Toronto Real Estate Hell

Toronto Real Estate Hell is a blog about the toxic, over-valued real estate market that has arisen in Toronto and surrounding environs

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"Canada’s not known as a vacation hideaway, but real estate agents have tales about foreign investors scooping up literally dozens of condo units at one time – tales that, if true, suggest there’s a fair degree of speculation in the market."   

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Excellent Australian documentary about real estate speculation. One need only look to some of the vacant and derelict land in Toronto to see the similarities to the situation in Australia. 

Toronto's over-valued condos are also the the result of foreign and domestic speculators buying up bundles of units at pre-construction prices, and simply holding on to them until the the value has gone up. This creates the illusion of great demand and drives prices higher. It also makes vacancy rates and new condo stock appear lower than they actually are. There are people who actually want to buy and live in these units who are at the mercy of people who are gaming the system for what amounts to free money. And don't give me that bullshit about the speculator taking the risk. If it was at all risky then it wouldn't be so rampant.

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The Trendy Plague

One of the most overused words in MLS descriptions is “trendy”. If I had a nickel for every current  Toronto MLS listing containing at least one instance of the word trendy, I might have almost enough nickels to buy a house in Toronto. Trendy is one of those great, safe words that appeals to everyone really, not just trendy people. Basically any young buyer interested in a property anywhere south of Finch thinks of themselves as trendy. Then there are the young to middle aged parents clinging to the idea that they can have kids and still be cool, and that they’ll never move to the suburbs like their parents did. A trendy neighbourhood is especially important to these people. And finally you’ve got the oldsters looking to move back into the city from distant suburbs ‘cause the kids have left the nest who believe that trendy is something they can aspire to be by moving to the right neighbourhood. 

Allow me to let you in on a little secret. 

Every single neighbourhood in the city of Toronto is trendy. 

Or at the very least “up and coming”, which is most certainly a precursor to the ultimate title of trendy. Please keep in mind that by Toronto, I mean the actual city of Toronto and not the far flung municipalities that have latched on to the city like leeches over the years, bleeding the good city’s coffers dry. If you’re unsure of the boundaries of the (actual) city of Toronto please use the map below for reference.

What the fuck is "The Peanut" ? View Larger

 As the map above illustrates, the area roughly bounded by the Humber river to the west and Main and Danforth to the east, and anything south of Bloor (with the exception of trendy “archipelagos” Yonge and Eglington and East York) is completely trendy. 

Below is an advertisement I found on craigslist simply by putting the word trendy into the search field of the real estate for sale section. There were 160 results from the past 2 weeks alone. This advertisement demonstrates the appropriation of the word trendy to try to make a decidedly un-trendy area trendy. A classic misuse of the word trendy indeed.

Maybe the Marina sells records on the sidewalk on sunny days.

Unfortunately, Port Credit is not trendy. Unless by trendy you mean “A lot of other people in a similar financial situation have been convinced to buy here recently”. There are not enough vintage clothing and furniture stores, dive bars, brunch spots, and thai restaurants in the whole world to make Port Credit trendy. The picture in this listing says it all. Nothing says trendy like a gazebo on a berm next to the lake and the brand spanking new pre-fab master planned townhouse tracts.

There used to be a lot of instances when it would have been appropriate to call an area trendy. For the longest time, Queen west was king of trendy. But rising prices have driven the trendy buyers to all corners of the city in the search for shitty old neighbourhoods and former industrial areas yet to be gentrified. This is undeniably a good thing, but it means that about 90% of the neighbourhoods in the city can be considered trendy. 

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Canadian cities dominate this global listing of Google searches for “housing bubble.”

Toronto at #2. Surprise?

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Introduction

Toronto Real Estate is hell. For me, following the real estate market, pouring over MLS listings and those glossy new condo guides is a lot like black tar heroin is for some; a truly nefarious addiction. It has become a pointless obsession for me, because house and condo prices in this city are so over-valued that home ownership, for myself and many others my age (or any age for that matter), will remain a fantasy. 

Before we get started, here’s a little about me. You can call me Rex. That’s not my real name, and I don’t intend on divulging that information because I wouldn’t want to risk offending my landlord, my employer, my family or anyone else who might take offence to the views I intend to express going forward. At the end of the day, it doesn’t really matter who I am, because I’m a dime a dozen in the housing market. I am 28 years old,  and a would be first time home buyer. 

From what I can tell, there are a few distinct causes to this problem. Any real estate agent, or good capitalist is immediately going to have a knee jerk reaction when asked about how prices got so out of hand, and cry out uncontrollably: “SUPPLY AND DEMAND!”. While this might be part of the reason Toronto home prices should and will always be higher than say, Moncton home prices, it’s not the only reason.

Foreign Investment/Speculation (“HYPE”)

This applies to mostly to condos. Investors from foreign countries buying up residential properties in Toronto skews the actual supply/demand ratio, making it even harder for average Canadians to afford a home in Canada’s most populace city. You aren’t just competing with everyone in the GTA who wants to buy a home, but also with foreign investors who see Toronto’s red hot condo market as a sound investment opportunity. As long as the whole world can buy up property, prices will stay inflated.

The Rental Market

My fiancee and I, along with our cat and dozens of house centipedes and silverfish, currently live in dank and mouldy one bedroom apartment in the basement of a million dollar home in the Allan Gardens / Moss Park area. For this privilege we pay almost a thousand dollars a month. This is actually less than we should be paying, as fortunately our landlords are decent enough not to raise the rent every year even though it is well within their rights. Most people are paying about 1100-1200 per month for a decent one bedroom, though depending on what your idea of “decent” is, you might pay as high as 1500-1600. With rents this high, more and more people are determined to stop throwing their money away on lining their landlord’s pockets and/or paying their mortgage, and start climbing the “property ladder” that they’ve heard so much about.

We could talk about the real forces behind the market and statistics and shit all day long, but in the end it all comes down to HYPE. The hype is infectious. It has it’s vicious hold on me, that much is clear. Do I continue to rent and watch the prices soar even further beyond my grasp, or do I jump into a market that may (but probably won’t) collapse in a matter of months and end up with a property suddenly valued 100,000 less than I paid for it?