you’re a seller in Toronto, the mar­ket looks very dif­fer­ent depend­ing on whether you’re sell­ing a gleam­ing condo suite for $899,000 or a slightly tired bun­ga­low for $549,000.

To Ricky Chadha, a real estate agent with Royal Lep­age Estate Realty, hyper-local in the condo mar­ket means he takes an inven­tory of what’s for sale down the hall – or in the build­ing next door. He doesn’t need to look far­ther. If plenty of units are up for sale in the same con­do­minium build­ing, he may advise the seller to wait a week or two to see if there’s less com­pe­ti­tion. But he doesn’t rec­om­mend that they wait any longer because try­ing to pre­dict the direc­tion of the mar­ket is too challenging.

Com­ment: Yet peo­ple who do not even work in real estate are happy to make those pre­dic­tions all the time.

“I always tell peo­ple to move when it’s the right time for them to move – not to try to play the mar­ket,” Mr. Chadha said.

He says bid­ding wars are com­mon for houses in that cov­eted $500,000 to $600,000 range that attracts move-up and first-time buy­ers. Buy­ers are will­ing to com­pete for houses in that range if they are close to tran­sit, rea­son­ably move-in ready and in an appeal­ing neigh­bour­hood, Mr. Chadha said.

He con­trasts that with the spring of 2012 when buy­ers were scrap­ping even over run­down prop­er­ties near the train tracks.

“Last year almost every­thing was going in mul­ti­ples because peo­ple were just so frus­trated at los­ing on so many bids.”

Unless they have a prime prop­erty, Mr. Chadha is not advis­ing sell­ers to hold off on look­ing at offers.

“That’s a risky game to play these days.”

He recently sold a house in Pick­er­ing with­out an offer date because that’s an area where buy­ers have more to choose from than they do down­town. So he was pleas­antly sur­prised when two buy­ers tabled bids a cou­ple of days after the house arrived on the mar­ket with an ask­ing price of $409,900. It sold for $417,000.

“We made short work of it. It was sold in two days, firm.”

Mr. Chadha said con­dos have been sell­ing more quickly recently in the seg­ment below $400,000 but have remained slug­gish at the higher end – espe­cially those con­sid­ered lux­ury units. The buy­ers are still look­ing, he said, but they often have more time to make a deci­sion because they’re less likely to have their tim­ing dic­tated by the school cal­en­dar and fac­tors like that.

“I think the condo buy­ers are seek­ing out more deals.”

Com­ment: Buy­ers have been look­ing for deals since 2006 – and not find­ing them. I had a client wait, she was sure the prices would come down. Even­tu­ally, prices rose enough that she could not buy any of the con­dos we orig­i­nally looked at. There are no deals, prices are not going to drop 25%. Even if 2013 sees a net drop, it will be 5% or less. Back to where we were in 2011.

Christo­pher Bibby, an agent with Sut­ton Group-Associates Realty Inc., said he had a flurry of condo deals in Jan­u­ary after a very slow fall mar­ket. Of seven condo list­ings he sold in Jan­u­ary, five of those were holdovers from 2012, he said.

He sold, for exam­ple, a sin­gu­lar unit in the But­ton Fac­tory Lofts that had been listed since last Sep­tem­ber with an ask­ing price of $1.495-million. The prop­erty sat through the fall but in Jan­u­ary show­ings sud­denly picked up and the seller signed off on a deal at slightly less than the ask­ing price.

Com­ment: But million-and-a-half lofts do not sell fast in gen­eral, we all know that.

Through the last quar­ter of 2012, buy­ers seemed timid and sell­ers were stub­born, says Mr. Bibby.

He believes that both groups have fresh mind­sets for 2013: The stand-off has given way to a more active mar­ket where buy­ers are will­ing to step up with offers and sell­ers are will­ing to nego­ti­ate. He esti­mates that prices have come down between five and 10% from the fall but adds that they seem sta­ble at the moment.

Com­ment: As I have explained ad nau­seum, prices peak first in the spring, then again in the fall. December-January is a low point, as is August. Com­par­ing yearly high points to low points proves nothing.

“The sell­ers’ expec­ta­tions are a lot more rea­son­able. Nego­ti­a­tions are tak­ing a lot longer,” he says. “But It’s healthy. It’s fine. I’m sup­port­ive of the process.”

As for where the mar­ket goes from here – espe­cially for con­dos – Mr. Bibby says it’s going to be inter­est­ing to see what hap­pens. The car­pen­ters and plumbers are fin­ish­ing up new units every day.

“A lot of really good inven­tory is going to come onto the mar­ket,” said Mr. Bibby of some of the new mar­quee addresses. But he acknowl­edges that the increase in sup­ply could pro­vide buy­ers with a lot to choose from. Still, he thinks plenty of buy­ers will be attracted to the gleam­ing new kitchens and bathrooms.

At Cap­i­tal Eco­nom­ics, econ­o­mist David Madani is stand­ing by his view that real estate prices in Canada will decline by 25% over the long term.

Com­ment: If he keeps say­ing it, one day it might hap­pen. I believe he made that pre­dic­tion in 2011 first, and prices have only risen almost 10% since then. So now prices actu­ally need to fall 35% to make him right. Which is even less likely to hap­pen than it was the first time. It was a stu­pid pre­dic­tion, made only to get his name in print. Which worked. Funny thing is, no one is call­ing him on it. No one is point out that he was – and is – WRONG.

The declines so far will prob­a­bly con­tinue this year, he said, even with­out an obvi­ous trig­ger for a cor­rec­tion. He said those insist­ing a trig­ger is nec­es­sary need look no fur­ther than the Van­cou­ver mar­ket where prices have already fallen by more than 5% from a year ago even as inter­est rates have remained unusu­ally low and the job­less rate has not increased.

Com­ment: Declines? What declines? Van­cou­ver has been drop­ping for years now, shed­ding about 35% since their high point. Why look at it if you live in Toronto? Why not look at Hal­i­fax or Cal­gary where prices have risen over that same time? They have no bear­ing on the Toronto real estate mar­ket, none of them.

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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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bid­ding wars in real estate toronto march 2013

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