Thursday, 5 March 2015

Suffering from Affordability Angst? Here's What to Do

London is pretty great, right? I think so! But I wonder if it is possible to be too great. Recently, I read an interesting piece on how Londoners are suffering affordability angst (click here for article). Many middle-class, working Londoners are concerned they cannot live in London because real estate prices have climbed so high due to the demand to live there. Of course, London is likely the most coveted city in which to live on this planet. New York come close, but London just has a little more history to it.

Toronto is no London or New York, but I have seen a similar kind of angst developing in Toronto. But should the buyers of Toronto have affordability angst?

I guess the short answer is: It depends. I have many clients who buy houses and big condos in Toronto all the time. Their Toronto jobs often reflect a good salary after years of doing their time. Some have made great investments, and they built equity in their property when they purchased at a less expensive time years ago.  If you have never purchased property and grew up in a big house with a yard and basement rec room on a quiet street, and you would like to duplicate that experience here in Toronto today, you may find that hard to do without a million dollars in some neighbourhoods close to downtown. What looked like a middle class experience in your childhood could now be considered a wealthy one.  House prices, even since the beginning of 2015, have been on a tear. Once again, we are seeing great demand on the limited supply of houses we have in established and many emerging neighbourhoods.

So, what is a Torontonian to do if the are suffering from affordability angst?

Sometimes the focus of discussions on Toronto condos has mostly to do with supply. Unlike houses, there are many condos that have recently been built or are being built in Toronto right now. There has been a lot of discussion that the condo market in Toronto is saturated. This has been stressed year after year, and yet the condo market does not crash. This mostly has to do with the limited rental stock and the limited houses. Those who want to rent turn more and more to condos since the city builds a lot fewer rental apartments these days, though there have been some new ones built recently. Those who don't want to compete with others for houses will find condos less competitive. The condo prices have not skyrocketed. Increases have humble in most condos. In some, there have been no increases in the past three to four years. There will be those who say that they want to live downtown, and condos downtown are too expensive. I have a condo coming out shortly at Queen's Quay and Spadina. I think it is priced well in the context of the rest of the Toronto condo market. It's central, and it has all of those things you like to have near you: nice parks, coffee shops, decent square footage and galleries.  You can still buy here in Toronto at affordable prices.

Still want the house in the established neighbourbhood? It's competitive out there. If you want to win the bidding war, you need to be prepared to go into battle. So, have a plan, know your limit, and see if you are in a position to give a competitive offer. If you are, do it! Houses, in my opinion, are golden tickets in this city for the long term.

Would you prefer to buy a starter home? Well, put on your potential goggles, and let's go look for a house in Toronto. It's still doable.  Now the kind of neighbourhoood you want to live in will depend on your budget. If you are under $500K you will have a hard time close to the city finding a house, though a condo townhouse could be an option. Still, there is renewed interest under way in parts of Scarborough and Etobicoke. I love the housing stock up in Weston too. Beautiful neighbourhood. Some of thehouses look like those in the Annex, but not as central and without the walkable main street. Still, the neighbourhood has great parks and a GO station to connect to downtown. In the east, I think the Danforth Village is still a great option for first-time buyers.

I'm not a big fan of this option for obvious reasons, but if you do not want to spend money on Toronto real estate, then you can rent. Just make sure you invest your money elsewhere. And remember, rents will go up. They have increased along with the prices of homes and condo in Toronto.

This sounds like a reasonable option. The city is too expensive. You are on a budget, but you want space and an big, nice house or condo. So, just leave the city and commute in if you need. But be careful. Not all communities outside of the city are built the same. Some are city planning nightmares. Some are poor investments with poor future prospects. Some are ripe for a renaissance. Hamilton is the place I go on about frequently. There is something in the air in the city, and the momentum is only going to keep building.

With all that said, you can still buy property in or near Toronto in many price ranges depending on where you are. We are not London. We are not there. For now, we seem to be heading in that direction, but we are not there yet.

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