Toronto downtown and central tops for return on investment
So, you wanted to buy a single detached home in the downtown Toronto area last year, but held off because prices were too expensive.
You should have bought, at least from an investment perspective, suggests a study released yesterday.
Toronto’s downtown and central districts topped the return on investment survey for the second quarter of 2007.
In top spot were the blue-chip neighbourhoods of Forest Hill, Chaplin Estates, Deer Park and Cedarvale, where prices increased 16.8% increase compared with the second quarter of 2006. The average detached home in those upscale neighbourhoods is now priced at just above $1 million.
“The trade-up market is really gaining momentum with sales and prices hitting new benchmarks,” Christine Martysiewicz said. “Buyers with existing equity in their homes are looking to the central core and the lure of a more prestigious address.”
The resurgence of the downtown core is interesting, because suburban and 905 areas showed the most appreciation in past quarters as buyers were priced out of downtown. And given that prices were already high in the central core where appreciation had slowed at this point last year, double-digit price gains this late in the cycle were unexpected.
Last year at this time, Scarborough was the top performer with a 21% gain over the prior year.
“People were moving out of the core to get more house for the money and the trade-up market, which had already appreciated by quite a bit, was taking a breather. But it’s still about location,” Martysiewicz said.
The second-best return on housing investment in the past year has been in Thornhill and Vaughan, up 15% to $565,428. In third place was another downtown spot, which includes the neighbourhoods of Yorkville, South Hill and the Annex, up 14.3% to $883,869 for the average home.
In fourth place was Willowdale, Newtonbrook and Lansing, where prices increased 12.2% to $618,179. One western district made the top five this quarter: prices for the average detached home in the Mineola area of Port Credit in Mississauga increased an average 11.3% to $581,167.
While these are the best performing neighbourhoods in the Toronto area, the average home (for all housing types including condos) only increased by 4.75% during the same time period.
Most analysts expect average housing prices to appreciate somewhere in the 4% range or under in 2008.
In the Toronto area, condos and townhomes rocketed to a bigger gain than did single detached homes. The top performer was in the west end, where the average condo in Mississauga, Applewood and Rathwood gained an astounding 32.7% to $215,000.
The report says potential home buyers priced out of the detached home market are flocking to condos.
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