Desperate homebuyers get creative as home listings plunge

Canada AM: Going to great lengths to land a home Real estate expert Mitch Parker discusses the concept of self-promotion and if it's a good idea.

There are plenty of signs of the deep desperation home-seekers are feeling in the super-heated Toronto real estate market.

The most recent was a young family so frantic to find a home, they printed up glossy postcard-type flyers featuring happy photos of themselves that they delivered in their target neighbourhood, hoping to find a sympathetic seller.

“The market is crazy right now,” real estate agent Mitch Parker said on CTV’s Canada AM Wednesday.

“This is the extreme side of things, I would say. Having a letter with your offer explaining who you are or about your family or if you are going to revitalize the house, how it’s going to improve the neighbourhood, that’s not a new tactic. That’s been around for a very long time.”

As inventory plunges and demand climbs, people are turning to begging, through letters, online ads, even direct pleas on doorsteps, in an effort to get a leg up in a frustrating house hunt.

New listings in Toronto in April were down almost 10 per cent from 2015, according to the Toronto Real Estate Board. The 2015 numbers were also down 10 per cent over the previous year.

The tight inventory pushed April’s sales-to-new listing ratio – a measure of the balance between supply and demand – above 75 per cent. That is one of the highest readings on record.

The natural effect of limited listings is that prices climb for the homes that are for sale.

The average price for a detached home in Toronto hit $1.2 million in April, up almost 13 per cent, and $1.3 million in Greater Vancouver, up a staggering 25 per cent.

“Toronto and Vancouver are both insanely hot right now but they are different markets,” said Parker. “In Toronto specifically, the problem is the lack of inventory that we’re seeing and that’s just driving prices through the roof.”

But the market is strong nationally, with some notable exceptions in Calgary and Edmonton, where plunging oil prices have taken a toll.

April was the busiest month for home sales in Canadian history. The average house price climbed to $508,097, up more than 13 per cent over April 2015, according to the Canadian Real Estate Association.

When Vancouver and Toronto are taken out of the mix (accounting for 54 per cent of the national market), the national average price comes down to $369,222 and the year-over-year gain is 8.7 per cent.

The CREA prefers to use the Aggregate Composite MLS House Price Index as a measure of housing prices. On that score, home prices rose 10.3 per cent in April, the biggest hike since May 2010.

Inventory was pushed to its lowest level in more than six years to 4.7. That figure represents how many months it would take at the current pace of sales to sell all the houses currently for sale.

The numbers only tell the statistical story. There are many tales of first-time buyers trying to break into the market or existing homeowners striking out when trying to downsize or relocate. Bidding wars have hit suburbs and smaller cities, such as Hamilton.

A Toronto newspaper editor recently wrote about how her young son had become “an innocent casualty of Toronto’s cruel real estate war” after her family repeatedly lost out amid multiple offers.

Parker says he doesn’t think direct appeals have much effect because the bottom line is that home-sellers are looking for the most money for their property.

“Flyering a neighbourhood looking for one seller who will take your offer, you’re really looking for a needle in a haystack, at the end of the day.”

He advisers potential home-buyers to be prequalified for a mortgage, have a solid game plan going into a bidding war and have a rigid top price in mind.

“If that house sells for $1,000 more, you don’t feel any remorse for it, you say, ‘OK, on to the next one.’ Keeping a cool head will set you apart.”