Bidding wars hit the 905, and ‘sellers love it’

The 416 may have more cachet, but the 905 has more room for swing sets and barbecues — and there are generally lower mortgage payments. This has more families looking westward for greener pastures, or at least greener lawns. And they’re bringing Toronto’s bidding wars with them.

While the competition isn’t as feverish, real estate agents west of the city are seeing more and more clients who would rather put extra kilometres on the car than pay the high price that comes with being closer to the city centre, or forgo home ownership altogether.

Areas to the west are seeing the same listing crunch that has characterized Toronto proper, which means that a growing pool of buyers is competing for an inventory that can’t keep up with demand. Larger numbers of offers and prices above asking are becoming commonplace in areas accustomed to a more balanced market.

“We’re setting records left, right and centre. I’ve never seen anything like it,” says Rob Kelly of Royal LePage Meadowtowne Realty in Mississauga. “Right now the buyer pool is so large with such a lagging inventory that it’s creating these crescendos. When there is a listing, it’s gone within days and attracting six, seven, eight, 10 offers. The houses are selling for well over what is considered market value.”

He says some areas to the west still have a way to go to catch up in price with points east, such as Ajax, where there has been morenew construction. “New-build is quickly reflected in the resale market and where there is not a lot of new growth, resale prices tend to lag. The west is catching up, but people can still get more bang for their buck.”

Mr. Kelly recently sold a three-bedroom brick home with a family room and finished basement on a quiet street in Mississauga for $450,000 to a couple with one child who were looking to move up from their Toronto condo and wanted more space. Reflecting the new reality, the house attracted eight offers and sold for $36,000 over asking.

Another of his recent sales involved a three-storey townhouse in Oakville that was priced $50,000 higher than what the last comparable unit sold for. On the day the sign went up, there were three offers and a deal was done for a bit over asking at $517,000.
“Sellers love it, but it’s a little scary for agents like me,” he says. “We don’t want it to be too exaggerated. We don’t want a correction.”
Allan Todd, president of the Mississauga Real Estate Board, says a home in the Streetsville area recently attracted 15 bids and sold for $101,000 over asking. But he thinks this type of sale, while making headlines, is still the exception, with most over-asking bids coming in between $1,000 and $10,000 over the listing price.

He believes one of the biggest factors driving the Mississauga market is the fact there isn’t the double transfer tax (a combination of municipal and provincial transfer taxes) that buyers in the city pay.

According to the Toronto Real Estate Board, the average sale price of a detached home in the city of Toronto was $955,314 in February, a year-over-year increase of 15.7%. In the 905, the average price was $640,405, an increase of 10.4% over last year. A large price difference between Toronto and many outlying communities was also seen for semis, townhouses and condos.

Peel Region, which includes Brampton, Caledon and Mississauga, averaged $613,503 for a detached home in February. Halton, which includes Burlington, Halton Hills, Milton and Oakville, was higher at $745,303.

The Realtors Association of Hamilton-Burlington reported that listing inventory for residential properties at the end of February was 14.5% lower than last year. In this period of strong demand, it means prices are on the rise there, too. The average sales price for February was $398,239, up 6.4% year-over-year. In addition to Hamilton and Burlington, the numbers include such nearby communities as Ancaster, Dundas, Flamborough, Stoney Creek and Caledonia.

“There’s lots of bidding wars and lots of prices going way up and over,” says Chris Medcalf of Royal LePage State Realty in Hamilton.

In addition to first-time homebuyers and commuters who don’t mind driving farther to get more for their money, he’s seeing a lot of interest from investors looking to flip properties for profit in long-neglected neighbourhoods.

“Toronto, Mississauga, Oakville investors, out-of-towners, are coming [to Hamilton] for the great value,” he says. “Some of these big beautiful homes have been selling for small amounts of money and these guys are coming in and redoing them from top to bottom. When you work out the square footage it’s great, great value.”

A client of his recently offered cash for a house listed at $209,900 in an estate sale on Melrose Avenue South and got it for $241,600. The house, on a street on which other homes have sold for between $400,000 and $600,000, will be renovated and put back on the market.

“That area has never been as hot as it is right now,” Mr. Medcalf says. “Houses there are selling, and selling quick.”

Source: National Post