The Toronto-area real estate market is headed for a fit and initially declining trend.
According to the Toronto Regional Real Estate Board, sales in September fell 18 percent compared to the same month last year, while new listings dropped 34 percent in the same period.
Meanwhile, buyers in the Greater Toronto Area raised average prices by 18.3 percent to $1,136,280 in September compared to the same month last year.
The combination of short supply and extreme prices is prompting some investors to test the market.
But sellers who think that every property sells out quickly at an eye-watering price often face a different reality.
Many agents modify their strategy for each of their listings.
Andre Kutyan, a broker with Harvey Kales Real Estate Ltd, says some investors who bought the property thinking they would hold it for a long time are now reconsidering that plan.
Areas such as Willowdale, Bedford Park, and the streets around Bayview and York Mills have attracted both domestic and foreign investors over the years, he says.
Now he is showing homes for sale after having been bought during the hazy days of 2016 and 2017. He first noticed the trend, he says, when he began to recognize listing photos from properties he’s shown in the past.
That can often turn the seller into an investor if the property has been leased in recent years or it is currently vacant, he says.
Sometimes listing photos provide a clue that the property has been listed in recent times: Mr. Kutian points to a North Toronto home that sold for $2.251 million in 2016. In the spring of 2017, it was put up for lease.
Now it is back on the market with a price of around $3.5 million.
“There is snow in the picture,” says Mr. Kutyan incredulously.
Mr. Kutyan says some of his own clients have decided to sell after the market’s dramatic uptick in 2020 and 2021.
A pair of investors plan to see how much buyers are willing to bring in for a one-bedroom condo unit they bought in the city’s upscale Yorkville neighborhood in 2017.
The couple purchased the 645-square-foot unit at 40 Scholard St., with plans to rent it out in the short term and possibly hand it over to a family member in the long term.
But the carrying cost has been more than the amount they are earning on rent. During the pandemic, rental rates dropped sharply in the city and tenants asked for cuts.
Mr. Kutyan says the couple has decided to sell after a few units in the building received big money recently.
Mr. Kutian plans to list Unit 1504 with an eye-catching price of $475,000, then hold back offers by a specified date.
“I’m not the one to set the price – let’s see what the market is going to do.”
Another group of investors is planning to list the bungalow they bought in April, 2017 for $1.318 million.
Mr. Kutyan plans to list the home at 394 Old Orchard Grove with an aggressively low asking price and hold back offer of $1.295 million.
He is already anticipating calls from agents about why the asking price is lower than what the couple paid for the property in 2017 and how much he actually expects to get for it.
“I’d say, ‘You tell me what’s happened to the market in the last four years.'”
Eli Davis, a real estate agent at Sotheby’s International Realty Canada, says setting a low asking price along with the offer date can be an effective way to attract multiple offers. But she cautions that it can also be a risky strategy because the agent is obligated if the home doesn’t sell on that date.
“If it turns upside down, you’re in trouble. Your seller still thinks it’s undervalued and should be gone.”
Some agents will then raise the price to the level they were expecting to begin with.
“I would not be in favor of it because the first two weeks usually tell the story,” says Ms. Davis.
It has recently seen a lot of price cuts on listings that have been sitting because the asking price was too high to begin with. Now that more inventory is trickling in, sellers are motivated to reduce their asking price.
He is not in favor of setting a price so high as to deplete the asset or so low as to create a frenzy.
Ms Davis plans to set prices in line with market value as she launches two mid-city properties – welcome any time in the coming days.
Buyers who come to the table are more likely to be serious if the asking price is realistic, and the property is more likely to sell quickly.
The Penthouse Suite in a boutique building at 5 Rosehill Avenue has an attractive layout, but it needs some updating, so she’s listing it with a $1.395-million asking price.
A three bedroom semi-detached house at 31 Oriole Rd. Deer Park will have an asking price of $2.895 million.
The owners of both properties have lived in them for several years, says Ms. Davis, and they are serious about selling so that they can move on to a new phase of their lives.
Sellers who are intent on getting a very high price are often opportunistic and they are ready to sit a home in their opinion.
She adds that such listings can be costly in terms of time and expense for an agent.
“I’m not interested in people who are just testing the market.”
Ms Davis says an investor who bought a pre-construction condo in 2017 recently contacted her to say she was thinking of selling the two-bedroom unit, which will be completed this year.
The owner paid $600,000 for the unit, which is less than 700 square feet in the Yonge Street and Eglinton Avenue area.
She says the problem facing her now is that many projects started around that time are starting this year. She says most of the people who shop in her building are investors, adding that she advised them to stay for a while.
“I looked at sales in the area and I don’t think he will be able to do anything. I think he will be broke,” she says, adding that he will have to pay brokerage fees and other costs. “It never changes — it There is always supply and demand.”
Robin Pope, broker of Pope Real Estate Ltd., has recently seen an uptick in an unusual strategy: Agents set a low asking price for a property but they do not set an offer date.
Typically agents who wish to wage a bidding war set an offer date to create a sense of urgency on the deadline.
Mr Pope says these agents expect buyers to eliminate competition anyway. But what actually happens is that they get a lot of calls and no offers.
“Due to the fact that the price is so attractive, they get a lot of activity,” he says. “It’s a really silly strategy because it doesn’t always work.”
He points to a condo near the waterfront that was listed with an attractive $688,000 price, but is still on the market three weeks later. The listing agent said the seller is looking for more than $800,000.
Mr. Pope again admits that the listing agent is simply misleading buyers, by letting the unit sit for three weeks at the price the seller is hoping to bring.
Of the strategy, he says, “I have experienced it more times than I have ever used. “I should never have experienced it.”
Mr. Pope says a buyer feels he has benefited from an agent’s wrongdoing. When a two-bedroom condo unit for $99,000 and no offer date hit the River City area market, she was willing to offer a little more than the asking price.
When Mr Pope informed the listing agent, he replied “No way – we want more”.
Mr. Pope’s client lowered his bid to $1.045-million. The unit should have been listed for north of $1.1 million, says Mr Pope, who believes the agent’s misfire gave the customer an edge because the seller didn’t get through a bidding war.
“It was a lovely apartment and got it for an excellent price,” he says.
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