April 6, 2017 | Toronto affordabillity
Let’s go back to 2004. It was the year the EU added ten new member-nations (no one was leaving), Prime Minister Paul Martin indicated the Federal Government would introduce legislation to extend marriage to include same-sex couples, and Facebook launched a social networking site open to Harvard students only. Many things were different in 2004, but I’m going back to this year for one specific reason. It is considered by many to be the year when affordability in Toronto really began to slip away. Because of this, the habits of buying and selling in Toronto shifted considerably.
Here are three of the biggest changes that just may prove that the real estate business is in a constant state of motion:
- Staging Is Common When I bough my first place in Leslieville in 2004, staging wasn’t really a thing for most properties. Sure, you tidied up and painted a little, but you didn’t put most of your stuff in storage and bring in a stager. In 2004, you really needed to be wearing your potential goggles as a buyer because few sellers bothered to stage their properties. Only a fraction of houses were staged in 2004. Why so little staging back then? Well, the price points of selling properties simply did not justify the cost of staging. When you are selling a house for $300,000, then it may not be worth the money to stage three bedrooms, a living room, a dining room and a recreation room in the basement. But now, with houses selling over a million, selling a property has become a real design effort. And that goes beyond the usual painting, to the fix-ups, landscaping, and small renovations. Now, staging is seen as what could up the price by hundreds of thousands of dollars.
- No More Upgrading To a New Home Every Five Years Before 2004, the climbing of the property ladder was a thing. People would buy a starter home; maybe a small house or a condo. Five years later, they would trade up. After a few kids they would trade up again. Maybe someone would land a new job or just want to try out another neighbourhood. So, they would trade up. People would change properties way more often than they do today. Now, people stay in their homes much longer. Some still move with their expanding family needs, and for job re-locations. But for the most part, it’s too expensive to move. The increase in land transfer taxes and the addition of the Toronto Land Transfer Tax in 2010 are largely to blame.
As an example, let’s take my first house on Rushbrooke. Back in 2004, I would have paid around $2000 in land transfer taxes for that house. Since I was a first-time buyer, I paid $0. Today, based on the estimation of the worth of this semi-detached three bedroom house in Leslieville, I would pay $26,000 in land transfer taxes as a first-time buyer. It would be closer to $32,000 if i was not a first-time buyer.
With that extra cost, people are more likely to just stay where they are. Growing families now grow their houses, bumping up a story to a bungalow or adding an addition on to the back of the property.
- Most Starter Homes Are No Longer Houses The starter home for many people today is going to be a condo in central Toronto. Yes, there will be some exceptions, but for most buyers right now, a house is not an option unless you are out of Toronto in Oshawa, Mississauga or Hamilton. In 2004, even single middle class Torontonians could buy a house. I bought my first one on my own. Nowadays, that would be tough.
This is not to say that 2004 was way better that today. It was not the golden era of buying properties in Toronto. I remember even back then, buyers like myself would look back to the late 90s and wonder: “Why oh why couldn’t I buy something then?!”
Today, real estate feels unattainable for many. Toronto has been a remarkably successful city as of late with GDP growth twice the national average. This was not anticipated, and now we are rushing to find housing for those participating in they city’s economy. I doubt there will come a time when a neighbourhood like Leslieville will become the terrain of first-time buyers again, but there are places and areas that are still attainable, likely further from downtown, that will transform and attract new buyers.
I think in 15 years, we will look back at Hamilton and wonder: “Why didn’t I buy in this insanely cheap city?” I think some may wonder: “Why didn’t I buy near the Eglinton Crossway or another new or planned transit line like the Scarborough Subway before it was finished and rose in value?”
My point: Real estate stays in motion. Someone in the future may look back to this year as the golden era of buying Toronto real estate in their lives.