Baby, we got a bubble!?

[Ex-Montreal Girl]

If I sell my house in 40 years (if I make it, I'll be 83 then) and someone wants to knock it down and build something new I still get great value for the land. If you buy a condo built in the 1970s or so and a developer wants just the land, does he buy everyone's units? What if a few hold out? How is the value of the land distributed?

That was done somewhere, I believe in Vancouver. But I can't quite recall. There was a big owners' meeting and there was a vote on whether to sell. But it's hazy. The trouble there though is that people in older condos have different stages of renovation, and different quality. Our place -- custom kitchen, custom bathrooms, marble, granite, yada yada -- is worth significantly more than most of our neighbours. Height and views are other factors. It's not one price fits all.

As to the business of maintenance fees, I have sliced and diced these for five years, before we bought and after. I think in dollar value we come out more or less the same, and that includes gym costs. Our building has great facilities. The bonus is never having to find people to shovel your walk or rake your lawn or fix your furnace or any of that. When I think of all the hassles of home-owning, from replacing a garage door bashed in by vandals to coming back from a vacation down south to discover burst pipes to having to call PCO to get rid of the wasp nest under the eaves to having to get the eaves cleaned twice a year, I am grateful to be here. And all the other downsizers who have moved in say the same thing.

It's not about maintenance fees. It's about the freedom. The trick is to find a solid building in a good location with great amenities.

 

[Eug]

Not sure why people are going on about how expensive houses are relative to condos in Toronto. Condo prices are almost as much as in Vancouver (even though house prices are still very far apart between the cities). That should be a sign that it's condo prices here that are over-inflated.
I mean, check out these amazing deals for detached homes...
A renovated house next to Victoria Park subway for 600k: http://www.remax.ca/on/toronto-real-estate/na-1-sutherland-ave-treb_e3109815-lst
A house by the bluffs backing onto a ravine for 750k: http://www.remax.ca/on/toronto-real-estate/na-4-romana-dr-treb_e3100049-lst

Seeing these really make me loathe to shell out 350k for a 1-bedroom condo with interior bedroom only lol

Let's look deeper at what you're paying for. The 2 detached examples have 2500 and 5000sf of land. Assuming that improvements typically make up less than 100k of the assessed value of an older house (up to 200k with major renovations), most of the value is in the land, about $150-200 per square foot. In the same neighborhood, Carmelina Condos, on a roughly half-acre site, was a $42M improvement (roughly $280k per unit and 150sf of land if divided evenly among the 150 units). The median unit price is $400k, probably higher. ($400k-$280k)/150sf = $800 per square foot of land. The median unit is therefore almost $100k overpriced.

I live in the general vicinity of that second house.

The reason I moved there was because you get a lot more bang for the buck, and it's 30 minutes to the core (or 20 minutes on the weekend). However, the retail strip nearby is not very nice. Fortunately, it was rezoned a few years back, and there is a condo complex going up there, so hopefully that should help spruce up the retail strip.

Yes, those small old bungalows, or at least the ones in poor shape with old dated interiors, are near worthless compared to the value of the land. However, that street is only beginning its transition. You won't find as many teardowns on that street as you will in other areas near the Bluffs, because that location isn't quite as nice. Move down to right near the water though, and a similar house will be $900000, with nearly all of that value being the land. If you do decide to build a McMansion, that's gonna cost you say $200 per square foot. If you build a 3000 square foot McMansion, then you've spent $600000. Total cost $1.5 million. Or else $1.35 million at 4 Romana. People on that Romana strip don't do that though because those on that strip are somewhat price conscious, so they renovate the interior instead or sometimes add a second storey. Look to spend anywhere from $75000 to $250000. So even then we're looking at close to a million bucks. At that point, $350000 for a small condo doesn't seem so bad, esp. if it's downtown.

But back to your point. Your comparison doesn't really make sense. People pay more to live downtown. If you really want to move out here that's great, but you can buy condos here too, and you won't have to spend anywhere near $350000 for a 1-bedroom. I believe it was close to $200000 for a pre-build 1-bedroom in fact, although the price is higher now for the remaining units.

http://www.thebluffs.ca/index.php/prices-plans
http://urbantoronto.ca/news/2013/07/haven-bluffs-coming-family-friendly-cliffside

It's not about maintenance fees. It's about the freedom. The trick is to find a solid building in a good location with great amenities.

Or in my case it was about finding a solid complex in a good location with few amenities, because I didn't want to pay for amenities I'd never use.

 

[TheKingEast]

No point showing asking prices when houses tend to core well over the asking price

 

[Eug]

No point showing asking prices when houses tend to core well over the asking price

Actually, for the Romana house, I'd guess that's a reasonable asking price. I wouldn't expect someone to pay $800000 for that.

 

[gentlepuppies]

I live in the general vicinity of that second house.

The reason I moved there was because you get a lot more bang for the buck, and it's 30 minutes to the core (or 20 minutes on the weekend). However, the retail strip nearby is not very nice. Fortunately, it was rezoned a few years back, and there is a condo complex going up there, so hopefully that should help spruce up the retail strip.

Yes, those small old bungalows, or at least the ones in poor shape with old dated interiors, are near worthless compared to the value of the land. However, that street is only beginning its transition. You won't find as many teardowns on that street as you will in other areas near the Bluffs, because that location isn't quite as nice. Move down to right near the water though, and a similar house will be $900000, with nearly all of that value being the land. If you do decide to build a McMansion, that's gonna cost you say $200 per square foot. If you build a 3000 square foot McMansion, then you've spent $600000. Total cost $1.5 million. Or else $1.35 million at 4 Romana. People on that Romana strip don't do that though because those on that strip are somewhat price conscious, so they renovate the interior instead or sometimes add a second storey. Look to spend anywhere from $75000 to $250000. So even then we're looking at close to a million bucks. At that point, $350000 for a small condo doesn't seem so bad, esp. if it's downtown.

But back to your point. Your comparison doesn't really make sense. People pay more to live downtown. If you really want to move out here that's great, but you can buy condos here too, and you won't have to spend anywhere near $350000 for a 1-bedroom. I believe it was close to $200000 for a pre-build 1-bedroom in fact, although the price is higher now for the remaining units.

http://www.thebluffs.ca/index.php/prices-plans
http://urbantoronto.ca/news/2013/07/haven-bluffs-coming-family-friendly-cliffside


Or in my case it was about finding a solid complex in a good location with few amenities, because I didn't want to pay for amenities I'd never use.

Those 2 houses aren't exactly tear-downs. They look pretty renovated and somewhat tastefully with the Romana one. The condo I used for comparison is just one ttc station away, and it seems to be asking over $600psf http://www.listofcondo.com/Carmelina_Condos/page_2433991.html

In Vancouver, these $800k old bungalows would already be in the $1.2M range. The $350k condo however, would be only about $400k.

 

[TheKingEast]

Actually, for the Romana house, I'd guess that's a reasonable asking price. I wouldn't expect someone to pay $800000 for that.

I've said things like that many times and have been proven wrong a lot. Don't underestimate how crazy some buyers can be. Regardless, asking prices are useless if we don't know whether the seller's holding back offers or not. If so, then sky's the limit.

 

[Eug]

Those 2 houses aren't exactly tear-downs. They look pretty renovated and somewhat tastefully with the Romana one.

I guess somewhat. The Romana home is definitely very livable, as it isn't a run down home with 60s decor. Perhaps a different home with the same structural design might be listed $50000 less. However, the renovation seems pretty low end in many regards. For example, that $79.99 Home Depot bathroom vanity is a dead giveaway. It certainly doesn't have the finishes of a luxury condo. If I bought that home, I'd be thinking I'd be spending $75000 to update it, although admittedly, that update might be 5-10 years down the line.

I've said things like that many times and have been proven wrong a lot. Don't underestimate how crazy some buyers can be. Regardless, asking prices are useless if we don't know whether the seller's holding back offers or not. If so, then sky's the limit.

If you're really interested in looking at detached homes and the Scarborough Bluffs aren't too far for you, and you like those prices then I would suggest actually coming out and having a look.

Like I mentioned before, the prices truly are cheaper here for decent homes on big lots, but just be aware that some of the homes need a bunch of work since they're 60+ years old. Yes, some homes do go for well over asking, but those tend to be the waterfront homes. Ones like that Romana home isn't as likely IMO, since that street isn't a popular one for tear down / rebuilds, and as mentioned that street IMO is popular because of its price.

What's been happening is many of the waterfront, or very near waterfront homes are bought up by contractors/flippers, torn down, and then rebuilt with modern million dollar homes. These teardowns go over asking by a fair amount sometimes, although the million dollar rebuilds often sit for months since $1.5-2+ million is a lot of money for this neighbourhood, not the norm. There is less incentive to do this on a street like Romana since it doesn't have the same view, and it doesn't have any snob appeal either. Plus, the surrounding homes are mostly bungalows too, many in mediocre condition. Oh and the school district west of Midland is not a good one. Poorly rated TDSB elementary school (median income $48500 but with ranking well below expected for income) and poorly rated TDSB high school.

OTOH, if you go east of Midland, there are many more upscale homes and not just on the water. Furthermore, the school district is very well rated both for the elementary school (median family income $117200) and high school. But even with all those upscale homes, and well-respected school district, there are still many bargains to be had, since some of those old bungalows as well as old brick 2-storey homes still exist.

As mentioned, the shopping strip kinda sucks, and this neighbourhood is car dependent too. However, the natural beauty of the area is almost unparalleled in the GTA, with lots of beautiful parks and hiking trails. It's very quiet, and popular with dog walkers, joggers, and cyclists. With a car, it's 30 mins or so on weekdays to downtown, so the commute is easy. It's also within 5 mins of a nice beach and public waterfront park at Bluffer's Park.

View from hiking trail at top of cliff:

 

[James]

As I've commented on in the past, I think neighborhoods in west Scarborough are going to (and already actually) see the largest price increases in the current market condition. Areas just east of Victoria Park, both near the 401 (L'Amoreaux, Tam O'Shanter) and down by the water (Cliffside, Cliffcrest) offer generous-sized lots and good-sized homes in mature quiet peaceful neighborhoods.

I know some younger buyers who are looking in these areas and, to be honest, I don't know why they didn't look sooner. When the TREB market watch reports come out every month, I always look at the average and median sale prices of detached homes in 3 separate categories: Toronto west, Toronto central and Toronto east. I continue to be surprised by how much Toronto central home prices are inflating the Toronto average/median. Toronto west and east homes are significantly more affordable (for Jan 2015, Toronto west average $708k, median $640k...while Toronto east average $660k, median $605k...source). Whenever people say they can't find a home for less than $750k, I always ask them where they're looking. Their response will usually put things in perspective.

 

[Eug]

Not so much now but back in the day, one of the many reasons some people didn't look east and west earlier is a technical one, because of the way MLS worked back then. You could only search Central Toronto, Western Toronto, or Eastern Toronto, but not all at the same time.

I bought last decade but for the longest time I was only searching the Central section of MLS. If you did that, its world on the east side ended at Victoria Park. No listings would show up at all past that street. I could afford to live in the C region, but I wasn't so impressed with the bang for the buck. After looking at number of what I felt to be overpriced homes in the C region, I started to search in Etobicoke and Scarborough.

As I've mentioned before, what drew me to Scarborough was partially the realization that the nicest area in The Beach(es) was actually not in the The Beach(es), but was in Fallingbrook, which in turn is actually in Scarborough. But you couldn't search there if you were doing home searches of the C region. They only showed up in E region searches. It turns out the Fallingbrook pricing was higher than I wanted to pay for the type of property I wanted at the time, but my real estate agent and I found several properties east of there in the Bluffs region that were really nice, and I eventually bought there.

Of course, the run up in prices in Etobicoke and Scarborough has a lot to do with proximity to the core and the affordable pricing, but I have to wonder if a small additional contribution is related just to the fact that MLS Toronto has integrated the whole amalgamated city now for online searches.

 

[TheKingEast]

The Bluffs are very nice. Just too far away for me. I still want to be in the middle of all the action.

 

[gentlepuppies]

The only thing holding me back from buying a house in the bluffs is I don't want to drive to work, and transit downtown isn't an option, despite being actually closer to downtown than North York. Otherwise, some of the deals around there are amazing.

 

[wang888]

The only thing holding me back from buying a house in the bluffs is I don't want to drive to work, and transit downtown isn't an option, despite being actually closer to downtown than North York. Otherwise, some of the deals around there are amazing.

I kind of like Scarborough over Markham simply for less traffic. Haven't u noticed. The streets are pretty empty. Most likely no population growth.

I want to buy a house now and looking north and east. Just so hard. The last condo I purchased was in 2010 and about to close soon. Should I flip it?

 

[Eug]

Markham is too far from downtown for me. Same goes for Vaughan, Richmond Hill, and Woodbridge. Even Thornhill is a bit too far for my tastes. And by "far" I don't just mean distance. I mean commute time. Going from up north to downtown is total disaster in morning rush hour, if by car, and the reverse direction is a total disaster in the evening rush hour.

Thornhill is actually OK proximity-wise to my workplace since I work at the bottom end of North York, but strangely enough, some colleagues tell me that if they leave after 8 am, it takes as long to drive from parts of Thornhill to get to my workplace as it does for me from the Scarborough Bluffs (which distance-wise is almost 50% further).

I can confirm the sometimes horrible afternoon commute north, since my mother lives near Bayview Village, and it takes long enough just to get there after work.

I also do occasionally work downtown and obviously coming from South Scarborough is a lot easier than it is from north of Steeles if you're coming by car. Basically, I'm 4 km east of the east edge of The Beach, so take The Beach car commute time to downtown and add 10 minutes.

As you can see, I'm a car guy. I sometimes would even take the car when I lived and worked downtown.

 

[DarnDirtyApe]

Sorry guys, but I just don't see that area getting more popular with younger first-time home buyers. Those who are looking for good transit and a walkable neighbourhood will find neither in south Scarborough, and those who don't care tend to head straight for the 905 due to the newer housing stock, infrastructure, shopping and better schools.

 

[Eug]

Sorry guys, but I just don't see that area getting more popular with younger first-time home buyers. Those who are looking for good transit and a walkable neighbourhood will find neither in south Scarborough, and those who don't care tend to head straight for the 905 due to the newer housing stock, infrastructure, shopping and better schools.

Not as popular with young first time buyers maybe, but buyers getting older and moving up from condos, for example 30-somethings with young kids.

Both my wife and I had downtown condos. She a 1-bedroom, and I a 2-bedroom. Before that we were in apartments downtown. We still liked a lot of what downtown had to offer, but we were both sick of living downtown, because of the noise and the traffic, and because of the lack of space. We also were considering having kids. However, neither of us had any interest whatsoever in moving to the 905. My wife actually used to live in the 905 before moving downtown, but hated the commute among other things.

South Scarborough was a great solution. Etobicoke would also have worked (although in our case Scarborough was closer to our workplace, with less rush hour traffic). The Beaches (and even better, Fallingbrook) were considerations, but the cost was higher than we liked, for the size and space we wanted. So, we ended up in the Bluffs. As for schools, in our neighbourhood the TDSB elementary school is rated in the top 15% for the province, and the TDSB high school is rated in the top 10-11% for the province (although honestly we didn't know that when we bought the place).