It’s no secret that many properties in North Toronto are being bought by builders or regular people like you and I who plan on tearing down the existing homes and building new ones. In fact, it’s happening so frequently that the first question I’m often asked by people who are thinking of selling is “Michael, is there any point to us fixing our house up since it’s just going to be torn down anyway?”. It may seem like all homes are teardowns, but that’s not the case. At least not yet. And besides, Is Staging Necessary is the subject of another post. Today I’d like to talk about building lots.

Although building lots have been in hot demand, sometimes things happen that make me pause and wonder whether a certain aspect of the market is cooling down. This happened with building lots in North Toronto recently. Here’s the cause of my pause:

Our clients owned a 20 x 120 foot property that was clearly a building lot as the home itself was in pretty bad shape. It was realistically listed for $775,000, there were 3 offers and it sold for $850,000. A week or two earlier, a bungalow on a 25 x 100 foot south facing lot was listed at $875,000 and sold for $885,000. I don’t know how many offers there were, but there’s usually a fair amount of demand for this type of property. (Prices have been adjusted for privacy purposes.)

Buyers have paid $1,100,000 and more for 25 x 150 foot lots so I found the fact that this one sold for only $885,000 to be quite surprising, even though it was only 100 feet deep. Questions I asked myself were:

• Are there no longer enough interested buyers for this type of property to bid prices up?
• Did the seemingly low list price cause buyers to shy away thinking that there would be so many offers it wasn’t worth competing?
• Is the market for building lots slowing down?

With respect to our clients’ property, I wasn’t surprised or at all disappointed by the sale price, but I was a little surprised that there weren’t a few more offers. The questions that popped into my head after the dust settled were these:

• Were there only 3 offers because 20 foot lots aren’t nearly as popular as 25 foot lots?
• Or was it because the property was priced reasonably and not intentionally low?
• Is the market for building lots slowing down?

Specializing in a niche market requires constant analysis. It’s the only way to understand what’s going on in the market at every moment so you can give your clients the best possible advice.

In this case, I don’t think the market for building lots in North Toronto is cooling down. There were only 3 offers for the 20 foot lot but the sale price was healthy. The 25 foot lot sold for less than I expected, but there may have been circumstances of which I was unaware or this may have been an irregular occurrence. If more 25 foot building lots start selling in this price range then I’ll start to believe that the market for building lots is cooling down, but we’re far from that point right now.

In the meantime, if you know of anyone who’s looking for an honest Realtor who really knows his stuff and doesn’t pressure his clients, Please Don’t Keep Me a Secret. I really appreciate your referrals. Thanks for reading and don’t be shy if you have any questions or comments!