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Eug · Jul 24, 2007, 07:18 PM

CAD$1.9 million > US$1.8 million

A house on the market for $1.295-million has sold for $605,000 over asking, sparking debate on the role of the bidding war in Toronto.

Sitting on a 50-foot wide lot on Munro Park Avenue, a leafy street that peeks out on the lake and is arguably the most desirable in the Beach, the four-bedroom home sold for 47% over asking, almost unheard of in even this city's booming real estate market.

"It was an American Idol feel out there. There were 10 agents on the stairs," says Royal LePage's Mark Butkovich, who along with Al Sinclair represented the buyers, a young childless couple who wish to remain anonymous.

"I knew it was going to be highly desirable. I just didn't quite anticipate the end result.
"I figured we might get $1.5 on it, but certainly I didn't see $1.9 coming," said Re/Max's Teresa Elliott, who represented the seller, a middle-aged woman whose family lived in the home for 45 years.

She inherited the property from her father, a real estate man.

Built around the 1930s, the 2,000-square-foot house is in good condition but in need of renovations.

The location is expensive, since the beach is right at the end of the block, but still...

ghporter · Jul 24, 2007, 07:24 PM

The ugly part is those gawdawful shingles. Otherwise it's a great bungalow style house. Historic, "cool" design, and a great location apparently set the stage for a bidding war.

Sherman Homan · Jul 24, 2007, 07:39 PM

OK, 'nn Canadians, what is going on with the Toronto housing market?! Seriously, is this a trend? A 50 foot wide lot with a 2000 sf house "in need of renovations" for a million nine?!

Eug · Jul 24, 2007, 07:53 PM

Well, that house isn't worth 1.9 mil, plain and simple, even though the location is excellent.

The news wasn't that a house sold for that much (because there are lots of houses elsewhere in Toronto that are truly worth that much). The news is that it went for 47% over the asking price, because of the stupid bidding war.

peeb · Jul 24, 2007, 08:01 PM

It's not great looking, but I don't think it's horrible. I also don't think it's worth that money, but hey.

Eug · 08:13 PM

Yeah, it's not totally fugly in truth. It's just not beautiful IMO. I guess they really, really, really liked the location. Maybe it looks better inside I dunno.

What I'm wondering is how they will finance the thing. Either they have a TON of savings for the down payment, or else this deal is going to get killed by the lender. No appraiser is going to say it's even close to being worth that much.

EDIT:

P.S. Maybe it will be good for them if the lender kills the deal. I wonder if they woke up the next morning and said, "WHAT THE FSCK DID WE JUST DO?!?!!"

andi*pandi · Jul 24, 2007, 08:11 PM

in all likelihood they will knock that house down and build something gaudier.

peeb · Jul 24, 2007, 08:13 PM

Originally Posted by Eug

No appraiser is going to say it's even close to being worth that much.

Well, I don't know, ultimately a house is only worth what someone is willing to pay for it - if that's what comparable properties are going for, it's possible the appraiser would approve it.

Eug · Jul 24, 2007, 08:21 PM

That's just it. Comparable houses in that area are not going for anywhere near that much. Now, most aren't in that exact location (which is less than a block from the beach), but I think they'd be hard pressed to find an appraiser to agree that the location is worth $700000 extra, compared to something a block or two further away.

peeb · Jul 24, 2007, 08:38 PM

Then I agree with the original assessment, I'm just saying that value is ultimately a subjective thing.

Eug · Jul 24, 2007, 08:42 PM

I think the bidding process should be more transparent (like it is in Australia).

The War of the Houses

After four years in London, one of the most expensive real estate markets in the world, a closet-sized studio selling for half a million dollars begins to look normal.

So in February, when I returned to Toronto, the seen-it-all smugness of the Old World informed my decision to buy a home. Compared with London, buying in Toronto would surely be a walk in the park.

Five months, 101 home visits and four bidding wars later, I joined the home-hunters' ranks of the barely walking wounded.

---

In Sydney and Melbourne, an auctioneer stands in front of a home for sale and takes competing bids until the slam of a gavel declares it sold. Imagine that happening in Toronto.

"The bidding war goes on right there on the spot," said Graham Joyce, president of the Australia Real Estate Institute, which represents 85 per cent of the country's real estate agents.

"It's certainly very public and you know how much you have to bid to get the property," he said, adding that the vendor sets a reserve price.

Buckaroo · Jul 24, 2007, 08:52 PM

Gads people. It's in Canada, and it's NEAR a lake. Damn, I can get 1000 acres and dig a big hole for a lake and have money left over.

New owners might bulldoze the house and build new.

Eug · Jul 24, 2007, 08:54 PM

Originally Posted by Buckaroo

Gads people. It's in Canada, and it's NEAR a lake. Damn, I can get 1000 acres and dig a big hole for a lake and have money left over.

Yeah, but you'd be in the middle of nowhere.

You can do that here too... also in the middle of nowhere.

alligator · Jul 24, 2007, 09:05 PM

Maybe it sits on a hidden oil well.

OldManMac · Jul 24, 2007, 09:09 PM

Chump change. Priced to sell: $165,000,000 - Los Angeles Times

peeb · Jul 24, 2007, 09:50 PM

Originally Posted by Eug

Yeah, but you'd be in the middle of nowhere.

You can do that here too... also in the middle of nowhere.

Yep - land in the Flyover States is pretty cheap, for a reason.

Eug · 10:43 PM

Originally Posted by OldManMac

Chump change. Priced to sell: $165,000,000 - Los Angeles Times

Yeah, Toronto isn't quite as expensive as Beverly Hills.

The most expensive house available for sale at the moment here is $12 million.
(I believe it was first listed at $16 million, but nobody was interested.)

This one in Toronto was $22 million though.

P.S. I once interviewed for a job in Beverly Hills. I was struck by just how grungy the outskirts of Beverly Hills is, on the Hollywood side. I had friends who lived in some of the "cheaper" areas of Hollywood, and they would not go out at night because of the shootings and various other stuff.

natnabour · Jul 24, 2007, 11:56 PM

its not as bad as the other $1.2mil houses I've seen.

My parents have been trying to buy a 2nd house for almost a year now and after going to multiple open houses with them, I deemed it hopeless. You can't find anything decent below $1.1mil, and what you DO find, needs soooo much work on it that you'd end up spending at least $1.5-$1.8 to get it in good condition.

I hear the bidding wars in San Francisco are just as bad as Toronto now.

hyteckit · Jul 25, 2007, 03:24 AM

Originally Posted by OldManMac

Chump change. Priced to sell: $165,000,000 - Los Angeles Times

If anyone is interested in buying the home, please contact me. I know the estate agency that listed the house. I work in the same office building out here in Malibu. I might get some commissions off the $165 mil house.

Mastrap · Jul 25, 2007, 05:42 AM

The Beaches are overrated anyway, IMO. Too many damn tourists in summer and on the weekend, hard to get to in winter.

L'enfanTerrible · Jul 25, 2007, 09:09 AM

Originally Posted by Sherman Homan

OK, 'nn Canadians, what is going on with the Toronto housing market?! Seriously, is this a trend? A 50 foot wide lot with a 2000 sf house "in need of renovations" for a million nine?!

This is unfortunately a trend in a lot of major cities right now. It's the result of a growing economy. Seriously, check MLS listings and browse to Calgary or Edmonton. It's ridiculous what some people are selling their homes for.

Eug · Jul 25, 2007, 09:49 AM

Originally Posted by L'enfanTerrible

This is unfortunately a trend in a lot of major cities right now. It's the result of a growing economy. Seriously, check MLS listings and browse to Calgary or Edmonton. It's ridiculous what some people are selling their homes for.

It's more in Vancouver and Toronto.

Calgary has some very high prices, but at least you get nice homes in nice areas there. While homes on average might be similar here in Toronto, that's only because the houses are much less nice for the same amount of money. A friend of mine is experiencing this, since he's moving from Calgary to Toronto. To get a reasonable house in a reasonable area here in Toronto, he's gonna have to increase his budget 100000-200000 over his Calgary home, and he'll get much less of a house for that.

He's not stupid enough to pay 47% over list price though. That's just odd.

olePigeon · Jul 25, 2007, 10:34 AM

Do to the poor state of the US dollar, I can't make a Canadian currency joke.

ghporter · Jul 25, 2007, 08:47 PM

This reminds me of when Silicone Valley colonized Austin, Texas. All these Central California eggheads showed up and said "Hey, that house is in a nice location. How much?" And Austinites gave them ludicrous numbers. "A million and a half." When the Californians said "sold" people started wondering about their sanity. Then the Californians started knocking down historic (though not registered as such) houses to put up pieces of crap. Imagine an Arts and Crafts bungalow in great condition being knocked down for something that looks like a "Courtyard by Mariot", only sized to fit the lot. That sort of thing happened.

And it fornicated the housing market in Austin completely. (I thought the housing bust of 1987 did that, but that was just a burp in comparison.) So Eug, maybe this is a sign of Something Bad® starting up. That's sad to say, but it's a possibility.

peeb · Jul 25, 2007, 09:05 PM

It's happening in a lot of other places too - there's a lot more equity left to cash out of the bay.

Eug · Jul 25, 2007, 09:13 PM

There have been big fugly modern houses put up all over Toronto. This is not new. However, modern and different doesn't have to mean fugly. It can be done tastefully. Personally, I would like to see that done to many older houses in the city. Some older houses are beautiful. Some deserve to be demolished. And when newer designs show up that are totally unique, sometimes it's a good kick in the pants to the neighbourhood. For example, I kinda like this one, even though it looks nothing like anything else in the neighbourhood:

Same goes for this one:

P.S. I checked out the house above in person. Nice house but it had some issues like super loud air conditioning, overly tall counters in the kitchen, and other oddities. However, I talked with a neighbour and despite the fact this house was totally unlike anything else there, she totally loved it.

Mastrap · Jul 25, 2007, 09:19 PM

We bought a wreck of a Victorian house in Little Portugal and rather than trying to restore it we're modernizing it. Next step new windows, then simple pine siding straight from the mill.

Eug · 09:33 PM

Yeah, I really like stuff that looks old and quaint (but in good condition) on the outside, but which is totally modern on the inside.

One neighbourhood in Vancouver where an acquaintance bought refuses to have any houses except Victorian style houses. However, the house was in such bad shape it would have made little sense to restore it, and it would have cost a fortune to renovate properly, so it made more sense (in their case) to simply demolish it. So they did... with the blessing of the neighbourhood committee... after they submitted an architect's design of a brand new Victorian home to be built in its place.

So, they had a (tasteful) Victorian home on the outside, but brand new with modern interiors, and of course up-to-date building materials, insulation, plumbing, wiring, etc.

P.S. My house is an old cape cod style house with cedar siding... but it was built relatively recently from the ground up (even though it looks like it could have been built 70 years ago).

ghporter · Jul 26, 2007, 08:26 AM

Old style externals don't at all preclude modern interiors. I too like modern interiors (especially since they tend to go with modern wiring, lack of air leaks, good insulation and so on).

Eug · Jul 26, 2007, 10:27 AM

Originally Posted by olePigeon

Do to the poor state of the US dollar, I can't make a Canadian currency joke.

P.S. Here's a summary of The Canada-U.S. housing divide:

U.S. existing home sales sank to a near five-year low Wednesday while prices continue to slide. In Canada, however, home sales continue to defy all expectations, breaking records for the last three months.

“Such a divergence between the Canadian and U.S. housing markets is unprecedented,” said Marc Pinsonneault, an economist at National Bank Financial, in a note to clients.

More bad news landed with a thud Thursday, with a report showing U.S. new-home sales plummeted 6.6 per cent in June — twice as much as expected.

A key reason for the difference stems from once-booming sub-prime mortgage market in the U.S. Over the past several years, low-interest mortgages were offered to many people with poor credit histories or low incomes. When borrowing costs sharply rose, however, new homeowners got squeezed.

The result has hammered U.S. economic data, corporate earnings and, this week, the stock market.

In Canada, meantime, the economy is expanding, jobs are being created and interest rates remain at a historical low.

In Canada, the number of existing homes sold in Canada has broken records in each of the last three months.

“Most importantly, this was true not only in the booming provinces of Alberta and British Columbia, but in the rest of the country as well, notably in the largest city Toronto,” Mr. Pinsonneault said.

---

There's an interesting graph in that link, but I can't seem to link the graph itself directly.