It’s been about a month since my HB and I started house hunting in Toronto and calling it a whirlwind 4 weeks would be an understatement. We came into it thinking that we’d just see what was out there and if we found something that made financial sense we’d consider putting in an offer. Oh how naive we were.
As I’ve said time and time again, the real estate market in Toronto is crazy right now. So much so that we’re going to be taking a little break from it in hopes that things will cool off. I know a lot of this craziness is due to the fact that interest rates are so low, but come on!
We thought house hunting in winter was a smart idea. Who the hell wants to shop for a house when it’s -20 degrees outside? Apparently a lot of other jerks who are willing to throw down piles of money on houses filled to the brim with asbestos. Ugh.
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My bitterness aside, let me fill you in on our most recent round of house hunting. Last weekend we saw 3 houses that were brand new listings on the market. They were all listed well below our budget, but as I’ve explained in previous posts, the listing price means absolutely nothing these days. All it is is a starting point.
Actually, it’s not even that. The listing price on a house is basically the seller telling potential buyers “If you offer anything below this, we’ll ignore you. And if you offer only $20,000 over this we’ll probably still ignore you. You know what, just give us a blank cheque, then we’ll consider giving you our house. Also, you’ll need to gut the place. Hope that’s ok.”
Let’s start with the first house. The house pictured above was our first showing. It was a semi-detached two-level house in an amazing location. It was literally a 5-minute walk to the subway, and from my work to the station, it was only a 45-minute commute (yes, I timed myself). From the outside, it looked promising. On the inside, well, here’s what the kitchen looked like.
This house was lived in by the same owner for the past 35 years and he clearly hadn’t done any updates since he bought the place. It was also a Power of Attorney sale meaning the guy probably died there. Kind of creepy knowing that his ghost might still be there, lurking in the hallways at night, but on the upside, it would mean no bidding war.
There was an offer date a week from the day we saw it and the seller was just going to pick the highest bidder. None of that “Alright bidders, everyone up your bids because we want all your money!” kind of crap. Just straight to it, they’re picking the highest offer and that’s it.
Personally, I really liked this place. The layout was great, the bathroom was in good condition, and I could see it looking like a really great place once we did some renovations. But there were quite a few things that needed to be fixed before just slapping a coat of paint on the walls.
For one, the whole house had knob and tube wiring. Most big insurance firms won’t insure a house with that type of wiring, so the whole house would have needed to be rewired. The floors also needed to be replaced or re-sanded. And there was a big possibility that there was asbestos in the walls.
Adding all of those things up, my HB and I just weren’t sure if we were ready for such a big undertaking. A few days later we took another look at it and even considered getting a home inspection. But our realtor said that it would most likely sell for more than we were willing to pay, so we decided to just let it go.
Although it sucks picturing yourself in a house and then having that dream just taken away from you in a matter of days, I know that when we find the right place my HB and I will have no doubts in our minds about it. I can’t wait to find out how much it goes for though.
For the second house we saw (sorry, don’t have any pictures to include), the inside was really what go us excited. It did have the craziest paint job I’ve ever seen (every wall was a different primary colour), and it did have a really odd layout, but we were told that those two things may scare off other buyers. It also had a semi-renovated basement that we could easily turn into a rental suite.
That being said, the offer day was only a few days after our initial showing and we just didn’t like being rushed into such a huge purchase. We were pretty excited at the prospect of making the house our own, but the timing wasn’t right and we decided against putting in an offer.
A good thing too since it would have been a big waste of our time. It was listed at $489,000 and sold for $625,000. That’s $136,00 over the asking price. Do you see why we want to wait until the housing market calms the f*** down? Crazy!
The last place we saw was weird from the start.
Looks pretty decent from the outside right? Well, apparently this house was on the market about a year ago and couldn’t sell (first red flag!). Secondly, the moment we walked in my HB and I both looked at each other and said “What’s that smell?” It didn’t smell like mold or cigarettes, it straight up smelled like a barn.
As if there was hay and a few horses not too far away. But on the upside, it was pretty spacious and included a coach house in the backyard we could rent out (maybe that’s where the horses were hiding?). On the downside, this relic from Little House on the Prairie was smack-dab in the middle of the kitchen.
Kind of a neat antique feature, but it took up like 1/6th of the kitchen. It was weird. Then we went to the basement and it was also pretty weird. It was big enough to turn into another rental suite, but it had two showers (that were disgusting by the way) and only one bedroom. It just didn’t make sense.
On paper, this house seemed great, but both of our guts told us “No, no, and hell no!” There’s a reason this house didn’t sell the first time and I feel like the reason would have become very evident if we did a home inspection. It’s listed at $549,000 and I believe it’s still on the market. And probably will be for some time.
It sure has been an interesting 4 weeks of house hunting, but I think for the next little while my HB and I are happy to take a step back. We’re both smart people and both fear making a mistake. And it wouldn’t just be a mistake, but the most expensive mistake of our lives.
Although we’re both kinds of over renting, we’re going to keep renting until we find a place that makes financial sense. Maybe that means waiting even longer until the market settles down, or maybe it means revisiting buying a condo or townhouse.
No matter what, I know I’m going to use this time to do some more research so we’re even more prepared the next time we go look at houses.
These days in Toronto (as well as in Van and elsewhere) RE agents often get their seller clients to list their houses lower than what they hope to eventually get. This is to get a buyer herd mentality going in order to get lots of overbidding. It’s a fool’s game at best in many cases, especially if the houses in question are suspect in quality. Obviously your agent wants a nice share of the commission pie and those are the types of houses that you will often see.
Have you tried looking around on your own for private “for sale by owner” houses? Might not be many out there but they might be more reasonable to negotiate for (especially since the seller hopes to save on the RE agent commission, which these days represents quite a few $$$).
Other than that the only other suggestion that I can give you (repeating an earlier comment of mine here) is to consider renting a nice house. My reasons: (1) chances are that such a house might be in much better condition, (2) it allows you to further save and invest in diversified funds, (3) you get a feel for house ownership and it’s associated expenses without paying a high mortgage, (4) you get a feel for the neighbours and neighbourhood without being stuck there if things later don’t work out, and (5) your rental landlord might one day decide that he finally wants to sell the house and you might then get lucky and get an exclusive shot at buying it, without competition from other buyers. The only caveat – I’m not sure these days how many houses are going for rent here in TO.
Anyway, good luck Jess.
We did see one place, it was a condo townhouse, that was for sale by owner. It was actually a really weird experience. Not only was the place just not what we were looking for but it was weird having the owners there at the showing. If anything it kind of put us off, but maybe they would have been a bit better at giving us a good price. Who knows.
Actually a lot of folks will be out looking at houses right now. Here’s the thing, those with kids are planning to move as soon as school lets out for the summer assuming they kids will be going to a different school come Sept. So by looking now they have the time to look, offer, offer some more, look more finally find a place, close on it and then pack and move in late June. I speak from experience. We moved the end of May and had to use alternate arrangements for our two oldest for the last month of school. We started looking in January.
This house was up as a Power Of Sale from the bank and they were looking to sale fast. The previous owners defaulted on the mortgage, not the first time from what I heard from others in the area. And yes…..it needed a shit load of work done to it as I have mentioned in earlier posts…….
Good point, I never thought about that. So maybe looking in the summer might be better for us?
It just might at that. You would be over the main rush for those with kids. Plus you would get a better look at the landscaping or lack of at any place you look at. Later winter or early spring too might work as those planning to move in late June might be looking to sell a current place quickly…
What ever time of year you look there will be pros and cons to it… People will be watching interest rates as well. Another thing to keep in mind… Your house is out there waiting for you when the time is right.
Jess, the more that I read the more I’m convinced that this might be a correct observation. Good house inventory is very scarce right now so you might want to wait until later. Here’s a few links to illustrate this fact:
http://www.theglobeandmail.com/life/home-and-garden/real-estate/toronto-homebuyers-shake-off-february-blahs-with-a-good-ole-bidding-war/article22942629/?cmpid=rss1
http://www.theglobeandmail.com/life/home-and-garden/real-estate/leslieville-starter-home-drew-in-100-potential-buyers/article22942530/?cmpid=rss1
Thanks Christine and Rob! Appreciate your input 🙂
It can get exhausting looking for a house in our area for sure but keep looking even if you are not aggressively looking. You never know when that one might pop up. We were just about to give up when we saw this home. Too bad the realtor made an error on the online ad and said there was only street parking… we went to check it out the day it was listed and it had a double garage and parking for 4 cars outside of it… we put a bid in right after we saw the inside of the house and the area.. well we’re super happy to say that we couldn’t have picked a better neighbourhood.
Looking forward to what the future brings… something will come. You’ll see.
Wow! Well hopefully the right house will pop up eventually. Even if it isn’t a house necessarily. After maybe a few weeks (or longer depending), we’ll continuing looking and hopefully if it’s meant to be we’ll find something.
In a totally selfish way, I’m sad that you’re taking a break from house hunting because I’ve loved reading about it. But, it sounds like it’s been eating up all your free time and has been expensive and stressful.
I’ve told you before how G and I are looking at getting pre-approved for a mortgage soon. I think we’re going to take a very slow and passive approach to house hunting after that. Just perusing listings at first, to see if there’s anything we even like. We’ll see if we actually even end up going to any showings or getting a realtor to work with. Might be aways away yet.
Hope you do end up finding something you love, eventually!
Well it doesn’t cost you anything to get pre-approved. I’m glad we did it because it definitely helped us determine our budget and also prove that we could in fact afford to buy something. Renting for so long, sometimes I feel like we’ll never own anything. Hopefully that’ll change soon but we’ll just have to wait and see.
The prices are absolutely crazy for such houses. Let’s hope the market will cool off soon, I don’t think it’s possible to actually get a decent deal at this time (unless you’re really lucky).
Anyway .. keep us posted and we’re keeping fingers crossed for you 🙂
Exactly. I think it’s just the wrong time. Hopefully things cool off.
I remember when my parents went to look at a bedroom in NYC listed at 750k, it sold for over a million! FOR A ONE BEDROOM!
I feel your pain! We’ve been looking through the winter as well. In the northeast US, most people take their homes off the market in the winter so they don’t have to deal with people coming in and out in the weather. So we’re finding that the only houses on the market are the empty ones. Mostly foreclosures and bank owned properties, so there’s no heat on and it’s just miserable to look at houses all day. We know if we wait until spring, the inventory will jump up, but… we’ve got a baby coming in June and we just need to get this done. And talk about expensive! We just made our third separate offer on the same house. Very frustrating and exhausting. Good luck!
I recently moved home to Toronto after graduating and want to start saving up for a place of my own. Honestly I don’t know how it will ever be possible for me to afford something in Toronto and it seems that what is “affordable” are condo’s with extremely high maintenance fees. Hopefully your luck turns around and you find a great place, but I agree the housing market in Toronto is insane. I’m going to stick with just searching around on MLS for now and hoping something miraculously appears when I have the money to spend.