When art director Cory Ingwersen started searching for a home in Toronto earlier this year, his hunt began in a slumping housing market.
Yet bidding war after bidding war, Ingwersen says he and his wife made multiple offers on several properties, only to be met by counter-bids that were 10 to 20 per cent more than the asking price – and more than they were willing to spend.
“We felt defeated,” Ingwersen, 32, said in an email interview.
Ingwersen isn’t alone in his home-buying experience, as some in the real estate industry say that bidding wars are now making a comeback in the city. And this is occurring despite the country’s largest housing market cooling considerably last year, as a result of officials tightening mortgage regulations, imposing taxes on foreign buyers and taking other measures aimed at curbing dizzying prices.
“We’re starting to see [bidding wars] happen,” said Toronto-based mortgage broker David Larock, in a July 11 interview with BNN Bloomberg. “The sky not falling and interest rates falling have combined to bring some enthusiasm back to the housing market.”
Toronto homes sales rose 10.4 per cent in June, compared to the same time last year, according to the latest Toronto Real Estate Board data. Meanwhile, the combination of rising sales and fewer active listings helped lift the average selling price three per cent to $832,703 from last June.
As for where bidding wars are popping up, real estate agent Ira Jelinek says he’s seeing them specifically in Toronto areas that have scarce supply or in central locations that are considered more affordable.
“Products outside of the core that are mispriced are sitting longer,” Jelinek said by email. “Inside the core, anything that is priced close to fair market value or a bit higher is selling quickly.”
After two months of serious hunting, Ingwersen says he and his wife finally landed on buying a historical row house in Toronto’s Cabbagetown neighbourhood. When Ingwersen’s realtor approached him and his wife with this particular property, it looked too good to be true, even though they started their search wanting a detached home, Ingwersen says.
“We were the first people to see the listing, and absolutely loved the house, which was by far the best listing we had seen to date,” Ingwersen said.
However, his realtor told him that the owner’s agent had neglected to properly strategize the listing, which opened the door for them to jump in. Ingwersen took a chance and submitted an offer immediately, but under the asking price.
After some back and forth, Ingwersen ended up snapping up the home at its listed price – and without having to enter the ring of a bidding war.
“Overall it was a very exciting process, but along the way we had extreme highs, and very low lows. It was a rollercoaster ride that had no end in sight,” Ingwersen said.
“We looked at over 60 houses in a very short timeline and what we quickly learned is that we had to compromise on the criteria we had begun our search with.”
Ingwersen notes that he was not surprised to find himself in the middle of bidding wars. He expected it because of warnings from his realtor, research he and his wife had consistently been doing on the Toronto market, and stories he heard from people close to him who had recently purchased properties.
“One friend lost out on three houses before being able to confirm an offer,” he said.
With bidding wars making a return, Larock says it’s important to do enough legwork long before offer night in order to prepare for the possibility of a battle.
He adds that buyers should determine how much they want to spend on a home, how much it will cost them to carry the property, the price they’re most comfortable with, and the maximum amount a lender will provide.
“You want to have a plan and an understanding going in before the emotion of the bidding takes place,” Larock said.