When we talk about the housing market, we usually mean economic projections, stats, starts and the like, but the “market” is in another way the people. The sales people, whose livelihoods depend on this business, the buyers, whose families are dreaming of a beautiful place to put down roots, and the sellers, who are working their towards their own dreams and financial security.
The news on the financial side of the market is that January saw a 22.3% increase year-over-year to bring the average selling price to $770,745 in the GTA. So what does that mean for the other side of the market, the people side?
It means the very rules of engagement have changed. If you’re old enough, you remember a time when your agent would take you to see a house for sale, and its current owner might be watching TV in the living room in her bathrobe while the dogs jumped on you at the door.
On the sales side, CBC.ca says getting listings in the first place has become as hotly contested as making sales. Some brokers are seeking joint ventures between their purchasers and developers, wherein the pair buy older properties or tear-downs on good lots, the developer fixes up the home or rebuilds, and after it’s sold, the developer gets a cut.
Some are going for a “maximum exposure” approach, using extensive branding on billboards, heavy-rotation TV and radio spots, and peppering neighbourhoods with flyers. Once they get the listing, they blow the advertising budget again. Some are throwing in services, such as staging or moving help, to secure listings, or fronting the costs of renovations. One realtor told CBC she thought that word of mouth was still the best way to get listings, and so she takes pains to be a supportive coach throughout the process.
This is all good news for the sellers, of course. For buyers, it seems to me they may be at an unfair advantage. What an individual seller is willing to do to get the best price for their home — clean, renovate, whatever — will require their own input, whether it’s money or elbow grease and time. Having such eager agents means that they have a professional with resources on their side. Kind of like going into court advocating for yourself when the other side has Clayton Ruby.
In a market like this, there isn’t much a buyer can do to tip the scales back in their favour. You can get out and look right away and not wait for the weekend, no matter how busy you think you are. You and your agent can write up offers properly and quickly. You can be realistic about your budget. You can be smart about what you bid on, and behave judiciously afterwards, getting the best rates, making extra payments when possible. All good things, but you’re a buyer in a sellers’ market, you just have to ride it out.
The Toronto Real Estate Board (TREB) continues to lobby against a foreign-buyer tax in the GTA, saying that less than 5% of its agents acted on behalf of foreign buyers in 2016. On a recent Metro Morning, an agent from Sotheby’s, Richard Silver (who is a past president of TREB), said foreign clients don’t come here just to park their money, but for the quality of the schools and the business opportunities Toronto offers. But people, he said, want to live here, not just invest here.
He noted that the TREB figures reflect only home resales and not sales of new construction. He pointed to the Vancouver market as evidence: even though their real estate board pegs foreign ownership at the same four-ish percent, the foreign-buyer tax there has caused a significant drop in sales, and their figures are also based only on resales.
Even with a foreign-buyer tax, the new construction market still might see a surge in prices. There are still deals to be had, occasional offerings in the $200,000 range, but we’ve been told to expect above average condo price growth this year. I spoke to a very successful condo broker about a year ago who said he thought we’d see condo price appreciations catch up to other home prices in the next couple of years. We’re starting to see it happen.
A foreign-buyer tax may make an impact, but will it make the kind of difference the GTA housing market needs? While our prices may be high, they’re still low compared to the major cities in other G8 nations, but that won’t always be the case. Toronto is a very desirable place to live. Get in while you can.