The good, the bad, the ugly: In a hot market, everything sells.
As Toronto outpaces Vancouver for home prices, there are days when the headline “Rundown shack sells for $2M over asking” seems inevitable. Even bad neighbours -- unkempt properties, nearby eyesores, rumbling train tracks -- aren’t necessarily deal-breakers. Somebody, somewhere, will step up and take it.
A scorching sellers’ market presents opportunities for “location stigmas,” says Vivian Kim, sales representative with IPro Realty and in her 15th year in real estate.
“For buyers, these types of properties may provide a chance to own a detached home or own in a good neighbourhood that may not have been possible otherwise,” Kim says. “And for sellers, absolutely a hot sellers’ market is an opportunity for all properties to sell faster and for a higher price, and that includes properties with location stigmas -- backing onto a commercial plaza, next to a cemetery, a messy neighbour, et cetera.”
Comparing two similar homes -- one with no issues, and one with a neighbouring eyesore -- there’s still a price difference, although Kim says that gap “narrows down” in a market as hot as the GTA’s. And as a result, now is the exact time when a lot of these listings enter the game.
Opportunities Abound for Investors
If an end user can’t stomach something unpleasant nearby, someone else will jump at it.
“Investors are having a heyday right now,” says Carol-Anne Schneider, real estate broker with Rexig Realty Investment Group Ltd. and a McGillivray Trusted Agent. She’s spent more than three decades in the industry.
“There are homes where people will say no. I think an investor will look for those to try to scoop them up, and see what they can do.”
What’s an undesirable neighbour? Kim and Schneider list what typically rankles buyers: schools, churches, gas stations, busy roads or intersections, railways, commercial plazas, hydro towers, industrial buildings, cemeteries, street parking issues, high rises, short-term rentals and rundown properties. A rough-looking home might be a sign of future construction -- an investor may fix it and flip it, or tear it down and build two homes on the site.
Fussiness increases the further you get from the core, Schneider adds.
“If you’re talking about Toronto proper, I don’t think it really matters,” Schneider says. “If you’re talking about suburbs, buyers can be a little bit more selective.”
When pricing is the same, clients may decide based on what’s around the home. One buyer comparing two properties pointed out that, for the first option, all homes were fully detached on the street -- for the second option, homes on the street were detached but linked at the garage. The first street had a more “executive” feel, Schneider says, which nudged the buyer to the first house.
Another buyer backed away from a property that was sandwiched between a church and a school. The sellers actually pulled the home off the market, Schneider says, as they weren’t seeing bids as high as they wanted -- presumably willing to wait for the market to get even hotter.
But generally, these properties will get snapped up.
“I have a property right now close to a hydro tower,” Kim says. “From the property front lawn, you can see the huge hydro towers. And a comparable one recently was backing on to a hydro tower -- that normally wouldn’t be selling for as much as it did -- got significantly over asking by a bully offer. So there are properties still selling quite quickly in this market, even with the eyesores.”
More Eyesores to Come as Infill Opens Up
Schneider predicts an upcoming tsunami of sketchy properties with a new rental opportunity opening up. After seeing “deplorable” basement apartments throughout her lengthy career, she foresees a similar cash-grab from bad landlords -- this time much more visible.
“I think we’re in for a big disaster of eyesores,” Schneider says. “The City of Toronto has just passed the garden suite approvals. If I’ve got a garage in the back that didn’t fit the laneway requirements before -- but now it does, right? Can I just throw a toilet and sink in there and call it a suite?”
In terms of buying activity, perhaps it hardly matters. With a growing population but sluggish homebuilding rates, it seems likely the current trend will hold: There will always be a buyer eager for any opportunity.
"I have been selling real estate for over three decades and have never seen a market like this one," Schneider says. "Home prices have risen in all neighbourhoods -- every home. The good, the bad and the ugly are selling right now -- and for top dollar."
