100 offers on a single GTA house: why scarce listings are further driving up home prices

100 offers on a single GTA house: why scarce listings are further driving up home prices

Arc Housing, Toronto Regional Real Estate Board

2022-01-23 2:15:00 PM

100 offers on a single GTA house: why scarce listings are further driving up home prices

With the number of homes for sale at an extreme low, bidding wars are pushing up markets — and crushing the dreams of weary house hunters.

Most days there isn’t much new to see online even though their search now encompasses a huge swath of the GTA, including Mississauga, Milton, Oakville, Burlington and Hamilton. Lately, they’ve been trying as far afield as Guelph and Grimsby.The Toronto Regional Real Estate Board reported 3,232 active listings in December, a 60 per cent tumble from the 7,892 the same month a year earlier. New listings fell 12 per cent year over year last month, leaving the whole Toronto region with less than a month of inventory (the time it would take to sell the current inventory at the current sales rate).

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Blame our pm for the open borders policy . That's insane. Crazy bidding wars with the buyer paying way more than what the house is really worth.

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Have your say: Are you having trouble finding real estate listings in the GTA?

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min. read JOIN THE CONVERSATION Every day Alicia Veilleux checks for new homes listed on Realtor.ca. She and her boyfriend have been searching for a two-bedroom house or condo since the fall. They began looking last fall in Etobicoke and Mississauga — just west of their Humber Bay Shores rental. Most days there isn’t much new to see online even though their search now encompasses a huge swath of the GTA, including Mississauga, Milton, Oakville, Burlington and Hamilton. Lately, they’ve been trying as far afield as Guelph and Grimsby. There might be 10 or 15 new offerings that meet their search criteria. The couple winnows it down to one or two places that are worth seeing in person. As if house hunting wasn’t tough enough in southwestern Ontario, Veilleux and her partner are up against the lowest home inventory levels in the GTA since 2007 and, as the supply dwindles, the scarcity is pushing up prices through increasingly ferocious bidding wars. The Toronto Regional Real Estate Board reported 3,232 active listings in December, a 60 per cent tumble from the 7,892 the same month a year earlier. New listings fell 12 per cent year over year last month, leaving the whole Toronto region with less than a month of inventory (the time it would take to sell the current inventory at the current sales rate). While the city of Toronto had more than a month’s inventory of homes in December, Milton and Oshawa had half a month’s supply. Some places — Whitby and Ajax, for example — had less than that. The Canadian Real Estate Association reported national inventories also hit a record low in December with 1.6 months of inventory, compared to a long-range average of five months. December and January are traditionally a listings dead zone and realtors promise there will be more listings as spring approaches. But this winter the shortfall of homes coming on the market is so pronounced that some listings are attracting more than 200 showings, said Zoocasa CEO Lauren Haw. She cites one northwest Toronto semi that drew 100 offers earlier this month. Listed for $849,000, it sold for $1.25 million. Veilleux, 28, feels like she and her partner don’t stand a chance. Not only do bidding wars drive prices beyond their comfort level, but they found they were automatically out of the running when they inserted conditions in their offers. “We really did not want to waive the finance clause because the news has been saying how exuberant the market’s been. We were worried that if we bid too high, the bank would come back and value it lower and we would be on the hook for I don’t know how much,” she said. “We’re just trying to be safe and we’re at the point in the market where being safe won’t get you anywhere.” It’s not just that listings are down. It’s that the pandemic has driven demand for detached and semi-detached houses in the suburbs — places with space for at-home work and learning, said Haw. Anybody who was holding out and thinking, “No, we’re going to go back to the office” is now realizing that work-from-home and hybrid home-office arrangements are here to stay, she said. “Even the people that were holding out, saying, ‘You know, I’m going to stay close to my office,’ they realize now that they do have the flexibility and you can move out.” Inventory is low across the region but some areas, particularly those once considered pockets of affordability, are harder hit than others, said Haw. “Durham is on fire and Peel is about the same. If we’re looking at Toronto and York (Region), they both have just over a month in terms of inventory for condos, about a month and a half for freehold (houses). That means you’re getting to Family Day for condos and you’re getting to March 1 for freeholds. In Durham and Peel, it’s a matter of weeks. We’re down to two or three weeks of inventory for both (condos and houses),” she said. The real estate board’s chief market analyst, Jason Mercer, says months of inventory is based on how many homes are left standing on the market at the end of the month and how long it would take for those homes to be sold based on the average number of sales in the previous 12 months. That means the figure is based not just on the number of listings, but the level of demand that shows up in the greater sales numbers. “(Months of inventory) is just a measure that you can compare over time to say, is it going up or down,” he said. Based on that measure, most GTA municipalities were down in December compared to the same month last year and many dropped significantly from the last pre-pandemic December in 2019. The city of Toronto had 1.1 months compared to two months last year and 1.7 in December 2019. Brampton had 0.6 months’ inventory last month, down from 0.9 in December 2020. Aurora went from 1.9 months in 2020 to 0.9 in the same period and Markham saw a similar drop. Ajax, Oshawa and Whitby were all under one month’s supply a year earlier but had slipped to half a month or less by December 2021. Mercer says the shortage is concerning across the board but it makes sense that some markets are seeing their inventory depleted and their prices escalating faster than others. “People are looking for a detached home but at a price point more affordable than the city of Toronto or York Region. It would make sense that some households may be looking at places like Durham or Dufferin County or Simcoe County. The result, of course, is that you do see tightening market conditions,” he said. Re/Max Realtron agent Dajan Kumarasamy said Ajax is currently feeling the biggest crunch in Durham Region. He sold a detached house there last week that had attracted 268 showings and 42 offers. Priced at $899,900, it sold for over $1 million. A few days earlier he sold another detached home in Pickering, priced at about $1.5 million. It drew seven offers and sold for about $1.8 million. The latter was listed at what Kumarasamy says was a reasonable price given that a similar home has sold in that area for about $1.3 million about three months earlier. “That shows you the trend of how quick these homes are appreciating in value when something is $1.3 million three months ago and now it’s at $1.8 million,” he said. When he was looking through last year’s sales, Kumarasamy said he came across a three-car garage-home about twice the size of the Ajax house he sold this month. “Just think about that,” he said. “They could have bought a huge, massive house last year for the exact same price.” Buyers are “super frustrated,” said Kumarasamy. “I have a lot of people who need to move because they either sold their house or they’re looking to sell their home and now they’re getting scared by the market,” he said. “At first they were, ‘Yes, I can get good money from my house.’ But the question is, where are you going to move next. That’s the big concern for a lot of people.” On Monday afternoon, there were 25 detached houses for sale in Pickering and 121 in Brampton, said Anne Alkok, area manager for Royal LePage Real Estate Services in Mississauga. The number of listings is always low in the winter, she said. But this feels different. “If you look over the last 10 years, I’ve never seen the number of active listings on the market be so low,” said Alkok. She said homes in Peel Region are averaging seven days on the market — “And that’s only because the agents are setting offer dates in order to ensure that more than one or two people actually get through the property.” “Days on market would quite possibly be even shorter if offers were conveyed as they come in, given the current demand,” said Alkok. In a Jan. 12 report, Scotiabank noted that Canada has the lowest housing stock of any G7 country with Ontario, Manitoba and Alberta having the fewest homes per capita in the country. It would take 650,000 homes to bring Ontario up to the same level as the rest of Canada, according to the report. “The whole world is going through a real estate crunch right now. Prices are rising everywhere. I don’t know that there’s anything we could do to stop inflation that doesn’t also stop the economy,” said Haw. RELATED STORIES