Greater Toronto Area real estate prices are in bubble territory! I have previously written about ridiculously high real estate prices. I can’t help, however, but to write another very short post on this topic because it has hit much closer to home…as in across the street and four doors down from our home.
Readers in other regions of the world will probably read this post and remark how real estate is on sale in the Greater Toronto Area (GTA). It just goes to show the value of something can be extremely different for one person and not another.
About a month ago, a house slightly smaller than our house with no garage (it has a carport which is essentially an “open” garage in that it just has a roof but no walls) was listed for sale at CDN$598,500.
Now, for readers who are unfamiliar with the weather in Toronto, January is typically not the month in which homeowners sell their house. It is Winter season but for the last several years our Winter season has been relative temperate. We rarely get bitterly cold days and, in fact, in the next couple of days the weather forecast is calling for a high temperature of 11 degrees Celsius. Still, January is not the greatest time of the year to be buying/selling because it means some families have school-aged children and interrupting a child’s routine can create grief. This is why many people prefer to wait until such time as the school year is over to make a move.
Since January is generally not the best time of year to be selling a house and because our local weekly newspaper has pages of pictures of houses listed “for sale” where the pictures were clearly taken during the summer period, I figured the house down the street would likely be up for sale for at least 30 – 60 days.
Wrong! Less than 5 days after the house is put on the market for sale, I am walking the dog at 9:30PM and walk past the house in question. Much to my amazement, there are eight cars parked on either side of the street. In each car is a person on their cell phone engaged in a conversation which is clearly audible from the sidewalk.
I pause and out of the house comes one individual who proceeds to walk to her car. Next thing I know, someone exits their car and walks into the house.
I resume my walk to the local park and then double back. On my way home, the person who had previously entered the house, exits, walks to his car. Someone else then exits their car and enters the house.
I honestly don’t know how long this went on because I wasn’t about to stand outside to watch the whole process unfold but in essence, the vendor and their agent were being presented with multiple offers. The potential buyers’ agents were calling their clients to inform them of the status of the bidding war.
Lo and behold, the next morning there is a SOLD sign on the front lawn!
Fast forward to four days ago when I am speaking with a couple of neighbors. I recount what I had seen and remarked how I thought the house probably sold for $650,000.
Boy, did I get a shock! One of my neighbors said the house sold for $675,000 with no conditions. The listing agent had also approached him to inquire whether he would be willing to list his house with her. Now his house is far nicer than the one that just sold and is on a much larger lot. If he was interested in listing his house the agent suggested $725,000 would very likely elicit a bidding war.
Crazy, isn’t it?
If you think that is outrageous, have a look at this article in the February 10, 2017 edition of The Toronto Star in which a house listed for nearly CDN$1.19 million sold for CDN$2.3 million. The 1,500 square foot house had originally been purchased 50 years ago for CDN$27,000!
Now I don’t know about you but I’ve seen real estate bubbles before and bubbles burst. When will this one burst…I have no clue. I think, however, potential home buyers interested in residing in the GTA should reconsider whether now is the time to buy. There is nothing wrong with renting until such time as some sanity comes back to the real estate market.