Monday, 25 June 2012

Alderwood: A Suburb in the City?

Alderwood’s not like the other emerging Toronto neighbourhoods. There’s big trees, big parks and generous lot sizes, but there’s no main street with clever new businesses to help it take off. The closest thing they have is Brown’s Line which is mostly functional. There is, however,  a great collection of shops at the bottom of the street where Brown’s Line ends and meets Lake Shore Avenue including an indie coffee shop, a  truly yummy empanada take-out, an authentic Mexican restaurant, and a fancy burger joint.

But Alderwood really isn’t about the commercial strip. It is more of a suburban part of Toronto that has much better access to the city than the newer suburbs further away. As an inner suburb, it has all the pluses of the burbs – nice, big yards, more space, detatched homes. Unlike other suburbs, you can easily get around to just about any where. The Gardiner and the 427, are easily accessible. And if you’re heading downtown, on transit, the GO station is not too far away.

Because it was once farmland, the steets are still named after farmer’s of the past where Farmer Brown became Brown’s Line and Farmer Horner became Horner Ave. With homes built in the 1950s, there is a large collection of bungalows. Now don’t let the word “bungalow” scare you off. Some of these bungalows are a decent size and have great layouts. The smaller, scrappier bungalows tend to be bought up by developers and replaced with a much larger, newer home.

Best of all, because it is an older suburb in South Etobicoke, it has a lot of mature trees in the neighbourood giving it a calm, leafy feel. If you’re a gardener, the soil is rich and less clay-ish than other parts of the city. Plants love it here. And if you’re lucky, you’ll live close to the Etobicoke Creek which is a great place to walk your dog in the ravine. You will be surprised by how much wildlife actually exists so close to the city.  Just be careful with your small dogs. There’s coyotes in the ravine!

Monday, 18 June 2012

The Truth Behind Bidding Wars

Like bees to honey, when we see the word"bidding war" in a newspaper or magazine headline, we cannot resist the sweet temptation to read on, even if the article that hooks you has little with the topic of a bidding war.

Bidding wars are simply a way of life in many parts of Toronto. Or that's what we're lead to believe. There's usually at least one article per week about a property that sold for WAY over asking. So, after you read enough of these, you begin to think that all houses sell for over 100K.

The truth is that bidding wars are not as prevalent as every one believes. And there are times when a home receives more than one offer and still ends up selling for under asking.  In some neighbourhoods, they are the norm, in others, much less so. Many bidding wars are a result of a hold back. That is, the seller will not take any offers for a good week or so to allow potential buyers to see the property. Then offers are accepted on a certain date.  The belief is that if you get enough people to the table to bid your house, they will lose their minds and go crazy with their wallets in a bidding war. And some times minds are lost. Other times, no one steps up to make an offer. 

In terms of this particular moment in time, here's what I am observing:

1. HOUSES RULE: Houses are more likely to go into bidding wars more than condos. 
2. STARTER HOMES: Homes and condos in the starter home range are more competitive with new buyers. 
3. STAGING WORKS: Homes that are staged and look amazing will more likely bring in more buyers.
4. THE RIGHT HOOD: Surprisingly high end Rosedale will see less bidding wars than Leslieville or Riverdale or even the Danforth Village. Neighbourhoods on the upswing or some emerging neighbhourhoods in the later stages will bring more offers in.
5. PRICED BELOW MARKET: Homes can be listed below what the seller will accept and usually below market value. This one drives me nuts. I have personally experiences sellers who have priced their home for $50,000 under what they really want for their home. They price for X and want Y.  The problem is that the buying public believes when a home is listed at a certain price, the seller would accept that price or better. The truth is, you can offer the exact price of the listing,  but the seller doesn't have to take it. HOWEVER, the seller cannot continue to offer the house at that price. That's false advertising. So, they must relist at a price they are willing to accept. I'm not the only one who feels frustrated by this practice. My collegues Mel and Brendan have expressed there frustration in this blog: click here.

So, that's Coles Notes on bidding wars in Toronto right now. And I emphasize right now.  The presence of bidding wars in this city are in a constant state of flux. The market, the psychology of the buyer, the culture of real estate is always morfing into some thing new. The trick is to have an idea of what your home is worth and then construct a marketing approach to your home on how you are going to sell it. And if you're a buyer, have an understanding of what price homes are SELLING and not what price homes are being LISTED. 

Monday, 11 June 2012

Residents' Groups: Friend or Foe of Toronto?

Toronto is a city of neighbourhoods. We've all hard this countless time. It's all a part of the Toronto brand. And though this point may have been driven home a little too much at times, it's true! In fact, we are becoming increasingly more splintered into a greater buffet of neighbourhoods. And I think that's a pretty amazing thing.

Even neighbourhoods that have never existed before have sprung up in the last 10 to 15 years with a new identity and a group of residents that are proud to be a part of their little village in the big city. There's the Junction Triangle, Liberty Village, and even the Distillery District that just didn't exist as identifiable neighbourhoods not too long ago. 

And what makes these areas successful are the people who live there. They form residents groups, condo boards and business improvement associations. They encourage fresh businesses to come to a given area. They bring in farmers' markets. They go to derelict land and plant pretty gardens. They make you walk through your neighbourhood with a feeling that things are getting better, that life is getting better, and that you should have pride in living in your neighbourhood. And for all of that, I give kudos to the residents' groups of Toronto. 

But it's not all flowers and farmers' markets. These groups can be quite powerful as well.  They can shut down some of the biggest developers in the city.  When a developer was planning on putting in a massive Smart Centre south of Eastern along the southern boundaries of Leslieville with a Walmart as it's potential anchor, the neighbourhood rose up in revolt and stopped the development in its tracks. In this case, the villain, Walmart, is an easy target as the bland, box store that could decimate any distinctiveness a little neighbourhood may have. So, it's easy to cheer on the residents' group here. 

For the most part, I am thrilled that neighbourhood assoiciations exist to keep developers in check. Still, I've seen neigbourhood associations get crazy. And strangely, it often happens in more established neighbourhoods where the residents don't want any thing to change. A classic case of NIMBYish (Not in My Backyard). So, at at time when the Beach could use a bit of an overhaul on it's tired commercial strip, the residents association rises up and shuns the idea of a condo being built, a condo that is mid-sized, and will bring in more residents to the area, and in turn, more people to support better businesses. 

I don't want to weigh in too much here on this particular debate, but I do want to make a point: The problem with some residents groups is that they want to block every thing. Keep their neighbourhood from changing in any way. There's no doubt we are living in a city where there is going to be more densification in every corner of Toronto. So, get used to denser living. Dense living does mean we may have less privacy, and more traffic, but it also means better businesses and more vibrant commercial hubs because there is a larger base to support the businesses. I've witnessed some interesting condos get turfed for the wrong reasons by the power of a residents group. I've also witnessed the same group block a really bad condo idea. Developers do need to be kept in check, and even shut down at times, but I think it's wiser to come to the table with some creative ideas on how to make change work, not screaming: No way! Not in my neighbourhood! And hopefully this will lead to the right kind of change in your corner of the city.  

Monday, 4 June 2012

The Effect of Toronto Land Transfer Tax on the Price of Homes

I get it. Toronto doesn't have any money, and they need to collect money to fund the things that cities do. I'm not here to weigh in on how Toronto should do this. Yes, there are some inefficiencies in local government, but Toronto has had a lot of services downloaded on it, federally and provincially, over the past 15 years. So, as a solution, the Toronto of 5 years ago decided to create a new revenue stream. And that revenue stream came in the form of the Municipal Land Transfer Tax. So, for those of you who are not familiar with this, we already have an Ontario Land Transfer Tax, but as of 2008, we also have a land transfer tax for Toronto. So, if you buy a property for for $500,000 you would have to pay $6475 in Ontario tax and $5725 in Toronto tax. Of course, if you were a first time buyer you would be forgiven around half of this, but if you're not, that totals $12,200. That's a lot money. Again, I'm not here to weigh in as to whether the city needs money - it certainly does, but by almost doubling land transfer tax, you do alter the local real estate market.

Toronto is the only city in Canada that charges a land transfer tax on the purchase of a new home. Last year the City was expecting $240 million, and they received $330 million. So, it's working to generate money. That's for sure. 

The funny thing is, many believed that an additional tax would cool prices off a little in Toronto. If buyers have to pay more in land transfer tax, the actual sales price of homes would drop a little so buyers could cover their extra tax cost. 

The crazy thing is: The exact opposite is happening. But why? Because current homeowners just don't want to move. If someone is planning to sell their starter home and move up to some thing bigger, and now land transfer tax is almost twice as much, it cost a lot more to move. So, they don't sell. However, if you are a first time home buyer, the government may rebate a good portion of your land transfer taxes. In the example of the $500,000 house, you would pay about half the land transfer tax if you qualified for the rebate for the first time buyers plan. If you buy a condo for $300,000, then you pay a mere $975. Pretty good for first time buyers, if they qualify. The land transter tax has a much smaller impact on their finances. So, first time buyers are not discouraged. The result: New buyers still want in. Those who already own a home and are consider selling, don't move because they don't want to pay all the land transfer tax.  So, a situation has arisen where there are more buyers than sellers. And we all know what that mean: more bidding wars and higher prices from fewer listings hitting the market. So, as a result the land transfer tax has played a key role in making the price of property more expensive in the city. 

I have a feeling that the city is not going to give up on such a revenue stream very easily, despite some grumblings. It's kinda like income tax. It was only suppose to be for a temporary tax back in 1917 to generate money for the war, but once the money came in, the goverment could not live without it.