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What's driving up house prices in North Toronto?
Published Thursday, March 15, 2012 11:09PM EDT
In the mid-1990s, a ravine-side bungalow on a large North York lot would have sold for about $600,000. Now, with the area blossoming into Toronto's top destination for moneyed immigrants, it could go for four times that.
In fact, realtor Bill Thom recently made just such a sale -- one of the latest in a real estate boom that is seeing homes in the north end of Toronto go for prices that would have seemed unfathomable even two or three years ago.
The home in question was a ranch-style bungalow on a large lot in Bayview Village. Its previous owners bought the Forest Grove Drive home for $1.65 million just two years ago and sold for a whopping $2.53 million -- a price much lower than what they were expecting.
"I tell you, the appreciation is better than Apple (stock)," joked Thom, whose smiling face -- cellphone pressed up to his ear -- is plastered on signs throughout North York. "I don't think it's the end."
According to a recent report by the Canadian Real Estate Association, home prices were up an average of two per cent in February compared to the same time last year, while the average national selling price for homes was $372,763.
But those national averages pale in comparison to the exponential growth in Toronto's north end.
Thom believes his home turf, near the intersections of Highways 401 and 404, has proven an appealing location for a few reasons. It's got highly-rated schools, is close to the subway, and also had good access to several of the area's main highways.
But one of the biggest reasons, he says, is the existing communities of immigrants that attract their friends.
Thom, who speaks several Chinese dialects, says his customers come largely from Chinese, Korean, Persian and Russian backgrounds. Many of them, he says, would rather have a new home than one that is 80 years old -- so areas with lots large enough to host brand-new mansions are hot items.
"(Immigrants who buy in this area) are usually the newly rich," he said. "They tend to like new-style. Everything new. At $10 million or more, they say, ‘Why I should I buy an 80-year old home in Rosedale?"
He sees traditionally wealthy areas such as Rosedale and Forest Hill as "old money" neighbourhoods -- offering less land and more cultural challenges.
"Most of these ‘new money' coming in, they may be rich but they may be linguistically challenged," he said. "They're the top guy (in their country, but) they may not speak English and may not fit in all that well.
"The Rosedale establishment families have been there for three generations. If you don't have the language to the degree you can mingle, it's sort of hard to live there."
Shane Baghai, a high-end condo developer with many properties in North York, says his larger and more expensive units usually go to newcomers who enter Canada on the Immigrant Investor Program -- which allows people willing to invest $800,000 in the country as a fast-track to citizenship.
"North York is an extremely palatable location to many people," he said, adding, "This is an area I tagged as an upcoming area about seven years ago."
Last week, a nondescript Willowdale bungalow made headlines when it sold for $421,800 above its asking price of $759,000. The buyer was a Chinese university student from a wealthy family.
While non-wealthy prospective buyers may balk at the borough's ever-escalating house prices, Thom notes its existing residents seem pretty pleased to think their homes could be next. He also points out that the influx of wealthy foreigners puts a lot of money into countless other businesses throughout the city.
"You talk to any car salesman -- BMW, Audi -- and ask them who's been buying all these cars," he said. "These people usually buy two, maybe three… For every dollar in real estate, it's felt through the economy maybe three times."
There are so many typical-looking bungalows in that area now going for more than $1 million that a website has emerged to parody the prices. Recent posts on FMListings.com refer to a $1.9-million asking price for a bungalow in Thornhill and one going for $1.5 million in Willowdale.
Compare that to the price of a home built by one of the world's most famous architects, for sale in Chicago:
"Today I found out that you can buy the Thomas H. Gale house, which is a home built by Frank Lloyd Wright in 1892… in Oak Park, which is the super fancy-shmancy, expensive area of Chicago. It's for sale at $1,295,000.00," writes the site's author, Melissa Hart.
She goes on to compare the historic home to a plain-looking bungalow in North York that is selling for $205,000 more.
"It was really hard for me to type ‘valuable' in the context of a North York bungalow without losing my sh*t just now," Hart writes.