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House Wars: true tales from the Toronto real estate market

Real Estate Bidding Wars

The second listing on their tour that day was another house on Ellsworth Avenue. It was too small, so Slutsky, Brand and the ever-positive Chapnick went to the last house of the day, on a nearby street. This one was a newly renovated three-bedroom semi, listed at $699,000. It had exposed brick and a fireplace in the living room, a kitchen with an island and lots of storage, and a finished basement with a separate entrance (and, weirdly, two bathrooms). The backyard had a parking garage, a big deck and enough room for a child’s sandbox. Slutsky thought the place might be too small, but Brand was off and running. “I love it,” she said. “Do we need to do an inspection? What’s another $500? Should we bully? $730,000? $740,000?” The two stood on the front porch, judging the view inside and out. It was time to make another offer.

The next week, Slutsky called me, bummed out. He had gone through the house with a home inspector, who advised that the renovation job was sloppy and had been done without permits. The furnace was cheap and improperly vented, and when the inspector touched the fence in the backyard, a board fell out. The house was no good. “We’re really depressed,” Slutsky said. “We’re at our wit’s end with this whole process.” Meanwhile, the house had sold for $737,000, five per cent over asking.

“I’ve got an idea for a new reality show,” a friend of mine recently said on Twitter. “Contestants fight to the death for a detached home with a garden.” To house-hungry Torontonians, that probably doesn’t sound like a joke. Prices have raced upwards for well over a decade, with an all-time sales record of 93,193 set in 2007, when the average home price was $376,236. Even the recession caused by the U.S. mortgage crisis hardly made a blip: in 2008, sales dropped to 74,552 homes, but the average value stayed steady, at $379,347. Since then, dollars and sales have continued to climb. There were 89,347 sales in 2011, and this past June, the average home price was $508,622.

Condo towers keep rising, but people who want an actual house in the city limits have a finite number of options—“They aren’t making more land” is a common refrain. This makes buyers competitive and aggressive, two traits selling agents know how to exploit. When I bought a house two years ago, my mom (who last moved in 1984) suggested I offer $15,000 below the asking price. I laughed. To buy a house in Toronto today you must follow a common schedule: watch for new listings on Thursday, go to the open house that weekend, then get ready to make an offer above the asking price that Monday. Buyers fall in love with a kitchen, or a neighbourhood, or an imagined future life.

Looking for a house is like taking on an all-consuming part-time job. As interest rates dropped over the past few years, the process has grown ever more frenzied. On the evening of the offer, hopeful buyers hunker down in cars as agents scurry to and from the house, wanting to know if their clients can throw just a little bit more on there, a little bit more. So they do. And they do. And they do, again. One disgusted buyer told me she lost a bidding war when another person added a pair of Leafs tickets to their offer. “I am already giving you $700,000,” she said. “I do not have to sweeten the pot.” Buyers use the language of battle: fellow bidders are “the enemy,” to buy a house is “a win.” The person who names the highest number is the victor, and the rest go home to recover, then start again.

Scheduled offer dates, bidding wars and climbing sale prices are a city-wide phenomenon, but there are significant neighbourhood differences. Shabby North York bungalows famously go for a million to builders who plan to put up two new houses on the 40-foot-wide lots. For buyers who want to actually live in the homes they’re bidding on, there are a few trendy neighbourhoods where the wars are dirtiest. As the hip ’hoods of the early 2000s—Riverdale, Little Italy and the Annex—move into the $1 million–plus range, the areas around them have become ruthless battlegrounds. A redone semi in the downtown west end, from Trinity-Bellwoods out to Parkdale, now starts at $800,000. Hordes of young families are trying to get into east end areas like Danforth east of Pape, and south through Leslieville and the Upper Beach, where there are still houses that don’t yet bear post-renovation price tags. Meanwhile, north of Bloor, the St. Clair streetcar right-of-way and Wychwood Barns cachet has helped launch Hillcrest into the bidding war game.

Tensions are high: one agent threatened to throw a punch; another received obscene late-night text messages from a competitor

These neighbourhoods share certain characteristics. Decently sized lots and good-to-great schools are a given, but more urban features are important too, like reasonable access to transit and amenities worth hanging around for on weekends. Since the American mortgage crisis of 2008, U.S. researchers have noted that the neighbourhoods bouncing back the quickest aren’t suburban paradises with big lots, but dense urban areas with high “walkability,” the capacity to meet everyday needs by transit, bicycle or foot. A recent New York Times story estimated that every “step up the walkability ladder” added $82 per square foot to the price of a residential home, and mentioned the website Walk Score, which rates this latest real estate must-have.

Walkability matters in the slightly less combative areas, too. Streets off Gerrard Street East, in the heart of Leslieville, earn 77 out of 100: residents can walk to green space, Little India fruit stands and hipster espresso shops, but transit access is poor. On the other side of town, a quick streetcar ride up to the Bloor-Danforth subway is one factor that has made Roncesvalles a million-dollar neighbourhood. Unsurprisingly, it gets a near-perfect walk score.

Convinced that walkable Toronto has more buyers than houses for them to live in, people have become desperate enough to take dangerous risks. Everyone knows that houses are sold as-is, with buyers bending over backward to submit frictionless offers, free of home inspection conditions and with closing dates that suit the seller’s needs. Home inspectors are now most often enlisted by sellers, who then leave a binder out for buyers to flip through. Some buyers pay for a walk-through with the seller’s inspector, or try to nail them down for a quick, free phone chat. The most conscientious buyers jostle to squeeze in a fresh $350 inspection in the hours between the open house and the offer date—Matthew Slutsky and Carlie Brand paid for two inspections and a walk-through on their first three bids, and Brand has a friend who paid for 10 pre-offer inspections before finally buying a place.