Bosley Realestate

The Affordability Conundrum For Toronto House Buyers: Livability, Condition & Costs

March 30th, 2021 | Real EstateJunction/High Park/Bloor West/SwanseaCorso Italia / DavenportHigh Park North / The Junction Wallace/Emerson & Brockton Village

I enjoy writing about real estate, a lot. Whether it's a blog, advertising copy or the features of a listing and its location, spinning words is my jam. Sometimes the story flows like a stream of consciousness while other times I have to dig deep searching for the message. More than occasionally, I have to close my laptop and believe the right words will be there tomorrow. Eventually, the bon mots show up. I just have to trust the universe and myself.

In this instance, when I sent the team my content for Urbaneer's new listing Spring Blooms Fresh Beginnings On Symington Avenue, Offered For $799,000 [NOW SOLD], they kindly informed me a chunk of effusiveness had been cut. This happens fairly frequently, but this time my mind kept circling back to the subtext of my feature sheet copy espousing how rare it is to find an affordable downtown house that you can move into and fix up over time.

It felt like an Oscar moment might have just been left on the editing room floor.

As my career in the Toronto real estate market approaches 30 years, I'm realizing that a critical moment in the dynamic of our urban housing market is in play right now, and it's something not only house buyers impacted by the limitations of affordability need to pay attention to, but we all should.




The Fixer Upper Isn't For Flippers, It's For The Missing Middle To Get Onto The Toronto Property Ladder 

No one ever seeks to spend one dollar more than they have to purchase a fixer-upper that, for the foreseeable future, will require spending every additional dollar of disposable income just to stay warm and dry. Even those of us who wish homeownership was a right - but are grateful we can afford the privilege - are still surprised (particularly those of us living in Canada's most expensive cities) we're obliged to stretch to the top end of our budget just to barely meet our physiological need for shelter and safety. In downtown Toronto right now, for a sum approaching $1,000,000 and a lifetime of indebtedness, you will find yourself clinging precariously on the bottom rung of Maslow's Hierarchy Of Needs

As I explored in 7 Reasons Why Toronto Real Estate Prices Have Skyrocketed Over The Past Decade, the success of our Canadian economy has relied on, if not required, the demand for housing to exceed the supply. Why? It ensures the shelter industry - which is a huge engine of the Canadian economy - remains lucrative and profitable, even though it has the unintended byproduct of prompting flippers (here's my rant called We Flip Eggs Over-Easy, Not Houses) and speculators to siphon the cheapest (and most needed) supply of low-picking fruit and juice it into easy liquid profits, while global money launderers wash their money paying premium prices for luxury real estate even the wealthiest of Canadians can't afford.

The challenge today? Because the Canadian government has, perhaps unwittingly, steered us to relying heavily on this Asset-Based Economy its success now requires it to continue firing on all cylinders. The collateral damage? There are a lot of first-time house buyers who have had to reconcile that any 'affordable' downtown house (essentially most any house in the original City of Toronto) within their modest budget will require, the day they close on their purchase and get the keys, to immediately begin repairing deficiencies (like broken windows and fist-punched holes in walls) and upgrading end-of-life building components (like knob and tube wiring) while mapping a life plan of more substantial and satisfying renovations that are currently out of financial reach. You know, those times you get tipsy with your partner and wistfully dream of the day you get to make indulgent decisions about fixtures and fittings, like what type of Caesarstone you'll choose, or whether you'll have brushed bronze or gold cabinet hardware, and if there's room in the kitchen for an 18 bottle wine fridge (and because you're dreaming, you've also won the lottery so you're going to have it all!). 

For a large segment of Toronto house buyers, manifesting the dream of homeownership will include waking to a nightmare of realities. This will especially be true if your objective is to secure a house within the limitations of a modest budget that also offers the opportunity and potential to accommodate your essential future selves. Like a house big enough for raising kids, space to accommodate an aging parent, room to 'Work From Home' (because it's a thing now), or a garage to use as a studio workshop (one of my friends calls her 'The Screaming Shack'). The price of admission to get onto the Toronto property ladder is mentally taxing, emotionally draining, and physically exhausting. At times it will ravage your spirit and crush your soul, but if you survive it's the closest guarantee you've secured the financial futures of yourself and those you love. In this respect, the significance of having a supply of fixer-uppers coming to market for sale is, in the context of the real estate 'property ladder' and the natural filtering of housing stock, critical to having a robust housing market that offers options and opportunity to everyone.

It's tough right now to find affordable houses that you can move into and tackle like Tom Hanks and Shelley Long did in The Money Pit in 1986 (except it won't be a mansion, honey). The pool of middle-class Canadians - called The Missing Middle - competing in bidding wars to purchase an affordable house in downtown Toronto - even with help from The Bank Of Mom & Dad - is swelling in number right now. These 'affordable houses' are barely habitable. On HGTV they're called Fixer-Uppers. Realtors have long called them 'diamonds in the rough', which is another way of saying coal. And right now they cost around $900,000. It's really important all Buyers on a budget determine the options and requirements of the lender. You want to establish the lowest down payment you can provide to borrow the highest amount of money based on your incomes. For example, a Buyer who is qualified and approved to purchase a $900,000 property with a high-ratio insured mortgage from CMHC can put a down payment as little as 7.22% of the purchase price (or $65,000). The mortgage insurance fee of $33,400 can be tacked onto the mortgage, which will be $868,400, so that won't come out of pocket, but your closing costs will be anywhere from $25,000 to $32,000 depending on whether your a first time buyer or not, given the Land Transfer Taxes for the City and province have a rebate to those purchasing for the first time.

Given a $900,000 fixer-upper requires around $90,000 to be allocated towards the down payment and closing costs, those Buyers who are short on additional savings should be extremely diligent in knowing what deficiencies exist, which components are failing, how much they're going to cost, and when must they be rectified. You should bring in a contractor pre-purchase and determine what is the least amount of money you can spend to ensure the property meets the building code, the requirements of your insurer, and your basic comforts. Given houses that have fallen into a state of disrepair that has rendered them uninhabitable require an immediate cash injection of at least $300,000+, the prize everyone has their eye on is the house that is sufficiently 'livable' so that, from Day One of moving in, whatever savings that are remaining after purchasing the house can attend to all the immediate and future scope of work. Love spreadsheets and lists? In my post - Dear Urbaneer: We’ve Moved Into Our New Home. Now What? - they become your friend.

But finding a house that fits these criteria is really scarce. In fact, it's so rare I consider properties like this as the "Unicorns of real estate"



Why Is This Happening?

Have you noticed it seems that whenever a house sells, the moment it closes a big dumpster is parked out front and the house is pretty much gutted from top to bottom? A full year later the house is ready for possession and, as the moving van drives off after delivering a showcase of designer furnishings, the new owners finally move in. Or much to your surprise, a 'For Sale' sign goes up, setting yet another new precedent for market value on the street. It never used to be this way and yet now it appears to be a common occurrence. 

Are you nodding your head in agreement?

It's hard to believe I wrote this opening paragraph almost nine years ago when answering a question in my Dear Urbaneer series that asked Why Are So Many Downtown Houses Being Renovated?.



At the time, the house in the photo above - located near College Street's Little Italy that had been purchased for $820,000 - was undergoing a substantial transformation.

It would sell three years later - in 2016 - for $2,215,000.

The Toronto real estate market has changed significantly since I started selling real estate in 1991. I offer a broad-strokes overview as to why in my 2018 post Gentrification, Densification, And The History Of Toronto Real Estate. In 2019, I share how the growing demand by urban professionals for executive homes is seeing Toronto Real Estate Shifting From ‘Fixer-Upper’ Flips To ‘Tear Down’ New Construction. And more recently, in April 2020, I document how the value of land has increased in the downtown core to support the intensification and densification of single-family properties into small condominium complexes in Trending In Toronto: Single-Family Houses Replaced By Boutique Condo Townhomes.

The forces of gentrification, intensification and densification today are not limited to former working-class neighbourhoods either. It now reflects the movement of the more affluent into areas ripe for asset appreciation. This includes neighbourhoods of all social statuses, including tony Forest Hill where - on my sister site I posted $4Million Mansions Are Being Torn Down For New $15Million Estates. The takeaway? When one of the more affluent neighbourhoods in the downtown core sees new builds garnering $15,000,000 price tags, it has a ripple effect across the rest of the city. This is reshaping the City of Toronto's property market.




Fixer-Uppers Are The Unicorns Of Toronto Real Estate

Finding a downtown house (as in the original City of Toronto, not the suburbs) at an affordable price point (in particular under $1Mil) that you can move into right away (after picking up the keys from the lawyer) and upgrade over time (where one is not obliged to renovate immediately) is becoming really hard to find.

They are 'unicorn rare', because:

1- The window of opportunity shrinks with every sale. Each time a property fitting these criteria sells it automatically has capital invested into it. This capital $ sum could be limited to the essentials required of a property tune-up (fixing deficiencies, replacing building components at or near the end of their life span, and completing a cosmetic refresh like paint and paper, lighting fixtures & hardware fittings) or it could go in the direction of a more substantial renovation.

Regardless, the house will have to sell for more money, not only to recover these capital investments but also due to the hefty costs of buying (double land transfer taxes in downtown Toronto) and reselling the property (in the future) just to 'break even'. Even without spending a penny, a property in downtown Toronto has to increase by about 7% just to break even, as I write about in this past post: Dear Urbaneer: How Long Does it Take to “Break Even” After I Buy Property?




Profile Of Sellers In This Price Point

In the past few years, I've been seeing Estate Sales coming to market refreshed with cosmetic improvements. Why? Because the beneficiaries of the Estate believe selling the property without investing in pretty upgrades (often superficial and leaning to 'slap dash') is leaving 'money on the table'. This is a new phenomenon, and it signals both how conditioned and consumed we are with making a profit on real estate. And, I want to add, that I'm not meaning to be critical of this given it is something I do counsel Sellers about when they are engaging my services. I am being hired to help garner the Top Dollar, after all. 

So who are the owners who don't do this? By and large, I believe the people who are selling their houses on the lower end of the price spectrum where the dwelling is in need of work either:

•  have limited financial means and/or are incapacitated or disinterested in maintaining, repairing, upgrading, or renovating (in a sliding scale of time and cost) the property

• are completely unaware or have become accepting of existing deficiencies to the point they no longer see them.

• have resistance to tackling home improvement projects out of fear. They fear it will cost more money, take more time, and cause more stress than is worth the economic return (Do not underestimate the wisdom here. Ask anyone who has gone through a renovation and a number of them will admit they paid a price mentally, emotionally, or financially that was greater than anticipated).

• they suffer from money scarcity anxieties rooted in childhood which prevents them from spending money, even when they have it.

• subscribe to the belief they should not be in debt, so they will let deficiencies in their house increase rather than getting a line of credit or reverse mortgage.




A Shift In Attitude Towards Shelter & Debt

For the most part, the idea of a buyer 'climbing the property ladder' simply didn't exist until the 1970s and later. There was no "Let's just get a secured line of credit on the equity gain we've made and install that Ikea kitchen we covet so we can enjoy it before we cash out and upgrade to a better house." It wasn't until the arrival of easy credit, and credit cards, in the 1980s when consumers became free-spending, comfortably incurring debt to satisfy a desire, and even leveraging debt to make a profit.

Earlier generations - who had survived amidst times of scarcity - considered frivolous spending foolish. Just as money was meant to be saved, anything that provided utility and function - and still worked even if slightly damaged - was used until rendered obsolete. Household items and parts that had a chip, or blemish, or had lost their lustre weren't destined for the garbage heap until they were broken. For all those previous generations who never felt their income was disposable, a rational reason still hasn't been offered explaining why a kitchen must be pretty, let alone photo-ready with "duo-tone cabinets, a wine fridge, and waterfall counters". 

For many, including the privileged, a kitchen was - and still is - a utilitarian space that functions as a place to prepare food, indulge the occasional (or frequent) coffee klatch, and perhaps get into the tipple on a Friday night and play cards. These are the people who wonder "Since when did wine needs its own fridge?". So when you encounter a house for sale today that is devoid of such trappings, it may not be for a lack of money, but because these items have a lesser value to the owner than their acquisition cost.

I do think we need to look and learn from earlier generations. For them, 'Home' is defined by the collective sharing of moments, experiences, or secrets; the display of photos and mementos; and the recounting of memories with others who have crossed their threshold and imprinted their energy, whether that be bad or good.

These are the roots of the idiom 'If these four walls could talk.'

And it's time to listen before we're surrounded by stuff that's pretty but has no real meaning.




We Live In A Consumer Culture, And Our Homes Have Become Important Status Symbols

Just like housing design has evolved over generations to adapt to changing lifestyles, so too has our collective concept of what shelter represents. In the not-so-distant past, upgrading or renovating your home was done out of necessity, either because the age of the property required it or because the property was somehow lacking in serving the practicality of its occupants. The motivations more often than not centered around function and utility, like accommodating the growing needs of the household such as the birth of another child or an inlaw moving in. Perhaps the basement would be finished to have a 'rumpus room' (when did you see that word?), or a workshop/hobby zone.

Today, however, in part because Buyers are not afraid of debt, and they're heavily influenced by design media like HGTV, they renovate to increase the market value of their property, to enhance or elevate their lifestyle, or to express themselves creatively and reflect their personalities. I've written about this in The HGTV Effect On Toronto Real Estate and Dear Urbaneer: My Obsession With Design Media Is Hampering My House Hunt!

This paradigm shift in shelter began with the rise of consumer culture in the 1980s and beyond when the influence of the media and subsequent growth of the internet commodified the shelter industry. The practicality and essential function of shelter - as in a place we stay warm and dry - became subjugated by a new emerging culture of domesticity rooted in desire and focused on display.

That's when the term conspicuous consumption got introduced, which was the intellectual's word for describing the 'self-absorbed show off'. This coincided with the term 'Yuppie' being coined, used as a derogatory title for young upwardly mobile people who were considered arrogant and obnoxious. I clearly remember reading a 1980s bestseller called The Official Preppy Handbook that derided these Yuppies. It cracked me up, mostly because it also mocked me. Yup, it's time I confess dear reader to being 'one of those'. I am an early adopter of shelter consumption who became educated on the many facets of Housing & Home - including How Our Housing Is A Symbol Of Self & The Psychographic MakeUp Of Loft Dwellers - and applied it to my career path. I have played a role in reshaping the urban housing landscape we see today, some of it intentionally, and some of it unwittingly. 

The steady diet of design media that's been fed to both you and me for nearly four decades has created a new “normal” affirming our desire to 'make pretty'. It's also helped to justify spending the money to do so. And an extended period of low-interest rates has made it possible for a lot of people. It’s not surprising when you consider the rise and the impact of the design media, how it has fundamentally created a shift around the concept of shelter, and what it “should” look like. This article talks about the fashion of housing and status --> The Kitchen Is A Cult Item And The New Status Symbol

Fashion of housing is so entrenched in us now that the days of finding a Fixer-Upper in downtown Toronto that hasn't undergone some kind of cosmetic style enhancement will soon evaporate. Our psyche is now highly invested in the notion that our homes must be Instagram-worthy, as a means of self-validation, self-esteem, and self-worth.





Soon The Options Will Be Limited

These 'diamonds in the rough' that you can still live in are the only kind of house affordable to many buyers because they don't have the large sums of capital necessary (or access to said funds) to undertake a substantial renovation of a house that has become so dilapidated it uninhabitable at the time of purchase, or they don't have the gross income to buy a more expensive property that may be in better condition (or size or condition).

And this is particularly challenging for those buyers who have less than 20% down because one can only go with a high-ratio purchase on properties that sell for $999,999 or less, which is challenging given the average sale price of a house in Toronto has just surpassed $1mil ('Not For The Faint Of Heart': Average Toronto Home Passes $1 Million Mark In February)

Remember - a buyer who secures a house that is only just habitable still needs to have sufficient capital (or access to it) to do the necessary dwelling repairs, property maintenance, and replacement of major building components on an as-needed basis simply to stay warm and dry. So they have to earn an income that covers all their monthly housing expenses plus be able to save sufficiently to remedy issues. And ideally, they also can save sufficient funds to do improvements. However, if your income and debt ratio can sustain it, it's better to buy a house you can improve over time, than a condo in the sky - because of the potential for growth - both in how the property can adapt to your needs over time and in future value.

So - back to our Symington listing. The home inspector report shares it has 4 years life expectancy on the roof of the house (the garage roof is new), 5 to 6 years remaining on the heating/cooling systems, a 100amp circuit breaker panel (connecting to the original knob and tube wiring which has to be replaced), copper plumbing (though the water line into the house is galvanized steel), and the lower level has signs of dampness with waterproofing remediation recommended. The house has some newer windows and some which will need to be replaced over time. Overall the interior presents well, and with a full washroom on each of the three levels, it lends itself to being converted into an income property (or income supplement) or a great family home. The spacious dwelling is structurally sound, as is the double car garage. Here's my post called Understanding The Six Essential Layers Of Property.

A house that has deficiencies is still an intelligent purchase if it is well-situated and has good bones - because it’s upon this foundation from which a dwelling can evolve towards the next stage of its evolution. And, as houses in the lower end of the price point have demonstrated, their values continue to climb. In some cases, they climb a great deal in a short period of time. Yes, real estate values have historically been cyclical; but the scarcity of this kind of product in this price point today ultimately represents an upside for homeowners tomorrow. The key is to buy, hold happily, and live for the long term, before selling.

(*Title Image courtesy of APK Pure, with thanks.)



Here's a better look inside our listing, Spring Blooms Fresh Beginnings On Symington Avenue, offered for $799,000 and NOW SOLD!

**Addendum**This property had 62 viewings over seven days, received 10 offers on the Offer Date, and sold for 56%+ over the list price**



A Blog That Explores The Big Picture Of Toronto Real Estate

Since I started the blog 11 years ago, along with writing about buying and selling property, design, culture and urban life, healthy (and unhealthy) housing, and my real estate forecasts, I've explored a number of different facets that shape our housing market including:

2013 --> Why Toronto’s East Side Real Estate Has Historically Been Cheaper

2015 --> What Are The Real Financial, Emotional And Health Costs Of Commuting?

2016 --> Buying A Toronto Condominium Pre-Construction With A 2020 Update --> More On Buying A Toronto Condo Preconstruction

2017 --> On Building Sustainable Housing In Canada & In 2020 --> Hello Toronto, Ontario, Canada! Make Your Home A ‘Net Zero’ Hero

2017 --> The History Of The Ontario Gothic Revival Cottage - Bay & Gable Victorian Architecture In TorontoEdwardian Residential Architecture In Toronto

2017 --> In 2010 I Predicted Why Toronto Real Estate Prices Would Skyrocketed Over The Next Decade

2018 --> The Psychology Of Real Estate, Housing & Home

2018 --> Gentrification, Densification, And The History Of Toronto Real,  Estate

2018 --> Why Toronto Real Estate Near Queen Street – East & West – Is Climbing In Value

2018 --> Ten Toronto New Builds That Recently Sold For Between $2M And $10M

2018 --> About Laneway Housing In Toronto, By Sustainable And Urbaneer

2018 --> Foreign Buyers, Property Prices, And Toronto Real Estate - and - Foreign Buyers, Inadequate Policy, And Canadian Real Estate

2019 --> Toronto’s Booming Technology Economy And Our Real Estate Market

2019 --> Toronto Real Estate, Yellowbelt Zoning & The Missing Middle: Part One & Part Two

2019 --> How Toronto Real Estate Is Shifting From ‘Fixer-Upper’ Flips To ‘Tear Down’ New Construction

2020 --> Trending In Toronto: Single Family Houses Replaced By Boutique Condo Townhomes

2020 --> Demand For ‘Forever Homes’ In Toronto’s Downtown Family Neighbourhoods Persists Despite COVID-19

2020 --> Exploring COVID-19, Urban Planning And Toronto Real Estate




Are you a buyer trying to determine your best path forward as a homeowner? You’ve got to not only consider the property market today- but how you can best steer your ship successfully. With decades of experience in the real estate trenches in Toronto, and a smart, strategic eye towards the future, I am here to help!

With a multi-disciplinary education in housing - and 28 years of experience in the property market - Steve and his team believe the search for a Home requires engagement on sensory, intellectual and emotional levels. In fact, it's how we've become top producing realtors. 



Thanks for reading!


-The Urbaneer Team

Steven Fudge, Sales Representative
& The Innovative Urbaneer Team
Bosley Real Estate Ltd., Brokerage - (416) 322-800

- we're here to earn your trust, then your business -

Celebrating Twenty-Eight Years As A Top-Producing Toronto Realtor


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