“At the end of the day, it’s the bank that owns the house – not the person putting down 20 or 30 per cent.”
But as the market tempo shifts, Mr. Bibby says, some agents are adjusting their tactics. He points to the recent sale of a narrow, detached house listed on Palmerston Avenue with an asking price of $2.18-million.
Mr. Bibby says the asking price was closer to market value and the agent did not hold back offers. Mr. Bibby’s clients made an offer very quickly and another bidder also jumped in. The listing agent was not trying to create a bidding war but competition happened organically.
Mr. Bibby’s clients were successful with an offer of $2.47-million.
“It wasn’t overpriced,” he says. It was a smart approach. Everyone felt good.”
An increased supply of listings also releases some steam from the market, Mr. Bibby notes.
Just after the long weekend, five new listings came out in the upscale enclaves of Moore Park and Rosedale, for example, where properties for sale have been extremely rare for months.
Buyers will be relieved to see more listings coming on, but many remain wary of the market’s heights.
Economists Kyle Dahms and Alexandra Ducharme of National Bank of Canada say housing affordability across the country declined for a fourth consecutive quarter in the final three-month period of 2021.
While the jump in house prices contributed a fair share to diminishing affordability, the larger driver was rising mortgage rates, they say.
The proportion of buyers opting for variable rate mortgages rose to a record high in the second half of last year, Mr. Dahms and Ms. Ducharme say, and those who chose that route increased their purchasing power in the fourth quarter by 10 per cent compared with buyers who chose the typical five-year fixed rate mortgage.
The economists say this escape route is about the vanish in the coming months with the Bank of Canada trend-setting rate, which variable rate mortgages are pegged to, on the rise. National Bank is forecasting a 125 basis points increase over 12 months.
In Toronto, home prices rose for the 10th consecutive quarter in late 2021 and an increase in rates was tacked on to that lack of affordability.
By their calculation, monthly mortgage payments amounted to 67.3 per cent of the median pre-tax household income, which was a much bigger chunk than the average for the period since 2000 and the average for other major markets in Canada.
Tam Boyko, a real estate agent with Keller Williams Real Estate Associates, says buyers and sellers are making their decisions against a backdrop of uncertainty these days.
At any given time, people may tap the brakes because of the weather, the pandemic, pending inflation and fears of recession. Now Russia’s war on Ukraine adds to the economic volatility.
“When things are weird, some people freeze while others carry on,” she says. “I think if some are sensing a pause, it’s just a pause.”
Ms. Boyko listed a one-bedroom penthouse condo in the boutique IT Lofts in Dufferin Grove just before the Family Day long weekend.
The 756-square-foot unit at 130 Rusholme Rd., was listed with an asking price of $1,199,703 and an offer date set for 10 days later. The unit, with a rooftop terrace of 488 square feet, sold after two weeks for $1.215-million.
Mr. Bibby has been watching the downtown condo segment closely as he prepares to list some fresh properties. He says 110 new listings popped up on the first day after the holiday, he says, compared with 30 to 40 new listings a day in recent weeks.
Mr. Bibby hopes that the spike in supply will help to satiate some of the demand.
Recently Mr. Bibby has been watching the sales in certain condo buildings where he will have listings in the coming weeks.
“I’m actually spending a lot of time right now tracking outcomes,” he says. “That gives us a read on where the market is today. There’s just no consistency anywhere.”
At the moment, junior one-bedroom and one-bedroom units are selling quickly to investors.
“You’re seeing a lot of people bidding very aggressively on smaller suites.”
At the higher end, he’s noticed that several of the sellers have seen offer nights come and go with no bids. The following day, the unit is relisted at a higher price.
“One approach doesn’t work everywhere,” he says. “Sometimes what worked last week won’t work next week.”
Mr. Bibby has listed three condo units recently without offer dates. He also set asking prices that the seller would be willing to accept.
“The agents on the buying side were confused.”
Even though there was no date for reviewing offers, he had several calls from agents asking if the seller was willing to look at bully bids.
“You can make an offer now,” he emphasized.
Mr. Bibby has one listing lined up for about a month from now. The seller is ready to sign the contract but Mr. Bibby has advised against nailing down an asking price until closer to the launch.
“We can’t fill in the price – we don’t know where we’ll be.”
