By Julie Gordon and Andrea Hopkins
VANCOUVER/TORONTO, June 8 (Reuters) - Kathe Sanz was
optimistic when she and her husband started looking for a larger
home. Their Toronto townhouse had nearly doubled in value since
they bought it and their C$1.1 million budget seemed rich enough
to move up the property ladder.
But the housing market in Canada's largest cities has priced
out many would-be buyers, leaving them stuck in their current
homes as new listings hit six-year lows and prices soar.
The national average price of a home in Canada hit C$539,400
in April, according to CREA. The average price of a detached
home in central Toronto hit C$1.29 million in May, up 15.2
percent on the year, according to the Toronto Real Estate Board.
"It got really disheartening, really fast," said Sanz, after
the couple watched a semi-detached house listed under their
budget sell for hundreds of thousands of dollars beyond their
price range, despite needing major repairs.
The same thing happened with the next home, and the next,
and the next. So the couple, a sales professional and a lawyer,
find themselves trapped, unable to make the leap to a detached
home.
"It's ridiculous to think that we're both 35 and we have a
$1.1 million budget, but we can't afford a stand-alone house,"
said Sanz.
Home sales in Toronto and Vancouver often attract multiple
bidders, driving up prices and forcing buyers to waive
inspections, financing clauses and to buy sight unseen.
Canadian Finance Minister Bill Morneau on Wednesday called
the hot housing market a "very real issue."
Toronto realtor Steve Fudge said he has clients who want to
cash in on their equity. Home prices have risen 44 percent in
the last five years, and people think they're wealthy enough to
move into a better place.
Fudge urges would-be buyers to wait until they win a
purchase because selling is easy, but buying is hard. "I will
not have them sell their house until we've secured something,
because I don't want them being homeless," he said.
How hot is the market? About six weeks ago, Fudge says he
helped a client buy a three-bedroom semi-detached home in
Toronto for "just over C$1.2 million" in a three-way bidding war
that started within 24 hours of the house hitting the market.
With the deal not yet closed, his clients have been
approached three times to sell their contract for over C$100,000
more than it cost.
Indeed, many owners are deciding not sell their homes
because it's too hard to buy another, so buyers far outnumber
sellers.
Data from the Canadian Real Estate Association (CREA) showed
there were 4.7 months of inventory at the end of April, the
lowest level in more than six years. In Ontario and British
Columbia, there is less than two months of inventory.
The stalemate is good news for renovators.
"We've been inundated with phone calls to come out and
quote," said Valery Macri, owner of Lionfish Developments, a
Toronto renovator. She said business is up by about 30 percent
since the start of the year.
"A lot of people end up with buyer's fatigue," Macri said.
One of her clients put an offer on a home in a seven-way bidding
war. The listing evaporated when the seller stayed put.
"Knowing that they will be up against six or seven other
people, they are going to overpay," she said.