Wanted – Worst house, best street
Toronto, and the GTA as a whole, is on fire. Not everywhere, but there are pockets of raging infernos in the real estate market, unlike ever before in recent history. An October Altus Group study advises that while the first quarter of 2020 was the weakest in 25 years, the pent-up demand for homes created the highest number of transactions in the third quarter – of all time. Prices of single-family homes are climbing at a staggering rate. With prices up 14.4 per cent year-over-year, Royal LePage forecasts that GTA housing prices are poised to rise another 8.5 per cent in the fourth quarter of 2020 alone. The single-family lowrise home, the historic Canadian staple, is one of the hottest commodities in every major centre from coast to coast.
Where does that leave you? Think about the old real estate adage, location, location, location – but this time with a more targeted focus. Look for the best, then seek out the worst. The worst house in the best area is where you still have a chance to wedge yourself into this marketplace, where other buyers are afraid to venture.
“The key to success in this area,” says Chantel Crisp, broker with Royal LePage Signature Realty, “is to come in prepared, with the right team of your own third-party realtor, home inspector or, even better, your own professional design-build firm consultant. This can ensure you have experts looking out for your best interest and helping you see what might be good and bad (read – costly) in a listing.”
Bad can also mean good for you, in that it not only provides you with better odds of a successful offer, but also means you can renovate the home to suit your tastes. You also stand to have a good return on your investment, as there is more opportunity for capital appreciation when it eventually comes time for you to sell the home.
“Be cautious,” Crisp forewarns, “as offers without conditions may be more attractive to the vendor, but also strip the purchaser of any means out if the deal is accepted. Remember, too, an offer without conditions can be lower than an offer with conditions, as vendors will often leave money on the table for a sure thing, versus risk associated with tying up a property with an offer that may ultimately fail, even if a higher number,” she adds.
Crisp speaks from personal experience. She retained Eurodale to design and renovate her new family home, complete with an in-law suite to provide additional income support and help pay down the mortgage. The original home, at time of purchase, was in need of a complete gut, a large two-storey addition and underpinning of the foundation, to work for the needs of her growing family. All new systems and finishes were both needed and welcomed. This approach allowed them to move into the community they wanted to live in, but otherwise couldn’t afford. Secondary suites are an as-of-right housing condition across Ontario and can help enter into a housing type that would otherwise be out of reach for many, without the supplemental income support. It’s a great stepping stone.
Fixer-uppers can be found in any neighbourhood. “Once you narrow down where you want to live, it’s important to keep an eye out for the homes with poor quality or cluttered photos, or no photos at all,” says Crisp. Buyers these days tend to gravitate towards prettier, staged options. So, the opportunity to scoop up a property at a lower price without the competition may be there.
Before purchasing a fixer-upper, speak with your realtor and design-build firm about your vision and priorities. A realtor can recommend the most cost-effective fixes that will make the highest impact on your future home value, to ensure you’re spending your reno dollars wisely. In contrast, your contractor can advise you of real costs to undertake what you are planning before you calculate your offer. Both of these are critical aspects when determining your costs on top of the purchase price.
In a hot market, being creative and resourceful and building a team of advisors can make the difference between sitting on the sidelines or buying your dream home. Visit realtor.ca to find a licensed realtor and renomark.ca, the home of the professional renovator, to begin your search.
Happy house hunting – and may your next offer be the one that is accepted!
|Brendan Charters is a Founding Partner at Toronto design-build firm Eurodale Developments Inc., the 2020 BILD Renovator of the Year.