Your Future Awaits! Sorting Out The Real Estate Predictions of 2015

By nature, predictions are whimsical. That's why many of them are wrong. The real estate predictions of 2015 that I have come across are often a mix of doomsday scenarios and rosy outlooks, like every year for the past decade. So, let me filter these predictions, analyze them for you and offer a few thoughts of my own for Toronto real estate in 2015.

Let me start by saying what is a little different in the predictions for this year. Generally, they are fewer of them that are alarmist than in the past. Yes, we are hearing that prices can fall by 15% according to RBC, and yes we have someone named Hilliard MacBeth, an Albertan based porfilio manager who wrote a book entitled When the Bubble Bursts: Surviving the Canadian Real Estate Crash, calling for a nasty downturn in Canadian real estate. She predicts that house prices will fall 50%. Ouch. This may sound scary, but keep in mind that a book like this comes out almost every year. Why? Because these books sell! Think of Garth Turner in 2008 who wrote The Greater Fool: The Troubled Future of Real Estate calling for a 30% drop in Canadian real estate that year and more to follow in the subsequent years.

Even though we have some negative predictions this year, there are  fewer doomsday predictions than in previous years. I have a feeling that the public may be suffering from what I call "CLF" or Chicken Little Fatigue after years of hearing the sky is falling in real estate.  I suppose at some point, someone will be right. Some Canadian cities will have a slip in real estate prices, but not this year in Toronto.

All in all, I find all predictions a little more cautious for 2015. There will be smaller gains, but gains nonetheless. That seems to be the general consensus. Price appreciation but not as much as 2014.

The focus of the 2015 predictions has been largely around interest rates. As the American economy improves, many believe the Americans will start raising their interest rates, and in turn, Canada will raise their rates as well. Most predictions I have read point to the forth quarter for such things to happen. Some worry that the rise in interest rates will effect the housing market. I agree, it will slow it down. Others, however, think the interest rate hike will be the straw that broke the camel's back for the indebted Canadian, leading to a downturn in the real estate market. I don't believe it will cause the real estate market to crash, but it may put the breaks on some very big price increases that have happened over the past few years. I imagine if the rising interest rates start to effect the housing market too negatively, the government will put the breaks on the increases or even reverse them. Housing has become too big of an industry to just let slip.

From a more localized,  more Toronto-centric perspective, some of the trends that have been happening the past few years will become more pronounced in 2015. The low supply of houses and townhomes will remain in great demand since very few of them are built any longer, and the demand continues to increase as the city and region grows. Houses will increase in value at a much faster pace than condos.  Small boutique style condos in improving or established areas will generally perform better than giant condos. The dream of owning a house will still be affordable for some first-time buyers in the right emerging neighbourhood, though condos will increasingly be the terrain of first time buyers were the prices are more reasonable and the supply of new condos keep growing as the city grows.

For those who want a house with a smaller price tag, house hunters will turn to second tier cities like Hamilton where detached houses with a yard are comparable to the price of a one bedroom and even a bachelor condo in Toronto. Access from Hamilton to Toronto will continue to improve. Hamilton will be a good choice for many who love the urban lifestyle. It is still a city of 500, 000 people. Unlike Mississauga or Brampton or Oshawa or any other Toronto suburb, Hamilton does not suffer from suburban sprawl or a dominant suburban culture. Its downtown is coming back after decades of decline. This phenomenon is not exclusive to Toronto. Such migration to second tier cities is happening all over North American. In San Francisco, many house hunters head toward Oakland. Expensive cities like New York or Chicago have triggered some middle class folk who want more space to head to Austin, Denver, Nashville or Charlotte. The thing about Hamilton is that it is close to Toronto and the new GO station will link up quite nicely. So, you can have your Toronto job or social life, and live in Hamilton. Commuting time is required though.

In terms of Toronto neighbourhoods, we will continue to see some of the advanced emerging neighbourhoods steal some of the sparkle from the more estalblished neighbourhoods. The general shift of wealth from duller north Toronto to the more vibrant south destinations will continue. The cool quarters will continue to attract more demand. Roncesvalles, the Junction, Leslieville, West Queen West and Brockton will continue their quick ascent. Danforth Village will continue to draw in many first time buyers, though not all houses will be in the first-time buyer price range in this neighbourhood in 2015. Areas along the Eglinton Crossway that is currently under construction will be a good bet for a long term investment. This includes Mount Dennis, a neighbourhood with some of the lowest prices in Toronto. Mount Dennis even has its own indie coffee shop opened in 2014! And that's always a good sign for a burgeoning community hub. Like last year, bargain hunters will see the western flank of Scarborough that borders Toronto begin to take off.  Corktown and the Distillery District will really start to shine as all the construction wraps up and the Pan Am Games begin. This may be one of the top spots to buy a condo this year and next. It is a well planned area with a lot of amenities near by. High Park, Leslieville and the Junction Triangle are all places where condos have not been overbuilt and fit in nicely with the neighbourhood.

All in all, it appears it will be a tame year. Of course, anything can happen! No one called for the price appreciation we saw in Toronto houses and a healthy condo market in 2014. 2015 could be just as surprising.

Follow the Dogs - A Buyer's Guide to Toronto Real Estate

I just got a puppy. It's a rescue puppy consisting of a mix of many breeds, a sweet girl who I am crazy in love with already.  When I went walking in my neighbourhood, I could not believe the number of people who I had never even seen before that would stop and chat with me. My new pup already loves just about any human, though she's fairly indifferent so far to other dogs.

But today's rant is not about the glory of owning a new canine, but how dogs affect the real estate market.  I know, this is the part where you roll your eyes and think "This is a bit of a stretch...." But bear with me. It really isn't.

Even if you don't like dogs or want one, the truth is, in a city like Toronto, you can spot an established or emerging neighbourhood by the  amenities that cater to dogs. Take, for example, a doggie day care or a doggie spa. Most of these indie businesses cater to neighbourhoods on the rise or ones that have arrived. It's doesn't mean that the more dog owners you have, the better your neighbourhood will be. That's not the case. It does, however, speak to the kinds of things that people want in their neighbourhood: Namely, the independent, quirky businesses that makes their area distinct and self-sufficient.  Take Tailwaggers in the Junction. It's part of many of the other indie businesses that have opened up there like The Beet, the Indie Ale House or Locomotive. All of these businesses are key to making the Junction an attractive place to live with a walkable main street. It's the kind of place with an impressive walk score, and makes life outside of the house or condo much better. It's easier to pick up fresh bread, an espresso, or drop one's dog off for a little snippety snip of the nails and the fur. Even better, you don't have to drive or take public transit to the businesses you need. 

Then there are the dog parks. I know this is a place of war in many neighbourhoods. Those who use the parks like to have it nearby for their dogs. Those who live by the park have to listen to dogs all day. I don't have a solution, but I can say that neighbourhoods that have dog parks often have a strong community. People chat with each other and the dark park becomes a community hub. People looking to buy here, even if they don't have a dog, feel good about it. It shows that there is some interaction. Plus, strong communities push for things like a business improvement association, better attention to the parks, farmer's markets, and well-used community centres.

Even if you live in a place with several low to high rise condo developments, you should still watch for the dogs. Many quality condos with no infrastructure or businesses previously in the neighbourhood, will put in designate parks dedicated to humans and their dogs. Of course, the best example of this recently is Cork Town with the incredibly awesome Corktown Common.

These days, no one wants to suffer the soul-crushing drive of the commute. The desire is not to live outside the city in a bigger house within driving distance to box stores you can find anywhere in North America. The push inside the boundaries of Toronto is to live local. People would rather walk to do their shopping that drive to it. This is why many of us love to live somewhere distinct whether it's the Danforth Village, Roncesvalles, Leslieville, Old Mill, Liberty Village, Alderwood, the Junction Triangle, Weston or Oakwood.  All of these neighbourhood have their own flavour, but are not so tightly defined that they are rigid or inaccessible to someone who is new.

At the end of the day, if you are still looking for this kind of neighbourhood in which to live, then follow the dogs. Even if you find dogs noisy, smelly and annoying, they still are good for your hood. Look for doggies’ stores and the dog parks when you are looking for real estate, and you may end up with a great investment and a pleasant place to live.

Toronto Real Estate Predictions of 2014

As a kid I had an obsession about how the future was going to look in the year 2000, at which point I would be 30 years old. Young me saw myself as an old fart by that date, but life was going to be worry-free and dazzlingly different. There was a book at my primary school library that had a 3 month waiting list about what the future would look like in 10 years, then 20, then 30 years. It was intoxicating! According to my chosen literature, we should all be flying around in our Jetson-style cars. Work, as we know it, would all be done by robots while we sat around drinking Tab Cola, and we would be able to control the weather under our domed cities. As you can see, this book had less to do with realistic scientific advancements, and more to do with marketing books to the fantasy lives of 9 year old boys. I guess the big takeaway lesson here is to keep your predictions of the future a little more grounded in reality, and keep it to less than 30 years.

 Still,  I can't resist making a few of my own predictions for Toronto real estate in 2014. I don't believe we'll be flying around in our cars this year, but I do see some changes on the horizon.

So here is my thoughts on how 2014 will roll out in Toronto real estate:

1. PRICES WILL GO UP  Not everywhere. And not as much as in 2013.  Price appreciation will be neighbourhood specific, and the kind of property you buy will be key. Houses will rule supreme with continued bidding wars, especially in desirable and emerging neighbourhoods. Certain condos will also rise in price, but not by leaps and bounds. Some condos will sag in price or even level out. It's simple supply and demand. Very little supply of houses means more demand. Many more condos means less demand. The key with condos is to be in right neighbourhood and the right building.

2. IT'S THE YEAR OF RECKONING FOR NEW TORONTO CONDOS. The year the most Toronto condos were ever sold in pre-construction was 2011. Many of these are coming to market this year. There are closer to 20,000 units slated to be completed in 2014. So this will be the year to watch to see what happens with all of these condos. Can they be absorbed? I think so. And really, I find that new builds were too expensive compared to resale condos for many years now. So, it's about time that we are a bit more realistic about the price of new construction. Developers will continue to offer appealing incentives like free parking or lockers or a year of free maintenance fees to sweeten the deal without officially lowering the price of the condo while still lowering your purchasing costs. By 2016, the ample supply of units will begin to dwindle. So, those incentives won't stick around forever...

3. INVESTORS WILL LOOK TO GREENER PASTURES. When the financial crisis happened in 2008, it seemed that Canada was one of the very few countries that didn't have their real estate market crash. So, many folks from abroad who grew weary of the stock market and their own country's real estate market, came here to invest in real estate. Canada makes it relatively easy for foreign purchasers to invest in our country. So, foreign investment became a big deal in Canada. Nowadays, the deals are better in the U.S. cities where prices are starting to rebound after their huge slump. So, there will be far fewer investors and more buyers who actually live in the properties they purchase in 2014. This is a good thing. Though every condo has its fair share of owners who rent out their condo, it's good to have a healthy number of owners who live on the premises. They can participate on the condo board and be involved with the running of their building. It makes for a stronger board and well-maintained maintenance fees.

4. HOT HOODS OF 2014. In the east, the dismal portions of Leslieville's Gerrard will start to really take flight as businesses find the trendy Queen East sections too pricey and set up shop a few blocks away where the rents are much cheaper. Corktown will rise like a Phoenix with is excellent location, great urban planning and all the work for the Pan Am Games to be completed in the next year and a half. It's still a great place to invest and live. The Distillery will also benefit from all the PanAm Games preparations. In the West, the Junction and the Junction Triangle will continue to push up its cool factor even more as it moves from hippie outpost to hipster centre. In terms of downtown, the south core, in general, will become much more interesting than the north core of the city, as businesses and commercial demand shifts back from the suburbs with a stronger emphasis on the south city core. Cabbagetown's main street on Parliament will continue to improve particularly with the success of the Daniels condos that were once in the Regent Park area. With the continuation of this project, Cabbagetown will grow more solid as an established neighbourhood and Regent Park will shake its stigma after 50 years.

5. WHERE THE DEALS WILL BE. Emerging neighbourhoods will continue to be the best place for investment. In the west, I feel south Etobicoke is largely still undervalued, especially parts of Long Branch. Caledonia/Fairbanks and Weston are poised to be the next hot spots, but 2014 will only be the early stages of this. North of St, Clair in Oakwood-Vaughan, the success of Wychwood is starting to push into this neighbourhood with its massive houses. The east will have some deals in the Danforth Village, Woodbine-Lumsden and Crescentown, but, for the brave, the deals will be pushing into Scarborough. Pick your 'hood wisely here. Best Scarborough neighbourhoods border the old city of Toronto/East York or the lake, but you can find some great homes along the ravines or in areas like L'Amoreaux. Hamilton will continue to be your best investment out of the city with continuing price appreciations that made Toronto blush last year.

Okay, there you have it. My humble thoughts for the next year. Hopefully they will pan out a little better than the Future Predicting book of my youth.

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.

Three Best Toronto Neighbourhoods to Buy a New Condo

There are many reasons why someone should not buy a new condo. For starters, it takes an average of 3.85 years for a typical Toronto condo to move from the initial sales stage to occupation. As we all know, a lot can change in that time - romance, babies, breakups, job relocations, or it could be as simple as you bought yourself a St. Bernard in a building that only allows small dogs. Also, at this particular moment in time, in this city, you can often buy a resale condo at a better price per square foot than a new condo. On top of that, the average Toronto unit is shrunk by 65 square feet in the last four years. So, why buy new?

Well, it's not always a rational decision, and, to be fair, there are some pretty amazing projects under way in this city where SOME of the newer condos can clearly outshine the condos that have been around for a few years or more. In other words, the smart new condos have witnessed how some of the old ones have failed and attempted to improve where others screwed up.

Of course, not all new condos are worth considering, but some are pretty impressive. So, with that said, here are three Toronto neighbourhoods I think would be the best place to buy a new condo right now.

1. Corktown. This River City project where several condos went up all at once was planned perfectly. There is a good mix of midrise condos here so you don't feel like the extreme height of the buildings have blocked most of your daylight. You're still centrally located south of King Street East just west of the Don River. So, it's easy to get around. Best of all, the design behind this place was not a hodge podge of different developers squeezing every last spec of greenspace out of a neighbourhood. Not here. There are parks and promenades and some pretty great new community businesses starting to move in. The best part? Well, you have one of the best green spaces in the city called the Corktown Common. Believe or not, Waterfront Toronto can do something well besides not make decisions. In my recent walk throught the Corktown Common, I was amazed at how well the park was designed. It is overflowing with local plants and wildlife with extended boardwalks throughout. The large marsh also has a practical function as part of the stormwater management system. But it's also a place to play - playgrounds, splashpads, an athletic field and open lawn for informal gatherings. I think this area will be a little undervalued at first. You are investing in a vision, but this one has been well planned, and I think it's a great place to live or invest.

2. High Park North/ West Bend/ The Junction One thing about this area north of Bloor from Dundas to Runnymede, is the amazing collection of historic homes. Not only does it have great infrastructure with the city's largest park nearby, but this neigbhourhood entails an exploding commerical strip that is becoming a new centre for the hip restaurants and cool shops, right along Dundas West in the Junction. There's not a lot of room for condos in this area, but that's why you should consider buying here. When it comes time to sell in the future, your competition with other condos will be limited. It also has a lot of warehouse and church conversions, which I believe is a great buy in any neighbourhood, but especially this one. If you want everything new, there is a great opportunity here to buy right across the street from High Park, where there will never be a building placed in front of you to block your view of miles of green space and well-maintained parkland right down to the lake. If you can care less about the view, then know that it will be gold when it comes to resale down the road. Daniels, the developers, have been waiting a long time to get their hands on this land, but the High Park Condos are on their way! Also, I would suggest the very cool "Duke" condos, just east of Keele on Dundas. This part of the the West Bend/Junction strip is a little under-appreciated, but the design on this place is fantastic and this midrise fits in perfectly with the neighbourhood.

3. Yonge Street South of Bloor If the condo market ever goes down, I often say, it would be best to own something unique and boutique that does not look like every other condo. Alternatively, if you like to be high in the sky, you want to be near the TTC. And by TTC, I don't mean a pokey street car or a smelly bus, but a subway that can actually get you around this city quickly, like the Yonge Subway Line. If you like the views from the bigger condos, the Toronto city by-laws will now allow developers to build higher than ever before on places like Yonge Street. Further south on this main street, you have condos coming up like Yonge and Rich, sure it's a terrible name, but wow, they could sure use some condos with decks down there, which these condos offer. Then there's Aura. Though I don't always think big is the way to go, I think Aura confidently tells us to go big or go home. And at 78 stories, it contains the highest living spaces in Canada, at the corner of Gerrard and Yonge, an area that really needed an infusion of wow. And when you have a perfect walk score of 100, you can practically walk any where, get rid of your car, and rent out your precious parking for lots of money.

If any of these projects tweak your interest at a time where you would like to buy a new condo unit for yourself or for investment, it would not be wise to go marching into the sales centre and buy a unit. Use a real estate salesperson so you have someone working in your corner, and not working for the builder's best interest. If you want to save on new condos, get in early. Though it's always more of gamble to go in early without the sales centre set up, I think you can score some good deals here during the VIP days. Alternatively, wait until the building is registered when a lot of buyers, who have bought years ago, will all be trying to sell at once. At that point, prices can be temporarily be pushed down when there's a flood of new units on the market from the same building. So, if you want to buy new, do it right, and do it in the right neighbourhoods!