Buying a home can be the biggest decision of your life. As an investment, it’s generally considered safe, but with so much at stake —not only finances, but also a huge expenditure of time and energy— a lot of people approach buying a home with trepidation.
While real estate is inherently unpredictable, there are a few factors you can weigh to judge the prudence of a particular purchase. The fact that interest rates have remained low by historical standards for years, that Toronto’s population grows by the tens of thousands each year, driving up prices across all areas of the city equally, but also other factors that affect the Danforth more acutely.
It’s a truism that it all comes down to location, but what matters when considering location in the Danforth area? There’s the obvious: proximity to the subway, downtown, and the DVP. A 2010 study showed Toronto has the longest commute times in North America, throwing a spotlight on the importance of location. But there’s also the purely mental aspect of East York’s separation from downtown by the bridge.
Broadview is only three stops east of Yonge, and yet it’s considered the east end — while three stops west of Yonge, at Spadina, you’re still very much downtown. The Danforth area doesn’t share the same urban vibe, despite being so close to the downtown core. While this has traditionally depressed home prices in the area, as more young families look for homes, the combination of proximity and a less urban feel will play to the Danforth’s strengths.
“East York, historically has had the largest population of retirees,” says local broker Anna Michaelidis. “Now, obviously, that’s turning over into young families.” However, studies suggest that while young families are snapping up detached and semi-detached homes, empty-nesters are not quite ready for condos. Sixty-one per cent of baby boomers who plan to downsize to a smaller home are looking for a semi-detached, the most common type of home in the Danforth area. That competition —from boomers looking to move to a smaller home, to young professionals looking to upgrade from a condo when their children are born— can only drive Danforth prices up.
Real estate, probably more than any other type of investment, goes through cycles. People looking to flip homes for profit are always on the lookout for a deal, but there has to be room for investment. “I can’t tell you how many calls I get from people wanting to do that,” says Dean Da Silva, a Danforth area sales representative. “There’s umpteen shows on TV with all these people flipping houses, and it’s crazy!”
With condos, buyers are very limited in the type of improvements they can make, but with detached homes, anything is possible —something not lost on buyers. “These dump houses are selling for so much money now. It’s mindboggling!” says Da Silva. “Everybody wants to renovate their own house. You’re getting these crazy bidding wars for these houses that are just so rundown, because people are like, ‘Oh, I want to flip, I want it to be raw, I want to do everything.'”
The macro-cycle of neighbourhood renewal depends on these investors. As Michaelidis explains, “Everything’s on a cycle, from the peak, and then it comes down, and it starts rejuvenating, and then it comes back up. You get places that are more rundown, somebody picks them up, they renovate them, they flip them, they increase the value, and they help increase the value for the whole neighbourhood, and that starts the trend of renovating.” East York is early in this cycle, meaning gains from real estate investment here may outpace the rest of Toronto.
Ultimately, the best way to gauge the value of a home is to compare it to others in similar condition in the area. While appraisers can estimate the value of the structure, “You can’t add up the bricks and mortar,” says Da Silva. “Market value is basically what one seller is willing to sell their house for and what another person is willing to buy it for.” Checking what neighbours sold their homes for —the more recently the better—is a very effective way to determine the value of your home. Whether you’re making a bid or thinking of selling, gauging your home’s value is the first step to making the right decision.