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Toronto Real Estate — Riverdale
Riverdale is a large neighbourhood in Toronto, Ontario, Canada. It is located directly east of the Don River Valley, south of The Danforth (Greektown) and north of Lake Ontario. The neighbourhood is characterized by two large recreational parks, Riverdale Park adjacent to the Don River and Withrow Park to the north east of Riverdale, as well as smaller parks. Riverdale is also home to Bridgepoint Health (formerly Riverdale Hospital), and the Don Jail, both at the corner of Broadview Avenue and Gerrard Street East.
Riverdale is known by many Torontonians as a thriving residential neighbourhood represented by a strong arts community that cater to independent galleries on Queen St. to the large corporate film studios along the waterfront.
There remains a strong working class element to the neigbourhood as well. The tree-lined side-streets are complemented by the various styles of Victorian and Georgian residential architecture, primarily built between the 1880s and the Depression.
The Riverdale Zoo was Toronto’s zoological park before the opening of the Toronto Zoo in the early 1970s. Now called Riverdale Farm, it continues as an educational farm for school children and the general public. Ironically Riverdale Farm is not actually in the Riverdale neighbourhood but is located west of the Don River in the Cabbagetown neighbourhood. The two neigbourhoods are closely linked even though separated by the Don River.
While Riverdale itself is usually said to refer to the stretch of Toronto east of the Don Valley Parkway and west of Pape, between Danforth Avenue (North) and Gerrard (South), these boundaries are arbitrary and many people on either side of these borders often claim to live in Riverdale (or not, as the case may be).
The area’s high real estate prices have encouraged many residents to call adjacent areas Riverdale too. Names such as South Riverdale (which stretches north from Lakeshore to Gerrard and east from the Don Valley Parkway to Carlaw) are a construct of real estate agents.
Just east of Riverdale is Leslieville, which encompasses a few quaint blocks of late 19th century storefronts lined with antique shops, galleries and cafes. Toronto’s second largest chinatown, also known as Chinatown East, is found at Broadview & Gerrard.
A few kilometers east, between Greenwood and Coxwell, you’ll find Little India that is a popular meeting place for the Toronto South Asian communities. South of Leslieville, just north of the waterfront, is what’s called the Studio District.
Industrial warehouses along Lakeshore avenue house production studies and many people working in film and television live in the old Victorians found along the area’s side streets. Carlaw and Queen has become an arts hub, with many artists choosing to run their studios from the various work-live lofts.
Some Riverdale residents differentiate between “upper” and “lower” Riverdale. “Upper Riverdale” is characterized is the part of the neighborhood north of Riverdale Ave., and “Lower Riverdale” is the area south of Riverdale Ave.
Generally, real estate prices are reflected in this divide. The closer the house is to Danforth Ave. the higher the sale price. Also, in terms of the quality of the housing supply, homes built in “upper Riverdale” are more likely to have better architectural features, and are more likely to be rennovated. However, there are some exceptions. There are a number of remarkable century-old homes built on Simpson and Langley Avenues, the latter street named after Toronto’s well-known early 20th century architect.
The neighbourhood has seen the rise and fall of prosperity over the past century. The grand homes built on some streets are testimony to prosperous times. Despite this rich housing stock, the area was considered to be down-and-out in the 1970s. These days though it’s ripe with yuppies, young and old. Withrow Park is full of well-dressed babies in Bugaboo strollers and the Baby Boomers who’ve lived in the area for decades often have a Volvo or a Saab parked out front.
The popular teenage drama TV series Degrassi Junior High is named after the Riverdale street of the same name (although the only school on Degrassi street is Eastdale Collegiate Institute at Gerrard street east)
Riverdale Collegiate Institute is the neighbourhood’s local high-school.
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Toronto Real Estate Forecast 2010
Toronto Real Estate Market at a Glance
* MLS® sales in the GTA will hit a record high 101,000 this year. Average prices for 2010 will increase to $444,000. Both sales and price growth will begin to show significant moderation in the second half of this year and early next year.
* New home sales will jump to 42,000 in 2010 thanks to a 50% increase in high rise sales. Housing starts will rise by 34% this year to reach 36,400 units on strong single-detached construction.
* The unemployment rate in Toronto will fall slightly to an average of 9% this year. Employment gains will push the unemployment rate down further next year, providing support for homeownership demand.
Toronto Resale Market – Nearing a Turning Point
The resale market in the Greater Toronto Area (GTA) will put an exclamation point on 2010 with a record level of activity this year. Sales will reach six digits for the first time and price growth will be well above the historical average. This momentum, however, is expected to wane in the second half of the year. In fact, the market will look quite different by 2011 as sales levels converge back to their longer-term average and prices show little movement. The era of rockbottom mortgage rates is coming to an end and the red hot GTA housing market will begin to lose its steam.
A full year of record-low borrowing costs has made first-time buyers out of tens of thousands of renters and parents’ basement dwellers in the GTA. However, the primary source of stimulus fuelling this increase in homeownership is already beginning to fade. Five-year mortgage rates are on the move and will be a full percentage point higher by the end of the year. Combining higher rates with the new reality of average prices well above $400,000 will make the transition to homeownership more expensive. The erosion of affordability will cause delay for many first time buyers, who have proactively accelerated their purchasing decisions and propped up sales temporarily.
Home sales in the GTA, however, are not expected to decline dramatically and will converge to the 10-year average in 2011. More jobs, stronger income growth and higher net migration will provide support for the market. Furthermore, demand from current homeowners is expected to pick up some of the slack left by fi rst-time buyers. Owners feel the timing is right to make a move as prices for their current home climb to new highs and fi nancing costs for their next purchase still remain low. Also, price appreciation for detached homes in some desirable areas in the GTA hasn’t been as strong as the rest of the market. A higher presence of move-up buyers will further increase the appeal of established neighbourhoods, which should see above-average price growth in the coming years due to their fixed level of supply and relatively low level of turnover. With move-up buyers looking to enter the high end and down-sizing baby boomers looking for less maintenance and to liquidate assets for retirement, a high level of new listings will be a theme over the next couple years.
Investors are also expected to be active in listings their condominiums — approximately 17,000 high rise units will be completed this year with an additional 16,000 coming on stream in 2011. Those who purchased at pre-construction sales centres a couple years back will realize their completed units have gone up in value by about 20 percent. Research undertaken by CMHC reveals that approximately 20% of the condominium units registered in 2009 were listed for sale. It is likely that this share will grow as investors look to capitalize on the recent run-up in prices. Expect up to 10,000 newly completed condominiums to be put on the market over the next couple years. The added supply will lead to softer price growth for high rise units relative to low rise homes.
Existing owners on the move and listings from some condo investors will provide buyers with more selection at a time when overall demand is moderating. With fewer buyers competing for more homes, bidding wars will become less common and prices will face little upward pressure. There is a risk that prices could come down some in late 2010/early 2011. However, any declines would be minimal and short-lived. In fact it is quite difficult to call a decline in house prices that lasts longer than six months in Toronto as prices have recorded annual increases in each of the past 14 years. That streak is expected to increase to 16 years in 2011 with a balanced market producing price growth of less than two percent. Prices can be expected to remain fairly fl at over the next few years to allow income levels to catch up.
Toronto New Home Market – The Future is ‘Up’
A calmer buying environment in the resale market will lead fewer purchasers into new home sales centres. Total new home sales will trend lower in the second half of the year, particularly for singles as the HST sets in, but will nonetheless register a banner year for 2010. High rise units will take back the majority share of new home purchases this year with a record-breaking 23,500 sales. The 18,500 low rise sales will provide a boost for housing starts in 2010, but single-detached homes will soon become a drag for overall housing starts in the GTA. The construction industry will rely more on high rise development next year thanks to recent condo sales centre activity.
Although sales have heated up, high rise starts have yet to materialize. The diffi cult sales and construction financing environment lasting through most of last year will weigh on the number of projects started this year — total high rise starts will remain at the decade average of 14,000 units. All signs point to a pick up in starts in the second half of 2010 and into 2011. Lenders are making credit more available and projects that opened sales offi ces back in late 2007 and early 2008 have hit their preconstruction sales targets. Groundbreaking ceremonies are beginning at sites across the city and a ready-for-construction backlog of at least 10,000 units should be cleared by year end. The upward trend will continue in 2011 thanks to sales levels hitting new highs in late 2009 and the fi rst half of 2010 (typical sale-to-start time lag for high rise projects is approximately 18 months). Also, as the large volume of units currently under construction finish up over the next couple years, more labour, fi nancing and construction cranes will be available to start new projects. High rise starts will rise by close to 30% next year with the potential for further gains in the years ahead. Healthy unsold inventory levels will support more project launches and demand will remain stable as affordability in the GTA declines and land constraints continue to favour high density development. Expect high rise cranes to appear in 905 areas such as North Oakville, downtown Mississauga, Vaughan Metropolitan Centre and Markham Centre.
Unlike the high rise market, better times for low rise construction appear to be in the past. The upward trend for singles beginning in the second half of 2009 will be shortlived and the longer-term decline that started back in 2003 will resume. A 60% increase in detached starts in 2010 will be matched by an equivalent reduction in 2011. The “pull-forward” effect from buyers and builders looking to close on homes before the HST is introduced will result in some let down in the latter part of the year. Furthermore, interest rate increases will no doubt impact affordability and demand for the most expensive houses, and new singles in the GTA defi nitely fit the bill — prices will average $600,000 this year. But perhaps the bigger story weighing on the outlook for single detached construction relates to the scarcity of available land. Over the past seven years the number of available units at construction sites has been cut in half, resulting in the same trend for sales and starts.
Greenbelt boundaries and Provincial housing density targets are making low rise development less feasible in the GTA. As well, single detached sites are typically located outside of the built-up boundary, which can require extensive infrastructure development. Single detached project sites will continue to come online, however at this time, less than 5,000 units are ready to build according to RealNet Canada Inc. Since a developer cannot sell what they do not have, single detached starts will remain limited and the supply squeeze will continue to push prices up. Row homes, which are conducive to infill development and more affordable than singles, will take on their greatest share of low rise housing starts next year with 30%.
Mortgage Rate Outlook
The Bank of Canada cut the Target for the Overnight Rate in the earl months of 2009. The rate was 1.50% at the start of 2009 and has since fallen to 0.25%. Looking ahead, we expect that short-term interest rates will begin to rise in the second half of 2010.
With the overnight rate expected to increase in the coming months, mortgage rates have begun to rise. According to CMHC’s base case scenario, posted mortgage rates will gradually increase throughout the course of 2010, but will do so at a slow pace. For 2010, the one-year posted mortgage rate is assumed to be in the 3.6-4.8% range, while three and five-year posted mortgage rates are forecast to be in the 4.2-6.7% range. For 2011, the one year posted mortgage rate is assumed be in the 5.0-6.0% range, while three and fi ve-year posted mortgage rates are forecast to be in the 5.6-7.2% range.
Rates could, however, increase at a faster pace if the economy recovers more quickly than presently anticipated. Conversely, rate increases could be more muted if the economic recovery is more modest in nature.
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Contact the Jeffrey Team for more information - 416-388-1960
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Have you started your kids’ condo fund?
The housing market is red hot and new condos are constantly changing Toronto’s skyline. New research shows parents are helping finance purchases for kids, partly as an investment
Garry Marr, Financial Post
Here’s one way to tackle the red-hot Canadian housing market: Get someone to buy you a home.
That someone would be your parents. According to a new survey from TD Canada Trust, 10% of Canadians are considering buying a condominium for their adult children. A year ago, only 5% of parents thought about buying the kids a condo.
“It could be something that the parents are looking at as a long-term source of income, letting their children live it in for now,” says Chris Wisniewski, associate vice-president of real estate and secured lending with TD.
It could also be that parents know condominium prices, like detached homes, have climbed to unprecedented levels, making it difficult for adult children to come up with a minimum 5% down payment, let alone the 20% needed to avoid costly mortgage default insurance.
Toronto condo research firm Urbanation Inc. says the average existing condominium in the city sold for $331,000 in the first quarter of 2010. Based on an average $369-per-square-foot price, that’s a 900-square-foot unit. For a new one, prices averaged $443 per square foot in the first quarter, so about $400,000 for that same-sized condo.
Ms. Wisniewski says low interest rates are convincing parents to step up and buy their children homes. The condominium represents an attractive alternative to those parents because the costs are stable.
“They know what the maintenance costs will be,” she says. “[Parents] are thinking, ‘I’m not worried my children are too young to accept the responsibilities of home ownership if I set them up in an apartment. They don’t have to recognize the responsibilities of maintenance in an apartment.’ “
Parents might also see a condominium as a way to get their kids to start a family. The survey found 36% of Canadians are willing to raise families in a condo.
“One of the reasons for that is affordability,” says Ms. Wisniewski. “Where are the new condominiums being built? They are being integrated in really nice existing neighbourhoods with all the infrastructure and all the schools and amenities.”
Brian Johnston, president of developer Monarch Corp.’s Canadian division, says he doubts families will ever be integrated into the condominium stock, but does agrees with the premise that parents are helping to buy housing for their children. He says parents often want to keep children close to them so they’ll chip in for a condominium in a nearby neighbourhood.
“How do we know they’re helping out? They tell us when they are writing the cheques for the deposit,” Mr. Johnston says.
Mr. Johnston said when it comes to recent immigrants to Canada, there is “lots of help” from family members to get that first home. “Condominiums are not inexpensive and they’re going to need that help, particularly if the younger ones have not had time to build up their finances.”
The builder has his own children and, based on today’s prices, he figures he’s going to have to lend a helping hand. “I don’t expect them to be able to buy a condo…before they are 30. That is just part of the deal [for parents],” says Mr. Johnston.
It’s not like Baby Boomers don’t have the cash. There have been endless studies that suggest the Boomers are set to inherit billions of dollars in the coming years from their parents.
Craig Alexander, deputy chief economist with TD Bank Financial Group, says there is no hard data to suggest how much parents are helping children, but they certainly have the financial capacity to lend a hand.
Canadians have $1.5-trillion invested in stocks and mutual funds with $500-billion of that figure in capital gains.
“The generation before the Baby Boomers were big savers and, as a consequence, there is a very large income transfer going to take place over time,” says Mr. Alexander, adding it makes sense that some of that money is going to end up in housing and real estate.
For first-time buyers facing rising rates and increasing prices, the helping hand couldn’t come at a better time – just ahead of tighter mortgage financing rules. Most of them probably hope their folks go from “considering” buying a condo to actually doing it.
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Contact the Jeffrey Team for more information - 416-388-1960
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Incoming search terms
Related posts:
- Condos to remain an attractive option for many home buyers TD Canada Trust Canada’s condo markets have delivered a strong performance...
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