Toronto Loft Conversions

Toronto Loft Conversions

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Modern Toronto Lofts

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Unique Toronto Homes

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Condos in Toronto

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Toronto Real Estate

Toronto Real Estate

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Tag Archives: number of offers

To buy or rent? Condos might be the answer to Toronto’s intense home-buying market

Sarah Kelsey – National Post

A safe location, room to grow, a good investment and located near the city. Doesn’t seem like a lot for a young professional couple to ask of the Toronto real estate and rental market. But as so many 20- and 30-somethings know, it is.

“We typically get outbid even after offering anywhere from $30,000 to $60,000 over asking,” says Rachel Doerksen, a public relations professional who lives in the city. “Recently we went after a house that had 17 registered offers … We knew we wouldn’t get it, but still tried. We made the top five bids, that’s something right?”

Comment: But that is part of the whole problem. If you knew you weren’t going to get it, why bid on it? If 10 out of the 17 did that, then all they did was push the price up much higher than if they had stayed out. When in a bidding war, the only piece of information you have to base your price on is the number of offers. Thus, the more offers there are, the higher price ends up. My usual rule of thumb is around $5-10,000 per offer over asking. So 17 offers could push the price $70,000 higher than 10 offers. So everyone who thought “why not?” added to the price. Now, the next listing is going to look at that sale price and generate expectations. So now, instead of a street with $600,000 houses, they are now selling for $670,000 and up. All because of people with no hope or expectation of winning the house making a bid for kicks. If you had trouble affording $600,000, you have a real problem with $670,000. So, by making a joke offer on a house you don’t plan to buy, you push yourself out of very market you want to buy into. The moral of the story is don’t make bids on houses you don’t plan to buy. Make one bid on one house and make it the best and biggest bid you can.

Rent or Buy
She and her husband, Jay, have been looking to make the leap from renters to property owners for several years. They recently had their first child and feel the pressure growing on their space. (“It already feels more cramped with a little baby who isn’t even crawling yet,” she says.)

The problem is they can’t afford to buy — they keep getting outbid — yet can’t, as they recently learned, afford to move to a larger rental unit either.

“We’ve been in our Little Italy apartment for six years now, luckily with no price increase,” says Ms. Doerksen. “We’re seeing basement apartments that haven’t been updated in 30 years go for almost the same as what we’re paying now … In order for us to get a better rental, we would have to pull back our future savings to cover the increase, making home ownership even more impossible.”

They’re stuck in something I like to call Toronto’s rather discouraging housing/rental market Catch-22. But there may be hope.

Comment: Same as people who own and want to move up. Sure, they bought their house for $450,000 4 years ago and they could get $600,000 for it now. But the house that was $600,000 4 years ago, the one they REALLY wanted, that one is now $850,000. While they may have $150,000 in equity, that still leaves a $700,000 mortgage. Even if they managed to save some money, let’s be nice and say $1,000/month for the pas 4 years. That is $200,000 total down – a LOT of money – but they still have a $650,000 mortgage. The mortgage payment goes from around $2,175 to $3,140 – a pretty big jump. Taxes also rise from around $2,300 up to $4,300. Add in a few hundred extra in higher utility costs for a larger home and now you have monthly costs going up at least $1,250. Heck, that is pretty much my mortgage payment as it is. These people would have needed an income around $90,000-100,000 originally to buy the $450,000 house. Their income would have to rise to around $150,000 to be able to afford the new payments. How’s that for a Catch-22? Having $200,000 in equity but not being able to move up.

In the midst of this “too expensive to buy/too expensive to rent” debate, several condominium developments are popping up that, in a sense, remove overpaying for a property from the equation. One such complex is Garrison Point.

In Liberty Village, Garrison will be a small community of five towers off Strachan Avenue and Ordnance Street; townhouses will also be available. Designed by award-winning architects Hariri Pontarini, the complex will offer incredible amenities to its residents as well as easy access to some of Toronto’s favourite spots (BMO Field, the Ossington scene, etc.).

And perhaps most important for people looking to make the leap into buying, Garrison’s suites will be uniquely affordable.

According to real estate market research firm Urbanation, the average cost to rent a one-bedroom condo in the third quarter of 2013 was $1,875 (that’s up about 4.2% from the same period last year). In some cases, you could end up paying upwards of $2,000 to rent a 650 square foot space — especially if you’re looking in prime locations like Liberty Village.

Over at Garrison Point, the average suite size will be 650 square feet and sell for $350,000. After factoring in a 20% down payment, property taxes and maintenance fees, the cost to carry the space each month will be $1,705.

In a sense, you could save money by buying.

Comment: But how does that benefit your people at the beginning? They have a baby, a 650sf one-bedroom condo is not going to help them in the least.

“What we offer is affordability,” says Sam Crignano, president of Cityzen Development Group, one of the developers behind Garrison Point. He, like many people, believes the low interest rates we’ve been seeing won’t last much longer, that if you have a down payment, it’s a good time to buy. That’s especially true when you consider all the added benefits you get with buying a condo.

There’s added space thanks to common areas. “You have to look beyond the square footage of a unit,” Mr. Crignano says. “There are meeting rooms, there are theatres, there is a gym, we’ve got an outdoor swimming pool and a number of areas that are designated for children [they will be programmed for kids of various ages]. You’ll have a lot of spaces that are an extension of the home.”

And there’s the luxury of being located in a prime downtown neighbourhood that’s safe. “I always say whether you’re renting or buying, you’re going to shop the neighbourhood first,” Mr. Crignano says.

“Liberty Village appeals to the full spectrum of the demographic curve, young people, young singles, young families and empty nesters all because of the green space, the walkability, the services, the fact you can live/work/learn/play in your neighbourhood.”

And then there are the ways a complex like Garrison Point will benefit the Liberty Village/King West community. As part of the development plan, four acres of the property’s seven-acre land will be conveyed to the city for a public park. Pedestrian bridges will also link the towers to the main streets around them, giving residents the ability to manoeuvre around the GO Train tracks with ease.

“At the end of the day it’s all about lifestyle and affordability,” Mr. Crignano says. “I truly believe this is a buyer’s market and there’s great availability, great design projects. We’re building better buildings — better designed and better built.” That’s why his company has invested so heavily in Garrison.

Which is something that could benefit young families like the Doerksens. “Looking further down the road, purchasing a home is a great investment and one that is important to us,” Ms. Doerksen says. “By continuing to rent, we aren’t banking our money how we would like to be. We would rather be building equity than signing a rent check to someone else each month.”

Comment: They should have been doing this for the past 6 years, but it is too late now. This article makes no sense, like 2 stories squashed into one.

Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto real estate agent with Century 21 Regal Realty.
He did not write these articles, he just reproduces them here for people who
are interested in Toronto real estate. He does not work for any builders.