House Rich or House Poor

Norma Walton

http://money.ca/you_and_your_money/2016/05/19/norma-walton-house-rich-or-house-poor/

Content

It’s a Love/Hate Relationship ………………………..What is to Love? …………………………………More to Love……………………………………….What is to Hate? …………………………………More to Hate……………………………………….

Predictions for the future: …………………………….More Predictions…………………………………………..Get on board or get out…………………………………

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It’s a Love/Hate Relationship

Some days Torontonians love their real estate… and

some days Torontonians hate their real estate.

That love-hate relationship can even happen all on the

same day.

What is to love?

• Toronto’s real estate is coveted internationally• There are approximately 100,000 new Canadians

moving into the Greater Toronto Area each year, all needing housing

• Toronto is cheaper than other major international cities

• Toronto’s stock of freehold houses is relatively new and in decent shape relative to other large cities

More to Love

• Toronto is a fairly safe city• Toronto is the most multicultural city in the

world and welcomes all people• Investments in improving residential houses in

Toronto pays off when the property is then sold or refinanced

What is to hate?• There are no affordable freehold houses in Toronto• There is no supply of affordable freehold houses in the city• The available houses listed at less than $1 million are usually

located next to subsidized housing projects and in relatively dangerous neighbourhoods hence they are not desirable

• Most Torontonians pay at least33% of their take home pay ontheir housing costs

• Average mortgage costs in somehigher end neighbourhoods aremore than $10,000 per month

More to Hate• Average house costs in some higher end neighbourhoods are

more than $2.5 million• The trend is to buy a house for $1 million plus and rip down

whatever is there now to build a monster house to the maximum allowable density

• Transaction costs in Toronto are far higher than surrounding areas because Toronto tacks on a city land transfer tax of about 1.5% of value in addition to the provincial tax of another 1.5% of value

• There is a large number of condominium projects in the works and even the price points for condominiums is at least $250,000 for a tiny bachelor unit along with significant monthly common element fees

Predictions for the future:• In my opinion, Toronto’s freehold real estate will continue to

increase in value over the long term given the demographics

• Monster houses will continue to be built in higher end neighbourhoods, occupied by between two and four people at a ratio of 1 person per 1500 to 3000 square feet

• There will continue to be a flightof young families and retirees tocommunities west, north andeast of the city because theycannot afford to live in the city

More Predictions• Basement apartments will be built

in existing houses due to theimmense demand for affordablerental housing of any kind and theneed for homeowners tosupplement their income to paytheir mortgages

• Despite the recent push by all levels of government to improve transit, commute times will continue to climb for those workers who live outside Toronto but work in the city and congestion on highways will worsen

• The surrounding communities will benefit from an influx of numerous new residents as these bedroom communities evolve into hubs of their own over time

Toronto freehold real estate is onlygoing up in value over the long run

SOEither get on board and buy something in the

city for what you can affordOR

Move to the suburbs, as in as far away from the city as you need to in order to afford the house you want,

and invest your extra money in a good car with no mileage restrictions because you’ll be spending a lot

of time in it!