Source: Toronto Star
Realtors call them “condo alternatives” — houses that may not offer the space and prime locations that a whole generation of baby boomers came to take for granted. But they do offer a backyard and one or two bedrooms at well below the average sale price in the GTA, which hit a record $613,933 in March.
Even the average GTA condo sale price hit $372,827 last month and is poised to surpass $400,000 in the city of Toronto for the first time.
These often tiny, imperfect houses — especially if they are within reasonable distance of major transit lines and shopping — are quickly disappearing and in high demand from first-time buyers, flippers and investors looking for a cheap rental property.
Surprisingly, about 90 houses sold for under $500,000 in the sought-after 416 region in the first two weeks of April’s peak spring buying market.
Admittedly, most were in areas once considered a tough sell.
Meet four happy — if nervous — couples who defied the odds and found a decent house to call home with a reasonable commute to the core.
LIST PRICE: $449,000
WHERE: Keele St. halfway between St. Clair and Eglinton Aves.
WHAT THEY GOT: Detached with no parking, 3 bedrooms, 1 bathroom in “as is” condition, a 20-by-100-foot lot
HOW: Savings and proceeds from sale of condo at Don Mills and Sheppard.
Justin Lau, 29, and his girlfriend Inge Boerma, 25, lost seven bidding wars in the east end before looking west. This house is on a busy street and needs work. But it’s halfway between the St. Clair streetcar line and new Eglinton LRT, a 45-minute drive to Lau’s Richmond Hill project management job and a 10-kilometre bike ride from Boerma’s fitness-related work downtown.
“I can’t believe a house that size is half a million dollars, but that’s what people are paying. I’m not too concerned that Toronto’s housing market is going to crash, but there may be a pull back.” — Justin Lau
LIST PRICE: $399,900
WHERE: Balfour Ave. in Danforth and Main St. area
WHAT THEY GOT: Semi-detached, no parking, 2+ bedrooms, 1 bathroom, a 12.5-by-100-foot lot
HOW: Savings, down payment help from dad, needed CMHC insurance
Web developer Simon Grossman, 35, and his fiancée Alison Britt, 34, a U of T arts major, lost out on five properties before beating out six bidders in March for this semi close to the subway and the Main GO Station. The couple saw “lots of really scary houses” under half a million. They won despite making their offer conditional on replacement of an outdated electrical box.
“The trick for us was finding a place where we would be comfortable if the market crashed and we were stuck there for 30 years. This is a tiny place — it looked much bigger in the pictures — but it’s cozy.” — Simon Grossman
LIST PRICE: $469,900
WHERE: Corbett Ave. in St. Clair and Runnymede area
WHAT THEY GOT: detached, lane parking with garage, 3 bedrooms, 2 bathrooms, 16-by-112-foot lot
HOW: RRSPs, investments, savings and needed CMHC insurance
Comptroller Zahra Hirji, 29, and her animator partner Jodi Sandler, 31, knew they’d found a rare gem right away: a detached house in the city of Toronto for less than half the average price, even if the area is in transition. Both their mothers were quite vocal that the place was too tiny, too expensive and in need of too much work. But Sandler delights in having a home office.
“It’s a decent-sized house. I think it paid to jump in just a little bit early in the year (January), so we didn’t have a lot of competition and a bidding war. We were prepared to do a bit of work.” — Jodi Sandler
LIST PRICE: $499,000
WHERE: Rockwell Ave. in St. Clair and Caledonia area
WHAT THEY GOT: semi-detached, mutual drive, 3+ bedrooms, 3 bathrooms on 17.5-by-100-foot lot
HOW: RRSPs, TSFAs, money from their September wedding
This semi showed poorly when newlyweds Shae Greenfield, 32, who works for the province, and his wife Sara, 29, who works for a non-profit, went to see it April 2 after 40+ days on market. They considered it a plus that the house needs work and the area is in transition. They made an offer that night, good for just two hours, after the price dropped from $509,000.
“We talked about holding off and saving up more money to be able to buy more house, but at the rate house prices are climbing, we felt we’d probably end up moving backwards.” — Sara Greenfield.
The spring market in the Toronto area has been especially frantic the past two or three years as first-time buyers grow more concerned that a housing correction isn’t coming anytime soon and they’ll have to jump in before prices climb even further out of reach.
At the same time, listings have seriously lagged behind demand.
That supply-demand imbalance helped push home prices up 10 per cent year over year in March.
Breaking into Toronto’s housing market has become far tougher than ever, according to research compiled for the Star by TD Economics economist Diana Petramala. She was co-author of a recent TD report that warned the GTA is fast becoming the Big Apple of the north, thanks to a decade-long housing boom that has eroded affordability.
Back in March of 1996, the average GTA home price was just $196,476 — about $280,394 in today’s dollars.
The average GTA income back then was $49,374 — just over $70,000 when inflation is factored in. While annual incomes were much lower among young buyers aged 25 to 34 and 35 to 44, at an average of $27,879 and $35,367 respectively (that equates to annual salaries today of $39,789 and $50,473), they were still enough to make home ownership a real possibility.
As of this March, however, the average GTA home price hit $613,933.
But that includes resale condos, which now account for a considerable portion of overall GTA home sales and distract from the fact that the average price of a fully detached house in the 416 and 905 regions combined was $787,388 last month — and over $1 million in the sought-after city of Toronto.
GTA incomes this year, as forecast by TD Economics, are expected to average $91,005, effectively the same as 1996 salaries for those in prime house-buying years of age 25 to 34 and 35 to 44 at just $38,591 and $59,393 respectively.
Interest rates have provided some buffer for today’s buyers, given that mortgages came with rates averaging 7.9 per cent in 1996, compared to just 3.99 per cent now. Rates are much lower, about 2.7 percentage points, for those locking in to a five-year mortgage today.