*Index and Market Summary based on previous 14 days rolling Average from Sold & Leased listings. PSF = Price per FT2
Stop, drop, and roll. The average price-per-square-foot (PSF) for Toronto is up 32.50% since one year ago, with downtown Toronto hitting almost $800/sqft on average. Following up on our post from two weeks ago that discussed how crazy the Toronto condo market is right now, we are excited to share some thoughts from Mark McLean, the new Broker of Record with Property.ca, our affiliated licensed brokerage, and an experienced mind on the matter of real estate.
Toronto prices fit a world-class market
A rental guarantee program is a form of investor insurance that guarantees rental income on an investor’s property regardless of tenancy. The program typically guarantees a property for a term of about 1-3 years at a fixed rental rate.
From the guarantee provider’s perspective, they are hoping to make money on the spread between the rent guarantee they offer, say $2000 per month, and the expectation of market value, say $2100, leaving them $100 profit.
The Toronto real estate market is out of control. In the last month, the average PSF for the City of Toronto has risen from $592 to $620* based on recent sales. We are seeing final sale prices coming in with a $125k difference between the winning bid and the next best offer, which is crazy. Toronto is a blind market and something needs to be done.
What we need most of all is more transparency. Canada’s current privacy laws are keeping buyers in the dark. When faced with a multiple-bidding situation, buyers naturally have to bid above asking. But when buyers have little information about competing offers, you wind up with massively inflated bids that are making it difficult for many people, especially first-time buyers, to purchase condos in Toronto.
In the wake of new consumer-direct services and technology, the real estate industry is seeing a rise in For-Sale-By-Owner (FSBO) transactions. FSBO (pronounced Fizz-Bow) is a common ‘Do-It-Yourself’ practice that removes the professional REALTOR® from the equation with the end goal of saving commission fees. But there is a hidden downside to FSBOs that we think you should know about.
How FSBOs Usually Work
Privately listed sales have just as much chance of finding interested buyers as do registered MLS listings. If a seller places a FSBO ad on Craigslist, Kijiji, or uses a specialty website like PropertyGuys.ca, they will 100% find a buyer. But they won’t find the best buyer. That’s because the buyers who shop for privately listed properties are hunting for a bargain.
The astounding rate at which Toronto condo prices have risen should have anyone who bought a condo four or five years ago jumping for joy today. Condos.ca PSF Index shows that since February last year an average 800 sqft condo has appreciated roughly $78,000, while condos purchased in 2012 are now worth about $130,000 more than what the owner paid.
For condo owners watching the Toronto market, the temptation to sell grows with each passing day. Of course, the hope for continued growth keeps some people on the fence, as does the worry over potential price corrections. But the truth is, today is a great day to sell your condo.
In the Toronto condo market playground, do you have to be a bully to win the bid?
With notably low inventory in Toronto’s freehold housing market and the average price up above $1 million in December 2016, more and more people are expected to buy condos in Toronto in 2017. The rise in demand is causing heated fights for available listings that are over almost before they start. As a buyer in Toronto’s condo market, you must be prepared to bully your way to the buyer’s seat or else risk never making it to the table at all.