GTA REALTORS® Release March 2021 Stats

For the third straight month of 2021, record home sales continued in March across the Greater Toronto Area (GTA) with buyers taking advantage of favourable borrowing costs and continued improvement in many sectors of the economy.

GTA REALTORS® reported 15,652 sales in March 2021 – close to double that of March 2020. While sales were strong, it is important to remember that for the second half of March we are comparing against the initial impact of COVID-19 in the second half of March 2020 when sales activity dropped off dramatically. With this in mind, it is important to consider annual sales growth for the pre-COVID period (March 1 to 14, 2020) and COVID period (March 15 to 31, 2020):

- There were 6,504 sales reported during the first 14 days of March 2021 - up 41 per cent compared to the pre- COVID period in March 2020.

- There were 9,148 sales reported between March 15th and March 31st 2021, an increase of 174 per cent compared to the COVID period of March 2020. This is a stark reminder of the initial impact COVID-19 had on the housing market and overall economy a year ago.

For March 2021 as a whole, new listings were up 57 per cent year-over-year to 22,709. While representing a strong year-over-year increase, the annual growth rate for new listings was well-below that of sales.

The MLS® Home Price Index Composite Benchmark for March 2021 was up by 16.5 per cent compared to March 2020. The average selling price, at $1,097,565 was up by 21.6 per cent over the same period. Following the recent trend, low-rise home sales in regions surrounding the City of Toronto drove price growth.


...

 I just represented a buyer in a multiple offer situation (also known as a “bidding war”) Happens all the time in Toronto, right?  What was different in this case was that there were 42 other offers along with ours!  So how did we end up winning the property, and, more importantly NOT overpaying?  Here’s what we did…..

Understand what a multiple offer situation is (and isn’t). Simply put, it’s one of several marketing strategies sellers use to sell homes.  Here’s how they generally work:

As a Realtor, there are many approaches to marketing a listing.  One strategy is to underprice the home in hopes of attracting as many buyers as possible.  Generally speaking the home is underpriced 10-15% below market value & offered for viewings for 7-10 days.  Offers are reviewed at a specific date & time which is indicated on the listing.   The seller hopes at the offer review time that the home sells with no conditions to the highest bidder.   In some cases ‘bidding frenzy’ may drive prices slightly over market value.

In this case the Sellers priced the listing super aggressively at about 30% less than market value.  A good Realtor can easily check market value by reviewing recently sold similar properties to make sure you're not overpaying.  

As a buyer, how do you compete in these situations?

  1. Communication with the listing agent.  A good realtor will open communication to get the best information to provide to a buyer to create a winning bidding strategy.  This way the listing agent understands you are professional, thorough and working in the best interest of your client to make this as easy as possible for thier seller to accept your buyers offer!  Information you can gather:
    • Preferred closing date
    • Target price (if they will share) or a recent sale they are targeting (again, if they will share)
    • Do they want best and final offer or will they expect multiple rounds of bidding?
    • Is there a home inspection to review ahead of time?
    • Do they require a deposit draft at the time of offer?
    • Do they have a cut off time to review offers; after which they won’t accept any?
    • How many offers do they anticipate?
    • Will they accept a pre-emptive offer? (more about that below....)
  2. Decide your offer strategy ahead of offer time so you’re not pressured during the bidding. 
  3. Prepare and be comfortable with offers at A,B,C levels should you need to; have these at hand so you're not scrambling to do paperwork at the last minute.
  4. Ask the agent for written instructions, and follow them!  If they can’t provide written instructions this means offers night may not be organized & at least you’ll be prepared for that, too!
  5. Review recent sales so you understand market value for the property.
  6. If there is no home inspection provided by the seller, do your own ahead of time. 
  7. Review seller provided home inspection
  8. Send the listing to your mortgage broker to review to see if you can waive any finance condition
  9. Write a personal cover letter to submit with the offer to stand out from other buyers; or better yet do a video
  10. Get a deposit (bank draft) ready to submit with the offer
  11. Ask yourself “If I found out the house sold for $XXX.XX would I be OK with that?”  You just hit your price ceiling, where you can walk away without regret or emotion.

Develop a bidding strategy:

In the case of this home, we were fortunate that the listing agent had clear and concise directions, which we followed.  After the fact there were several offers higher than ours, but with conditions --that made our offer more appealing.  In our case we had decided our bidding strategy would be:

To offer a large deposit and have it available offer night

To go in with our highest and best offer

The house may sell for higher than market value because of the number of offers (it did not)

To rely on the owner-provided home inspection

The mortgage broker cleared an offer without finance conditions

To follow the rules set down by the listing agent

What happens if you can’t offer without a condition of finance (or inspection)?

Understand that to get a seller to accept a finance condition in an offer, you will likely need to offer a premium price.  Make sure you don’t offer what the property will appraise for; or you will have to come up with the balance in cash.

Do houses sell before the offer date?

Yes they can if a seller is willing to look at a pre-emptive offer.  This is also called a ‘bully offer’.   This may be discretionary and is usually (but not always) included in the listing details.  Bully offers are typically at the top of the price range a seller is anticipating with no conditions.  

...

Many of my clients want to make sure they make the right choice when they are downsizing to a condo.  Here are my to 5 tips for choosing a great condo when you’re downsizing from a house:


  1. Size – most people will feel comfortable in 1000 sq ft or more coming from a house.  This will generally put you in a spacious, older building.  Which were designed with this in mind when they were first built!
  2. Convenience – will your driving be limited in the future?  Pick a building that is close to shopping to maintain your independence for the next 10, 15 or 20 years!
  3. Community – every condo building has it’s own community.  Many buildings popular with downsizers has an active social community, some even have a recreation staff.   With and experience & deep research I have compiled a great list.
  4. Layout – Did you know that the layout of a condo may make a bigger impact on your comfort than the size?  Split bedroom floor plans, large balconies, two bathrooms are some of the most desirable features!  
  5. Amenities – Have grandkids?  Maybe a building with a pool is the way to go!  Many buildings have special features like pet spas, indoor & outdoor pools, putting greens, great gyms, guest suites, the list goes on.  Thinking about what building amenities you’ll use regularly (or not) will help you find a great choice!


For more tips on downsizing, check out my YouTube virtual Downsizing series! 


Virtual Downsizing Seminar Series

...

JURY STILL OUT ON CANADA'S HOUSING 'BUBBLE', BUT A NATIONAL FIX WOULD DO MORE HARM THAN GOOD

Some think the Canadian housing market is in a bubble of epic proportions, while others believe it’s just a simple case where demand has outpaced supply, both in big and small cities.


But there’s no doubt that the rapid escalation of housing prices during a pandemic-induced recession is fuelling debate about what’s behind the surge and whether regulators can or should do something about it.


After a drastic drop in residential sales activity in April 2020, housing markets rebounded, with each successive month posting new sales records. Price increases soon followed. At the same time, the number of new listings was lower than home sales, resulting in more buyers competing for fewer properties.


Housing prices rose so fast during the downturn that they have surprised many industry observers. A quality- and size-adjusted housing price index produced by the Canadian Real Estate Association (CREA) showed that prices in February were up by 17 per cent year over year in large urban markets.


In Moncton, N.B., prices were up by 28 per cent. Prices escalated even faster in suburbs on the periphery of large cities, such as Barrie, Ont. (north of Toronto), where the increase was 34 per cent.


Much of the demand for housing has to do with ultra-low mortgage rates, which lower the monthly cost of ownership, and the nature of the pandemic-induced recession. White-collar, knowledge-economy workers, who are more likely to own a house, have largely been spared by the downturn, while those in sectors such as hospitality, travel and tourism — who are more likely to rent — have disproportionately suffered layoffs and financial hardship.


Teleworkers generated demand for larger homes at the expense of housing in the urban core. Prices, therefore, rose faster in the suburbs and beyond compared to the centre. But this is where conventional wisdom ends.


Tsuriel Somerville, a professor of urban economics at the University of British Columbia in Vancouver, points out some ignored demographic undercurrents that may partially explain the real estate puzzle. COVID-19, he believes, might have accelerated some transactions that would have happened regardless, but over a more extended period.


Somerville said the oft-repeated argument that millennials are not keen on buying and are content with renting and living in a sharing economy has its limits. Eventually, millennials will get into the ownership market when their demographics dictate.


COVID-19 is likely the catalyst that hastened the transition to owning for some and encouraged others to move to a larger dwelling.


But as demand rapidly increased, supply lagged, at least in the resale market. Unlike buyers, sellers may not be motivated to plan both a sale and a subsequent move in the middle of a pandemic, Somerville said.


Sellers often stay on the sidelines when prices rapidly rise, waiting for the market to peak before they list, further constricting supply and contributing to price escalation.


That prices have considerably risen is not in dispute. Whether it is a bubble is a matter of debate. David Rosenberg, president of Rosenberg Research & Associates Inc., is not one to mince words and he believes that we are witnessing a housing bubble of epic proportions.


Rosenberg looks at more than just prices to also focus on the supply side, especially the construction of new housing, which he said is at an all-time high. Residential construction in Canada accounted for 9.3 per cent of GDP in 2020, 55 per cent higher than the long-run average value of six per cent. In the United States, by comparison, residential construction accounted for just 4.6 per cent of GDP, he noted.


Douglas Porter, chief economist and managing director of BMO Financial Group, wonders whether Canada will ever build enough housing to meet the insatiable desire for homeownership. If people believe housing prices only move in one direction, demand might remain high.


However, he believes that given the recessionary tardiness, the economy will welcome growth in any sector it can find, even if it’s in residential property. He said monetary policy cannot do much in the short run to address housing prices.


Calls for the government to address rapidly escalating housing prices are rising, but one should be cautious before advocating for the blunt use of macroprudential instruments. Should the federal government or one of its agencies intervene with a tool that is indiscriminately applied to all of Canada, much like the mortgage stress test, there could be unintended consequences.


CREA’s latest release reveals that the escalation in housing prices is far more pronounced in Ontario than in other provinces. Year-over-year price increases were four per cent in Calgary, 6.9 per cent in Vancouver and 18.4 per cent in Montreal.


In general, prices in the East have heated up far more than elsewhere, which suggests that should regulators be tempted to act, provincial and local governments might be better placed to devise interventions, such as a land transfer tax, sensitive to their local market circumstances.


A one-size-fits-all housing remedy might further hurt struggling markets in Alberta and Saskatchewan, where current housing prices are below their highs recorded five years ago. Murtaza Haider is a professor at Ryerson University. Stephen Moranis is a real estate industry veteran. They can be reached at the Haider-Moranis Bulletin website hmbulletin.com.


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GTA REALTORS® Release March 2021 Stats

For the third straight month of 2021, record home sales continued in March across the Greater Toronto Area (GTA) with buyers taking advantage of favourable borrowing costs and continued improvement in many sectors of the economy.

GTA REALTORS® reported 15,652 sales in March 2021 – close to double that of March 2020. While sales were strong, it is important to remember that for the second half of March we are comparing against the initial impact of COVID-19 in the second half of March 2020 when sales activity dropped off dramatically. With this in mind, it is important to consider annual sales growth for the pre-COVID period (March 1 to 14, 2020) and COVID period (March 15 to 31, 2020):

- There were 6,504 sales reported during the first 14 days of March 2021 - up 41 per cent compared to the pre- COVID period in March 2020.

- There were 9,148 sales reported between March 15th and March 31st 2021, an increase of 174 per cent compared to the COVID period of March 2020. This is a stark reminder of the initial impact COVID-19 had on the housing market and overall economy a year ago.

For March 2021 as a whole, new listings were up 57 per cent year-over-year to 22,709. While representing a strong year-over-year increase, the annual growth rate for new listings was well-below that of sales.

The MLS® Home Price Index Composite Benchmark for March 2021 was up by 16.5 per cent compared to March 2020. The average selling price, at $1,097,565 was up by 21.6 per cent over the same period. Following the recent trend, low-rise home sales in regions surrounding the City of Toronto drove price growth.


...

 I just represented a buyer in a multiple offer situation (also known as a “bidding war”) Happens all the time in Toronto, right?  What was different in this case was that there were 42 other offers along with ours!  So how did we end up winning the property, and, more importantly NOT overpaying?  Here’s what we did…..

Understand what a multiple offer situation is (and isn’t). Simply put, it’s one of several marketing strategies sellers use to sell homes.  Here’s how they generally work:

As a Realtor, there are many approaches to marketing a listing.  One strategy is to underprice the home in hopes of attracting as many buyers as possible.  Generally speaking the home is underpriced 10-15% below market value & offered for viewings for 7-10 days.  Offers are reviewed at a specific date & time which is indicated on the listing.   The seller hopes at the offer review time that the home sells with no conditions to the highest bidder.   In some cases ‘bidding frenzy’ may drive prices slightly over market value.

In this case the Sellers priced the listing super aggressively at about 30% less than market value.  A good Realtor can easily check market value by reviewing recently sold similar properties to make sure you're not overpaying.  

As a buyer, how do you compete in these situations?

  1. Communication with the listing agent.  A good realtor will open communication to get the best information to provide to a buyer to create a winning bidding strategy.  This way the listing agent understands you are professional, thorough and working in the best interest of your client to make this as easy as possible for thier seller to accept your buyers offer!  Information you can gather:
    • Preferred closing date
    • Target price (if they will share) or a recent sale they are targeting (again, if they will share)
    • Do they want best and final offer or will they expect multiple rounds of bidding?
    • Is there a home inspection to review ahead of time?
    • Do they require a deposit draft at the time of offer?
    • Do they have a cut off time to review offers; after which they won’t accept any?
    • How many offers do they anticipate?
    • Will they accept a pre-emptive offer? (more about that below....)
  2. Decide your offer strategy ahead of offer time so you’re not pressured during the bidding. 
  3. Prepare and be comfortable with offers at A,B,C levels should you need to; have these at hand so you're not scrambling to do paperwork at the last minute.
  4. Ask the agent for written instructions, and follow them!  If they can’t provide written instructions this means offers night may not be organized & at least you’ll be prepared for that, too!
  5. Review recent sales so you understand market value for the property.
  6. If there is no home inspection provided by the seller, do your own ahead of time. 
  7. Review seller provided home inspection
  8. Send the listing to your mortgage broker to review to see if you can waive any finance condition
  9. Write a personal cover letter to submit with the offer to stand out from other buyers; or better yet do a video
  10. Get a deposit (bank draft) ready to submit with the offer
  11. Ask yourself “If I found out the house sold for $XXX.XX would I be OK with that?”  You just hit your price ceiling, where you can walk away without regret or emotion.

Develop a bidding strategy:

In the case of this home, we were fortunate that the listing agent had clear and concise directions, which we followed.  After the fact there were several offers higher than ours, but with conditions --that made our offer more appealing.  In our case we had decided our bidding strategy would be:

To offer a large deposit and have it available offer night

To go in with our highest and best offer

The house may sell for higher than market value because of the number of offers (it did not)

To rely on the owner-provided home inspection

The mortgage broker cleared an offer without finance conditions

To follow the rules set down by the listing agent

What happens if you can’t offer without a condition of finance (or inspection)?

Understand that to get a seller to accept a finance condition in an offer, you will likely need to offer a premium price.  Make sure you don’t offer what the property will appraise for; or you will have to come up with the balance in cash.

Do houses sell before the offer date?

Yes they can if a seller is willing to look at a pre-emptive offer.  This is also called a ‘bully offer’.   This may be discretionary and is usually (but not always) included in the listing details.  Bully offers are typically at the top of the price range a seller is anticipating with no conditions.  

...

Many of my clients want to make sure they make the right choice when they are downsizing to a condo.  Here are my to 5 tips for choosing a great condo when you’re downsizing from a house:


  1. Size – most people will feel comfortable in 1000 sq ft or more coming from a house.  This will generally put you in a spacious, older building.  Which were designed with this in mind when they were first built!
  2. Convenience – will your driving be limited in the future?  Pick a building that is close to shopping to maintain your independence for the next 10, 15 or 20 years!
  3. Community – every condo building has it’s own community.  Many buildings popular with downsizers has an active social community, some even have a recreation staff.   With and experience & deep research I have compiled a great list.
  4. Layout – Did you know that the layout of a condo may make a bigger impact on your comfort than the size?  Split bedroom floor plans, large balconies, two bathrooms are some of the most desirable features!  
  5. Amenities – Have grandkids?  Maybe a building with a pool is the way to go!  Many buildings have special features like pet spas, indoor & outdoor pools, putting greens, great gyms, guest suites, the list goes on.  Thinking about what building amenities you’ll use regularly (or not) will help you find a great choice!


For more tips on downsizing, check out my YouTube virtual Downsizing series! 


Virtual Downsizing Seminar Series

...
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