How not to be permanently left on the sidelines in Toronto’s “runaway” real estate market.

My phone vibrates at 3:30am this morning. I know what is it alerting me of. It is my automatic MLS email, giving me the new listings for a particular area and client. We have been searching for a condo for him for the past 5 months. His requirements are reasonable….around $600,000, 1+1, no parking and walking distance to Bay/Front. Easy enough, no? One would think.

I wake up at 7:30am, connect with my client, discuss the unit and agree to meet at the condo at 5pm (the time he finishes work). I will be with offer in hand, to be signed on the kitchen counter if my client likes the unit, and sent to the listing agent by 6pm. Firm offer. Not even a Status Condition as we have experience with other units in the building and my client is willing to assume the other associated risks.

4pm. I am backing out of my driveway and get a call from the listing agent. I already know what the call is about. He is letting me know the unit is already sold or that there are registered offers on it. I answer….”Bob, sorry to tell you, but we just sold it”. Firm. Over asking. Over asking, with no competing offers. Sold within 12 hours. I call my client and tell him the news, and he is ok with it. We have been through this before and he understands the dynamics of the market. On to the next we go and now I carry blank offers in my car and he has agreed to leave work the minute I call him with the next unit.

It has come to this. The Toronto market (condos and homes) has reached levels I have never imagined we would see. IT IS A ZOO OUT THERE. You can read 10 different articles and you will get 10 different opinions with regards to what is happening and what will happen to the market. I can tell you, as a “foot soldier” on the Toronto real estate front, this market is not slowing down for a long while. The city is bursting at the seams and the vast majority of my clients are financially in an excellent position and have no problems qualifying for any safeguard installed by the government. They just need something to buy. I have 10 active buyers, waiting for their turn. I have scraps to show them.

If we look at condos, the inventory of units on the market currently is half of what it was last year, and last year we saw a 15% price appreciation is the majority of the city core. Projections show that this year will yield the same (if not more) price increase. Single family homes are even worse. Buyers on the fence are still believing that the market will “correct” or “balance” or “even out”.  I am sorry to say that if you do not get in the market now, you might very well never be a home owner in Toronto proper. As I have mentioned for years now, Toronto is in it’s “Manahattinization” faze and will catch up with the rest of the world’s great cities.

What can you as a buyer do to get into this market?

1. Widen your search area. I know that everyone wants to live close to work, entertainment or other attractions, but you need to sacrifice some of these wants/needs in order to access more inventory.
2. Define and stick to a savings plan. Decide what you want to own and then work backwards to ensure you have your desired down payment and monthly cash flow.
3. Protect your credit like it was your firstborn. Believing that credit cards can be paid “when you get a chance” will cause you issues later in life. Pay everything on time and nurture your score. You will be glad you did.
4. Look at income properties. Could you live in one unit and rent the other out? I have several clients who are living for free, with the income they collect from their renters from the basement.
5. Ask for help. Talk to your parents/family. Let them know of the challenges (if they do not know already) and see if they can assist you in attaining your home ownership goal.

The battle for a personal piece of the city will only intensify and get more difficult. You Realtor (get a good one!) will have a plan ready and will be prepared to strike at a moment’s notice, but you need to have the foundation set. Don’t get left on the sidelines, or you will never be in the game.

 Bob Odanovic is a Realtor with REMAX Ultimate Realty Inc. Brokerage in Toronto, Canada. He is also an avid real estate investor throughout the GTA. Feel free to contact him with any questions at odanovic@gmail.com.