Toronto real estate: First foray into bidding wars leaves homebuyer bruised

Vanessa Gallant just stepped onto the bidding war battlefield a month ago — in the relatively quiet community of Vaughan — and already she’s feeling bloodied.

So bloodied she recently filed a formal complaint with the regulatory body for Ontario’s 58,000 realtors, the Real Estate Council of Ontario (RECO).

She’s wondering why RECO has launched a new ad campaign telling buyers to beware when realtor practices are, she believes, driving up emotions and prices in an already frantic sellers’ market.

“The process is flawed,” says Gallant, 35, a first-time homebuyer. “It’s taking away any power that the buyer has. I think it is unfair and unethical.”

Gallant thinks RECO should be reviewing what have now become commonplace practises in the GTA: brokers “underlisting” properties for far less than their market value and then holding off accepting bids until there is a frenzy of demand that many believe has helped fuel the bidding war frenzy and driven up prices.

Bidding wars are no longer just a City of Toronto phenomenon, according to a recent ReMax study. They are impacting househunters in suburban areas, as well as some cities in resource-rich provinces such as Manitoba, Alberta and Nova Scotia.

“I’ve gotten to the point where if they are holding back offers, I won’t even bother to go see the house,” says Gallant, who’s been looking in earnest for a month now in the Vaughan and Newmarket areas with her fiancé.

Their first bidding war came as a shock: Their agent prepared them that they would need to bid over asking if they hoped to get a simple, three-bedroom semi in Vaughan listed for $419,000.

They saw it on a Saturday, but bids weren’t being accepted until Monday. By the time they registered their $430,000 bid, there were 13 offers.

That night the owners signed them all back.

“I just felt it was putting people in a bidding war twice when the offers were already over asking price.”

The couple abandoned their bid. The home sold for $457,000.

“I really feel that this way of soliciting multiple offers gives only the seller power,” says Gallant in her complaint to RECO.

Concerns and confusion around multiple offers have spiked across the GTA in the last six months in particular, now accounting for 30 per cent of the 15,000 inquiries the council has had in the last year, says Bruce Matthews, deputy registrar in charge of complaints for RECO.

“Some agents may be taking advantage of the current supply and demand imbalance (continued high demand and unusually low supply) to leverage what’s in the best interests of their clients,” says Matthews.

“But we need to take a step back here. We’re dealing with a free and open marketplace. Both the buyer’s and the seller’s agents have a responsibility to promote and protect the best interests of their clients.”

He stresses RECO has no regulatory power over buyers and sellers and, ultimately, can’t stop sellers if they want to reject offers or seek higher bids.

Veteran Beach realtor Al Sinclair calls the current bidding system “democratic.” Holding back offers doesn’t always ensure a bidding war, he says, adding he used that tactic with two east-end properties recently, only to get one offer on each at asking price.

Realtors are finding this “frenzied” market almost as frustrating as buyers, says Toronto Real Estate Board president Richard Silver.

The market is so fast-paced right now, with many buyers willing to pay whatever it takes thanks to low interest rates, that determining fair market value is actually becoming more difficult, says Silver.

“There’s no way to regulate this market. It’s about supply and demand. It regulates itself.

“Right now there are more buyers than sellers and when it changes — and I think it will as we get into May and June — the market should return to more balanced territory.”

Real estate values on the rise

Ottawa realtor Paul Rushforth sometimes senses a hesitation in homeowners who'd like to sell their homes. They're worried that potential buyers are afraid that real-estate prices are about to fall, just as they have fallen, drastically, over the past few years in the United States.

``I tell them there's really very little to worry about,'' Rushforth says. ``Especially in Ottawa, we don't really have a real-estate bubble. In nearly six decades, we've only seen prices go down four times - and I, personally, expect prices to continue increasing.''

Vancouver and Toronto may have real-estate bubbles, especially in the condo market, but that's not true of Ottawa, Rushforth says. ``I actually expect that, five years from now, people will be wishing they had bought in 2012.''

You can sell your house for top dollar now, he says. But to squeeze full value from your home, you need to put a little time and money into sprucing your property up.

``A modest amount of money and a little perspiration can give your house a huge boost in selling price, something my clients have shown time and time again.''

Here are Rushforth's top tips on giving a home more appeal:

Paint: Nothing freshens a home more than a recent coat of warm and inviting paint, which Rushforth calls ``the greatest bang for your buck of all the things you can do for your house.''

Lighting: Prices are lower than they used to be, and you can easily pick up an inexpensive chandelier or dome lights at a big-box store like Home Depot.

Kitchens: A new funky backsplash, a sleek countertop and new hardware on cabinet doors will make many a potential buyer smile. Ceramic floor tiles and new coat of paint give an extra boost.

Bathrooms: With fresh, warm paint on the walls, new ceramic tiles and new lighting, a dated bathroom can be brought inexpensively back to life.

Floors: You should refinish any scratched hardwood floor, replace soiled carpets, and replace linoleum with ceramic tiles. Stay away from laminate floors.

And then there are less tangible things that greatly affect how a potential buyer responds to your home. There should be no clutter anywhere. Every surface should be as clean as possible. It even helps to make sure the house smells nice - maybe by baking chocolate-chip cookies or putting out fresh flowers.

Many home improvements don't have to cost anything, Rushforth says. He's had clients who have bartered for electrical or plumbing services. One web designer created a website for a siding company that happily redid part of his home's siding in return.

``With the rise of social media, it's easier than ever to find ways of sharing, bartering, swapping and trading,'' Rushforth says.

Some of Rushforth's clients have held poker tournaments to raise money for home improvements. Others have sold used cars or rented out use of a summer cottage. Holding garage sales is a great strategy, since you not only get some needed cash, but reduce the amount of stuff you'll have to move when the time comes.

``Without breaking the bank, you can usually improve your house far more than you first expected,'' he says. ``The key is to do things conservatively and wisely - to do a lot yourself, to use lower-end fixes, and barter and trade where you can.''

Rushforth has seen these strategies work time after time - in his real-estate practice, and also in the television show All For Nothing?, which he hosts with designer Penny Southam. Each week, two households compete to see who can get the greatest increase in house value while spending essentially nothing.

``The homeowners get better than a 10-to-1 return,'' Rushforth says. ``The average home increases in value by $27,000 with expenses of only $2,600.''

If you'd like to see Rushforth's techniques in practice, watch All For Nothing? on the W Network. The program airs Tuesdays at 1 p.m. and 10 p.m., ET and PT.

``These common-sense strategies will work for anyone who wants to sell a house,'' Rushforth says.

Blue Jays pitcher Ricky Romero still looking for a place to live in Toronto

DUNEDIN, FLA.—Toronto’s real estate market is hard on everybody, it seems.

Blue Jays’ ace Ricky Romero apparently hasn’t found a place to live in the city a week before the season opens.

“Need to find a place to live in Toronto!!! #ASAP,” Romero tweeted Tuesday.

Jays’ fans were quick with their offers to put up the left-hander.

“I have a pull out couch you could surf on. My 4 yr old would however prefer the company of @2Morrow23,” tweeted @needsanickname, referring to No. 2 starter Brandon Morrow.

“move to Forest Hill Ricky. There’s been a big void here ever since Mats Sundin left town,” wrote @mattsteinberg.”

“Appreciate everyone who has offered their couch, but I’ll pass on that one,” Romero later tweeted in response. “And some have offered to kick out their wives?! LMAO!!! #ProFans”

Romero played down his real-estate woes when asked about it Wednesday morning.

“I just kinda did it to see what the people would say,” he said.

So is he really hard up for digs?

“Honestly, not really. There’s places. I just haven’t really sat down to pick out one.”

Partners Real Estate Investment Trust Announces Appointment of New Chief Financial Officer Effective

Partners Real Estate Investment Trust (the "REIT" or "Partners REIT") (TSX VENTURE:PAR.UN)(TSX VENTURE:PAR.DB) is pleased to announce that the board of trustees has appointed Mr. Tony Quo Vadis as Chief Financial Officer of the REIT, effective April 13, 2012. Mr. Quo Vadis brings over 25 years of accounting experience and has worked in both public practice and industry, including 11 years as a Chief Financial Officer and participation in an Initial Public Offering.

Ms Dionne Barnes, who has served as the REIT's Chief Financial Officer since June of 2010, has resigned her position effective April 13, 2012, to pursue other opportunities. Mr. Adam Gant, Chief Executive Officer of Partners REIT stated that, "On behalf of the board of trustees and management of Partners REIT, I would like to thank Dionne for her significant contributions to Partners REIT and wish her the best in her future endeavours. In addition, we are excited to have Tony join the team with his depth of experience both financially and operationally."

About Partners REIT

Partners REIT is a growth-oriented real estate investment trust, which currently owns (directly or indirectly) twenty-eight retail properties located in British Columbia, Alberta, Manitoba, Ontario and Quebec, aggregating approximately 2.1 million square feet of leaseable space. Partners REIT focuses on expanding and managing a portfolio of retail and mixed-use community and neighbourhood shopping centres located in both primary and secondary markets across Canada.

Forward-looking Statements

Certain statements included in this press release constitute forward-looking statements, including, but not limited to, those identified by the expressions "believe", "expect," "will", "offers the opportunity", "intend", "look forward" and similar expressions to the extent they relate to Partners REIT. The forward-looking statements are not historical facts but reflect Partners REIT's current expectations regarding future results or events. These forward looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including the replacement of our Chief Executive Officer effective April 13 2012, our status as a "real estate investment trust" and general economic and industry conditions. Although Partners REIT believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein.

The forward-looking statements contained in this press release reflect our current views with respect to future events and are also subject to certain other risks and uncertainties and other risks detailed from time-to-time in Partners REIT's ongoing filings with the securities regulatory authorities, Actual results, events, and performance may differ materially from those contemplated in Partners REIT's forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. Partners REIT does not undertake any obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise, except as required by applicable securities laws.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Canadian housing prices continue to rise, but rate slowing

Canada's booming housing market may be topping out ahead of the key spring home buying season as price increases are slowing even in the country's hottest areas, according to the country's largest real estate organization.

The Canadian Real Estate Association says a survey of five major housing markets showed prices continued to rise in February, but the rate of increases was down.

Gregory Klump, CREA's chief economist, said the slowdown in increases was due in part to a tightening of mortgage rules and simple affordability for homebuyers.

"The compound effect of previous changes are working to slow the market and certainly prevent the market from forming a bubble," he said.

"Year-over-year price gains have been shrinking and that continued in February."

The 5.1 per cent year-over-year increase in February was the smallest since June 2011, according to the association.

The largest year-over-year increase in CREA's Multiple Listing Service Housing Price Index was in Toronto at 7.3 per cent followed by Vancouver at six per cent, but Klump said even the country's hottest markets showed signs of fading.

In Vancouver, Klump said that in addition to a slowing in price gains, sales are also slowing.

"Prices continue to rise but the sales are trending lower, so on balance when you take all the trends into account it does appear as if the market is beginning to form a top," he said.

TD Bank chief economist Craig Alexander said the smaller price increases was good news for the Canadian economy.

"I think for this year we're going to see the market continue to cool and I think the average for the year nationally will be a gain in the two to three per cent range," he said.

Alexander said he believed there was some overvaluation in the Canadian real estate market, but that was not as overvalued as some fear.

"There are some groups that are predicting quite a dramatic decline in home prices over the next couple of years," he said.

"It is actually encouraging that we're seeing price growth slow because if income growth picks up, then it gives us the scope to actually unwind some of the overvaluation that's out there."

The Bank of Canada has said that household debt is the "biggest domestic risk" to the economy.

Statistics Canada reported last week that household credit market debt, which includes credit cards, mortgages and loans, rose in the fourth quarter, though the pace of borrowing slowed.

Credit market debt-to-personal disposable income in Canada backed off to 150.6 per cent from 151.9 per cent in the quarter as gains in income outpaced debts.

Alexander has suggested Finance Minister Jim Flaherty should intervene again to further reduce the risk and recommended several options for the minister, including reducing the maximum amortization on mortgages to 25 years from 30 or hiking the minimum down payment to seven per cent from five.

He has also suggested a minimum interest rate for banks to use when qualifying potential homebuyers as another possibility.

Broken down by category, price gains slowed in all housing categories tracked except for two-storey, single-family homes.

The aggregate composite MLS HPI rose 1.1 on a month-over-month basis in February, with prices for two-storey, single-family homes up 1.6 per cent. Prices for townhouse/row and apartment units saw smaller gains of 0.4 and 0.5 per cent respectively.

The index based on single-family, townhouse/row unit, and apartment unit sales activity in Greater Vancouver, the Fraser Valley, Calgary, Greater Montreal and Greater Toronto.

Canadian real estate market needs tightening up, Flaherty warns

This week Ottawa sent some of the strongest signals yet that it’s determined to do what it takes — short, it seems, of further tightening mortgage lending rules — to cool Canada’s overheated housing market.

Finance Minister Jim Flaherty finds himself walking an incredibly thin tightrope.

This week he warned Canada’s bankers that they have an obligation to tighten the reins on their own lending practices, rather than wait for Ottawa to legislate another round of tougher mortgage regulations.

At the same time, ReMax released a report saying that low interest rates and the low inventory of homes for sale are further pushing up house prices and spurring bidding wars — not just in Toronto, but also in Winnipeg and a handful of booming, resource-rich areas across Canada.

This week the Canada Mortgage and Housing Corp. signalled that it’s going to do what it can to blow some cold air on the overheated market by keeping a lid on the amount of mortgage insurance it makes available over the next few years for higher-risk borrowers.

Condo developers are also feeling the pressure and said they’ve seen a significant tightening in lending requirements the last few months as fears grow in Ottawa, and among bank regulators, that Vancouver, and Toronto in particular, are at the peak for a condo boom that may be due to go bust.

“The banks feel they have a lot of exposure right now in the condo market and they’re being more careful about financing only the right developers — those with a strong track record — and the right project,” says a major Toronto condo developer.

Now it’s far tougher to get financing for projects unless the developer has sold at least 70 per cent of the units and collected deposits of 20 to 25 per cent of the purchase price, he added. “The deposits seem to be key.”

“This is going to weed out a lot of the smaller builders and newcomers to the industry.”

Flaherty is being driven by three legitimate concerns, says Jim Murphy, president and CEO of the Canadian Association of Accredited Mortgage Professionals: extraordinarily high levels of household debt, fears of rising interest rates and the exposure of Canadian taxpayers, through CMHC insured mortgages, in the event of a housing downturn.

The federal government now has a $600 billion cap on the amount of mortgage insurance CMHC has outstanding, but it has increased that cap twice since 2007 when it stood at $350 billion.

Ottawa recently hinted that it’s not prepared to lift the cap again and this week CMHC tabled a corporate plan with Parliament that anticipates a much slower increase in the amount it insures between now and 2014.

Tightening lending requirements, and availability of CMHC insurance, too much risks sending the economy into a tailspin, as the Canadian Association of Accredited Mortgage Professionals recently warned Flaherty.

According to a study they recently prepared for the finance minister, 18 per cent of the jobs created from 2006 to 2011 were in the real estate financing and housing/construction sectors and helped insulate the country from the global economic downturn, stressed Murphy.

“I think (Flaherty) is trying to find the right balance. I think his overall messaging is good,” says Murphy.

“But the biggest risk to the housing market is not necessarily rising (interest rates), it’s if somebody loses their job and can’t pay their mortgage.”

Five things we learned about Toronto’s real estate bidding wars from the Globe and Mail

Some basic math: a hot real estate market in Toronto as well as several banks that offer mortgage rates historically low, like a bidding war seriously ridiculous (case in point: the bungalow Willowdale sold for $ 1.2 million in early This month the asking price $ 421.800). A recent Globe and Mail have dug in the battles of Toronto races, share stories from the nightmare Homebuyers and a few words of caution from experts. Here are our top five lights.


The first Realtors Crafty uses psychological tricks to start the bidding war
Property prices predators to burn the bidding wars are a winning tactic. Low prices create "auction fever that more deals will determine the bid higher than they would have started at a higher price to begin with," according to a professor of economic psychology.


The second Toronto is attracting foreign buyers with a lot of money and spend it
The story contains some striking examples of how foreign buyers fueling the market. The woman who paid more than $ 421,800 for the bungalow Willowdale request from China, as a buyer who paid $ 1.4 million for a unit of Don Mills quoted at $ 1.25 million dollars. An agent with Harvey Kalles said it has sold more than a dozen suites with a blow to their foreign customers.


The third potential buyers Desperate to break the rules for home-purchase label
When agents are submitting an offer for a house in Mississauga, has been shown to buyers as defined in person to plead his cause. At least the house was for sale, also, a couple who are looking to Christmas has begun to distribute the letters to pass some beautiful homes and asked if the owners would consider selling.


The fourth year the school is located behind the thrust of the spring sales
The warmer weather is not the sole cause of the housing market heats up in spring. Home Sales peak in March and April the families who buy now may move during the summer, which means that children will not change mid-year school.


The fifth Banks offer more money than buyers require
Economists argue that low interest rates encourage people to overload yourself, but banks, apparently doing their urging. "I go to the bank to get approved for a mortgage," says a buyer, who stayed behind. "I think to a maximum mortgage of $ 600,000, and the bank tells me:" Why so little? Why not go to a loan of $ 900,000 or $ 1 million? "