A little over two years ago, my wife and I began searching for our first home in Toronto. We started out looking at condos. After viewing over 30, we were convinced that a home represented a safer and more logical investment. The quantity of condos under development made us financially weary, and the limited space of those within our budget did not match our plans to start a family.
In our search for a home, we cast a wide net, from the Beach(es) to High Park, and North York to downtown. And we saw homes of all shapes and sizes, from semi-detached units in desperate need of repair to detached homes that were fully renovated. While this made for a longer process, we learned a lot about what kinds of properties were out there and how they were being priced. We also wanted to keep our options open in a seller’s market.
By the time we purchased, we had looked at over 70 properties, and bid on no less than six homes. In one case, a townhouse that was listed at $549,000 sold for $732,000, a whopping $183,000 or 33% over asking – see Option #2 in this Toronto Life article. (I believe there were more than 50 bids). It was a difficult reality – we felt like we might never win a bid.
Since then, the Toronto market has only gotten hotter, and will continue heating up with lowered interest rates. So when a young couple recently came to RS Homes looking for their first home, I was reminded of our own experience. To help them out, we highlighted several factors that support design flexibility and long-term value:
- Maximum frontage and depth: lot dimensions determine allowable Gross Floor Area (GFA), which is typically 30-35% depending on your location;
- Preferred existing foundation type (for renovation): poured concrete or concrete block
- Existing ceiling heights: the taller the better, especially in the basement to avoid costly underpinning
- Favorable lot conditions: devoid of limitations such as easements, right of ways, or shared elements
Following our conversation, they bid on a property that was asking $799,000 and sold for $955,000 ($156,000 or 20% over asking). Unfortunately they were unsuccessful. Speaking afterwards, our friends indicated that they were more disappointed and emotionally invested than they had realized. Indeed. I remember that feeling, and was glad to hear they haven’t given up. Things will inevitably cool off heading into the fall, as fewer buyers remain and sellers see their seasonal window of opportunity closing. Our advice: stick with it, but always be conscious of your total budget for purchase AND new construction or renovation. If you spend too much on the land, you may price yourself out of building your new home, or those essential upgrades that you need.
Ultimately, the house my wife and I purchased was the best we’d seen. We strive to help others achieve this satisfaction, through home buying and custom home building. If you want help navigating Toronto’s hot real estate market, please feel free to contact us. We’re always happy to assist you in exploring the challenges and opportunities hidden within a property before you make an offer. You can also learn more about the RS Homes process here, or download our guide on 6 Essentials to Custom Home Building.