Monday, 28 May 2012

The Early Signs of an Emerging Neighbourhood

Once a neighbourhood starts emerging - and I mean fully emerging - there is no stopping that kind of momentum.  In some part of Toronto, some locations have transformed from grim and even creepy to celebrated travel destinations raved about in the New York Times. We all know Ossington went from criminal gangs to fashionable night spot, and Leslieville went for Riverdale's ugly sister to the belle of east Toronto. But the ones who are really patting themselves on the back are the ones who got in early. The ones who had the foresight, the bravery and maybe just the dumb luck.

My first home in Leslieville I bought for 242K. It was sitting on the market for weeks. The sellers really didn't do much to improve it's curb appeal, and Leslieville was kinda cool, but still a little unknown eight years ago. After 5 years, some renos and a stager, plus the rise of Leslieville as a neighbourhood, I was able to sell for almost 540K after 15 offers. I know. Aren't I the greatest thing? Well, not really. I thought those who bought it paid way more than they should have, but they turned around and sold it for 680K two and a half years later. So looks like the the emerging continued once I sold. It goes to show you that an emerging neighbourhood can still outpace the rest of Toronto, even at its later stages, but that's not what I"m talking about today.  

I'm talking about getting in early and holding on long enough. So some things to look for in a potential emerging neighbourhood that is still in its budding phase:

1. a good commercial strip: Even one indie coffee shop is a good sign. If you don't have that, is there a commercial strip that has a community feel? Is the city planning on fixing up the area? Is there a growing community involvement? Some areas are not near a great commercial strip. Neighbourhoods like Alderwood, though, are near great parks and ravines. So, that helps too. 

2.Proximity. If you're close to an emerging neighbhourhood, people will start to become priced out of that neighbourhood. So, they will look to live nearby. 

3. Transit: Can you get to it? Weston Village will have the Go transit stop soon. That will work well for them. Junction Triangle near Lansdowne and Bloor is right on the subway. 

And of course, you have to be okay with living there. You have to be that person who can see the potential. And if you are, then you'll be happy, and hopefully richer in 5 to 10 years. 

Tuesday, 22 May 2012

What Vancouver's Cooling Housing Market Could Mean for Toronto

It's official. Vancouver's real estate market is cooling. Some may say tanking. Others may say a mild and temporary leveling off. According to the Canadian Real Estate Association, the average price fell by nearly 10 percent in April from a year ago. That's the biggest drop since the recession of 2008.  As many know, Vancouver's real estate market has been smoking hot for a long time, aside from a few blips, making it one of the most expensive cities in North America. So now that the sizzle has dampened on Vancouver, Toronto has picked up the title of "the city with the hottest real estate market in Canada". And because of this, I've noticed that people here in Toronto are worried about what is happening in Vancouver. Should they be? Does a market so far away have any bearing on our city? And most importantly, if Vancouver is tanking what does that mean for Toronto?

I think there are three scenarios that could result from Vancouver's cooling market:

1. Nothing. They're two separate markets with different forces at work. When Toronto had a housing correction in 1989, Vancouver didn't crumble. Also, Vancouver's average home price is $735, 315 where Toronto's is $517,556. That's almost 30% lower than Vancouver. Prices would need to drop in Vancouver by almost a third to compare to Toronto prices.

2. Toronto will cool too. New buyers may be very happy to hear this, though I think the cooling would occur in the condo market, and less when it comes to houses.  The upside will be that developers will have to work harder for new clients by throwing in some perks, and being a little more accommodating when it comes to finishes. Developers tend to get a little lazy in an up market. Sellers should move quickly if they are planning on selling.

3. The Toronto real estate market will surge. Foreign investment has been key to the success of Vancouver. Many of them are now looking at Vancouver as a lousy place to invest. So, since it is easy for overseas buyers to buy homes in Canada, they will start buying more property in Toronto where the market is currently showing an increase of 2.5% from last April.  On paper will still look good.

Personally, if I was a betting man, I would think option #1 would be the most likely. Yes interest rates and government policies can effect both cities, but we have different economies, different pricing and historically we don't always cool and heat up in tandem.

Monday, 14 May 2012

Is King West the new Yorkville?

The other day I had an open house on King West. It was a pretty stylish penthouse suite in a typical condo building for the area. What surprised me the most about this particular open house was the number of people coming through that were heading down from Yorkville.  In the past few years, I have heard many times that King West is fast becoming the new Yorkville. I wasn't crazy about the comparison, and quite frankly King West isn't the new any thing, it's just King West.

But clearly, after my weekend open house, I learned that many people love to compare the two neighbourhoods. Why? Well, the biggest reason I see has to do with the Toronto International Film Festival.  Once centred around the fancy streets and cafes of Yorkville, this juggernaut of a festival has moved it's epicentre to the TIFF lightbox on King West.  And those serious movie-goers and star watchers like to be close to the action. Even if you don't go see any film at TIFF, many still love to claim it as their neighbourhood.

The second most glaring comparison has to do with the pedestrian-friendly, walkable streets of Yorkville. And now, in the King West area, we have the proposed John Street promenade that  would see John Street a walkers-only street. There are some pretty big plans to make John Street a cultural hub.

Then there's the high end factor. Though Prada has not moved into King West yet, it does have it's share of high end, boutique stuff from the Thompson Hotel to Gotstyle. There is even rumours of a proposed  Whole Food grocery chain coming to the neighbourhood on the main floor of the Minto. Just a reminder that Yorkville was the first area of Toronto to receive a Whole Foods.

Now there are some differences as well. King Street is busier, generally younger and closer to the action -whether you want the action or not. The streets are not quiet on a weekend night in the summer, but the theatre is a walk away.

So, now I'm not surprised people make the comparison. Like Yorkville moved from hippi hangout to richie rich, I believe King West will likely appreciate and ascend to high-end fashion destination faster than other parts of the city. So, not a bad place to invest.

Monday, 7 May 2012

Boomers: Are They Really A 'Demographic Time Bomb'?

Oh those boomers. They are a often a well-intentioned and always a powerful lot!  Because of their massive numbers, they have been able to mold our society to suit their interests as they age through it, from the consciousness-expanding hippies to money-making Yuppies. But lately, I've been seeing the term "boomer" associated with some thing that sounds a lot more explosive, namely the phrase "demographic time bomb". It certainly implies that we are going to be altered once again, but now by this big bulge hitting their retirement years. 

As far as real estate is concerned, some writers and bloggers believe the boomers will lead us to a deep decline in real estate values with no recover for a very long time. Their argument goes some thing like this: The boomers are largely responsible for an inevitable housing correction that's not based on interest rates or iffy mortgages, but on simple demographics. Unlike their parents who bought a house to live in it for 50 years, many boomers have moved around far more often and have invested far more heavily in real estate. And since they are one of the most voracious consumers in the history of the world, boomers have driven up the prices of homes to new heights. Soon many of the baby boomers are going to be heading into retirement.  And this is where the bomb comes in. After spending a great deal of their money on real estate, a large number of boomers will need to downsize, relying on their homes to fund their retirement. This leads to a lot of homeowners exiting the market at once and caboom! The housing market takes a nose dive. And since there will be such a glut of inventory left behind, it will take a long time to recover. 

In some ways, I think it's a pretty fair argument, though a little extreme. And the effects of this won't be felt the same in every part of Canada.  From a Toronto perspective, I don't feel there's going to be an earth shattering caboom! Our market will rise and cool like it always has, and it's very likely that the boomers will effect the market as they exit, but here's why I think it won't be as impactful:

1. Immigration. Immigration today makes up 80% of the country's growth in population. And since most immigrants head to Toronto, Montreal and Vancouver, we are positioned pretty well to pick up the slack of any exiting boomers compared to other parts of the country. 

2. They're still here! The boomers are downsizing, not disappearing from the earth. So, they will be buying smaller and easier. Lower maintenance and no stairs. So, despite some current concerns over overbuilt condos, boomers are really going to serve a purpose in the coming years in that market.

3. City momentum. Let's face it, over the last 20 years, cities have had a renaissance. Not just Toronto. Everywhere. Even rustbelt underdogs like Pittsburg and Cleveland have had a rebirth. Back in the 50s, the suburbs were the place to go, and the downtowns of the Western world suffered. But with insane commute times and the cultural appeal of living near or in the city, a lot of people have been drawn back to the urban fold. I can't see this momentum changing any time soon. And as commute times become longer, and city neighbourhoods improve, Toronto will continue to have more appeal. 

So, don't be too angry with the Boomers. You can't blame them for downsizing. And if I'm wrong, and the whole housing market heads south because of them,  there will always be those first-time home-buyers who will be very grateful for a welcome price reduction.