How To Weigh The Cost Of Upgrading Your Aging Or Obsolete Home

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There plenty of urbanites who have owned their dwelling in the original City of Toronto for 2 decades or longer and who are consciously mapping their future – including when to sell and where/how they’ll downsize. Unless they’ve completed a substantial renovation in the past ten to fifteen years, most of those those homeowners are being advised by their realtor that their property is approaching the end of its economic life, and that its value now lies predominantly in the parcel of land it sits upon.

This likely won’t be news to them, as they’ll only have to look down the street to see a newer, larger, and more luxurious dwelling that has been transformed or rebuilt to exploit its ‘higher and better use’. Knowing this, it’s not uncommon for these homeowners to begin exercising financial prudence when it comes to spending money on their aging property; if an integral building component like a window, a radiator, or a shower enclosure fails and requires replacement, they’ll opt for the most economical solution to resolve the deficiency. After all, if the future buyer is going to substantially alter or rebuild the house, they’ll likely deem all the more recent capital improvements invested in the dwelling to have little or no value – regardless of their actual cost. So, why would the  current owner spend more money to complete anything more than the easiest fix? Let’s discuss.



Imagine, for example, that you’re the owner of an aging home and are weighing the cost of replacing outdated windows. Given windows are an integral part of a home’s facade which impacts the exterior appearance, the interior feel, and frames the views of a property’s landscape, the replacement window you choose could still have serious bearing on the resale value of your home, even if it may ultimately be knocked down. So what do you do? It’s true that the cost you’ll incur to complete the upgrade will vary depending on the quality, the design, the customization, and the materiality of the installation, and sometimes the best solution may also be the cheapest solution.

However, the situation bears exploration and contemplation. Even if your tenure is not going to exceed 15 years, as a property owner you have to reconcile that if you opt to replace your vintage window with a new manufactured vinyl unit. Although you’ll enjoy the practical benefits of reducing maintenance while improving energy efficiency (if the product has low-emissive coatings, argon gas, and double or triple pane construction), you’re risking altering the appearance in a manner that detracts from the home’s existing vintage charm while compromising on the very qualities you enjoy that will be diminished with the new window. This is a challenge evey property owner has to make as they weigh the costs of replacing or upgrading existing building components. Is it worth improving your comfort and ease with the economical new window option at the expense of the beauty specific to its original aesthetic? As with all things housing – and regardless of whether the house will be torn down or not on resale – every property owner has to weigh out the price tags on the replacement of existing building components with new products which range from cheap and cheerful to costly and custom and, often reflected in the price tag is the degree to which quality, performance, design, and beauty is achieved. As a result, it is prudent to consider options before making a decision.



Yes, The Highest & Best Use Of Land Dictates The Value Of Toronto Property Today 

There is a good chance that an aging property in a good neighbourhood – by virtue of the dwelling’s obsolescence and the desirability of the site – will either be radically renovated or torn down when the time comes to sell the dwelling. While the single-family property market in the original City of Toronto has included substantially gutting, topping up (adding another floor) or tearing down existing structures over the past two decades to create the on-going demand for luxury single-family homes. However, as Toronto has moved into a housing crisis, with skyrocketing demand and a lack of affordable housing options, the City has been under growing political pressure to implement as-of-right options for property owners to add additional units on their property. Here is my co-authored post on the City’s recent as-of-right by-law approving Laneway Housing In Toronto, By Sustainable And Urbaneer, while this piece called Toronto Real Estate, Yellowbelt Zoning & The Missing Middle: Part One, explains how it’s time for politicians to allow multi-unit dwellings in single-family neighbourhoods as long as they complement the existing neighbourhood fabric. What’s also trending? As I wrote in Ten Toronto New Builds That Recently Sold Between $2M And $10M, Toronto’s luxury real estate market is no longer confined to long-established affluent neighbourhoods, but now encompass any neighbourhood spanning the central core.



Located North of Queen East, West of Victoria Park in The Beaches – MLS District E02
Bought: October 2014 / $950,000  •  Sold: April 2018 / $3,600,000


How The Six Essential Layers Of Property Comprise Total Market Value

As I wrote in Understanding The Six Essential Layers Of Property, it’s important to understand how the Site, Structure, Skin, Services, Space Plan, and Stuff (the furnishings) each contribute to a property’s overall value. While the percentage of value I list here do not reflect the value of all Toronto real estate, they do serve as a guide in establishing how the different layers each factor into the price you’ll garner when the time comes to sell.

The Site: When it comes to establishing the value of a property’s site, in the original city of Toronto the parcel of land your house sits on represents about 85% of its market value. Given this is the most valuable asset, I would recommend in advance of selling you determine what a future buyer could build on the site, and potentially resolve any mitigating issues a future buyer might have. This would include any restrictions because it’s on a ravine, as well as completing an arborist report identifying which trees are protected.

The Structure & Skin: If the structure and building envelope have maintained their integrity, or require only minor repairs, it’s value is worth in the ballpark of 7% of the value of the property. If the foundation is severely compromised and suffers for structural issues, or there are significant water management issues (like flooding in the basement) it would likely make better financial sense to knock the shelter down and construct a new one. However, if it has some utility, your future buyer will keep as much of the original foundation and structure as feasible and then add/extend onto it. By taking this course of action, the property becomes a ‘renovation’ rather than a ‘new build’ which is easier for getting approvals, permitting while saving on costs.

The Services & Space Plan: If the services – roof, windows, heating/cooling, plumbing and wiring – of your house are newer to mid-life, there can be a real value of around 3% for these building components, as long as they’re at but not much beyond mid-life to obsolescence. Even if the space plan does not align with the way people prefer to live today (here’s On The History – And Popularity – Of The Open Concept Space Plan ) a property which is habitable will appeal to the Buyers who would live, or rent, the dwelling while they go through planning/design, approvals/permitting, material/sourcing, and costing. This can take at least a year or two for a developer, and for the end user usually 4 to 10 years while they save the capital necessary – before undertaking the renovation/rebuild. It’s important to keep in mind that even if your property is purchased with the intention of tearing down the house, a buyer will pay more money if the residence is sufficiently habitable for the next 3 to 8 years while the design, approvals and permiting process is completed. After all, if a buyer can offset the acquisition cost by generating an income, or personally occupying the dwelling, it becomes a more attractive purchase. Furthermore, dwellings which are unihabitable can be harder to finance, often requiring larger down payments.

Stuff: The final 5% of value in a property is in its presentation. In other words, an old decaying house that comes to market as an estate sale in ‘where-is as-is’ condition – that presents as ‘overwhelming’ – will lose the majority of buyers who don’t want to undertake a huge project. If a house lacks charm, feels like every surface needs some attention to make it livable (let alone upgrade), then the pool of end users shrinks, leaving only the renovators and opportunists to bid on it. The same goes if the interior is stuffed with contents, or there are too many mismatched styles. This piece explains Why Home Staging Is Important When Selling Real Estate, as well as some of my challenges with this sales strategy.




Selling Livable Rather Than Land Value

If the dwelling hasn’t tipped into the ‘sad and forlorn’ zone – to the point where it really is worth just land value – even if it needs work, as long as it presents as ‘livable’ it will have its audience. In fact, given the rise of the shelter media, it’s not unusual for buyers to request that I find them a house with decent building components but a really old kitchen and bath they can renovate and put on their personal stamp. This is because the 24-hour loop of television home makeover shows – Behold The HGTV Effect On Toronto Real Estate– have convinced buyers renovation is really fun, an easy way to personalize your home, and profitable to do in the process.




What Do Buyers Covet?

For every property owner, it’s important to itemize your home’s unique qualities, in addition to your personal favourite features, as they could be equally compelling and alluring for buyers. For example, if a home is set on a picturesque ravine lot, the view will be highly desirable, and the property’s intrinsic value would be tied to how well that aspect is showcased for Buyers. SO replacing failing windows with new ones that frame that desirable view – that’s a great investment. For example, I recently sold an enchanting fairy tale cottage in The Beach on a 25 x 169 foot lot ( A Hide ‘N Seek Sanctuary In The Beach Offered For $1,799,000 ) perched on top of a hill overlooking the old riverbed that is Kenilworth Avenue today. During the 30 days it was for sale I discovered there are a large group of buyers who have long been casually keeping an eye on the market awaiting the right generous parcel of land that offers quiet, privacy and a treescape view. I underestimated how many people covet a centrally-located property with a natural landscape, and how intangible a premium it is given how rare it’s offered for sale. While a ravine lot is rare, every property has its own unique and best features, so it’s important homeowners keep their eyes on this prize when it comes to future resale.


What’s the takeaway? Any upgrades that better showcase the unique or desirable aspects of your property are likely worth the cost. If the structure of your home is bordering on obsolete, a buyer will either buy it for it’s vintage character or with the intent of replacing it completely.



If you enjoyed this blog, try:

How Toronto Real Estate Is Shifting From ‘Fixer-Upper’ Flips To ‘Tear Down’ New Construction

Dear Urbaneer: Help! We Want to Renovate, And Keep Our Relationship Intact

How To Assess The Value Of Outdoor Living Space


I get it. As a homeowner, it can be hard to reconcile balancing budget with resale value when it comes to choosing the most suitable building component, both as it pertains to how you value your own quality of life during your tenure, and how a future buyer might perceive your choice. With decades of experience in the real estate trenches, I cannot exclusively make these decisions for you, but I can expertly counsel you on which improvements are best and the most impactful specific to the property in question.

May I be of help to you, or someone you love?


Thanks for reading!


Steven Fudge, Sales Representative
& The Innovative Urbaneer Team
Bosley Real Estate Ltd., Brokerage – (416) 322-8000

– we’re here to earn your trust, then your business –


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