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Friday, July 16, 2010

Which Toronto neighbourhood is the best?

When it comes to buying a home the question of which neighbourhood is the best (or at least the best for you) is a question that is bound to come up.

For example, I happen to like the quaintness of Tiny Town (Craven Road, near Gerrard and Coxwell). There's also Marlborough Place Avenue, a thin street between Avenue Road and Yonge Street, just north-west of Rosedale Subway Station. So despite the small size of the homes in Tiny Town or on Marlborough, these little houses are arguably pretty good if you want to find a house on a budget and you're not fussy about lots of space.

If you live way out in the middle of nowhere (ie. Mississauga's Lorne Park) you might think being surrounded by lots of trees (and the occassional vacant lot) is a good thing. Lorne Park is like the new Oakville... really far away from downtown Toronto, but the houses and land there is cheaper... just so far as you don't mind commuting.

And frankly there's nothing I find MORE BORING than sitting in traffic for 2 hours per day, because that is what you get when you live in Oakville, Richmond Hill, Vaughan, Markham, Purpleville or even those crazy people who commute all the way from Aurora, Newmarket, Pickering, Barrie or Hamilton. Its not even NEAR Toronto any more when you live way out there. Its just insane people who are too cheap to buy a house which is closer to downtown Toronto...

Or worse, they're so obsessed with having a backyard and a front yard that they completely ignore the condo option. Don't even get me started on the anti-condo movement... (Although I will note that overseas in Asia, condos are considered to be better than a house. The anti-condo sentiments in North America are outdated and unrealistic.)

Anywho... my point is that there is still plenty of unused land close to downtown where people can buy a house (or even build a new one). People can get "more bang for their buck" simply by shopping around more and exploring different options... ie. Midtown, uptown, Little Italy, Cabbagetown, Lawrence Park, Leaside, Summerhill... you know... the sleepy neighbourhoods where the prices aren't sky high, and are still pretty reasonable when you consider their location.

Price appreciation in the suburbs and satellite cities of the GTA have been going up so fast that a house in Richmond Hill is now comparable to the price of a house in Leaside. The houses in Richmond Hill may be bigger, have extra rooms you will never use (seriously, I swear the people designing these houses are building extra living rooms in them just so they can jack up the price more)... and frankly who needs all the extra space?

As a devoted cyclist I like being able to cycle around downtown on a moment's notice. Driving for an hour to get something annoys the hell out of me. I want to be close to the things I want. I am willing to pay extra for the convenience... and when you consider that the prices of homes in these suburban boonies are going up quickly it makes you realize that its probably unsustainable.

Lets take Lorne Park for example (its an upscale neighbourhood near the beach in Mississauga), where the average price has gone up 30.2% in the first half of 2010 compared to 2009 prices (figures from ReMax). The average home there is now $880,373 compared to $676,289 in 2009.

So you're not saving any money by living in such an upscale suburban neighbourhood. All you're doing is giving yourself extra headaches from traveling farther, making your gasoline budget sky rocket and destroying any convenience you could have had by living in a neighbourhood closer to the downtown core.

The “near suburbs” have been driving up prices during the first six months of 2010 because buyers want homes within a half-hour drive of downtown. Except Lorne Park isn't even near the downtown... the commute time is still 40 to 50 minutes via the Gardiner Expressway.

But buyers in 2009 actually got a deal in 2009... because prices in Lorne Park dropped 18% in the wake of the financial crisis in the USA. Thus anyone who bought a home in Lorne Park managed to get it on sale and is probably now tempted to flip it for a good sale value.

According to ReMax 80% of GTA neighbourhoods had a decline in value in 2009. With the record low interest rates people actually looking to buy probably got a good deal.

But this year the prices are back up. The average sale price in June was up 8% compared to June 2009, but overall the number of sales of Toronto homes were down 23%... despite the fact that home listings is up 28%, suggesting the Toronto real estate market is becoming a bit flooded.

Usually when the market is flooded prices should come down, but this phenomenon is not limited to just Toronto. Canadian home sales across the country in June were down a seasonally adjusted 8.2% compared to May. The Canadian Real Estate Association reported 36,467 sales in June, down from 39,778 reported in May.

Actual (not seasonally adjusted) sales was also down by 19.7% in June compared with June 2010.

And yet despite the lower number of sales, the average price in Canada in June was $342,662, up 4.9% from June 2009.

Part of this is probably due to the rise in interest rates and Canada's shakey recovery from the American Recession. Job numbers in the service sectors are up, but manufacturing is still shedding jobs.

So which Toronto neighbourhood is best? I think it really depends on what you can afford, but vote is for any neighbourhood where you can walk to the movie theatre, the grocery store or go shopping... all within 20 minutes.

Because then its no longer the size of your house. The whole city is your oyster.

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