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Bidding Wars: Housing gone crazy

Posted: June 4, 2013

bidding-war-300x259Hamiltonians are hanging on to their homes while out-of-towners are flocking to move in.

There is an overall shortage of real estate listings in Hamilton, combined with strong demand in certain pockets of the city. That has resulted in bidding wars and plenty of frustration for people searching for a new address.

Listings so far this year are down 2.5 per cent over last year, but 22 per cent compared to 2011.

“This is the driest spring for listings that I’ve experienced and I’ve been in it for 25 years,” said realtor Vivian DeBruyn-Smith. “Our volume is down almost half but we are seeing more listings lately.”

Realtors have mixed opinions about why homeowners aren’t listing their properties.

Tom Fleming thinks Hamiltonians are betting on a continuing resurgence in the city and expecting to see values rise further as GTA buyers keep arriving. But DeBruyn-Smith thinks many are hesitating because they are spooked by news reports of slumping sales.

More than one-quarter of Hamilton homes sold over the last month have gone for asking price or more. In the west end of the lower city, that number is 38 per cent. In the central lower city, it’s 32 per cent.

It’s common practice in hotter areas of the city for realtors to hold back offers until a week or so after the listing goes up. That allows GTA buyers time to find the listing and see the home, says DeBruyn-Smith.

The practice was forbidden by the local real estate board until about 2007, she said.

Some local realtors say they are surprised by the number of offers and how high some buyers are willing to go. A Hamilton Mountain four-level backsplit had 11 offers and went for $46,000 over asking.

A one-and-a-half storey historic home in the west end went for $47,000 more than listed.

“We look really cheap to (GTA buyers),” said DeBruyn-Smith. “They aren’t averse to paying prices a local realtor would see as astronomical.”

The most glaring example was a west end 2 1/2-storey brick home that went for a whopping $170,000 over asking after 20 offers.

Fleming says the home was priced very low to bring in crowds but that the final offer was still likely about $70,000 over fair market value.

“There have been a number of situations where we are shaking our heads. There are some homes that five years ago you couldn’t have given away that are now in bidding wars.”

Fleming has recently been involved in a competition for a house in the industrial North End and in a neighbourhood off Ottawa Street.

“Five years ago, that house would sit around for long time but there were three offers on it. We’re seeing it throughout the market, regardless of price point.”

Fleming says strong demand is driving up prices in the west end of the city but buyers are finding good value close to the waterfront, in east Hamilton and in Stoney Creek.

A ReMax Canada report earlier this year said property values in Hamilton have jumped 76 per cent in 10 years.

Chris Medcalf has been selling real estate in Hamilton for 33 years.

“I’ve seen it come from nothing to something. The downtown core had been undesirable but homes are selling in no time now. Everyone is trying to get downtown.”

The demand is largely driven by out-of-towners, often first-time buyers priced out of the market in the GTA, says Medcalf. The average home price in Hamilton is about $370,000, while the average in Toronto is about $520,000.

He says GTA buyers are getting into bidding wars all over the city — the Mountain, the east end, Stoney Creek, Dundas — but most frequently in the west end.

It’s not much of a surprise that the Locke Street district is one of the hottest around, along with the Aberdeen and Herkimer neighbourhoods.

“The Toronto person looks at a house and says, ‘I can’t believe you’re giving it away,'” says Medcalf. “Hamiltonians say, ‘I can’t believe you’re charging so much.'”

So Hamilton buyers focused initially on the west end are often left looking elsewhere in the city.

Stacey Escott knows that all too well. The Strathcona mother of two young children has been searching for a bigger house in the neighbourhood for six months.

Hamilton is a draw.

All the realtors agreed that out-of-towners look at the city’s real estate market much differently than Hamiltonians. DeBruyn-Smith says they aren’t weighed down by preconceived notions about good and bad neighbourhoods, for instance.

Medcalf is the most blunt.

“If Hamilton doesn’t open its eyes, we’ll be priced out of our own homes. We’ll all be pushed to Dunnville.”

Courtesy The Hamilton Spectator