You know when you eat a big spoonful of ice cream in summer and, despite the scorching heat of the season, you get a bad case of head freeze which leaves you in momentary agony? Well, right now I feel like I'm living the opposite of that. It's arctic cold outside yet my head is burning Hot. Worse still, I do believe it's contagious. The prognosis is a bad case of Spring Real Estate Fever.
Boing! Yes, the bidding wars are back with a vengeance and buyers are exploding, and perhaps reckless, in frustration. And it's brutal. Last week a whole lotta real estate went into competition and we practitioners ended up awry, askew and askance. Seriously.
Wanna tale from the trenches? Last week nearly every freehold dwelling I showed to clients in the hip, the almost hip, and the not-hip-but-family-friendly parts of town received four to fourteen offers! Huh? Sadly, this resulted in dozens of eager wide-eyed fully-qualified buyers having their hopes not only dashed, but stomped. Thud! As the sale prices were reported through the week it became apparent that rational, prudent, and educated home shoppers may no longer be able to compete in the market. They are now effectively being slaughtered by high risk-taking rivals who, in the case of last week, blindly bid anywhere from 8 to 24 percent over the list price to seal the deal. Blech!
Sure, in several instances brokers had followed the increasingly common practice of intentionally listing the property lower than 'fair market value' in order to incite competition, but I have to admit I saw some sales which commanded shocking ding-a-ling prices. Those sales made me want to raise my eyebrows like Phil Keoghan from CBS's Amazing Race!
Seriously, this rash of precedent-setting values secured by the city's newest triumphant, and surely jubilant, real estate Acquisitors (my word - definition: rampaging aggressive property bidders who thwart their prudent rational educated competition by slamming in (Over The) Top Dollar Bids mostly comprising shocking sums of borrowed capital) has left me wondering how long those elated strutting peacocky soon-to-be-
indentured servants homeowners will have to own those dwellings to actually earn a return on their investment. I'm not sure if you're a Vanity Fair reader, but I recently read the article in the March issue on the fate of Ireland's real estate bust and it left me wondering, "Could the Toronto real estate market go Cuckoo KaBoom?"
In Cruella Deville fashion I am pointing my long bony fingers at the Bank of Canada, for I believe their elimination of 35 year amortizations on mortgages is one of the contributing culprits for the current insanity. Apparently there are so many buyers trying to secure a property on or before March 18th they're competing against one another and pushing values up. Good Grief! Who wants to overpay for the privilege of spreading their crazy mortgage debt over 35 years (instead of the impending reduced limit of 30 years)? Apparently a lot! Ugh!
Depending on your situation, and by this I especially mean first time buyers who are in rental accommodation, you might be prudent to wait. However, if you're looking to cash out or downscale, now could be a crafty clever minx-of-a-moment to make your move. Is that you?
Yes, Bidding Wars, and the oft-accompanying Bully Offers, are alive and well. To learn more about Bidding War and Bully Offers, click HERE for my recent HomeWatch Newsletter.