[URBAN NOTE] "Torontonians are paying the highest price to live the urban dream"

[rfmcdonald]

The Globe and Mail's Marcus Gee writes about Toronto's long history of out-of-control real estate costs.

In 1898, the Toronto Publishing Company put out a social study of the youngish city by the lake. In Of Toronto the Good: The Queen City of Canada As It Is, author C.S. Clark marvels at the extravagant price being asked for a house on Charles Street. It was “not by any means a new house,” then fetching just $16 a month in rent; yet, a real estate agent had the temerity to demand $3,200 for it. The carrying cost of a mortgage on such an expensive property would be ruinous, “and your chances of profit are only contained in the remote contingency of the property increasing in value.”

It’s hard not to wonder what that house would be worth now if it survived (Two million? Three? Four?), and what C.S. Clark would think about the stupid prices agents are demanding for a place to rest your head in the feverish April of 2016.

House prices have been climbing steadily in Toronto since 2000. The average price of a detached house passed $1-million last year, economic jitters be damned. An eight-foot-wide Victorian went on sale for three-quarters of a million.

This season, things are reaching a whole new level of nutty. As the spring real-estate rush gathers pace, there is a giddy (if you’re a seller), desperate (if you’re a buyer) feeling in the air. Quite ordinary houses are going for $100,000, $200,000 over the asking price. Bidding wars are commonplace. So are bully offers – when buyers come in early with a high bid that they hope will blow everyone else away.

As The Globe reported this week, “sales vaulted ahead 15.8 per cent in the first three months of the year compared with the same period last year. The frenzy pushed the average selling price up 13.6 per cent in the quarter compared with the first quarter of 2015.”