When first-time buyers Daniel Boase and Teresa Young bid on a bungalow recently in Toronto, they won against five other competing offers.
They ended up paying $311,000 -- easily topping the $299,000 list price for a two-bedroom, yellow-brick house with a finished basement, cedar deck and spacious backyard in the North York area.
"The low interest rates played a factor," says Mr. Boase, a 34-year-old partner in Frontline Investments, a Toronto-based investors relations firm.
"But business has been good, and we had some money saved. And thirdly, we wanted to just stop renting, and create an investment."
Affordability and consumer confidence have fuelled homes sales across Canada since last year as mortgage rates plunged to 40-year lows. Bidding wars are also now pushing up average prices.
If you are selling or buying a resale home this spring, here is a snapshot of Canada's four biggest centres -- Toronto, Vancouver, Calgary and Montreal, and some strategies to consider.
Toronto: seller's market
Sellers have been in the driver's seat since late 1996, and continue to be king. "Demand has remained robust due to low rates, and milder than normal weather," says Ted Tsiakopoulos, market analyst at Canada Mortgage and Housing Corp. (CMHC).
There have been more reported bidding wars so far this year compared with 2001 in the High Park area, which includes Bloor West Village and Roncesvalles Village, as well as east-end neighbourhoods such as Riverdale, East York and the Beaches, he says. "Paying $50,000 to $60,000 above list price is not uncommon."
In February, the average price for single-family homes rose to $270,945 -- creeping closer to the October, 1989, peak of $287,767. Preliminary estimates indicate the average price will rise 5 per cent to $265,000 for the year from 2001, compared with an initial forecast of $257,000, Mr. Tsiakopoulos says.
Anyone selling should list soon to avoid increased competition in April and May. For buyers, he suggests waiting for more listings to avoid multiple-offer situations, and obtaining a pre-approved mortgage to get a rate guarantee. Short-term rates should remain stable, but the five-year, 6.85-per-cent rate is expected to edge up and average 7.23 per cent for the second quarter, he says.
Vancouver: seller's market
Vancouver has been a seller's market since last year, and there have been bidding wars in areas such as Dunbar, Point Grey and Kitsilano. Low mortgage rates and a lot of pent-up demand is supporting the market now, CMHC analyst Carl Gomez says.
The average price fell to $285,910 in 2001 from $295,978 a year earlier because there were a lot of first-time buyers in the market, and more lower priced homes, he says. "But that is also a sign of a healthy market." He expects the average home price to increase to about $295,000 this year -- still down from the peak in $307,747 in 1995.
Mr. Gomez says it's "the best time in years for people to get into the Vancouver housing market" because prices should rise as the economy rebounds.
Empty nesters, who have built up equity over the years, can profitably downsize to a condominium, but it's not a good time for condo owners to sell at a profit if they bought around 1996-1997 when prices for their dwellings peaked, he adds.
Calgary: seller's market
Calgary has been a seller's market since the end of the third quarter last year, and that has been triggered by a combination of low mortgage rates, lots of job creation and strong immigration to the province, says CMHC economist Richard Corriveau.
He was forecasting the average home price to rise to $190,000 this year but he expects that number to be revised "with some upward potential."
Some of the hot neighbourhoods in terms of year-over-year sales increases include Bowness, Tuscany and Mount Pleasant in the northwest district of Calgary; Whitehorn and Pembrooke in the northeast, and Signal Hill in the southwest.
Mr. Corriveau says it's certainly a good time for buyers because prices are expected to keep rising, and "we haven't seen mortgage rates as low in a very long time." It's also an opportune period for sellers to put their homes on the market as listings are down 35 per cent from the same time a year ago, he adds.
Montreal: seller's market
It's been a seller's market for single-family homes over the past four years and for condominiums over the past two years, CMHC analyst Jean Laferrière says. The market is being driven by low mortgage rates, steady employment and a low 0.6-per-cent apartment vacancy rate.
Hot areas include West Island and neighbourhoods such as Outremont, Mont Royal, Westmount and Notre-Dame-de-Grace.
He says it's a good time to buy for a longer-term investment because the bargain homes of 1996-1997 -- which could be flipped a few years later for a nice profit -- are no longer there.
Vendors should consider buying another home before selling, or have a backup plan like staying with a relative, in case it is tough to find a dwelling that they like, he says. He expects the average price to rise to between $135,000 and $137,000 this year.
© The Globe and Mail
Only GlobeinvestorGOLD combines the strength of powerful investing tools with the insight of The Globe and Mail.
Discover a wealth of investment information and and exclusive features.