Toronto Real Estate and Neighbourhoods Blog | Move Smartly

The Best Strategy When Competing against 17 Other Buyers for a House

John Pasalis in Toronto Real Estate News

When Toronto’s real estate market started to pick up in April it was encouraging to see that many Toronto home buyers were taking a very cautious approach when competing for houses.  It wasn’t uncommon to see a house with 4-5 offers sell for just over the list price.  Since then we’ve seen the imbalance between supply and demand widen.  In June there were 27% more buyers competing for 30% fewer houses when compared to the same month last year.

The shortage of homes available for sale is driving some buyers to pay far above a house’s true value when faced with a multiple offer scenario.

Last week 17 eager home buyers decided to compete for a small house just south of the Dufferin Mall.  The home was priced at just over $400,000 making it within reach of most first time home buyers.  Unlike many homes getting multiple offers, this one was not staged and had a list of selling features that included:

• Knob and tube wiring (an old type of wiring that would need to be replaced)
• 65 Amp electrical service (most insurance companies require 100 Amps)
• A 27 year old furnace
• A lead water line coming into the home
• Old windows
• Very dated and weathered kitchen and bathrooms

Given the poor condition of the home, I was quite surprised when I heard that 17 buyers decided to compete for this house.  Maybe they all read the same Globe and Mail article that weekend that highlighted the redevelopment and gentrification going on in the Dufferin Mall area.

Media Roundup July 31, 2009

Media Roundup

Real Estate News

Home-price index posts small gain (Globe and Mail)

Daniels finds a winning formula (Globe and Mail)

Low-rate mortgage shams (Globe and Mail)

Five must-haves for flipping a house (Globe and Mail)

With the fate of 1Bloor in doubt, just one plea: Not another parking lot (Globe and Mail)

Changing bank rules hit signature condo project in Toronto (Daily Commercial News)

History In The Making? (True Condos)

Housing and the Crisis, Part III (Creative Class)

Housing and the Crisis, Part IV (Creative Class)

Lofty visions: The return of Harry Stinson (Toronoto Star)

Beach home prices lead GTA (Toronoto Star)

Economists React: More Evidence U.K. Housing Has Bottomed (WSJ)

A Look at Case-Shiller Numbers, by Metro Area (WSJ)

Economic News

Canada's economy contracts sharply in May (Globe and Mail)

Recession winding down in U.S. (Globe and Mail)

BoC may have to break interest rate promise (Canada.com)

Signs of stability and an economic bottom (Globe and Mail)

Record number on unemployment (Globe and Mail)

Canada's recovery in sight, report says (Globe and Mail)

Urban Planning and Neighbourhoods

The laneway house: A novel solution to Vancouver's real-estate crunch (Globe and Mail)

Extreme makeover: library edition (Toronoto Star)

Building a winner in midst of failure (Toronoto Star)

National Post Editorial Board: Just say no to strikers (National Post)

'Tortuous' property law section needs legislative adjustment

Bob Aaron in Legal

Appeal court judges find wording of law 'virtually incomprehensible'

A three-judge panel of the Ontario Court of Appeal has called the wording of a section of the Ontario Real Property Limitations Act "virtually incomprehensible" and "tortuous at best."

In a decision released in late April, Justice Robert Blair noted that the wording of section 31 of the Real Property Limitations Act is essentially the same as that of the 1832 Prescription Act of the United Kingdom.

The appeal court noted that the British law "has long been disparaged."

Both the Ontario and British laws deal with the process of acquiring property rights – such as squatter's rights – by uninterrupted use over a long period of time.

Justice Blair referred to the 1966 U.K. Law Reform Commission, which concluded that the "Prescription Act 1832 has no friends. It has long been criticized as one of the worst drafted Acts on the Statute Book."

Media Roundup July 24, 2009

Media Roundup

Real Estate News

Toronto Life Square in receivership (Globe and Mail)

A real-estate guide to incarceration (Toronto Star)

End tenant's agreement before putting home up for sale (Toronto Star)

Rates Unchanged (Canadian Mortgage Trends)

Mortgage Advice From Mark Carney (Canadian Mortgage Trends)

Economic News

The recession is over. Cue the painful recovery (Globe and Mail)

Key forecaster sees ‘grim' second quarter (Globe and Mail)

Home renos lead retail rebound (Globe and Mail)

US Real Estate News

Signs show U.S. housing is starting to stabilize (Globe and Mail)

Home Resales in U.S. Probably Increased in June for Third Month (Bloomberg)

Housing and the Crisis, Part 2 (Creative Class)

Urban Planning and Neighbourhoods

The Dufferin Mall. Really? (Globe and Mail)

Brick Works is part of city's lore, and soon to be a model for its future (Toronto Star)

Toronto eyes self-serve bike-rental operation similar to Montreal (National Post)

Money flowing fast to Toronto's long-neglected eastern waterfront (National Post)

Toronto Real Estate Sales Up 27% Mid July

John Pasalis in Toronto Real Estate News

Here is the latest press release from the Toronto Real Estate Board:

In the first two weeks of July, Greater Toronto REALTORS® reported 4,437 sales up 27 per cent compared to the first two weeks of July 2008. The average price for these transactions was up four per cent year-over-year to $394,750.

"The resurgence in home ownership demand experienced in the spring has continued into the summer. Home buyers continued to take advantage affordable market conditions in the first half of July," said TREB President Tom Lebour. "If the mid-month results carry forward, we may see the best July on record."

Year-to-date sales, at 45,213 are down four per cent compared to 2008. Average price, at $384,645 is down one per cent.

"The GTA housing market has held up very well this year given the current economic climate, especially relative to past economic slow-downs," explained Jason Mercer, TREB's Senior Manager of Market Analysis.

"The cost of borrowing has been key. With inflation in check, the Bank of Canada has been able to aggressively lower interest rates – an option that wasn’t available in the early 1990s or early
1980s."

___________________

Supply continues to be an issue for Toronto's real estate market.  The number of new listings coming on the market declined by roughly 20% compared to the first half of July 2008.

Related Post

Alarming Imbalance in Toronto's Real Estate Market

John Pasalis is the Broker owner of Realosophy Realty Inc in Toronto. Email John

Subscribe to the Move Smartly

Have mortgage financing in place prior to closing

Bob Aaron in Legal

Back in November 2005, Nahid Eskandapour signed an agreement with Lebovic Enterprises Ltd. to buy a new home on Colony Rd. in Richmond Hill. The closing was originally scheduled for Feb. 14, 2006, but was extended several times until the final date of May 5 that year.

The agreement of purchase and sale was prepared on a standard form of what was then the Greater Toronto Home Builders' Association. It provided for forfeiture of the purchaser's deposit in the event of default, and that the house was deemed to be completed when the interior work was substantially completed so that it "reasonably shall be occupied."

The Town of Richmond Hill issued a residential occupancy permit on April 24, 2006.

The floor plan of the home showed the laundry room on the second floor. When the buyer inspected the house in April before the scheduled closing, she discovered no laundry room there, but that a rough-in for a laundry room was located in the basement.

When the builder discovered its mistake, it quickly altered the house to locate the laundry room on the second floor. It was completed by May 2.

Media Roundup July 17th 2009

Media Roundup

Real Estate News

First-time buyers: Taking Liberty (National Post)

Do record home sales mean the worst is over? (National Post)

First-time buyers: Get centred (National Post)

Home sales strengthen in second quarter (Globe and Mail)

Canadian home sales up in 2nd quarter (CBC)

Refinance and save? Think again (CBC)

Yonge-Bloor development on the brink (Toronto Star)

The Problem with 1Bloor (SavelBlogs)

Update on 1Bloor (SavelBlogs)

'If I lose 1 Bloor, I don't just lose a deal - I lose my dream' (Toronto Star)

Will 5-Year Mortgage Rates Fall Further? (Canadian Mortgage Trends)

Pre-Approval Conversion Volumes Jump (Canadian Mortgage Trends)

Economic News

Canada Buys C$2.33 Billion of Bank Mortgages, Less Than Offered (Bloomberg)

Canada Bonds End Sharply Lower On Influence From US Treasurys (WSJ)

Inflation goes negative for first time in 15 years (Canada.com)

Inflation: Why do prices rise and fall? (CBC)

Why economists are watching the paint dry (Globe and Mail)

Canada's economy - The Great Divide (Globe and Mail)

Urban Planning and Neighbourhoods

Cities for People at OCAD (Spacing)

Cities for People: The Melancholy of East Chinatown (Spacing)

Cities for People - Crescent Town (Spacing)

Cities for People — Main Square (Spacing)

Toronto's Forgotten Landmarks: Tower Automotive (BlogTO)

Transit City power struggle? (National Post)

Buying inducements must be disclosed

Bob Aaron in Legal

Lenders need to have all pertinent information to prevent mortgage fraud allegations

An Alberta court has ruled that the contents of a lawyer's file in a real estate transaction may be disclosed to the police when no legal advice was provided to the client, and the circumstances give rise to a presumption that a crime was committed.

Back in April 2007, Christopher and Roya Gour began the process of buying their first home in Edmonton. They contacted a local realtor, Sanjay Sharma, who showed them a house listed at $405,900. He did not reveal that he was the seller as well as the agent.

When the Gours expressed concern that they would not be able to afford the renovations needed on the property, Sharma informed them that the seller would give them a "renovation credit'' of $40,000 on the purchase.

On May 1, 2007, the Gours agreed to buy the house for $405,000 and signed the paperwork.

ResMor Trust Company agreed to provide financing for $364,500 without knowing about the $40,000 renovation credit. As a result, it unknowingly financed the entire purchase price.

Media Roundup July 10th 2009

Media Roundup

Real Estate News

What rising mortgage rates mean to you (Globe and Mail)

10 of the 905's best streets to live on (Toronto Star)

Toronto's Condo Kings: Is their boom sustainable? (Canada.com)

Housing more affordable in Toronto, study finds (Toronto Star)

New Canadians are driving force in real estate, says report (CBC)

Housing sales report best June on record in Greater Toronto Area (Globe and Mail)

Housing sales soar in Ontario’s biggest cities (Financial Post)

GTA building permits rise (Toronto Star)

Housing affordability shows improvement: RBC (CBC)

RBC sues ex-worker for inflating Calgary real estate values (Vancouver Sun)

Leap in home building offers hope (Globe and Mail)

Savvy selling lies behind strengthened sales numbers (Globe and Mail)

Buyers Take a Beating in June (True Condos)

Economic News

Ottawa's mortgage aid may cost banks  (Globe and Mail)

Canada's economic bounce will be short-lived, Merrill Lynch says  (Globe and Mail)

Pitfalls dot recovery road, IMF warns  (Globe and Mail)

Bankruptcies soar by 31%  (Globe and Mail)

US Housing Market - Interview with Yale University economist Robert Shiller (Globe and Mail)

Alarming Imbalance in Toronto's Real Estate Market

John Pasalis in Toronto Real Estate News

The Toronto Real Estate Board reported 10,995 sales in June 2009, a 27% increase over the same month in the previous year and the highest June sales on record.

Toronto’s real estate market continues to suffer from an extreme shortage of homes for sale.  The following chart shows that the volume of homes available for sale has been on the decline since March (purple line). 

There were 30% fewer homes available for sale in June 2009 compared to the same month in the previous year.  But while inventory continues to slide, sales have been on the rise.

The combination of the 27% increase in sales and the 30% decline in inventory means we are in the middle of a very unbalanced seller’s market.