Just this week, the battle lines were tightly drawn on an up-and-coming street in the Coxwell and Danforth area where a renovated semi-detached house, listed for $549,000, drew a stunning 25 bids. The Rhodes Ave. home went for $717,336, almost $170,000 over the asking price.
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A safe location, room to grow, a good investment and located near the city. Doesn’t seem like a lot for a young professional couple to ask of the Toronto real estate and rental market. But as so many 20- and 30-somethings know, it is.
“We typically get outbid even after offering anywhere from $30,000 to $60,000 over asking,” says Rachel Doerksen, a public relations professional who lives in the city. “Recently we went after a house that had 17 registered offers … We knew we wouldn’t get it, but still tried. We made the top five bids, that’s something right?”
She and her husband, Jay, have been looking to make the leap from renters to property owners for several years. They recently had their first child and feel the pressure growing on their space. (“It already feels more cramped with a little baby who isn’t even crawling yet,” she says.)
The problem is they can’t afford to buy — they keep getting outbid — yet can’t, as they recently learned, afford to move to a larger rental unit either.
“We’ve been in our Little Italy apartment for six years now, luckily with no price increase,” says Ms. Doerksen. “We’re seeing basement apartments that haven’t been updated in 30 years go for almost the same as what we’re paying now … In order for us to get a better rental, we would have to pull back our future savings to cover the increase, making home ownership even more impossible.”
They’re stuck in something I like to call Toronto’s rather discouraging housing/rental market Catch-22. But there may be hope.
In the midst of this “too expensive to buy/too expensive to rent” debate, several condominium developments are popping up that, in a sense, remove overpaying for a property from the equation. One such complex is Garrison Point.
In Liberty Village, Garrison will be a small community of five towers off Strachan Avenue and Ordnance Street; townhouses will also be available. Designed by award-winning architects Hariri Pontarini, the complex will offer incredible amenities to its residents as well as easy access to some of Toronto’s favourite spots (BMO Field, the Ossington scene, etc.).
And perhaps most important for people looking to make the leap into buying, Garrison’s suites will be uniquely affordable.
According to real estate market research firm Urbanation, the average cost to rent a one-bedroom condo in the third quarter of 2013 was $1,875 (that’s up about 4.2% from the same period last year). In some cases, you could end up paying upwards of $2,000 to rent a 650 square foot space — especially if you’re looking in prime locations like Liberty Village.
Over at Garrison Point, the average suite size will be 650 square feet and sell for $350,000. After factoring in a 20% down payment, property taxes and maintenance fees, the cost to carry the space each month will be $1,705.
In a sense, you could save money by buying.
“What we offer is affordability,” says Sam Crignano, president of Cityzen Development Group, one of the developers behind Garrison Point. He, like many people, believes the low interest rates we’ve been seeing won’t last much longer, that if you have a down payment, it’s a good time to buy. That’s especially true when you consider all the added benefits you get with buying a condo.
There’s added space thanks to common areas. “You have to look beyond the square footage of a unit,” Mr. Crignano says. “There are meeting rooms, there are theatres, there is a gym, we’ve got an outdoor swimming pool and a number of areas that are designated for children [they will be programmed for kids of various ages]. You’ll have a lot of spaces that are an extension of the home.”
And there’s the luxury of being located in a prime downtown neighbourhood that’s safe. “I always say whether you’re renting or buying, you’re going to shop the neighbourhood first,” Mr. Crignano says.
“Liberty Village appeals to the full spectrum of the demographic curve, young people, young singles, young families and empty nesters all because of the green space, the walkability, the services, the fact you can live/work/learn/play in your neighbourhood.”
And then there are the ways a complex like Garrison Point will benefit the Liberty Village/King West community. As part of the development plan, four acres of the property’s seven-acre land will be conveyed to the city for a public park. Pedestrian bridges will also link the towers to the main streets around them, giving residents the ability to manoeuvre around the GO Train tracks with ease.
“At the end of the day it’s all about lifestyle and affordability,” Mr. Crignano says. “I truly believe this is a buyer’s market and there’s great availability, great design projects. We’re building better buildings — better designed and better built.” That’s why his company has invested so heavily in Garrison.
Which is something that could benefit young families like the Doerksens. “Looking further down the road, purchasing a home is a great investment and one that is important to us,” Ms. Doerksen says. “By continuing to rent, we aren’t banking our money how we would like to be. We would rather be building equity than signing a rent check to someone else each month.”
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Sales of existing homes in the Greater Toronto Area nudged up 2.1 percent in February compared to a year earlier, while prices continued to climb.
The latest data from the country’s most populous city, as well as other urban centres such as Calgary and Vancouver, suggests that Canadian home sales
fared better than some experts thought they would in February, and prices maintained their sturdy upward trajectory.
The average selling price over Toronto’s Multiple Listing Service last month was $553,193, an increase of 8.6 percent from a year earlier, the local real
estate board said on Wednesday. The MLS Home Price Index, which seeks to create a more apples-to-apples comparison of prices over time by accounting for
changes in the type and location of home that are selling, was up 7.3 percent.
“While the strong price growth experienced over the last year should prompt an improvement in the supply of listings, sellers’ market conditions will
continue to prevail this year,” Jason Mercer, senior manager of market analysis at the Toronto Real Estate Board, stated in a press release.
Canadian home prices are being watched closely, amid concern that they are overvalued. In an interview this week, Ed Devlin, the head of Canadian portfolio
management at bond giant Pimco, said he expects to see prices start to dip later this year and then fall by 10 to 20 percent in real terms over the next
three to five years. He expects that mortgage rates will rise this year, and will be one of the catalysts for softer prices.
Deutsche Bank said in December that it thinks Canadian home prices are 60 percent too high, and declared that it believes Canada is the most overvalued
housing market in the world. Other observers, including Canadian bank economists and the Organization for Economic Co-operation and Development, see a much
smaller degree of overvaluation but nonetheless agree that prices are too high.
In recent years Finance Minister Jim Flaherty has been trying to take some steam out of the market to reduce the growth of house prices as well as the
amount of mortgage debt that consumers are racking up. His actions precipitated a steep slump in house sales that began in the summer of 2012 and lasted
through the spring of 2013. But the slump did not appear to have a major impact on prices.
Vancouver, the city that was hardest hit by the sales downturn and the least affordable market in the country, is now seeing record average selling prices
for detached homes. On Tuesday the city’s real estate board said the benchmark price for all types of residential properties rose 3.2 percent from a year
earlier, to $609,100 in February, as sales increased by 40.8 percent.
Calgary’s real estate board said on Monday that the benchmark price of a single-family house was $482,800, up 9.1 percent from a year earlier. Overall
sales in the city rose 8.7 percent from February 2013, and according to Bank of Montreal economists overall median prices in Calgary were up 7.6 percent.
Real estate industry players in many major cities say that a lack of supply is buttressing prices.
“Consumers who are in the market for single family homes priced below $300,000 do not have many options, and when product does become available, it
typically does not stay on the market for long,” Bill Kirk, the president of the Calgary Real Estate Board, stated in a press release.
The full national picture for February won’t be available until the Canadian Real Estate Board releases data later this month. But Bank of Montreal
economist Sal Guatieri suggested in a research note that he thinks February’s market shows some momentum.
“February existing home sales in several major cities suggest the market is warming up after cooling a bit recently,” he wrote. “Wrapped up in a parka
lined with cushy low interest rates, hardy Canadian home buyers have mostly shrugged at the chilly weather and high prices.”
But Guatieri added in a note on Wednesday that home buyers “have yet to face the test of a meaningful climb in interest rates.”