Welcome to my latest Tales From The Real Estate Trenches, where I periodically post real time experiences on the Toronto real estate market.
So, do you believe there is a correlation between the weather and Toronto real estate sales?
After a bitter chill swept Toronto this past month with freezing temperatures - including an extreme cold weather alert - most everyone including realtors, buyers and sellers found refuge cocooning from the elements while celebrating Holiday with their loved ones. This isn't unusual. In fact, the arrival of the Spring market in Toronto is often predicated on the weather. If January and February find us battered by blizzards, the real estate market is postponed until everyone can navigate with ease and relative comfort.
However, this past weekend temperatures warmed up and the sun shone in all its glory. The result? It was all Buyers needed to tour en masse the handful of Saturday & Sunday Open Houses - in the hopes something
perfect suitable acceptable habitable - would match their budget. One pair of my Buyers were delighted to find one magical well-priced contender, despite noticing there were an abundance of stylish latte-drinking mobs of Buyers lingering far too long in the Open House subconsciously staking out their finder's claim. Yes, underneath the veneer of social niceties and fake fur parkas, everywhere one could feel yet another bidding war brewing.
Here's 3 sales - which received a total of 35 offers - last night (Tuesday January 23rd, 2018) which I believe signal it's time to gear up for an explosive Spring real estate market.
The house above - located north of Bloor near Lansdowne - definitely garnered attention by the stylish on-trend facade. A 2.5 storey semi-detached 5bed dwelling with laneway parking, this former 'duplex' was actually under the throes of a renovation, being sold 'as-is' with building permits in place as a single-family deconversion. The pre-sale inspection listed a litany of repairs - including knob and tube wiring, issues with the heating system, a damp stacked stone foundation and structural compromise.
Requiring significant capital investment (an easy invitation to drop 250k+ from the get-go) it was well-suited to someone in the building industry who is familiar navigating the City of Toronto permit and inspection process, and was prepared to respond to the surprises of renovating a century-old house by having a fair amount of disposable cash on hand. However, with the market transitioning since April 2017 when government interventions began their attemp to cool the market - flippers have expressed reluctance. And in their line of business they should. The buy and flip crowd are at the top of the risk list (with speculators heading the pack) when profit margins are limited on a quick turn-around and there's uncertainty.
But that didn't impact serious interest. Listed at 799k, the property garnered 14 offers last night. The final sale price? It spiked over $950k! For a fixer-upper. Sheesh!
As I counselled my Buyers, these are my must-read blogs for anyone reconciling a project like this -->
This 2-storey 3bed renovated row house with a separate entrance to a non-conforming basement apartment - located north of Dupont near Dovercourt - came to market for $749,000. While this location has long been off the radar as a 'no man's land', it's surprisingly central. Just north of a rail corridor that has physically and psychologically cut off this area from awareness, the recent movement of art galleries and cafes into the industrial buildings facing the rail corridor on Geary Avenue began signaling gentrifiction was arriving, catering to the modern desires of professional hipsters (here's a past blog called Hipsters Or Not, Real Estate Values Rise).
There were two recent comparable sales - 60 to 90 days ago - for 751k and 875k which instantly signalled the 749k list price would attract competition. The 875k listing was of a similar condition but further south which, being closer to the shops on Bloor and the subway line - would be accorded a premium. The other dwelling that sold for 751k, was close to this listing, but chopped up into dated 1bed apartments. Because of this, I instantly added 100k-ish in value to account for the renovations. So - with my rational prudent appraisal supporting a base line of 850k-ish - the question was whether a buyer would add an additional premium to the list price for not having to invest the time, energy and capital necessary to renovate, and whether 'demand' would fuel the winning buyer to pay more than recent sales comps.
The answer was Yes. This property received 15 offers last night and spiked 23% over list with the requested quick closing. No, sadly my buyers didn't win this bidding war, but they ranked in the Top Five bids which was pretty amazing given this was their first attempt to secure a property. By all accounts they're already more savvy and competitive (and have a larger budget) than nine other buyers.
If you're trying to establish what a property might sell for, here's -->
and if you're trying to reconcile size, location and condition here's How To Search For Your Next Property Purchase
While the freehold housing market has been wonky since April, the condominium market has consistently posted gains this past year, increasing in value by around 14 percent. Of particular demand? The 2bed condo is soaring in value, in part because millenials are seeking affordable city-centre accommodations that are family-friendly (see Dear Urbaneer: Should We Raise Our Kid In A Condo?).
So when this renovated 2bed 2bath west-facing corner-suite came to market for 599k at Bloor and Dundas - near The Junction and High Park neighbourhoods - it, too, had 'bidding war' written all over it. Situated in a brick 7level midrise completed in April 2005, the 126 suites had decent amenities including an exercise room, games room, meeting room, landscapes terrace with bbq, visitor parking and concierge. Well-maintained and well-managed, with a reserve fund of $1.8mil, there were a few 1bed sales in the complex that sold last year which - at a price of around $725 per square foot - indicating this was a slam dunk to sell for over list. There was one 1bed unit which had the bonus of a rare ground floor terrace that sold for $833 per square foot, and zero 2bed sales in the complex since 2015 to serve as comparables, which signalled how stable the complex is.
My first time buyer was rational yet willing to be competitive to secure the right place. He analyzed last year's sales in the complex and, having viewed the most recent comparables in proximity to this listing, decided he would be willing to compete. We reviewed the Condominium Documents in advance of the offer date and reached out to MortgageJake to arrange a financing pre-approval. I tip my hat to mortgage broker Jake Abramowicz, as he managed to execute an appraisal on the property which supported a value for around 12% over the list price of this 886 square foot suite.
My buyer decided to proceed with an offer reflecting the appraisal, with no conditions, and the Seller's preferred closing date. Up against five other parties, the Seller accepted our bid on the first round, in part for the substantial 70k bank draft deposit, and the security of knowing the buyer was placing a down payment in excess of 20% with a pre-approved pre-appraised financing package. In short, he pulled out all the stops to lock this down.
Considering a condo? Here's some great Urbaneer posts -->
While three sales last night do not make a real estate market, I feel this Tales From The Real Estate Trenches signals demand remains strong for real estate in the original City of Toronto. Many of us just needed some bright sunny days without our parkas (fashionistas forgo your fur coats!) to discover what momentum lays in store for the Spring market. While we're not back to the precedent-setting sums set in April 2017 (here's my August post called The Wackadoodle Toronto Real Estate Market which documented a drop in values of about 15% from the peak), the question now is "How soon will the market recover to peak property values?".
Actively engaged in our housing market? Here's some of my essential reads:
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Steven Fudge, Sales Representative
& The Innovative Urbaneer Team
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