I am back from holidays and would like to express a sincere thank you to my colleagues who managed my affairs while I was away. I am very glad and proud to be part of our Century 21 Fine Living brokerage.
This summer’s real estate market is taking the same historical path in that overall sales volumes have dropped while home prices have increased. If the historic pattern remains consistent we will see September sales pick up with gusto!
For buyer’s, this is a GREAT time to be able to “cherry pick” a purchase. Homes that would normally sell quickly are spending more days on market and thus may make sellers a bit more flexible in terms of price and conditions.
GTA Home Prices Up in July (View the Full Market Report)
August 3, 2012 — Greater Toronto REALTORS® reported 7,570 sales in July 2012, representing a decline of 1.5 per cent compared to 7,683 sales reported in July 2011. The decline was most pronounced in the condominium apartment segment in the City of Toronto. Total sales in the rest of the Greater Toronto Area (GTA) were up compared to the same period last year.
“Very strong annual sales growth in the first half of 2012 and an earlier peak in sales this spring compared to 2011 help explain more moderate sales this summer. New mortgage lending guidelines and the additional upfront cost of the City of Toronto land transfer tax also prompted some households to put their buying decision on hold,” said Toronto Real Estate Board (TREB) President Ann Hannah.
The average selling price in July 2012 was $476,947 – up by four per cent compared to July 2011. The MLS® Home Price Index (MLS® HPI)* composite index, which allows for an apples-to-apples comparison of benchmark home prices from one year to the next, was up by 7.1 per cent year-over-year.
“The GTA housing market became better-supplied in recent months. Buyers benefitted from more choice in the market place, resulting in less upward pressure on the average home price in July,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.
“The mix of homes sold in July 2012 versus July 2011 also appears to have changed, further influencing the average selling price. This is evidenced by the different annual rates of growth between the overall average price and the MLS HPI®,” continued Mercer.
Featured Article in The Globe and Mail
A close friend and client brought this article to my attention as the sale took place close to home. The sale actually took place last May during the spring market. What I find more interesting than the sale itself are the posted comments by readers. Too many are reacting to headlines and miss important details. I felt compelled to respond with my own comment.
Sydnia Yu -Special to The Globe and Mail – Published Thursday, Aug. 02 2012
25 YORKLEIGH AVE., TORONTO
ASKING PRICE $869,000 / SELLING PRICE $1,350,000
TAXES $6,692 (2011) / DAYS ON THE MARKET Nine
LISTING AGENTS Susan Tallarico and Rita Auciello, Sutton Group-Old Mill Realty Inc.
The Action: This original brick bungalow is down the street from a few properties on smaller lots that sold for more than $1-million in bidding wars.
So this was priced in the mid-$800,000s, which quickly piqued the interest of 40 potential buyers who requested private showings and many agents-only and public open houses attendants. On the day the sellers stated they would review offers, there were 10 registered.
What They Got: The large lot easily accommodates a double driveway, an attached garage and this over 60-year-old house composed of three bedrooms, three full bathrooms, a sunken living room and a stone fireplace, a formal dining room and a kitchen with a walkout to the deck and south-facing backyard. There is an extra bedroom in the basement, along with a library and fireside recreation room with walkouts to the garden.
The Agent’s Take: “It was a beautiful property because it was 170 by about 200 feet and it was beautifully treed,” says agent Rita Auciello, who cites 70-foot lots as the norm. “And it was on a very nice street that’s quite prestigious.”
Builders were interested in rebuilding on site, while others planned to reside there or renovate. “It was a very nice home with a nice design,” says Ms. Auciello. “It reminded me of the Mad Men era and a lot of people made that comment.”
My posted comment to article in response to the other posted comments (Click to read other posted comments)
Disclosure: I am a neighbourhood relator in this pocket. I am not associated with the listing agents in anyway (I work with a different company) other than professional colleagues. I did not represent the buyers or any other interest in this property.
The listing agent priced it perfectly! – Prior to the sale, the market valuation would have pegged the property at around 850k-900k for land value. Having walked the property and home most buyers in the $1million price point would of considered this a knock down and new build. For an end user a 900k purchase price plus about 800k-$1million (depending on size and finishes) build would put the buyers in line with other new homes in the neighbourhood. Actually they would have a larger home on larger lot.
There is a neighbourhood by-law in place that requires min 70 Foot lot frontage so the property can ONLY be sub-divided into 2 building lots. Even in this case a builder has paid about 675k per lot. Add the 800k to build for each home (builders can build for much less) and you have 2 brand new 4000-5000sqft homes on 85′ X 200′ Ft lots for less than $1.5 million. Each home should command $2million plus. The builder stands to make a $1million for their risks and efforts.
So in summary:
- An end user will have a much nicer home in a fantastic pocket on a very large city lot for less than buying a resale home on the same street or
- A builder will make $1million dollars once selling 2 new large homes (at $2million plus) on what would be still very large lots. Making the neighbourhood even more exclusive.
That’s the process. It worked perfectly.
Also consider that any buyer who is spending $1.3 million on a tear down has done some homework and have some plan. This is not a first time buyer/developer who bought. Buyers are more savvy than ever and there are way too many comments that suggest that buyers are stupid and don’t know what they are doing. In this case it was the exact opposite.
Thank you and have a great shortened work week, Anthony