A Good Home, Housing, Real estate

When House Prices Go Crazy

At this time of year, people in Southern Ontario usually talk — ad nauseum — about the weather. This year, it’s real estate prices. 

In a village store 90 minutes east of Toronto yesterday afternoon, a woman mentioned a small house in her neighborhood whose price had almost doubled in recent years.

“It’s unbelievable, what’s happening,” she said. 

The house recently sold, after a bidding war, for $100,000 more than the asking price.

House prices in the Toronto area are crazy. And there’s a huge downside.

The prices of some homes have increased by a third in the last year alone. 

It’s affecting the rental market too. Last week, I read that some Toronto landlords have nearly doubled their rents. 

So I wonder: where’s the average person supposed to live?

Many families and single people are moving away — up to a couple hours’ drive away from their work — for affordable housing.

But that’s having an impact too. House prices were a lot lower in regions east, west and north of the city just a couple years ago. But the newcomers’ arrival  in those regions has pushed up prices there too.

 

Blog Photo - House sold sign

Last evening, at a small gathering roughly 2 hours from Toronto, the host seemed to still be in shock when he told visitors that two houses in the nearby village had recently sold for more than a million dollars. A few years ago, they would have been around $600, 000.

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Foreign speculators, investing in Toronto’s real estate, were blamed for causing the huge increases. There oughta be a law, some people said.  The government, fearing a real estate crash, now requires house buyers to have a 20% downpayment – or pay for very costly mortgage insurance.

Blog Photo - House 2

If you’re well-off, that’s not a problem. But for first-time buyers, 20% is $140-thousand downpayment on a $700,000 dwelling… if you can find one. 

No-one’s yet instituted a law against bidding wars.  These fierce competitions bring an intense ‘auction fever’ to every house sale — the kind of panic that leads to foolish decisions.  Many families today, after paying their mortgages, are barely making ends meet.

And now there are bidding wars in the rental market too.

So who benefits from these out-of-control price increases? Well, some sectors do.

  • Sellers moving out of the region to a more affordable community.
  • Realtors, whose percentage (5 or 6%) is usually fixed. That means huge increases for them when house prices explode.
  • Some landlords.
  • And government, through taxes. 

But if you’re an average-income, would-be buyer (or renter), you’re scrood.

There outghta be a law.

A Good Home, Architecture, Barns, Country Living, Couples, Courage, Daydreams, Dream Kitchens, Family Stories, Farm, Farm house, Following your dreams, Home Decor, Homes, Renovating, Restoring old houses

A House With Potential

One of my favorite TV shows was a series called “Build a New Life in the Country”.

Every episode focused on a couple who decided to leave the big city and move to the country, where property was much cheaper, especially if the place needed work.

Via Channel 5
Channel 5 UK

And they all did. Some were derelict houses, even abandoned barns.

Stone walls falling down? Check. Money running out halfway through the job? Check.  Crumbling roof, ceiling and floors?  Check, check, check.  But these brave souls were determined.

 What made each story gripping was the risk of failure.  Some of these homeowners couldn’t build their way out of a paper bag. Yet, they’d taken on the challenge, dreaming of that better life in the country. Some hired skilled workers, but other couples tried to do the work themselves.

At a critical point in the project, the host,  architect George, would appear on site and utter a dire prediction: “It will take a miracle for this work to be completed….”

Via channel 5
Channel 5, UK

And there I’d be in my living room, cheering on these intrepid builders, hoping they’d get their miracle (they usually did). But at the end of each episode, I’d wonder: What makes a sane person look at an old house and say “I think I’ll just buy this pile of bricks and bring it back to life”?

These questions came to mind recently when I came across a photo of a quaint old house near to both charming Roseneath and artsy Warkworth, two villages in the rolling hills of Northumberland, about ninety minutes’ drive from Toronto.  It was listed at a mind-bogglingly low price compared to houses in the Greater Toronto Area:  just $259,000.

mls.ca
Realtor.ca

The house sits on nearly 4 acres of land, and has, the listing says, “fantastic views”.  It has some nice original features: 2 staircases from the main level to upstairs (a great feature found in some old houses), wide-plank floors, a beautiful front verandah and a circular driveway. It also has some recent improvements, such as updated furnace, some new wiring and a drilled well.

mls.ca

But the interior photos tell a sobering story:  this house needs significant updating. New plastering, some new windows, maybe a new roof, new kitchen, etc., etc, etc. In other words, money and work. So who’d buy it?

Blog Photo - Red Brick House 1 staircase

http://beta.realtor.ca/propertyDetails.aspx?PropertyId=13876645

“Well”, says my husband, peering over my shoulder at the computer screen, “$259,000 is a low starting point; could be great if someone had the money to update it.”

mls.ca
Realtor.ca

“Sure”, I think, daydreaming  of buying that house and installing my dream kitchen.

Farmhouse ktichen
“Dream kitchen” via myhomeideas.com

Then the  thought of all that work, all that money — and all that renovation dust in my nose, eyes and mouth –  wakes me up immediately.

But my friend John, who bought a century-old house east of Toronto and is lovingly restoring and updating it, thinks the Northumberland house has potential.  It could be a wonderful project for the right buyer.

“Some things obviously have been done but definitely not all and that is really the key.  I would purchase this house over one that’s completely updated, as by doing the work and exploring the house you really get to know it and make it what you want and then it is your home!

“And if you do most of the work yourself and only contract out the (really skilled stuff like) electrical and roofing and not get too carried away with your renovations, $150,000 should cover everything!”

So here’s my pie-in-the-sky question: if you had a choice, would you buy a nicely renovated house that’s move-in ready? Or would you buy the house that needs a lot of work but could yield a significant financial return?