Welcome to urbaneer.com's December Home of the Month. This feature provides a snap shot of what urbaneer.com's Buyers have recently purchased in the City of Toronto.
This month we share the tale of Buyers climbing the property ladder from a central west-end stacked condo townhouse to a premium freehold Riverdale property. We've long contended that – given the soaring escalation in prices – those who aggressively stretch themselves to their top dollar in an effort to bypass multiple climbs up the property ladder will ultimately serve themselves well. If you can limit how many times you have to pony up the exorbitant closing costs associated with buying Toronto real estate, the better you'll increase your net worth years from now while reducing the hassle of moving. Which is exactly what our Buyers did, when they leaped from starter home to forever home by pro-actively purchasing this Riverdale Victorian manse with an aggressive bully offer.
There's no question we've seen prices soar as demand continues to trump supply – in particular for larger downtown freehold houses in family friendly neighbourhoods. Gentrification – the movement of middle class households into working class neighbourhoods – is no longer a recent phenomenon in Toronto. In fact, it was the focus on my own undergraduate thesis in the late 1980s called “Gentrification: Yuppie Porn In South Riverdale” – funded by the Ministry Of Municipal Affairs – which I wrote about in this past post called A Nose For Leslieville.
In Toronto, gentrification was first documented in the 1970s. It began in Cabbagetown, followed by Riverdale in the 80s, College Street in the 90s and Roncesvalles Village in the 2000s. More recently it's filtered into The Junction, Brockton Village/Wallace Emerson (here's Art Galleries Are The Vanguard Of Emerging Toronto Neighbourhoods) and Corso Italia in the west and Leslieville, Gerrard/Coxwell and Danforth Village/East York in the east (see our Neighbourhood Pages to learn about many of these areas). Today, gentrification is not exclusively about where the next hot neighbourhood is (as most every downtown neighbourhood is – or is in process – of being fully gentrified by younger Canadians), but finding the least expensive properties anywhere in the City that don't need a wrecking ball or a contractor and his crew to complete a total gut (here's a part Dear Urbaneer titled Why Are So Many Downtown Houses Being Renovated?). It's wherever you can find a habitable home that one can upgrade over time in proximity to a subway or streetcar within the original City of Toronto. (That said, watch for the next boom along the Eglinton West transit line!)
One phenomenon that follows an established neighbourhood – once gentrified – is how specific properties become increasingly coveted both by the existing residents as well as new arrivals. These are the signature properties that have rarer qualities – like four or five bedrooms, renovated while retaining the original details (or even newly constructed), a large lot or a private drive.
With Riverdale – which has a collection of working and merchant class Victorian and Edwardian row, semi-detached and detached 2 and 3-storey dwellings comprising two, three, and four+ bedrooms – thirty years has transpired since The Danforth was dominated by Greek immigrant storefronts. Since then, it has become a bastion of well-educated high-earning urban professionals. Many of the residents have been here a decade or two, buying when they were young and childless. Fast forward to today, and these couples now have two or three tweens, a menagerie of pets, and top earning incomes as they crest into the top of their career paths. These families have well-established roots and community ties to the area, which boasts some of the best schools in the city. They love the area (in fact they'd never consider leaving the neighbourhood as long as the kids remain in school) but they're definitely feeling the squeeze in their first house. They may have already tacked on a breakfast room, or dug out the basement, but with the kids growing they're splitting from the rafters of their modest dwell. With their solid incomes climbing their respective careers, these financially stable families now begin to eye the prized properties in their 'hood which are few and far between.
This is the group whom our Buyers were competing against, for this market entrenched in the neighbourhood have one significant advantage over those Buyers who are seeking entree into Riverdale. Whatever price they are obliged to competitively pay to land the big jewel of a property nearby, they have the comfort and assurance that their own property – which is down the street, around the corner, or at most six blocks away – will garner it's own requisite premium. So whatever sum they have to pay in a bidding war ultimately helps push up the value of their own existing home that they'll turn around and subsequently sell. In other words, it's the Buyer who owns property closest to the subject listing who can in theory pay the highest dollar. This is the market any Buyer coming into an established neighbourhood has to compete with – including our own Buyers who strategically employed their own advantage – by snatching this house from right under their noses with a cash condition-free bully offer.
While the prospective Buyer closest to the house can have the greatest peace of mind in paying top dollar, what they often lack is preparedness. Most neighbourhood residents may keep an eye on their area – attending weekend open houses to satisfy both their curiousity while searching for the right next move – but they often aren't as prepared to bid on a house as the Buyers who are actively looking. Usually the area Buyers haven't got their financing fully squared away with a pre-approved mortgage, a sizable cash deposit ready to convert into a bank draft to submit with an offer, or their own dwelling repaired, prepped and ready to come to market in short order. Typically, when a house comes to market with a holdback on offers seven days later – a common strategy here in Toronto – time is on side for these Buyers who can complete their due diligence before the offer date. But if a Buyer strategically submits a bully offer before the offer date, by acting quickly and aggressively they can effectively trump this market.
Such was the case with this elegant 2.5 storey five bedroom two bath Victorian manse with dug-down lower level on a large lot with private drive that had been owned by the same fellow since the mid 1980s. First, our Buyers had an advantage as I was privvy to the background story in advance of it coming to market. By coincidence, the owner and his friend had been referred to me to discuss co-purchasing a property together for their retirement years. Although he had already chosen his listing realtor, he asked if I might provide a second opinion on preparing his house for sale. Already in good condition mechanically – including hot water radiant heat in the Iower level – and a conscientious restoration of the exterior including original double-hung windows, I reconfirmed the advice he had already been told. Before coming to market, to achieve top dollar he needed to have the walls plastered and painted white top to bottom, the floors sanded and stained a warm walnut, and have everything well-presented and stylishly staged. He also had understated recessed lighting installed (but not TOO much, thankfully, which we ranted about in this post called We Flip Burgers, Not Houses).
For all the qualities this house boasted, what it lacked was a decent kitchen. The owner – who loved to cook – had spent years managing his culinary feats in a tight space with an awkward layout, vintage cabinets and counters, and piecemeal prep areas. He struggled as to whether he should renovate for resale or not. My advice was to do nothing. Why? Because – given its target resale audience – this kitchen would not be limited to the existing footprint, but would likely undergo a substantial contemporary kitchen/family room addition. In my mind, this house on its substantial 32×111 foot lot would – one day – have an as-of-right glass cubed family room constructed at the rear (with a lot this large it could bypass having to go through Committee of Adjustment approvals as I had too with my own Riverdale dwell). Because of this, it didn't make sense for the owner to install a new kitchen when it would likely be ripped out fairly soon.
As it turned out my counsel reconfirmed what his listing realtor – a well-established top producer who had been in the industry a similar length of time as my own 25 years – had advised. The list price needed to be under $1mil even though the house was worth significantly more. In the age of bidding wars, the key objective is enticement – not only with all its value-added benefits and prized features – but with a 'too good to be true' list price.
Here's some snaps of the property:
*Images courtesy of Toronto MLS
Our Buyers – who were fairly new to the search process but very astute and informed – knew instantly this house was 'the one'. And with my being privvy to the seller's mindset and expectations, within 72 hours of coming to market a bully offer was submitted in an effort to entice the Seller to accept our sum before the local market could compete. On the first submission – emailed on a Friday night – the bully offer was rejected, but it wasn't without the listing realtor sharing with us what sum the Seller would be willing to consider to take it off the market. The next day – just as the Saturday open house teeming with crowds of prospective Buyers was wrapping up – we resubmitted an offer 32% over the $949,900 list price. To the dismay and consternation of many other realtors and their Buyers who couldn't move quickly enough, we secured the property. And while the selling price certainly raised eyebrows, the next day a house for sale a few doors down with a holdback on offers also received a bully offer that was also $300,000 over list. These two sales in quick succession set off a firestorm of bully offers throughout the neighbourhood, and notched up a new tier of precedent setting prices on the east side. Here's one of our most popular past posts called Why Toronto’s East Side Real Estate Has Historically Been Cheaper that sheds more insights on why values are climbing on the east.
Congrats to our Buyers for their winning bidding war strategy. Here's more on Bully Offers & Bidding Wars – Strategies for Buying and Selling, plus A Winning Bidding War Strategy and Anatomy Of A Bidding War In The Toronto Real Estate Market.
Serving first and second time buyers, down-scaling Zoomers, renovators and those building their property portfolios, our mandate is to help our clients strategically secure the best real estate on offer, while ensuring their purchase best serves their practical needs and their dream of “Home”. We identify a property's best qualities, features and insouciant charm in the context of the future target market while meeting your own wishes, wants and desires. And although searching for the right property can be an intense and sometimes lengthy process it is, without fail, rewarding both to our clients and the Urbaneer team.
If you, or someone you love, has specific real estate needs, wishes and desires, and would enjoy the personalized service of Top Producing boutique Toronto real estate outfit who subscribe to a pressure-free approach – and a specialty in unique urban homes – please know we're here to help at urbaneer.com.
~ Steven and the urbaneer team
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