Where the First Time Buyer Are Migrating Now

 I had a listing this past week that has just sold in the Caledonia-Fairbanks area. It's between St. Clair and Eglinton, west of Dufferin. For those who are familiar with Toronto real estate, it feels like a throw-back to three to five years ago when first time buyer could still afford a house in the city of Toronto for under $600K, and even $500K, in some cases. My client bought the property in 2012. At the time, first time buyers were heating up neighbourhoods like Mimico and the Junction Triangle that were still affordable for those with a house budget under $600K. 

My client did not have that kind of money at the time, and I needed to convince her that she may need to try out a neighbourhood that is a little off the radar, but whose population largely take care of their homes, and still has easy access to public transit and highways like Caledonia-Fairbanks. Now, the winds have changed some, and those emerging neighbourhoods that were once off the radar are heating up. 

When the property was purchased in 2012, I told my client it was the early years of this West End neighbourhood. It was mostly working class Portuguese families. You may feel like a bit of an outsider, if you were not one of them. At the time, this home had been somewhat renovated with new stainless steel appliances and granite counters. New wood floor and an amazing garage. The house was on the market for months with several reductions. In my opinion, the house was poorly marketed and may have suffered from attracting serious buyers because it did not show well and did not reach the intended buyer. Not a lot of effort was put in to the sale of the house back then. That's why we were able to buy for under $400K in 2012 dollars. 

Of course, when my buyer moved in, there were some further improvements made, and the house was generally cared for. So, it looked lived in and like someone took pride in their home. I think it makes a difference to buyers to come in and see that real human beings live in this place, though I do stress the importance of staging. Real human beings and staging is a good combo. This week, in 2015, we sold it for over asking the asking price of $489,000 in a week. 

I could brag here about my excellent marketing strategy and staging prowess, but I do have to give some credit to the neighbourhood itself. It is slowly being discovered, and the first-time buyers have given up on many of the previous emerging neighbourhoods of the past, that are rising too high in price, and are coming here. It has all the qualities of a successful emerging neighbourhood. The adjacent neighbourhoods, the Junction Triangle to the south and Oakwood to the east are becoming too expensive for many first time buyers. It's also becoming a more desirable neighbourhood because of the Eglinton Crossway currently under construction. The Eglinton Crossway will make this neighbourhood much more accessible to downtown and the Yonge Line. 

Some of the buyers can see the future potential and are making their move now. The other factor that is attracting buyers has to do with the neighbourhood diversifying. There is still a strong Portuguese presence here, which comes with the benefits of some delicious Portuguese desserts along St. Clair and Rogers Road, but the people coming through the open house were from all walks of life. They are, however, comprised mostly of couples and individuals who have been renting closer to Bloor and downtown but are buying up here where it is somewhat affordable to buy a house. Yes, it's not Little Italy or even Little Portugal, but Caledonia-Fairbanks is a more affordable area to buy a house than most Toronto neighbourhoods. First-time buyers, take note. The timing here is good.

First Time Buyers: They're Back!

I'm not sure they were ever really gone, but it seems as we move further into 2013, first time buyers are coming back to the real estate market. After crabby reports  on the slumping prices in Toronto in the second half of 2012, first time buyers are putting up their mitts in bidding wars for houses across the city.  

And if you are one of these first time buyers, it may feel like you just can't catch a break. No one could use a drop in the value of real estate more than someone who would like to buy their first place. They have every thing to gain from a price drop and nothing to lose from one.  And though there has been a little weakness in certain segments of the condo market in Toronto, first time buyers remain in a competitive price range, especially when it comes to houses. In the last two months, I have had more competition in the first time buyer housing segment than any other. 

Not only are they in a competitive price range, but first time buyers worry that Toronto will become too expensive, and they'll get priced out of the housing market. On the flip side, they are concerned that Toronto is at it's real estate peak. After all, they have a lot to lose if the market heads south, especially if they have just bought a property. 

Yeah, it may seem a little grim, but here's why some Toronto first-time buyers are not feeling so glum:

1. Yes, houses are competitive, and there can be bidding wars to buy them, but they are great investments. There are only so many left in this city, and at some point, first time buyers won't be in the price range to buy houses in Toronto at all. In the near future, buying a house for a first time buyer will simply be out of reach. But it isn't yet. Even though it is in a lot of other cities, like Vancouver.

2. Condos are still affordable. So, maybe houses are already out of reach for some first time buyers, or they would prefer the ease of a condo. If that's the case, there are a lot of condos to choose from. But do pick wisely. Though the larger condo developments may seem cheaper, they often do not increase in value in the same way as a townhouse or a midrise or lowrise.

3. Rates are good. I know we keep hearing this all the time, but it's true.  Plus, renting isn't much better than buying. Yeah, there are those who think you can rent and invest and make/save more money than if you buy, but I don't believe it. Rents have done a pretty good job of keeping pace with the rise of house prices. In fact, some can carry a mortgage with the rent they pay. So let's say you currently pay $1500 in rent.  If you put 5% down or $15 737, you can have a purchasing price of $314 733 with that $1500. Then you start to build equity.  Of course, this is all with what the lenders are offering now, according to Joe Sammut at Mortgage Architects. This can change. And it does take time to build enough of a nest egg to cover a down payment and some of the closing costs. At the end of the day, though, once you buy a home with a 25 year mortgage, you pay the same mortgage every month for 25 years with a variation on the interest rates only. Rents go up.