Tuesday, 29 October 2013

Detached Homes: The New Royals of Property Types

People love detached houses. And really, who can blame them? You don't have a flimsy party wall separating you from your neighbours with the colic baby, or the neighbours who like to make love loudly to AC/DC.  Alternatively, you may be the one with the baby, or the AC/DC music to get you in the mood, and you're tired of the neighbour's complaints. With a detached house, these concerns are much less of a worry. Sound has much more trouble traveling through two exterior walls and the outdoor space between you and your neighbour. It's a much valued, extra layer of privacy.

Plus, there's the light. Not always guaranteed to be brighter than their townhome and semi cousins, many detached homes still receive more sunshine from more windows of their four exterior walls.

While most buyers are open to semi-detached houses, row houses or condos, especially since they have smaller heating bills due to the fact that they share a wall or two or more,  I do have clients who have insisted on detached homes. And judging from the stats, their decision have been a wise one.

The truth is, detached homes are rare in Toronto, especially in more central downtown neighbourhoods. They are often located in areas that were once considered "suburban" even if it was the suburbs of the Annex or High Park of 125 years ago.

Of course, no one is building detached homes any longer. In a city like Toronto that is undergoing a great deal of intensification, detached homes are not the wave of the future. With land at such a premium, a lone home is rare in the city of Toronto. Most of the time, as I often mention, new land is used for the building of condos or townhome condos or something denser and more suitlable to the future of this city.

In terms of price, the detached house has already gone past the affordability of most Canadians where a 416/647 Toronto detached houses has an average price of $856,169, up 10.2% from last year according to the Toronto Real Estate Board. Semi-detached by comparison are up 1.9%.

Even if you have never really been concerned if you had a semi or a row house or a detached house, detached houses are proving to be very sound investments. In recent years, this property type has clearly pulled ahead to be the front runner in terms of appreciation.

I don't want to overplay this too much, since I have found that neighbourhood, and the condition of the property, and how a property is marketed, affects the selling price more than whether it is detached. Still, in the hierarchy of home types, there's no denying that detached is king!

Thursday, 24 October 2013

The Toronto Housing Market In 20 Years

Something odd started happening in Toronto a few years ago. The condo market, and the market for houses divorced, and decided to go their own ways. It was an amicable split, but I'm not sure anyone would have guessed that the two styles of properties would not be together any longer.

Just before the breakup, the condo market levelled off, even dipped in price in a few places, whereas the houses have increased substantially in price each year. Where there has been a steady stream of new condos coming to market, there is a growing shortage of houses to be bought. Many buyers have been putting up their mitts for bidding wars in Toronto neighbourhoods where you'll find increased competition in the housing sector.  With condos, there is often a little room for negotiation. They really are two different markets functioning in the same city. Weird, I know.

Both are a product of intensification policies that were put into place 10 years ago. The idea was to keep a portion of the GTA green. Essentially, we are no longer allowed to develop on the green belt and expand out to sprawl and unwisely gobble up all our farming land and natural surroundings. And really, who couldn't get behind that? So, developers were encouraged to build higher instead of outward.

Because of this policy, there has been a lot of condos built in the last ten years. Visually speaking, Toronto  has changed dramatically. There have been very few houses or even low rise condos and town homes that have been built. And now, builders cannot keep up with the demand for lowrise housing acccording to the president of Realnet, George Carras.

Though there has been mounting pressure for the government to change its policy to make low rise housing more cost effective to build, the chances are, in my opinion, things will not change much. Even if they allow builders to build on the greenbelt, there is still a demand to live in the city. This is a trend all over the Western world, not just here in Toronto.

But what does the divorce of the housing and condo market mean?  Well, it means Toronto will be a different place in the future. So, I'm going to make some thought-out predictions of Toronto's market in 20 years. Of course, no one can anticipate the twists and turns of a housing market based on the economy of the world or the demographic shifts to come. I'm certainly no Nostradamus.

Still, I can make a few educated guesses, based on intensification policies and my hunches as full-time real estate agent with a love of how real estate works in this city. And here's are my thoughts:

 1. Houses prices in the green belt will continue to soar. No surprise here. Lowrise homes will become a rare and valuable commodity. It will be very much like the current state of real estate in Vancouver where the average house cost $700,000 more than a condo. It means that houses will be a strong investment. There are fewer of them, and with a growing city, they will only be in greater demand for the years to come. It doesn't necessarily mean that condos will tank in comparison, but some of them will always be a starting point for entry level first-time buyers and up.

2. Transit will finally grow. That's right, I'm optimistic about transit! Currently, transit is a disaster in this city, and everyone knows it. Toronto has been dragging its heels for too long, and now everyone is waking up to this reality. It will become the number one issue of this city. Though there's not much money for it, the Relief Subway Line will be built along with the Eglintion subway/light rail and the Scarborough subway. From a real estate point of view, it is often wise to invest near these new transit lines.

3. Snazzier Condos. Because land in the city will be harder to find for builders of the future, condo projects will be more daring with their designs for the precious land that is left. Some recent condo projects have had a lot more thought and design put into them than 20 years ago. That will continue. Greener buildings, more unique construction and a better fit for a given neighbourhood.  Let's just hope the units don't shrink any smaller than they already are!

4. Bungalows will be an endangered species. No builder in his or her right mind would build a bungalow now in Toronto. Lots with bungalows will be bought up for their size, and builders may just build huge houses or if the neighbourhood allows it, they will build three town homes where one bungalow once stood. And even if you are not ready to knock down your bungalow, you may consider a bump up where you add an extra floor. It's happening all over the city right now from Alderwood in the west, to the Danforth Village in the east. That trend will keep on going. So long sweet bungalow!

5. Backlane houses. Right now this city does not allow for backlane houses. Other cities like Vancouver and many U.S. cities certainly do. Because there will be such a demand for houses, I suspect the bylaws will loosen up to allow for backlane houses. That could be wishful thinking on my part, but you never know.

Some of these predictions may be  obvious to some or fanciful to others, but consider what has changed in this city in 20 years. I'm sure very few future real estate thinkers of 20 years ago would have predicted that prices of houses would climb so high, They would likely not have guessed that our skyline would be completely transformed or certain neighbourhoods would rise from their derelict conditions to be centres of trendiness and community. I may not nail all my predictions, but I'm pretty sure the Toronto of 20 years from now will be a very different place.

Wednesday, 16 October 2013

Getting There First

Do you ever notice that some of the best condos in many Toronto neighbourhoods are often the ones that got there first? What do I mean by that exactly? Well, take Liberty Village for example. Here was a place that 10 to 15 years ago was pretty much empty with the exception of some old warehouse buildings longing to be converted into condos. Then some developers had the idea to buy up available warehouses and transform them into condo lofts. And it's these condos, in an emerging neighbourhood, that often turn out the best.

Why, you ask? Well, for two reasons. First, the land that was purchased when there was very little infrastructure in place. That means, no grocery stores or pharmacies or hipster restaurant or espresso bar nearby. For a location like Liberty Village, putting the financing together may not have been easy for a developer, but the land had been much less expensive when there was a risk that no one would want to live there. So, the condo builder is able to spend money on other things - like a better design and nicer units. For buyers, since the builder is gambling on a new area, then initially it would have cost less to purchase. Still, even if you buy your "first to arrive" condo, once all the other condos have built up around it, you still win. The units may not be as inexpensive, but you will benefit from the better design that was put in place long before you arrived. Those condo builders who come later to the game usually have to spend more money to obtain the land, and they have to build higher (city permitting). Since they spend more on the purchase of the land, less money goes into the condo, and the design is not as fancy or the layouts are smaller to make more money off of more units.

Take the Toy Factory Lofts in Liberty Village, for example. One of the first condos to open in Liberty Village and still one of the best ones. Some of the newer ones are, architecturally speaking, unimaginative and dull, and surprisingly pricey. Same goes for the Distillery District. Pure Spirit was one of the first ones to arrive, and is still one of the best designs I've seen.

In areas that had a lot of vacant land before they became condo meccas, like Liberty Village and the Distillery, it's easy to see why the early bird gets the worm. Corktown will be interesting since all the buildings went up all at once - no one actually got there first, though some can argue that a few arrived a little earlier than others. Regardless, it may be tough to pick the best one of the bunch yet. What Corktown does have over an area like Liberty Village is a planned neighbourhood. The parks, the infrastructure, the size of the building were all smartly laid out first to fit in with adjacent neighbourhoods and natural areas. It did not run the risk of becoming overdeveloped and too densely populated. Overdevelopment can make transit and driving a lot more unpleasant than it needs to be.

In the future, Toronto still has some areas that may still undergo some condo-ization. Once that GO station is built is Weston, I suspect they will start to see some condos going up there. Regardless, if you are a risk-taker who buys the first condo in the neighbourhood where no condo has gone before, or if you are buying in one of the first condo buildings to go up in an area that has already been completely filled up, buying those "get there first" condos can be a smart purchase. I wouldn't say it's a hard and fast rule, but it's a good rule of thumb.

Thursday, 10 October 2013

How to Name (And Not Name) a Toronto Condo

You know, I often wonder what is going on in the marketing departments for many condo projects. How do they come up with a name of a Toronto condo? Why decide something should be called "X" or "Aura" or  "Ice"? When I refer to a given condo name to some of my clients, they often groan a little,  disappointed at the potential reference they may be using in the future if they tell they're friends or family to come and visit. It seems to me that the naming of many condos have not been terribly successful in Toronto, and there is room for improvement.

I think the ones that drive me the craziest are the ones that take zero pride in living in this city. Some condos name themselves after somewhere else that is suppose to be better than here. These names are chosen to make the condo owner feel mildly superior to the rest of us because they get to live in a paradise, fantasy resort all year around. We have, for example, condos called "Malibu" and "South Beach" that have nothing to do with their location in Toronto, but just gives you the idea that there's woman running around in bikinis all day, and it's summer all the time. You have the feeling that someone sexy is going to rub baby oil on your shoulders by the pool. These namings seem to just miss the mark, and underestimate their buyers.

Then there's the one's that have no imagination at all. They are named after the address where the condo is located. Though this does make it very easy to remember where you live, it's a little drab to say you reside at "1 King West" or "460 Yonge Street". There's certainly no confusion, but it does lack magic.

Then of course, you have the condos that name themselves after a coveted and loved Toronto neighbourhood, but they're not really there. I'm thinking specifically of the rather lengthy condo name of "The Village by High Park Condominiums". Not necessarily a bad condo, but it's not really by High Park. In fact, it's not even in the High Park Neighbourhood. At the time, I guess it wasn't impactful enough to say that you live a condo in the West Bend /Junction neighbourhood. Too bad, because the Junction carries a lot more cachet these days.

Finally, out of the lame-named condos, there are those that are excessively aspirational. If you would like to be more than just a citizen of the world, and feel more like a king or queen, you may consider  living at "the Royalton".  Some condo names aspire to be something so ridiculous that the name is almost good in a bad way . Take 77 Maitlaid or "Celebrity Place". I suspect, however, that the marketing department was very serious when they came up with this campy name.

Now, some of you may be saying, "Dave, don't be such a crank. Not all of these names are so bad in Toronto." And I couldn't agree more. A lot of the coversion lofts have taken their names from what the lofts used to be before they were living spaces. It's an ode to Toronto's past. It's easy to take pride in that. There's the "Toy Factory Lofts", the "Printing Factory Lofts"," and "the Candy Factory Lofts" I mean, who doesn't like candy and toys? You don't have to be a conversion loft to make reference to your roots. Take the condo named "Radio City", the old CBC centre for radio. When people ask you where you live, you say, "Radio City" and when they ask how it received such a name, you have a little story to tell them.

History aside, I like the name "the Duke". There's something classy about it without being over the top. It's kinda like David Bowie (also known as the Duke), and it references its neighbourhood's closest main intersection by taking the "Du" in Dundas and the "ke" in Keele to form its name. Not the cleverest thing in the world, but catchy!

I even like the condo named "Picasso" With any old, plain building, I would find this name pretentious, but because the building itself looks like something Picasso would have made if he was a designer of condos, I think it works. Can't you see a little Picasso influence below?

Now, as a much needed disclaimer as a real estate agent, I would never suggest to any one that he or she or they should pick a condo based on a name. Some great condos have ridiculous names. Still, in the condos to come, I  hope a little more imagination goes into naming. No one really wants to pretend they live somewhere else like "The Manhattan" or the "French Quarter". So step up and let's get more creative.  I'm hoping that our condos with the best names (and designs) are coming our way!

Wednesday, 2 October 2013

Can You Save Money If you Sell Your Own Home?

A long time ago, before I started my real estate career, but after the dinosaurs disappeared, I was a producer for several lifestyle series on broadcast TV. Many of which were geared toward real estate. At one point, I developed a show where real estate agents squared off against FSBOS (For Sale By Owners). In developing the show, I spoke to several real estate salespeople and several FSBOs to see who could do a better job of selling a property at the best price - the owner or the realtor. The show never made it past the development stage. During my research, I learned that there were very few FSBOs that were successful. Most had no clue about what is involved with trying to sell a property. There were some successes, for sure! Usually FSBOs who either had some kind of experience as a builder, or some connection to real estate that allowed them to understand what was involved. I would say that most of the time the FSBOs I came across failed to understand what was required in selling a property.

Nowadays you have discount brokerages like Comfree and Property Guys who promise to put your home on the MLS for a smaller fee than the usual 5% real estate agents charge, plus offer you some guidance as to what to expect as a seller. And this appeals to some sellers. The common belief circulating out there goes something like this: If you list your property on to the MLS, you can sell it yourself, and not pay as much commission.

Unfortunately,  I think there are only a few people who can pull this off. For the most part, even if you can sell your own property, the sales price is often lower than if you paid full commission. Why you may ask? If the condo unit or identical house next door sold for a certain amount, why can't the seller attain the same price and save the commission?

Here's why:

1. First of all, most of the buyers out there will be represented by a real estate agent. Traditionally, a seller that goes with a full service brokerage will give 2.5% to the buyer's salesperson and his or her brokerage and 2.5% to the seller's salesperson and their brokerage for a total of 5%. So, most buyer agents will likely make sure that any seller using a discount brokerage will pay them. If they are not paid any thing by the seller, then the buyer has to pick up the 2.5% commission, and they are usually not too keen to do this.

2. Buyers believe they should pay less for those who are not paying any commissions to buyer or seller real estate salespeople. Let's say a buyer does not have a realtor. The seller would think this is great, and he or she doesn't have to pay that 2.5% commission to a buyer agent. The thing is, when a buyer approaches a FSBO, they often take off the 5% when they put in an offer. So, if the unit next door to you that is exactly the same as the one you have for sale and it sold a week ago for $500,000, the buyer is going to look at that price and remove 5% or $25,000. Because in reality, your neighbour's house is really worth $475,000 when the commissions are removed. If you are not paying commission to anyone, then your place is worth $475,000. The bottom line: Buyers who are going to FSBOs are looking for deals too. They are not going to pay you more money for your property. They want to pay less since no professional real estate salespersons are involved. They want a deal.

3. Real estate sales have become more competitive and complex. It's not just about slapping a listing on the MLS. You need a marketing campaign. You need proper staging. You need a negotiation strategy, and you need to know the market around you well. The truth is, owners are not always the best at determining the value of their own home or unit. They will either overprice it and it will languish on the market for days, or they will sell it to a neighbour for way under asking to the bliss of the neighbour who took advantage.

4. There's a lot of work involved. Most people have regular jobs. So, they are not always available to answer question or make appointments. It may not sound like much, but most agents come with a front desk that will book every thing, plus an agent will often seek out feedback. Real estate salespersons will also chat with their fellow colleagues about real estate. They do it all day. They love to talk about it. This chit chat is often the way other agents find out about properties.

5. Real estate salespersons will drive you nuts. The truth is, most real estate salespersons know that those who try to sell their own properties do not have much success. There are even those who specialize in picking up FSBOs as clients when they mess up.  So,  you are going to be hearing from real estate agents. They will be circling your property like a carcass if it fails to sell.

I know why sellers sometimes become frustrated with agents. I am still surprised sometimes at how little some real estate salespersons do when they are selling a property. I can see why sellers think they can do it themselves. And I'll say this one more time: Some can! And I tip my hat to you. But for most FSBOs or those who prefer to take the short cut out there, I believe you will lose money instead of save some. You will save the money on the commission, but you will likely sell your home for less (if at all). In the end,you will likely do a lot more work than you think.