The latest data from Greater Toronto Area REALTORS reveals that housing resales for the month of September was up 21.5% compared to the same month in 2015. An impressive climb in and of itself, but pretty typical when you are talking about real estate in the GTA where double digit growth has become the norm.
The average selling price is up 20.4% to $755,755, with the simple laws of supply and demand guaranteeing that number will climb considerably in the months to come, as Toronto Real Estate Board President Larry Cerqua outlined.
“We continued to see strong demand for ownership housing up against a short supply of listings in the Greater Toronto Area in September. The sustained lack of inventory in many neighbourhoods across the GTA continued to underpin high rates of price growth for all home types,” he said.
This lack of supply continues to drive home prices up, meaning the average detached house in the city is now over $1.2 million. It’s a price-point that is simply out of reach for many buyers, so more and more are electing to go the townhouse route. But are Toronto townhouses a good investment?
Passing on the Detached Home
Toronto townhouses are becoming increasingly popular as an investment option. Brittany Kostov, a real estate agent with Zoocasa Realty, has certainly noticed a growing trend for these properties, whether they are a condo-townhome or the more expensive freehold townhome.
Related Read: Condo vs. Freehold Townhouse – Which is Right for You?
“A lot of my clients traditionally would have gone from renting to a one-bedroom condo to a townhouse and then a freehold. What I’m finding now is they are choosing the townhouse over both the one-bedroom condo and the freehold home. They say it’s expensive to move in this city, so where can our money take us the furthest and get us the square footage we need to live for more than a few years?”
A townhome is the best answer to that question for many people and can come in a variety of shapes and sizes, with prices to reflect that. Kostov outlines the different ends of the scale when it comes to buying a townhouse.
“My client just won a bidding war last Wednesday for a freehold townhome in the east end. It’s a three bed, four bath, so it’s huge and she can grow into it. This one was in the $1.4-million range. It’s right in the core of Leslieville at Queen East and just east of Broadview.”
That’s a hefty price for most buyers, particularly those looking to make their first step into home ownership. More common for those buying a townhouse is the smaller, less expensive option you would find in the downtown core.
“I had another client that just sold a condo townhome and that was in the $450,000 range and had a lot of interest. There were a few other options for sale in the area and they also received multiple offers,” says Kostov. “The feedback from the buyers that came through was that this was their fourth or fifth offer they made on a townhouse in that price range. They were constantly getting outbid. It’s mostly new couples that are planning for a family that see a townhome as their first choice.”
A More Affordable Option
When analyzing why more and more buyers are attracted to these properties, it is not too difficult to see just why they are growing in popularity. With a detached or even a semi-detached house out of the price range of many buyers in Toronto, and the cost of properties in Toronto’s satellite cities far from cheap either, people are deciding that a townhouse is their best option.
“You’re getting the feel of being in a freehold home,” says Kostov. “You can walk up to your own front door and don’t feel like you’re in a frat house like with many of these huge condo towers. Now because rents are skyrocketing so much, people are deciding they might as well take that monthly payment and put it towards a mortgage.”
Solid Price Gains to Come
In her opinion, and also that of most of her peers, the chances of prices coming down anytime soon in the GTA are remote. As such, better to get in now than kick the can further down the road for another three years to find the cost of these properties have increased by hundreds of thousands of dollars.
“I think it’s such a good investment now because you are paying off your own mortgage instead of someone else’s. It’s cyclical – there’s always going to be those first-time buyers that have a $500,000 to $600,000 budget. You can not buy a first time home for that price point so that’s why it’s always going to be a good option in terms of raising value.”
