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.

First-Time Buyer Blues: Don't Be Glum. Be Smart!

I conducted an open house this weekend for a comfy three bedroom house in Toronto that is priced under $500,000 with no parking. It was a cute place, in a part of the city that is improving. Not a bad area, but not a well-serviced one yet. Because I was under that magical $500K mark, there were many, many first-time buyers lining up to see the house. It was packed.

The thing is, I have never seen such a sad bunch of dejected buyers for quite some time. They were zombies,  marching through one open house after another with a visible sense of hopelessness. They have become aware of how competitive it is to buy a Toronto house in the starter home range so far in 2014. Bidding wars are expected.

Like a therapist, I listened to their tales of woe. Many of them have shared experience, and have drifted down the same path. They live downtown or in a nice Toronto neighbhourood in a pleasant rental unit. They thought: "Hey, how about I buy a house instead of renting an apartment?" I think it's a good idea. Why not build some equity to pay down your own mortgage instead of paying down your landlord's mortgage?  The thing is, they often rent in very central neighbourhoods like downtown, Trinity-Bellwood or Little Italy. At first, when they begin their house search, they check out house prices in the neighbourhood they live and realize it's not really affordable. Often, they then seek out an advanced emerging neighbourhood like the Junction or Leslieville. Yes, it's a little less central, but they are groovy hoods that are clearly on the upswing, already stocked with the obligatory hip coffee shops, Toronto Life-featured restaurants and all the yoga you can stretch out of your body. Some first-time buyers, who can afford certain emerging neighbourhoods, will look to the Danforth Village, and the Junction Triangle - but even these hoods have become highly competitive. If you're looking to buy a house under $500K, you may need to revisit your approach.

With all that said, it is easy to see why the first-time buyers become down. They are used to renting in a great neighbhourhood where they can spill out of their home and have a pleasant Spring walk to their local butcher or their favourite vegan bakery. The truth is, if you are looking for a house for under $500K, that can be tough, if not impossible. So, they wait for the market to change. The truth is, I don't believe any of the neighbourhoods listed above are going to become affordable any time soon. Even if we have a slow down in the housing market, there is still a shortage of houses in the city. Because of the province’s Places To Grow policies, all new construction is overwhelming high density. No more new houses are being built.

So, if you have a budget of under $500K and you cannot sink yourself  into bidding wars, you need to have a plan, and a little vision.  Here are some tips I think may get you to where you want to be:

1. Forget the House. Maybe you never lived in a condo before. Maybe the thought of them makes your skin crawl, but the truth is, you can find a great condo in a central area for a budget under $500K. Maybe you hate high-rises? No problem. Low rises and condo town homes are great investments. You can find them all over the city in your price range. That way, you can have a neighbourhood  a short walk to the nearest subway. You can linger at the espresso bar down the street before work or hit up the gym on your return.  And if you need a little outdoor space, you pick one with a rooftop deck and a bbq. Easy Peasy.

2. Save or Make More Money. This is a risky option. In the past five years, any one saving money has probably lost out. During that five years, the amount put aside likely wouldn't be enough to cover a home's price appreciation during that same time. Houses, in my estimation, will continue to rise in value. Still, if you can find a way to increase the amount you can qualify for, it will lead to more options. Also, if you have a larger down payment, you can afford a higher price point.  Maybe you are on the verge of a giant promotion or you have some family money coming your way. That may change your options. 

3. Pick An Emerging Neighbourhood That's Just Starting to Turn Around. So maybe as a first time buyer with a budget of $500K you want a house, and and condo won't do. You have to have a yard, and you just don't want to pay maintenance fees. Fair enough. Then you need to be a bit of a visionary here.   Forget about the all-star neighbourhoods. 10 years ago, Leslieville was the dumpy nowhere land between Riverdale and the Beach. Tumbleweeds would roll Queen East at night because there was nothing going on and no one was around.  You need to pick the next Leslieville.  In the east, there are still a few opportunities in the Danforth Village, though I suspect those days are numbered. You need to look to the neighbourhoods next to the ones exploding in price. In the east, you may want to consider Scarborough. It's one of the most undervalued parts of the city. In the west, you may want to try north of St. Clair in the Caledonia, Fairbanks, Keelesdale, Earlscourt and Corso Italia neighbourhoods. Sure the hip factor is not there yet, but it's coming. If you want the lower price, you have to get there before things change. For even lower prices, there is Mount Dennis and Weston. Yes, Weston is further away and hard to get to, but there is a GO station straight to downtown soon and I believe there is even a subway link in the works for Weston to the new Eglinton station.  These neighbourhoods can be the Riverdale and Roncesvalles of tomorrow. Get in now.

So first time buyers with a  budget under $500K, don't be so glum if you want to buy a house. You just need to tweak your dreams a little. If you just can't leave downtown, then get a condo. If you just have to have a house, then you need to go a little further afield. I know it will feel strange living in an area you may have never even visited. I've done it in Leslieville 2004! In time, though, you can make that area your home. Hopefully, with the other first-time buyers moving out there, the restaurants, the daycare, the cafe with the great patio will be right behind you.

What Neighbourhoods Have the Best Price Appreciation?

In the spirits of the Olympics, I thought I would discuss something of a competitive nature. That is, I thought I would explore some recently compiled stats on homes in Toronto neighbourhoods and how they stack up against one another. These statistics were based on the sales from the Toronto Real Estate Board from January 2012 to January 2014 for detached homes. Out of the 36 Toronto districts, the top 5 districts were as follows:

1. C9: The Richie Rich (Rosedale and Moore Park)
2.  C2: The Centre of the Universe (including Annex, Wychwood, Yonge-St.Clair)
3. C1: Also the Centre of the Universe (including Niagara, Trinity-Bellwood, Dufferin Grove, Palmerston-Little Italy)
4. W02: Emerging Neighbourhood Emerging Fast (including the Junction Area, High Park North  Wallace-Emerson, and the Junction Triangle)
5. W03: Early Emerging Hoods Rising From Their Inexpensive Past (Rockliffe-Smythe, Keelesdale-Eglinton West, Westom-Pellam Park)

For a complete list of detached home sales in Toronto please click here for complete results.

Now lets look at the winners. Clearly the top spot speaks to the amount of money that is entering the high end market in the past two years. C09 had an increase of 115.63% in just two years.  I do find these stats to be a little questionable. I will discuss this below, but it does indicate that high end is back in Toronto. The centre of Toronto is still very strong showing us how much demand there is for detached houses in these neighbourhoods. C02 has a increase of 71.25% and C1 had an increase of 54.02%.

I think some emerging neighbourhoods really showed their growing value in past two years. A more advanced emerging neighbourhoods can be found in W02, that has increased by 51.69%. And for a place where houses have been remarkably inexpensive by Toronto standards, the early emerging neighbourhoods of W03 have increased by 40.61%.

Now all, this info may be a little overwhelming.These are remarkable increases. If you have bought in the top neighbourhoods, especially if it is a detached house, you will be thrilled. You may be crying over your keyboard if you wanted to buy in these areas but decided to wait a few years.

But before you get too smug in your foresight or crushed by your buyer position, let's look at these stats with a critical eye.

First of all, let's be clear that these are detached homes only.  Detached homes are king. Even if you want to live in a dense city like Toronto surrounded by people, Torontonians still covet the detached home. And these stats prove it. More than any other housing type, detached homes in this city have surged ahead in value. Detached homes across Toronto sell for a much higher average than other housing types, though semis, row houses and many low rises have also done well in the past few years. So, if you cannot afford detached, the other property types are still great investments that are appreciating in value as well.

Another pattern you can see from these stats: Emerging neighbourhoods, whether they are newly emerging or later in the cycle are good investments. Neighbourhood is still key to the success of a purchase whether it is a condo, a detached house or a town home. Pick wisely.

Despite what these stats may hint to us, I do tend to be fairly critical of them too, and for good reason. One of the fundamentals of gathering statistics is to have a large enough sample. If you don't have a large sample, your stats can show some pretty wild variation that may lead to a misrepresentation of a given neighbourhood. So, take Rosedale and Moore Park, for example. In the last year, there were less than 100 detached houses that sold in Rosedale and Moore Park. That is not a large enough sample to give meaningful results, making it much more prone to wilder fluctuations. It could simply mean that bigger and fancier homes have sold more in the last year than two years ago. So, in a nutshell, its #1 position may just be a lucky fluke.

Other neighbourhoods have some unlucky results based on these statistics. This past year I have experienced detached homes in bidding wars in the Oakwood-Vaughan area, and yet the statistics position this neighbourhood, along with Forest Hill, in dead last. The results just don't add up for me when I see demand in Oakwood increasingly outpacing other areas of Toronto. Again, I believe the small sample of homes reflects the wild fluctuations in the detached homes that have sold.  If you look at the sales statistics for each year in the district of C03,  you'll find that in January 2012 detached homes sold for $1,355,000 then plumetted to $635,000 a year later,  then shot back up to $1,210,000 by January 2014. There was really no reason why home prices would have been cut in half between January 2012 and January 2013 only to shoot back up again between January 2013 and January 2014. If we just regarded the statistics from the last year, Oakwood-Vaughan would have been one of the best performing neighbourhoods in the bunch. Clearly, there was just not a big enough sample of sold homes to give us clear results.

Another reason these statistics may be a little off has to do with how the neighbourhoods are grouped together. Take again the Oakwood-Vaughan area. Homes south of Rogers usually sell for much more than homes north of Rogers. Then we have the wealthier neighbourhood of Forest Hill mixed in C03 district to make three very different neighbourhoods slotted into the same sample with very different communities and styles of homes for sale.  Detached homes in C03 range from sprawling city estates to very neglected homes in need of some serious love.

Regardless if you live in the overwhelming lucky Rosedale-Moore Park or the neighbourhood unfairly disadvantaged in these statistics like Oakwood-Vaughan, it still does show us how home sales can be like the Olympics. Some athletes, like some neighbourhoods have shown us a remarkable improvement on their performance. Other athletes, and some neighbourhoods, often perform well, but were a little unluckily or treated unfairly by the judges. So,  have fun with the stats, but don't take them too seriously.

Should First-Time Buyers Be Blue?

It's tough for first-time buyers right now. I really do feel for them, especially if a house is the property of preference. On top of the Feds making it difficult for first-time buyers to qualify for a mortgage, there is a huge demand for houses at a time when most of the new inventory added to the Toronto housing market have been condos.

I remember when I bought my first house back in east end of Toronto, almost ten years ago. I would proudly tell my friends that I bought a fixer upper in this neighbourhood called Leslieville. Often, they would scatch their heads, and ask me: "What's a Leslieville?"

At the time, Leslieville was only a place between Riverdale and the Beaches (now called the Beach). The Queen East strip was dead at night with a the exception of a few crusty bars that attracted a lot of folks that look like pirates. There were a few coffeeshops, and the beginning of some galleries, but it was not the go-to destination that it is now.

I did some very un-scentific research today with the help of the MLS to see what the prices were like 10 years ago in the month of September compared to the sales in September now. The median price in Leslieville was $251,500 at that time. Today it is $617,000, and that includes a disproportionte number of smaller homes that came out this month. So, to me, it seems that median pirce may be lower than it should be.

If I take a west end neighbourhood, like the neighbourhood I live in now, I can see a similar price appreciation. West Bend, like it's neighbour, The Junction, was considered an early emerging neighbourhood 10 years ago. On the MLS, both areas are a part of "High Park North". Ten years ago, in the month of September, the median price for a  home was $350,000. Today, though there have only been 4 completed solds to date in September, the average sale is $874,000.

All of this info can have two different outcomes, depending on who you are. First, if you own a house in these emerging neighbourhoods or another successful one, you are patting yourself on the back. Yes, we were all smart investors, and maybe a little lucky too.

Alternatively, if you are one of the Torontonians who have not bought property in this city, you may find this news a little depressing. You may even think the writer of this blog is a jerk for bragging about his investments. You may saying to yourself "If only I bought ten years ago, I could live in a great neighbourhood at a great price! It's too late for me!"

But I'm here to tell you otherwise. In many ways, things are not that different now than they were ten years ago. I will easily concede that it's more expensive to buy a house now,  and competition for finding a decent house is stiff.  Still, a lot of the same rules apply when I bought my first place in an emerging neighbourhood as they would today. Here's why:

1. It's Called An Emerging Neighbourhood for a Reason

Okay, today places like the Junction and Leslieville are trendy destination neighbourhoods chock a block of cool restaurants, community involvement and kick-ass farmer's markets, but ten years ago, they were dreary, run-down and didn't have much going for them. The Junction didn't even serve alcohol ten years ago. So, it would be next to impossible to get a profitable restaurant  launched without a liquor licence. People would have rather lived off Roncesvalles where there was more of a neighbourhood feel.

2. You May Have to Go Further than You Feel Comfortable

At one point, the Junction was far way. Moving to Mimico was considered radical. I mean, it's in Etobicoke! And yet, it's now considered one of the best neigbhourhoods to live in - Top 10 in Toronto according to Toronto Life any way. My point is that if you want those first-time buyer houses at a lower price point you will have to go out to Danforth close to Vic Park, and even into Scarborough. If you want to buy a big house for less, you may need to consider Weston or even Caledonia-Fairbanks.  They may not seem like the greatest hoods right now, but after 10 years, they could be the next big deal.

3. You Can Always Buy a Condo

Condos are in much greater supply, but they exist in emerging neighbourhoods as well, and if you want to be central, then they are the perfect option. The good news is that condo prices are not running way out of control at the moment. So, they are still in reach for most first-time buyers, and in some ways the same rules apply. Emerging Neighbourhoods like Corktown will be, in my opinion, worthy neighbourhoods to invest in or own a condo in the years to come.

So, first-time buyers of Toronto, you don't need to despair. Not only are condos in your reach, but houses too. If you want a house, it won't be easy. Currently, it is still fairly competitive to find a house. So, bring your potential goggles, know you may have competition, and hang in there! It can be done!

When an Emerging Neighbourhood Takes Flight

Emerging neighbourhoods can vary widely. They often start out as dismal and down-on-their-luck areas that MAY turn around, but they can also be the neighbourhood that was once down-on-its-luck and has since transformed into one of the most vibrant and successful neighbourhoods in Toronto.

I have helped clients buy and sell properties in both types of emerging neighbourhoods. I become excited when I see a neighbourhood transformed from a lackluster, underpriced outpost to a location where buyers are clamouring to buy property or open a business that has creative flair and imagination.

Sometimes an emerging neighbourhood comes about slowly but when the whole area has gathered enough momentum there can be a sudden swift surge of change. The locals, especially those who have become involved with their neighbourhood, watch in wonderment at how rapidly their neighbourhood is transforming.

In 2013, I believe the neighbourhoods of West Bend and the Junction are experiencing that pivotal surging moment. These adjacent neighbourhoods, which have always had high quality housing stock, were at a lower price point for decades compared to most other neighbourhoods in downtown Toronto. The main commercial street, Dundas Street West, once struggled to attract and retain businesses. (With a few exceptions like the longstanding and outstanding Vesuvio's Pizzeria). It certainly did not have the draw to attract people in large numbers despite its impressive architecture. However, in the early 2000’s, change slowly began. The long established "Dry" bylaw, prohibiting the sale of alcohol, was removed in a plebiscite and very soon, restaurants, organic food supermarkets, design/furniture stores and health-related businesses began to open up. For those new business owners, it was an inexpensive place to open up. And it was this lower price point that allowed newer businesses to experiment and try out new ideas.

For many, there was a belief that the Junction and West Bend did not have the density or the easy transit access to allow for a vibrant exciting commercial strip. Many speculated that these areas would not draw crowds in the manner of Trinity Bellwoods or Leslieville with their easy access to downtown via the Queen streetcar. However, 2013 has put those fears to rest. Not only has the number of new businesses exploded in the Junction and West Bend, but the community in both neighbourhoods has come together to create a Farmer's Market, a Flea Market and now proposes to turn an old police station into a community hub.

In the last year alone, this part of Toronto has seen the arrival of the wildly successful Cantina and Indie Ale House. In the last 6 months, we have seen a surge in the number of new business arrivals. We have seen "Coming Soon" signage for a wine bar, an Italian restaurant on Annette, and a cheese store offering gourmet grilled cheese. We have seen the opening of Gerhard Supply, a men's clothing store where Canadians designers make all the clothes from Canadian sourced material. And though there are many, many coffee shops to choose from, we now have yet another delicious option at Full Stop. For meat lovers, there is the new Gourmeats. East of Keele, a strip of Dundas West that can be a little more challenging to entice new business, there is Foodbenders, offering catering and take-out options for those in search of a healthy alternative. Should you find you have overeaten at all these new tasty options, you can head out to the new RPM: Total Fitness for spin class or strength training.

This neighbourhood is now chock a block with options that most neighbourhoods would die for. On top of what I have already mentioned, there are bars, patios, Thai, Indian, Cajun food, a vegan bakery, a regular bakery, clothing stores, chocolate stores, lawn bowling, ice cream, yoga, pet grooming stores, a doggie supply store, a TV production company, pies and more. To be honest, I am not sure if the Junction and West Bend neighbourhoods are missing anything.

This is what you want an emerging neighbourhood to become.

First time buyers often ask me “what neighbourhoods will emerge next? Where can we buy in the hope that prices will appreciate more than other neighbourhoods in the city”. However, the question should really be “What will an emerging neighbourhood look and feel like if it fully emerges?” Then I could simply drive prospective buyers through West Bend and the Junction to illustrate how a neighbourhood can change. And later, when that person is ready to sell, he or she can make a great return on their investment.