A house in Toronto recently sold for more than $1 million over asking, as the average price for homes sold in the Greater Toronto Area last month skyrocketed by 20 per cent over the previous December.
The split-level home, located at 19 Talwood Dr. in the Lawrence Avenue East and Don Mills Road area, sold by Ecko Jay Realty Ltd Brokerage on Nov. 10 for $2,658,000 after being listed at a price of $1,488,800.
The open-concept property offers “privacy galore” and “truly feels like being in the country,” according to the listing, and has three bedrooms, three bathrooms, a garage, a pool and sits on half an acre of land adjacent to trails and parkland.
Ecko Jay, the real estate broker who sold the property, told Global News the house was on the market for one week and had 15 offers before it was sold. He added it was intentionally priced lower to create a bidding war.
Toronto-based real estate lawyer Bob Aaron said significantly undervaluing real estate listings is a common tactic real estate agents use in Toronto to drive up competition.
“It’s just a gimmick to get attention and to stimulate a bidding war. It can backfire, particularly if nobody shows any interest or they get offers around that price and not the increased price,” he said.
“So it’s dangerous and this time it worked and that’s because there are so few listings available in the market.”
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The latest statistics from the Toronto Real Estate Board show annual home sales in the GTA hit record numbers last year, with 113,133 residential property sales through the MLS system in 2016 — an 11.8 per cent increase over 2015.
TREB commissioned Ipsos to conduct an online survey of 3,518 realtors from Oct. 5 to Oct. 21, and reported the average price of a home sold in the GTA rose to $730,472 last month, up 20 per cent from December 2015.
“If you look at the demand for ownership housing in the GTA over the last year, I mean obviously we saw very low borrowing cost but that was coupled with a relatively strong regional economy,” said Jason Mercer, director of market analysis for TREB.
“We saw low unemployment, we saw income growth over the rate of inflation so a lot of households, we’re certainly confident in their ability to purchase and pay for a home in the long-term, but what they are up against in a lot of cases is a real short supply of listings.”
Mercer said that while there were more than 113,000 deals done through the MLS system, a second consecutive record year, there is a “constrained supply” of homes for sale that is driving up competition and price growth.
“It just gets back to the fact that while we’ve seen sellers’ market conditions over the last two or three years, they only grew stronger this year,” he said, adding he expects to see home purchases continue to grow under the current market conditions this year.
“And if we don’t see any sort of change on the supply side we should continue to see upward pressure on home prices.”
Aaron said that given the relatively short supply of houses, the risk in underselling a home such as the 19 Talwood Dr. property is smaller to the listing agent.
“A more realistic listing might have been $2.2 million, but when you undervalue it greatly, it gets the attention of so many people and they probably had a huge bidding war and a lineup in front of the house,” he said.
“So it worked and it was happy for everybody except the buyer I suppose. The numbers of X dollars above ask to me are relatively meaningless. It’s the market out there and the arms-length open market system seems to work and that determines the value.”
With files from Marianne Dimain