Thursday, 27 October 2011
At least once a week I hear: "Who can live in a 500 square foot condo?" To which I say: "Someone who doesn't want to live in a 270 square foot condo." People love space. Even in in-demand Toronto neighbourhoods where it's at a premium. I often find these space loving buyers are drawn to the 80s condos. They built them big back in the day. Much bigger than today. Sure, they need some kitchen updates and may be a new floor, but wow, you have space to move!
Then there are those who won't even consider such a dinosaur. The people who love new condos. It's true that the design is nicer and certainly more up-to-date. The newer condos don't have the look of a Communist-style lego building of some of the older condos. There's better kitchen counters, stainless steel appliances, and cooler looking lobbies. But it seems that the newer the condo gets, the smaller they become.
Then there's that additional cost. With any one looking at condos, 80s or modern, the first question out of their mouth ( next to questions about parking) has to be: What are the maintenance fees? People are obsessed with this extra cost. And for good reason. High maintenance fees are almost a big enough stigma as a house that was a grow-op. Both push down the price of a given property.
I can say wholeheartedly that people do not like high maintenance fees, even if the condo is priced low. They often think some thing is wrong with the condo. And some times there is, but other times, especially with 80s condos, there are a lot of amenities like a gym, a concierge, or say, tennis courts. I would say the balk of the buyers with whom I have come into contact want low maintenance fees and would certainly cut out the extras.
Back in the 80s, when condos were really starting to take off in Toronto, developers wanted to project an image that living in a condo was a like a day at the spa where you didn't have a care in the world. You barely had to leave your luxurious building for any thing. We'll take care of you. So, condos bulked up on the extras - squash courts and indoor heated pools. And so, many of the 80s and 90s condos had some pretty hefty maintenance fees right from the start.
Newer condos, for the most part, tend to have fewer perks because they want to keep the maintenance fees down. Does this always work? Not always. If a condo is not able to build a decent reserve fund for a rainy day, then they have to raise maintenance fees. I heard of a condo recently whose reserve fund had been largely tapped out because the elevators had to be replaced only a couple years after construction. So fees went up. The developers, as far as I know, didn't pay a dime.
Still, 80s condos could have higher maintenance fees for another reason. Old things need to be replaced or updated after a few decades - a new roof, an updated heating system, new fire codes regulations. This will also cause fees to go up.
I'm not trying to steer any one into choosing an 80s condo or a modern one, but it's a good idea to understand the pros and cons of both. There are great 80s condos and terrible ones. And there are lousy modern condos and excellent ones. Still, it's good to know the perks and down sides to each one.
So let's recap:
GOOD THINGS: often bigger size, often less expensive per square foot, a reserve fund that has been established.
BAD THINGS: Could have higher maintenance fees and older building systems and parts may need to be replaced.
GOOD THINGS: Better finishes, more stylish, and less out of date, likely won't need to replace any thing just yet. Less amenities can mean lower maintenance fees. Fewer renos required - just move in!
BAD THINGS: Often smaller in size. With brand new buildings, there's usually a small reserve fund to start. So maintenance fees can go up suddenly once the condo board has an idea of the cost to run the condo.
Thursday, 20 October 2011
I recently chatted with someone who bought a condo downtown around Queen and Yonge for what seemed like an amazing price. A loftie, exposed brick, open concept place that sounded like a real find. But the dream became some thing less dreamy pretty fast when he told me he didn't have any parking at his new home. So now this guy, who does own a car, is going to have to park on some of the most congested park-unfriendly streets in the city. And the funny thing is, he thought he found the deal of a lifetime. But the reason he was able to find a unique, large loft right downtown at a great price is because there is no parking. You take out the parking and the price drops significantly, and for good reason: People love it. And the older they get, the more they want it. Every time I hold an open house whether it's a condo or a reno'd Victorian, one of the first things out of peoples' mouth's is: Where is the parking?
Some might say parking on the street is fine, and they may be right, but that doesn't change the fact that most people don't want to do it. They don't want to come home from work on a rainy day and find every spot within five blocks of their home has been taken. They don't want to get up at 6am to move their car because they have to switch to the other side of the street that day. They don't want to shovel their car out of a snowbank that the plough going by just made.
Even if you never plan to drive a car, you could always rent parking out and make yourself some money. And if you change your mind, maybe you can buy it once you need it- but it won't be cheap. Some estimate that parking spots in key neighbourhoods in downtown Toronto condos can be sold for over $70,000.
I have never heard of a condo that has too much parking. In fact, I rarely hear of a condo that has available parking spots to sell. You may think you're are getting a big deal on that house when you find a place with no parking, but when you go and sell it down the road, the big deal will repeat itself, but you won't be on the winning side of that deal. So, do your future self a favour. Get parking, get parking, get parking.
Wednesday, 12 October 2011
Today I walked out of an open house in the Dufferin Grove neighbourhood, just south of Bloor. It was a beautiful house and every thing had been redone from top to bottom with a professional design firm - open concept, top-of-the-line kitchen, high efficiency every thing. At the end of the walkway was a woman on a bike looking directly at me, waiting for me to be close enough to say some thing.
"How much is it?" she asked. When I told her the price tag of almost $800K, she almost fell off her bike.
Then she confessed to me: "I've been renting in this neighbourhood for years, and I am never going to be able to buy."
She seemed pretty dejected, but I told her, as nicely as possible, that you have to look for a neighbourhood with a bit more possibility, not one that has more or less arrived. The next Dufferin Grove, if you will. She didn't seem very happy with my speech. She wanted to live in THIS neighbourhood in a house that is affordable. She wanted to be one of the smart people who invested in this neighbourhood 10 years ago when it was still affordable. But she wanted 10 years ago to be now.
So often I see this kind of dreaming. People fall in love with a certain neighbourhood, often a pretty one, and they wait and wait and wait for prices to change or for some amazing deal to pop up. The truth is, there won't be any great deal in a desirable neighbourhood. Sellers know when some thing is working. And they are not just gonna suddenly list some thing that's substantially lower in price than their neighbours.
I told her her she needs to head a little north toward Wallace Emerson for some better deals. Already there are clear signs that this location is improving. Still, some people will go to an emerging neighbourhood and see the glass half empty - the commercial strip that seems patchy, some houses that seem run-down, the longer car/bike-ride to downtown. And those people will be renting for a long time.
Tuesday, 4 October 2011
For well over a hundred years or so, we all know that large North American cities, whether it's New York, Toronto, Montreal or Miami have been built on immigration. The result: Culturally distinct "ethnic enclaves" that have grown from a common immigrant base. You could probably find a Little Italy or Chinatown in almost every large city on the continent. Even the gay villages of many urban centres can be considered an ethnic enclave of sorts. They add their own character to a given neighbourhood and contribute to the appeal and cultural diversity of a city as a whole.
The funny thing is that this kind of city neighourhood is changing, and has been changing for awhile. There are a lot more non-Italians in Toronto's Little Italy than Italians, and a lot more Italians outside of the city in Woodbridge. New immigrants are not necessarily heading to the city any more, and as a result, the population of a given ethnic enclave is becoming a lot more complicated.
Take Little India in Toronto, some times called Gerrard India Bazaar. South Asian business still dominate here down Gerrard street, but a change is under way. In the 70s, it became a destination for new arrivals from South Asia, and a distinct part of Toronto was born. Businesses down Gerrard Street between Coxwell and Greenwood were almost all South Asian owned. Many Indian-Canadians (and other Canadians) would travel to this destination, a distinct part of the city to indulge in South Asian culture. But today South Asian newcomers are heading out of the city in much larger numbers to Brampton, Mississauga and Vaughan. And as a result, Gerrard India Bazaar is having trouble competing with their much larger and fresher suburban counter-parts.
So, what does this mean for this location? It means that places like Little India are going to change. The neighbourhood will not be able to support a commercial strip that has exclusive South Asian businesses. I imagine it will keep some of the cultural flare of South Asia- a destination for great food, and products from India, Pakistan, Sri Lanka, Bangladesh and even Afghanistan, but there will be other businesses that reflect the newer population buying homes in this neighbourhood, mostly made up on non South Asians. As prices become too high in Leslieville and the Beach, there will be more pressure for more buyers to buy in this less expensive area and alter the local South Asian population. I imagine this commercial strip will begin to an have an influx on new businesses that will mix with the stronger South Asian businesses that survive. Already I've seen the obligatory independent coffee shop emerge right on Gerrard Street, just west of Coxwell - a good sign of a more multi-faceted neighbourhood to come. Still, there's no guarantees, and there could even be a period of decline where some of the businesses close down and the Business Improvement Association in the neighbourhood must encourage other businesses to come in. I, however, think this strip could become some thing very interesting.
How long this will take is any ones guess but the potential is here for Little India to become like Greektown on the Danforth where Greek businesses mix with organic super markets, excellent bakeries and sushi joints run by Koreans.
Saturday, 1 October 2011
You know, I went to a nice little restaurant, last night, called Zocalo. Less than year old. It was set up on Bloor Street near Lansdowne and Bloor, an intersection famous for it's low-end strip joints and seediness. Despite the neighbourhood, the place was full. Great food at a very reasonable price. Happy customers that kinda felt like they just discovered a well kept culinary secret. I think there's some thing to be said about being a pioneer in an emerging neigbhourhood like Lansdowne and Bloor. But what does a successful business have to do with residential property demand, you ask? Well, a healthy commercial strip leads to a strong/cool/in demand community, then, eventually, it becomes a destination that every one wants to travel to, a place too expensive to buy unless you bought early or you have money. If you're looking for a home close to transit that I believe will have some of the best appreciation over then next 5 to 10 years, then consider this neighbourhood, whether you call it the Junction Triangle, Bloordale Village or just Bloor and Lansdowne, the seeds have been planted, and good things are gonna happen here. It won't happen overnight, but at some point the character of this corner is gonna change.