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Sellers test the Toronto real estate market – The Globe and Mail

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Broker Andre Kutyan plans to list the house at 394 Old Orchard Grove with an aggressively low asking price of $1.295-million and hold back offers.

Harvey Kalles Real Estate Ltd.

The Toronto-area real estate market is moving into the fall in fits and starts.

Sales dropped 18 per cent in September from the same month last year, while new listings contracted by a sharper 34 per cent in the same period, according to the Toronto Regional Real Estate Board.

Meanwhile, buyers pushed the average price in the Greater Toronto Area up 18.3 per cent in September from the same month last year to stand at $1,136,280.

The combination of scant supply and peak prices is tempting some investors to test the market.

But sellers who think that every property sells quickly for an eye-watering price often confront a different reality.

Many agents tweak their strategy for every listing they have.

Andre Kutyan, a broker with Harvey Kalles Real Estate Ltd., says some investors who purchased a property believing they would hold it for the long term are rethinking that plan now.

Areas such as Willowdale, Bedford Park and the streets around Bayview and York Mills have attracted lots of investors – both domestic and foreign – in years past, he says.

Now he’s seeing houses appearing for sale after they were purchased during the frothy days of 2016 and 2017. He first noticed the trend, he says, when he began recognizing the listing photos from properties he has shown in the past.

Often he can deduce the seller is an investor if the property has been up for lease in recent years or it’s currently vacant, he says.

Sometimes the listing photos provide a clue that the property has been listed in the recent past: Mr. Kutyan points to one northern Toronto house that sold in 2016 for $2.251-million. In the spring of 2017, it was put up for lease.

Now it’s back on the market with an asking price around the $3.5-million mark.

“There’s snow in the photograph,” Mr. Kutyan says incredulously.

Mr. Kutyan adds that some of his own clients have decided to sell after the dramatic run-up in the market in 2020 and 2021.

One pair of investors is planning to see how much buyers are willing to bring for the one-bedroom condo unit they bought in 2017 in the city’s upscale Yorkville neighbourhood.

A couple decided to sell their condo at 40 Scollard after a few units in the building recently received big money.

Harvey Kalles Real Estate Ltd.

The couple purchased the 645-square-foot unit at 40 Scollard St. with plans to rent it out in the short term and possibly pass it on to a family member in the long term.

But the carrying costs have been higher than the amount they are earning in rent. During the pandemic, rental rates downtown dropped sharply and tenants asked for reductions.

Mr. Kutyan says the couple has decided to sell after a couple of units in the building received big money recently.

Mr. Kutyan plans to list unit 1504 with the attention-getting asking price of $475,000, then hold back offers until a scheduled date.

“I’m not about to fix the price – let’s see what the market’s going to do.”

Another set of investors is planning to list a bungalow they bought in April, 2017 for $1.318-million.

Mr. Kutyan plans to list the house at 394 Old Orchard Grove with an aggressively low asking price of $1.295-million and hold back offers.

He is already anticipating calls from agents asking why the asking price is less than the couple paid for the property in 2017 and how much he really hopes to fetch for it.

“I’ll say, ‘You tell me what’s happened to the market in the past four years.’”

Elli Davis, a real estate agent with Sotheby’s International Realty Canada, says setting a low asking price with an offer date can be an effective way to draw multiple offers. But she cautions that it can also be a risky strategy because the agent is in a bind if the house doesn’t sell on that date.

“If it backfires, then you’re in trouble. Your seller still thinks that it’s under-priced and should go over.”

Some agents will then raise the price to the level they were hoping for to begin with.

“I would not be in favour of that because the first two weeks usually tells the story,” Ms. Davis says.

She has also noticed lots of price cuts recently on listings that have been sitting because the asking price was too high to start. Now that more inventory is trickling out, sellers are motivated to reduce their asking price.

She’s not in favour of setting a price that is so high that the property languishes or so low that it sparks a frenzy.

Ms. Davis plans to set asking prices in line with market value as she launches two mid-town properties – offers welcome any time in the coming days.

Buyers who come to the table are likely to be serious if the asking price is realistic, she says, and the property is more likely to sell quickly.

The penthouse suite in a boutique building at 5 Rosehill Ave. has an attractive layout but it needs some updating, she says, so she is listing it with an asking price of $1.395-million.

A three-bedroom semi-detached house at 31 Oriole Rd. in Deer Park will have an asking price of $2.895-million.

The owners of both properties have lived in them for many years, Ms. Davis says, and they are serious about selling so that they can move on to a new stage of their lives.

The sellers who are intent on getting a very lofty price are often just being opportunistic and they’re willing to let a house sit, in her opinion.

A three-bedroom semi-detached house at 31 Oriole Rd. in Deer Park will have an asking price of $2.895-million.

Sotheby’s International Realty Canada

Listings like that can be costly to an agent in terms of time and expense, she adds.

“I’m not interested in people who are just testing the market.”

Ms. Davis says one investor who purchased a pre-construction condo in 2017 recently contacted her to say he is thinking about selling the two-bedroom unit, which will be completed this year.

The owner paid $600,000 for the unit, which measures less than 700 square feet, in the Yonge Street and Eglinton Avenue area.

The problem he has now, she says, is that many projects that were launched around that time are coming onstream this year. Most of the people who bought in his building are investors, she says, adding that she advised him to hold off for a while.

“I looked at the sales in the area and I don’t think he’ll make anything. I think he’ll break even,” she says, adding that he will have to pay brokerage fees and other costs. “It never changes – it’s always supply and demand.”

Robin Pope, broker with Pope Real Estate Ltd., has noticed a recent uptick in an unusual tactic: agents set a low asking price for a property but they do not set an offer date.

Typically agents who want to spark a bidding war set an offer date in order to create a sense of urgency at the deadline.

Mr. Pope says that these agents seem to hope that buyers will end up competing anyway. But what happens in reality is they get lots of calls and no offers.

“By virtue of the fact the price is so attractive, they get lots of activity,” he says. “It’s a really stupid strategy because it doesn’t always work.”

He points to a condo near the waterfront which was listed with an attractive asking price of $688,000, but three weeks later it is still on the market. The listing agent said the seller is looking for more than $800,000.

Mr. Pope again believes the listing agent is only confounding buyers by keeping the unit sitting for three weeks at a price far below what the seller is hoping to fetch.

“I’ve experienced it more often than I should,” he says of the strategy. “I shouldn’t ever experience it at all.”

Mr. Pope says one buyer feels she benefitted from an agent’s misstep. When a two-bedroom condo unit with an asking price of $999,000 and no offer date arrived on the market in the River City area, she was willing to offer slightly more than the asking price.

When Mr. Pope informed the listing agent, he replied “no way – we want more”.

Mr. Pope’s client sweetened her bid to $1.045-million. The unit should have been listed north of $1.1-million, says Mr. Pope, who believes the agent’s misfire gave the client an edge because the seller didn’t get a bidding war.

“It was a lovely apartment and she got it for an excellent price,” he says.

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Here are some facts about British Columbia’s housing market

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Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.

Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.

Average residential home price in B.C.: $938,500

Average price in greater Vancouver (2024 year to date): $1,304,438

Average price in greater Victoria (2024 year to date): $979,103

Average price in the Okanagan (2024 year to date): $748,015

Average two-bedroom purpose-built rental in Vancouver: $2,181

Average two-bedroom purpose-built rental in Victoria: $1,839

Average two-bedroom purpose-built rental in Canada: $1,359

Rental vacancy rate in Vancouver: 0.9 per cent

How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent

This report by The Canadian Press was first published Oct. 17, 2024.

The Canadian Press. All rights reserved.

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B.C. voters face atmospheric river with heavy rain, high winds on election day

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VANCOUVER – Voters along the south coast of British Columbia who have not cast their ballots yet will have to contend with heavy rain and high winds from an incoming atmospheric river weather system on election day.

Environment Canada says the weather system will bring prolonged heavy rain to Metro Vancouver, the Sunshine Coast, Fraser Valley, Howe Sound, Whistler and Vancouver Island starting Friday.

The agency says strong winds with gusts up to 80 kilometres an hour will also develop on Saturday — the day thousands are expected to go to the polls across B.C. — in parts of Vancouver Island and Metro Vancouver.

Wednesday was the last day for advance voting, which started on Oct. 10.

More than 180,000 voters cast their votes Wednesday — the most ever on an advance voting day in B.C., beating the record set just days earlier on Oct. 10 of more than 170,000 votes.

Environment Canada says voters in the area of the atmospheric river can expect around 70 millimetres of precipitation generally and up to 100 millimetres along the coastal mountains, while parts of Vancouver Island could see as much as 200 millimetres of rainfall for the weekend.

An atmospheric river system in November 2021 created severe flooding and landslides that at one point severed most rail links between Vancouver’s port and the rest of Canada while inundating communities in the Fraser Valley and B.C. Interior.

This report by The Canadian Press was first published Oct. 17, 2024.

The Canadian Press. All rights reserved.

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No shortage when it comes to B.C. housing policies, as Eby, Rustad offer clear choice

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British Columbia voters face no shortage of policies when it comes to tackling the province’s housing woes in the run-up to Saturday’s election, with a clear choice for the next government’s approach.

David Eby’s New Democrats say the housing market on its own will not deliver the homes people need, while B.C. Conservative Leader John Rustad saysgovernment is part of the problem and B.C. needs to “unleash” the potential of the private sector.

But Andy Yan, director of the City Program at Simon Fraser University, said the “punchline” was that neither would have a hand in regulating interest rates, the “giant X-factor” in housing affordability.

“The one policy that controls it all just happens to be a policy that the province, whoever wins, has absolutely no control over,” said Yan, who made a name for himself scrutinizing B.C.’s chronic affordability problems.

Some metrics have shown those problems easing, with Eby pointing to what he said was a seven per cent drop in rent prices in Vancouver.

But Statistics Canada says 2021 census data shows that 25.5 per cent of B.C. households were paying at least 30 per cent of their income on shelter costs, the worst for any province or territory.

Yan said government had “access to a few levers” aimed at boosting housing affordability, and Eby has been pulling several.

Yet a host of other factors are at play, rates in particular, Yan said.

“This is what makes housing so frustrating, right? It takes time. It takes decades through which solutions and policies play out,” Yan said.

Rustad, meanwhile, is running on a “deregulation” platform.

He has pledged to scrap key NDP housing initiatives, including the speculation and vacancy tax, restrictions on short-term rentals,and legislation aimed at boosting small-scale density in single-family neighbourhoods.

Green Leader Sonia Furstenau, meanwhile, says “commodification” of housing by large investors is a major factor driving up costs, and her party would prioritize people most vulnerable in the housing market.

Yan said it was too soon to fully assess the impact of the NDP government’s housing measures, but there was a risk housing challenges could get worse if certain safeguards were removed, such as policies that preserve existing rental homes.

If interest rates were to drop, spurring a surge of redevelopment, Yan said the new homes with higher rents could wipe the older, cheaper units off the map.

“There is this element of change and redevelopment that needs to occur as a city grows, yet the loss of that stock is part of really, the ongoing challenges,” Yan said.

Given the external forces buffeting the housing market, Yan said the question before voters this month was more about “narrative” than numbers.

“Who do you believe will deliver a better tomorrow?”

Yan said the market has limits, and governments play an important role in providing safeguards for those most vulnerable.

The market “won’t by itself deal with their housing needs,” Yan said, especially given what he described as B.C.’s “30-year deficit of non-market housing.”

IS HOUSING THE ‘GOVERNMENT’S JOB’?

Craig Jones, associate director of the Housing Research Collaborative at the University of British Columbia, echoed Yan, saying people are in “housing distress” and in urgent need of help in the form of social or non-market housing.

“The amount of housing that it’s going to take through straight-up supply to arrive at affordability, it’s more than the system can actually produce,” he said.

Among the three leaders, Yan said it was Furstenau who had focused on the role of the “financialization” of housing, or large investors using housing for profit.

“It really squeezes renters,” he said of the trend. “It captures those units that would ordinarily become affordable and moves (them) into an investment product.”

The Greens’ platform includes a pledge to advocate for federal legislation banning the sale of residential units toreal estate investment trusts, known as REITs.

The party has also proposed a two per cent tax on homes valued at $3 million or higher, while committing $1.5 billion to build 26,000 non-market units each year.

Eby’s NDP government has enacted a suite of policies aimed at speeding up the development and availability of middle-income housing and affordable rentals.

They include the Rental Protection Fund, which Jones described as a “cutting-edge” policy. The $500-million fund enables non-profit organizations to purchase and manage existing rental buildings with the goal of preserving their affordability.

Another flagship NDP housing initiative, dubbed BC Builds, uses $2 billion in government financingto offer low-interest loans for the development of rental buildings on low-cost, underutilized land. Under the program, operators must offer at least 20 per cent of their units at 20 per cent below the market value.

Ravi Kahlon, the NDP candidate for Delta North who serves as Eby’s housing minister,said BC Builds was designed to navigate “huge headwinds” in housing development, including high interest rates, global inflation and the cost of land.

Boosting supply is one piece of the larger housing puzzle, Kahlon said in an interview before the start of the election campaign.

“We also need governments to invest and … come up with innovative programs to be able to get more affordability than the market can deliver,” he said.

The NDP is also pledging to help more middle-class, first-time buyers into the housing market with a plan to finance 40 per cent of the price on certain projects, with the money repayable as a loan and carrying an interest rate of 1.5 per cent. The government’s contribution would have to be repaid upon resale, plus 40 per cent of any increase in value.

The Canadian Press reached out several times requesting a housing-focused interview with Rustad or another Conservative representative, but received no followup.

At a press conference officially launching the Conservatives’ campaign, Rustad said Eby “seems to think that (housing) is government’s job.”

A key element of the Conservatives’ housing plans is a provincial tax exemption dubbed the “Rustad Rebate.” It would start in 2026 with residents able to deduct up to $1,500 per month for rent and mortgage costs, increasing to $3,000 in 2029.

Rustad also wants Ottawa to reintroduce a 1970s federal program that offered tax incentives to spur multi-unit residential building construction.

“It’s critical to bring that back and get the rental stock that we need built,” Rustad said of the so-called MURB program during the recent televised leaders’ debate.

Rustad also wants to axe B.C.’s speculation and vacancy tax, which Eby says has added 20,000 units to the long-term rental market, and repeal rules restricting short-term rentals on platforms such as Airbnb and Vrbo to an operator’s principal residence or one secondary suite.

“(First) of all it was foreigners, and then it was speculators, and then it was vacant properties, and then it was Airbnbs, instead of pointing at the real problem, which is government, and government is getting in the way,” Rustad said during the televised leaders’ debate.

Rustad has also promised to speed up approvals for rezoning and development applications, and to step in if a city fails to meet the six-month target.

Eby’s approach to clearing zoning and regulatory hurdles includes legislation passed last fall that requires municipalities with more than 5,000 residents to allow small-scale, multi-unit housing on lots previously zoned for single family homes.

The New Democrats have also recently announced a series of free, standardized building designs and a plan to fast-track prefabricated homes in the province.

A statement from B.C.’s Housing Ministry said more than 90 per cent of 188 local governments had adopted the New Democrats’ small-scale, multi-unit housing legislation as of last month, while 21 had received extensions allowing more time.

Rustad has pledged to repeal that law too, describing Eby’s approach as “authoritarian.”

The Greens are meanwhile pledging to spend $650 million in annual infrastructure funding for communities, increase subsidies for elderly renters, and bring in vacancy control measures to prevent landlords from drastically raising rents for new tenants.

Yan likened the Oct. 19 election to a “referendum about the course that David Eby has set” for housing, with Rustad “offering a completely different direction.”

Regardless of which party and leader emerges victorious, Yan said B.C.’s next government will be working against the clock, as well as cost pressures.

Yan said failing to deliver affordable homes for everyone, particularly people living on B.C. streets and young, working families, came at a cost to the whole province.

“It diminishes us as a society, but then also as an economy.”

This report by The Canadian Press was first published Oct. 17, 2024.

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