After living abroad my buyers returned to Canada to raise their young children. With the lure of a lucrative job offer on Bay Street, Toronto seemed a logical choice, though in short order my fab clients discovered this is a pretty expensive city.
In fact, Toronto has become Canada's most expensive city, ranking 59th in the world according to the new Mercer’s global cost-of-living survey. Here's a brief synopsis as reported in this Globe and Mail Report On Business post.
For Toronto buyers, the financial sting is most felt with the Double Land Transfer Taxes that accompany a property purchase here. The two land transfer taxes, one issued by the Province of Ontario and the other by the City of Toronto, added a whopping near $27,000 on this $868,000 purchase. Worse, these sums cannot be financed with your mortgage but are due in full when you close the sale.
Click HERE to connect to the Toronto Real Estate Board's Land Transfer Tax Calculator if you want to see how much the tax payable will be on your next purchase (though note most first time buyers are entitled to a $5725 rebate, which are the taxes payable on the first $400,000 of a purchase).
These spiralling taxes are contributing to the shortage of available listings for purchase. Because of the costs associated with moving, property owners are electing to move less frequently as it's becoming too cost-prohibitive to climb the property ladder. Instead, those who own freehold houses are staying put by renovating up, out or down with attic expansions, family room additions and basement dig-outs to create additional living space.
This may create a fundamental shift in the downtown housing market.
A healthy housing economy requires an adequate supply of product at all price points available to meet the needs of consumers. This natural filtering of housing stock accommodates both those keen to climb the property ladder as well as those downscaling into smaller and less expensive accommodations. However, if property owners start to stay put due to the excessive costs associated with buying and selling, the number of available houses for purchase may dwindle. This could stall the momentum of our market, especially if demand for houses remains strong.
I expect this will be the case for housing in the Old City of Toronto, which roughly encompasses The Beach west to The Kingsway, and from Lake Ontario north to Sheppard. I predict prices for attached, semi-detached and detached homes in this geography will continue to escalate higher than other locations, to the point that only the most affluent of buyers will be able to afford entree into the freehold market. As a result, a lot of people who covet a house with a garden in these locations will either have to opt for a condominium or relocate to the suburbs and reconcile the misery associated with an unpredictable commute.
Here's some recent urbaneer.com press offering insight on the situation.
Given this reality, what did my Buyers do?
After a lot of research on their part and plenty of discussion, my buyers did what more and more first time buyers are opting for. They decided to bite the bullet and leverage themselves to their absolute max into the downtown freehold housing market with the objective of NEVER MOVING for the next twenty plus years. Rather than face ongoing double land transfer taxes, realtor fees, legal costs and financing charges associated with multiple moves, they stretched themselves by purchasing a big house with supplemental income in a great centrally-located family neighbourhood.
The end result was the purchase of this massive detached five bedroom two-a-half bath vintage house with lower level suite (and desirable on site garage) in kid-friendly Roncesvalles Village.
Offered for the first time in almost thirty years, this family home offered loads of character details and a lot of heart. In fact, crossing the threshold you could feel the love of a couple who had raised their kids, cultivated their garden, and embraced their community. This is the kind of house where birthdays have been celebrated with hot dogs on the barbecue, hot summer nights spent with neighbours under patio lanterns, and holidays rejoiced with family and friends around the crackling wood fire. From toddlers to teenagers and beyond, this place has served as an amazing family home.
How fitting to know as the Sellers downscaled with retirement, my Buyers will now be carrying on these very same traditions.
In what remains a common occurrence in the downtown housing market, my buyers had to outbid other purchasers by offering three percent over the asking price to secure the dwelling. In my opinion this was a wise move, for this house has everything one might need for a long-term purchase. In fact, I predict this house will increase in value faster than most Toronto real estate.
If you, or someone you love, requires guidance finding a great property with a promising return on investment, please know urbaneer.com is here to help!
Congratulations S n J!