We’ve heard it time and time again: Location, Location, Location. The fact is, we need to bold, underline and maximize the font size because, to get to the point, location does matter. We took a look at the effects of transportation on Toronto’s real estate market, but the fact is, location is one of the biggest factors affecting real estate investment decisions in the City of Toronto.
We take a look at the following in this detailed study:
- Toronto’s diverse neighbourhoods
- How prices vary depending on neighbourhoods
- Investment strategy is as important as choosing your neighbourhood
- Understanding your neighbourhood and its offerings
- Why walkability is a major factor in choosing your neighbourhood
- What you should be doing as a first time home buyer during your property search
For the purpose of this piece, we take a look at various neighbourhoods as case studies to provide perspective on the various elements that we shall dig deep into.
Toronto’s Neighbourhoods – Putting it into Perspective
The City of Toronto has over 140 neighbourhoods, as defined by the city, while others identify over 240 distinct neighbourhoods. A clear definition of what is a neighbourhood has yet to be established but many of Toronto’s neighbourhoods have come to be defined over the years by their demographics, their landmarks and of course, their culture.
The St. Lawrence Market landmark dictated the naming of the neighbourhood within Old Town Toronto. It all begin in 1793 with the creation of the Town of York, which can still be seen and felt through heritage buildings and old architectural elements. The market complex sits dead centre of the community, a centralized location for people to socialize, shop and take in the culture of the neighbourhood. While the City of Toronto categorizes it within its definition of “Waterfront Communities”, St Lawrence Market has established its own identity, its own presence and its independent cultural feel.
Neighbourhood Choice vs. Property Price
Its common knowledge that the sought-after neighbourhoods are definitely the most pricey. However, what determines “sought-after”. Is it the convenience of downtown? or the luxury of living in a posh neighbourhood like Yorkville? Not really. Many neighbourhoods in the city have established price points because of the generic reasons listed above. However, it is important to look at prices from a trends point of view.
If a neighbourhood has declining property values, it is important to know if its an area with slow development, no future for transit upgrades, lack of amenities, etc. All this shall be discussed in the next section, Profiling a neighbourhood.
Prices are determined by multiple factors. Land value, types of property, age of neighbourhood, perception (the trickiest of evaluation points) and of course, neighbourhood history. Forest Hill is an excellent example. Littered with luxury residences boasting great curb appeal, it is one of Toronto’s most affluent neighbourhoods. As a result, property prices have always been high. As of Fall 2012, the average property price is $1,340,222, a 30% increase from its previous average of $1,034,146.
One would assume homes in downtown Toronto would be expensive. On the contrary, it is again dependent on the neighbourhood’s growth attributes. The Financial District, a major economic centre in Toronto’s downtown, experienced a 23% drop in property prices from an average of $394,828 to $303, 192. This is likely due to developments in surrounding neighbourhoods and Toronto’s waterfront, that offer more bang for the money. However, this is likely a great time to invest because of its close proximity to businesses and downtown living.
Not Just The Neighbourhood: Define Your Investment Strategy
Tackling neighbourhoods is not an easy task. As understood, a region that has the perception of being expensive can actually see a reduction in price. The problem is, people don’t have a clear strategy on what elements they absolutely want to focus on. A neighbourhood and community setting is definitely a factor but end of the day, it depends on your investment strategy.
Leaving aside the “emotion level” and tangible factors, a neighbourhood should be looked at from a growth perspective. Identify a region going through a transition, as Don R. Campbell clearly mentions. Don’t just guess or assume, identify the facts. A transition could be seen through the development of land, an increase in property developments, transit developments and the further investment by the city. This allows residents to truly analyze the neighbourhood they intend to invest it or find more suitable neighbourhoods outside a buyers current list.
Don R. Campbell breaks down three top factors he would recommend buyers to look at when making investment decisions. Watch the video below.
Paint A Picture of Your Neighbourhood
A neighbourhood should be looked at from a broad perspective, profiling its various characters, amenities, conveniences and opportunities. In addition to these, you must look at the growth of the neighbourhood based on current projects, proposed developments and current offerings. Here are some of the things you should look for:
- Shopping Options, primarily for essential items – Grocery shopping, pharmacy, etc
- Transit Access
- Schools and daycares
- Housing developments – Types of housing and developments & number of new developments and upcoming developments
- Amenities – Banking, gas stations, libraries, community centres, hospitals, facilities
- Lifestyle & recreational elements – Coffee shops, restaurants, social hubs, movie theatres, parks, bike trail,
The above factors play a major part in determining the value of a neighbourhood.
Yonge-Eglinton Community of North Toronto for example is rapidly developing hub in Toronto’s midtown. Housing projects are all around the neighbourhood, with the majority along Yonge Street and Eglinton Avenue. Here are the various plus pointers:
- Plenty of essential shopping outlets including a Metro and Pharma Plus.
- Yonge Street and Eglinton Avenue are serviced by TTC buses and residents have access to the Yonge Eglinton Subway station.
- Two of Toronto’s best schools – North Toronto Collegiate and Northern Secondary – are located within the neighbourhood
- Endless choice of boutique coffee shops and restaurants.
- Yonge-Eglinton will also soon receive the service of the Eglinton LRT.
- Community Centre, Eglinton Park, Toronto Public Library, major banks, a couple of gas stations, clinics and much more – an endless collection of amenities and resources for residents.
- Majority of the needed services are found within the neighbourhood and are walkable.
The above factors paint a clear picture about the neighbourhood and what it has to offer. Interested buyers can use such information to put into perspective where they are investing and what they can benefit from in the long run.
A Walkable Neighbourhood
Walkability is a trend we see in Toronto very often. The creation of the Walk Score has become a vital decision tool for people investing in their properties. However, walkability doesn’t just surround a property. The neighbourhood comes into the picture when we talk about the walkability of amenities and resources.
If you are investing in a property, you want to ensure that essential necessities and amenities are not miles apart from one another because that is just inconvenient. Bayview Village is a great example of centralized services. Bayview and Sheppard is an intersection that serves up 2 gas stations, a TTC subway station and the YMCA. In addition, the Bayview Village Shopping Centre is located at the intersection, housing a Loblaws, multiple banks and much more. The condominium projects and residences are located all around this centralized area, providing accessibility through a simple, short walk.
As we can see from the example above, walkability is a factor residents should overview before investing in a property.
Do Your Due Diligence
What should a home buyer do when deciding on a neighbourhood? Well, there are multiple things you can do to be proactive and informed:
- Determine your budget. It would be plain stupid to have a $300,000 budget and then go walk-about in the Forest Hill neighbourhood.
- Identify the kind of lifestyle you want to adapt or your family wants to adapt, detailing it out before you go visiting neighbourhoods.
- List the things you want to have available at your doorstep and then compare it with whats available in that neighbourhood.
- Visit the various neighbourhoods, both at night and during the day, and really understand what kind of neighbourhood it is.
- Assess the neighbourhood with other factors such as proximity to work, distance from major centres and transportation access.
- Speak with individuals in the neighbourhood, especially those that live there or run businesses.
- Research! You can find everything from restaurant quality to hot spot information online.
- Justify your investment’s potential before you invest.
Identifying a neigbourhood is not as simple as putting a pin on a map. It is about understanding its culture, its amenities and its potential. From transportation to finding the perfect income property, neighbourhoods need to be treated like the investment itself; analyze all the details, determine the value and establish long term value.
- Globe & Mail – Toronto Neighbourhoods Market Stats
- PWC Research Report – Emerging Trends in Real Estate 2013
- Canada Mortgage and Housing Corporation – Comparing Neighbourhoods
- National Association of Realtors® – Profile of Home Buyers & Sellers
- Forest Hill Home – Toronto Life
- Toronto Financial District – Giligone / Wikipedia
- St Lawrence Market – Proof Brands
- Yonge Eglinton – Jeff Lui / Flickriver