So why is North York so Expensive? And Scarborough so cheap?

[boldpreza]

Who the heck are buying these bungalows for $750-$900K?

Several people are buying these for very different reasons. Downsizers who want to keep a yard but not the interior of a massive house or can't handle stairs as well anymore.
First time buyers possibly though not always with cash from the bank of mom and dad.
Builders who want the lots, even at 40ft frontage they can build and make money.
People looking to move up from condos/stacked townhouses(me included here), the recent condo boom has left these folks flush with, if they sold, cash or maybe just a substantial amount of equity if they didn't compared too just a couple of years ago.

Additionally its not a bad buy. Its substantially cheaper than York Region still, which has a similarly ethinically diverse areas(Markham in particular), its closer to Toronto than anything in Durham Region with yes better transit than those areas and similar access to GO service. For a lot of people as well the property taxes are way cheaper than buying in other municipalities.

This is obviously not applicable too all of Scarborough of all scenarios to be honest but it gives you an idea what is driving the demand in some ways in Scarborough.

 

[TheOneAbove]

It's funny, your anecdotal evidence is different than mine. I have many friends and family in the business from mortgage agents to real estate agents to those working in the big 5 banks to the 2nd tier banks. All I hear about are Canadians purchasing homes. I hear about salaries, I hear about debt, etc.

I think there is a decent amount of foreign investment, I just think it's overblown. Prices are high for many reasons and to me foreign investment is just a boogeyman. People are priced out and need to be mad at someone and it's the foreigner. The media simply isn't doing a good enough job at covering this story.

As for your post, that's a pretty basic conclusion to me. I don't know too many people who are buying now that follow the 30% principle. That is an outdated principle and I don't think that's a good enough measure to determine how much foreign ownership is fuelling the market. I don't think it's that easy.

Its okay, the majority of opinion in Toronto right now is still in the denial stage about unaffordability. Realtors/real estate firms don't want to see commissions, increased sales prices, and etc. to drop, so that's just a bad starting vantage point for advice on how healthy a housing market is.

Anyway, one needs to look no further than Vancouver to see how foreign investment has affected prices. As soon as the government - finally - installed a foreign buyer's tax, the prices have stopped jumping 20% in a year and are starting to pull back.

I'm not against foreign investment, free trade, or any of that. But when there's a housing crisis, there's a housing crisis. Something simply must be done. Now Toronto is on pace to skyrocket past Vancouver's outrageous prices if nothing is done.

 

[TheKingEast]

Its okay, the majority of opinion in Toronto right now is still in the denial stage about unaffordability. Realtors/real estate firms don't want to see commissions, increased sales prices, and etc. to drop, so that's just a bad starting vantage point for advice on how healthy a housing market is.

Anyway, one needs to look no further than Vancouver to see how foreign investment has affected prices. As soon as the government - finally - installed a foreign buyer's tax, the prices have stopped jumping 20% in a year and are starting to pull back.

I'm not against foreign investment, free trade, or any of that. But when there's a housing crisis, there's a housing crisis. Something simply must be done. Now Toronto is on pace to skyrocket past Vancouver's outrageous prices if nothing is done.

You lose me when you compare Vancouver to Toronto.

Vancouvers housing market had slowed down prior to the tax btw.

 

[TheOneAbove]

You lose me when you compare Vancouver to Toronto.

There are direct correlations that are occurring with Vancouver. Wealthy foreign buyers are absolutely using Toronto as a dumping ground for investments, and for locals we have insanely cheap money as interest rates are still abnormally low following the Great Recession. Its a perfect storm, I never said it was exclusively foreign buyers. It is one piece of the puzzle. This isn't about xenophobia, its about ensuring housing is livable for the majority of people who live in our communities. Home ownership is not a right, but it should be reasonably achievable. We are living in unprecedented times, our forefathers didn't have to worry about investors in nations around the world dumping investments into local real estate and therefore pricing locals out. This is something that is an entirely new phenomenon in the global economy. It requires new, innovative ways to manage.

I also do not think it is ridiculous to take average incomes in a given postal code/location and calculate what people could reasonably afford on the average income in that location at 30% of gross income. That is an average that has meaning, it is generally a good idea to be able to afford housing under that percent of your income for the well being of the greater economy and the individual. Too much debt is a bad thing. So, you already lost me a long time ago in this discussion. LOL

Toronto cannot continue down its current path, it is not sustainable. Whether it crashes or there's a softer landing is a choice policy makers have to make. But this denial that anything bad is happening, or calling anyone who points out a problem a 'xenophobe' just ignores the topic at hand and is unsubstantiated name calling.

 

[TheOneAbove]

On the topic, this headline posted just as we began discussing this:

http://www.theglobeandmail.com/real...s-tax-to-cool-housing-market/article34256991/

By any measure, 30% increase in prices in just one year is beyond what the market can handle. There are clearly forces outside the GTA pressuring this upward price movement, and now that Vancouver has a tax foreign investors are moving into Toronto.

This is a crisis and can no longer be avoided.

 

[boldpreza]

On the topic, this headline posted just as we began discussing this:

http://www.theglobeandmail.com/real...s-tax-to-cool-housing-market/article34256991/

By any measure, 30% increase in prices in just one year is beyond what the market can handle. There are clearly forces outside the GTA pressuring this upward price movement, and now that Vancouver has a tax foreign investors are moving into Toronto.

This is a crisis and can no longer be avoided.

I don't get why people are holding to this foreign buyer idea! Yes more have decided to come here but no, they are not the sole reason for this insane increase! We are living in a time with quite a few things contributing to this.

Home owners are not selling. I just checked MLS and right now there are 856 freehold units(including conditionally sold). 856 units is nothing for a city of 2.5 million. Even if you add condo units you fall under 2500 units combined(and that includes parking spots). Believe me scarcity is a major issue here.

Additionally, interest rates are still really low. Even from a B-lender if you have 20% DP you can get 3.59% as your mortgage. For most people right now thats a worst case scenario. Money is cheap to borrow and people are making the most of it.

You also have the demographics change. People my age(millenials, echo boomers, the under 40) they are now all getting married and starting to have kids and now all want those houses with a yard. Oh wait we have cut the amount of those houses being built significantly in favour of condos and back to first point the ones already built aren't being sold. Definite problem with demand and supply here.

Further this city and in fact the entire region are growing rapidly. Immigration is strong in Toronto, its the place to be but its not just movement of people from other countries, its inter-provincial movement as well. Alberta is struggling, the Maritimes have been struggling, Northern Ontario even is struggling right now and the best place, the place of hope for many of these CANADIANS is Toronto. They come here and work and send money back to their families.

To your point though, I look at the recent sales numbers and I am sickened by them. Houses should not be going up this fast in terms of value, certainly not for any extended period of time, but foreign buyers are not the ones we should blame. There are simply too many factors here and honestly the foreign buyer isn't focused on a detached bungalow in Malvern or Rexdale but those neighbourhoods are shooting up as well. I will give you that in part of Markham and Richmond Hill you may have a case but a foolish tax like that of British Columbia won't be our saviour.

We have a problem with supply right now and its time to revamp our planning. They want to build intense neighbourhoods I get that but not everyone wants to live in a cubby condo. We need to start making it easier to get developments going and we need to start building more new houses in the City of Toronto. Until we free up supply, we won't have any relief on this until people are simply way too overburdened with their mortgages no matter what taxes we implement(and the government fritters away).

 

[TheOneAbove]

It likely isn't just one or the other, its all of the factors you mentioned and more. Including foreign buyers with lots of cash. Anecdotal or not, I've seen plenty foreign cash buy homes way over asking price. The stress test recently implemented should have limited domestic buyers abilities to over-bid the severe amounts we're seeing, but it didn't make much of a dent. Foreign investments are absolutely a factor, and this is no longer a single family house thing. I personally witnessed a condo sell for $80k over asking price this month.

In regards to supply, I agree we should increase it. Toronto should probably be construction 3x as many condos as currently in planning.

With the greenbelt as it is today, there simply aren't room for new single family homes in many places. Condos, yes. I'm agnostic toward the Greenbelt, but it certainly doesn't leave much room for single family homes at this time.

 

[narduch]

One thing that has happened is people no longer buy a 'starter' home, build up equity, then buy the home they really wanted 5-10 years later. That market has been destroyed. That's one of the main reasons why there are so few homes on the market. People just stay where they are now. The home reno stores are doing great though.

I'm surprised there isn't more pressure to open up the Greenbelt. That being said at this point I don't think it would even make a difference. I can't see the developers flooding the market causing prices to lower. Instead they would slowly release lots so that the prices would remain high.

 

[boldpreza]

It likely isn't just one or the other, its all of the factors you mentioned and more. Including foreign buyers with lots of cash. Anecdotal or not, I've seen plenty foreign cash buy homes way over asking price. The stress test recently implemented should have limited domestic buyers abilities to over-bid the severe amounts we're seeing, but it didn't make much of a dent. Foreign investments are absolutely a factor, and this is no longer a single family house thing. I personally witnessed a condo sell for $80k over asking price this month.

In regards to supply, I agree we should increase it. Toronto should probably be construction 3x as many condos as currently in planning.

With the greenbelt as it is today, there simply aren't room for new single family homes in many places. Condos, yes. I'm agnostic toward the Greenbelt, but it certainly doesn't leave much room for single family homes at this time.

And that is my point. Recently the conversation has been to single out the foreign investor as the sole culprit and hold up a foreign buyer tax as the sole solution. We aren't Vancouver, though as I said above, maybe in Richmond Hill or parts of Markham you could make the case but the vast majority of GTA isn't boiling over because the investors aren't looking everywhere.

We need to broaden the conversation and look at a lot more areas to find out whats really happening here. To be honest the only thing I could see really affecting the market is a significant increase in interest rates. The people that have a "Fear of missing out" will at that point "Have missed out" and the pressure from those guys will be gone making the market way less rabid. With the market cooling from that, the foreign investors or whats left of them would find other higher yield places to out their money.

I like the idea of opening up more space to develop but the Greenbelt is something I don't think we should touch and really at this point don't need too. There is still a lot of serviceable land outside of the Greenbelt that doesn't affect our water supply. That is raw land at that. Further with manufacturing being a dying industry(even if manufacturing did come back, it will eventually be so heavily automated the jobs just wouldn't be there) we need to look at redeveloping all those brownfield sites we have all over the City. Once we start developing that we also need to consider what we build. Diversify it to 50/50 low rise/high rise. We can still have a very urban feel but maintain neighbourhoods with real houses. Its not the lack of condos being built(people are buying them just to get something) its the lack of homes for people to raise one or two kids in.

 

[OneCity]

Scarborough's waterfront housing is being torn up from the Beach to the Rouge with $$million homes. Any transit expansion in the coming decades will further drive appreciation and attractiveness elsewhere. Such value when this thread created and there's a lot of room for growth given the City's unaffordability issue and the revitalization in quite few Scarborough neighborhoods in the not so far future.

 

[Eug]

Scarborough's waterfront housing is being torn up from the Beach to the Rouge with $$million homes. Any transit expansion in the coming decades will further drive appreciation and attractiveness elsewhere. Such value when this thread created and there's a lot of room for growth given the City's unaffordability issue and the revitalization in quite few Scarborough neighborhoods in the not so far future.

It should be noted that this inflates price increase stats.

The sub $1 million lakefront bungalows along the Bluffs are being torn down and then big two-storey homes are built in their place, a half dozen in the last few years just on one street in Scarborough near my place. The latest ones are going for over $2 million, and the last one for almost $3 million, even though just a few streets north, decent detached homes can be had for under $900000. These properties on the lakefront aren't truly appreciating 200% since they are effectively brand new builds with house sizes 3X or even 4X the original, but it affects the average so the average price increases reported can be misleading.

BTW, here is a price increase interactive map for 2016, for detached homes:

https://www.google.com/maps/d/viewer?mid=1f0CvJLKjsXBzPlpP-xEzBp_m_Ws&ll=43.69992215027431,-79.34655942431641&z=12

 

[junior43]

It should be noted that this inflates price increase stats.

The sub $1 million lakefront bungalows along the Bluffs are being torn down and then big two-storey homes are built in their place, a half dozen in the last few years just on one street in Scarborough near my place. The latest ones are going for over $2 million, and the last one for almost $3 million, even though just a few streets north, decent detached homes can be had for under $900000. These properties on the lakefront aren't truly appreciating 200% since they are effectively brand new builds with house sizes 3X or even 4X the original, but it affects the average so the average price increases reported can be misleading.

Yep, it was the same on my street on the bluffs. There'd been 8 teardown/rebuilds over the last 5 years or so and I knew of another 3 about to start - and that was only on the lower half of my street. Add in the fact a lot of the new owners of these McMansions were D-bags, I sold my POS original build bungalow and upsized to a new build condo last fall - and got rid of my mortgage to boot! They've already framed a truly hideous McMansion where my house was - and it'll probably go for 1.6 - 1.7 ish.

 

[Eug]

Yep, it was the same on my street on the bluffs. There'd been 8 teardown/rebuilds over the last 5 years or so and I knew of another 3 about to start - and that was only on the lower half of my street. Add in the fact a lot of the new owners of these McMansions were D-bags, I sold my POS original build bungalow and upsized to a new build condo last fall - and got rid of my mortgage to boot! They've already framed a truly hideous McMansion where my house was - and it'll probably go for 1.6 - 1.7 ish.

One house overlooking the water less than a decade ago was sold for a high 6-digit $ price, and then was heavily renovated. However, the new owners didn't build a McMansion. They built a ranch style bungalow on I believe the same foundation, and it looked quite nice and tasteful. So, not huge and not two-storey, but much bigger than your traditional post-war brick bungalow and of course with all the modern amenities.

Well, according to a neighbour, it was listed for $1.7 million this spring... and then sold for over half-a-million $ over asking. Holy crap if true. Yeah, asking price isn't necessarily a great indication of fair price, but $2.25 million for a bungalow in Scarborough is still much more than I would have guessed just a few years ago, even in that waterfront location.

It makes me wonder if it was the original post-war home in the same location what the sale price would have been.