My detailed rant here... http://ow.ly/9yRkl

Often I hear these bidding war stories and think that the house was just under priced to promote a big war. As such, I found it surprising to read, "In previous sales nearby, bungalows have sold short of $900,000."
Could any Realtors out there run some comparables and see if this is true?
There is no doubt that there is big demand in the city, with many pockets having little supply. Couple that with cheap money, and you are able to get some big bids.
What happens to these purchasers when / if rates go up? Yikes.

I already did that but didn't poosted any stats about it in my blog post... There are comparable properties that have sold for similar prices but this one is big price jump. There were others in the past yehat have sold at that price point and a bit lower.
I'm just baffled on how someone could make an offer for that much over the asking price!?!?

I'm not going to defend or accuse the agent and the buyer in this case because I don't know the market in this area and I have no idea what went down on this particular bidding war.
BUT I will say that it's that time of year again! Every year in March I see this. The market changes. Old price points are surpassed, new precedents are set, and the first time buyers who have been looking for the past few months, maybe they have lost out on a bidding war or two are caught with their pants down and the market just blows them over. It may very well be that the new normal for a bungalow in this 'hood is now $1M+. Doesn't matter that none have sold more than $900K (if that is truly the case).
You may have been able to buy something just a few weeks ago that now costs 5% more or 3 months ago and now it's 10% more. That's what happens every year as the spring market takes off and the perpetually high demand of Toronto real estate hits the perpetually how supply of properties available for sale. KA-BOOM! prices just went up.
Anecdote: I was in a bidding war this week with some first timers. 2011 sales for units (with minimal updates) in the building averaged around $280K. this unit had about $25K worth of updates. Was listed at $320K. Just sold for $356K! 6 offers. Listing agent even admitted it was not priced for a bidding war! What do you think the next listing in the building is going to be listed for?

Andrew, I agree... what worries me is somebody is going to get stuck with a purchase and a hefty deposit on the line and standing in court trying to explain why their deposit shouldn't be taken by the seller...
I just see something wrong when this much money is flying around...
Not particular to this event but should an agent be allowed to list a property so low or far away from market value?

It's all foreign money. There will likely be no mortgage (or a very low LTV) on this place so no worries on that front. This will go on until other investments become more attractive or something causes Toronto Real Estate to become less attractive. I believe this happened to some extent in the 80's but I was too busy playing with GI Joe's and Transformers... all of which were made in China.

I remember reading an interview somewhere on Buzz Buzz with a guy from Vancouver who called this HAM - Hot Asian Money.
I have heard from others that this might be a derogatory word.

Just a funny little point: For the "over asking" amount, they could have purchased a decent condo downtown!

Funny... Even funnier is that for the price of a small condo downtown they could also have gotten a nice detached bungalow with a basement apartment at Warden & Lawrence which is a safe, central, middle-income area.

Marco said:
I remember reading an interview somewhere on Buzz Buzz with a guy from Vancouver who called this HAM - Hot Asian Money.
I have heard from others that this might be a derogatory word.

Good memory. It was actually a tweet from December between BuzzBuzzHome, Gord Smart and Brian Persaud, below:
"Interesting. Who uses this?? RT @BrianPersaud: HAM = Hot Asian Money #LearnedSomethingNew"

Addy said:
Andrew, I agree... what worries me is somebody is going to get stuck with a purchase and a hefty deposit on the line and standing in court trying to explain why their deposit shouldn't be taken by the seller...
I just see something wrong when this much money is flying around...
Not particular to this event but should an agent be allowed to list a property so low or far away from market value?

I agree with Brian as this particular Chinese Uni Student was a First-time Buyer with family support from the mainland (ALL CAPITAL).
Bottom line is foreign investment has been over-aggressively pumping our markets, since combined recent major shifts in U.S. & European economies, increased natural disasters and turmoil overseas. & like anything else when there's increased competition, it's survival of the fittest!
This isn't your average local First-Time Home Buyer's idea of fairness, but like gas prices before we hit 30cents over the loon we can sit there and complain, but chances are we'll just end up adjusting/getting used to it. My first-timers are doing a bit more shuffling as they're realizing what $250-350 will get them nowadays, $350-450 etc. I don't mind the extra leg-work.
P.s. This is Willowdale ;-)

Prices go up. We see this every spring. Nothing new here.