Thursday, April 10, 2014

Bermuda Triangle of Real Estate - TORONTO

The Bermuda Triangle does not get as much press nowadays with the Malaysia Air disappearance in the vast Indian Ocean.  Remember the Bermuda Triangle is a place where things get lost, no one knows why, they are never found, its a big mystery, etc.

We are trying to move to Toronto from the Washington DC area to be closer to family.  Trying to buy a condo or home in Toronto is Bermuda Triangle-esque.  We are looking for a centrally located 1500+ sq ft condo with two bedrooms and an office, or something similar (townhouse) and our budget is up to $1,000,000 (way more than our 3500+ sq ft house in the expensive DC market).

  • In 5 weeks of searching with an agent, we have identified about 12 to 15 properties and seen 8.  There is not much on the market and not much like this being built within the 427-401-DVP area.  A vertically stacked 3+ level townhouse does not really work because of all the stairs, not that there are a lot available anyway.
  • Nothing is under $700,000, maintenance runs about $1200 (condo) to $250 (townhouse) per month.  Once you get above $1M, maintenance seems to shoot up to $1800+.
  • Houses are often bought with no inspection, no conditions, huge earnest money in a certified check ($50K), a love letter to the seller, and after a bidding war that starts the day the house is listed.  Our agent says the condo market is "more normal" because you can have a condition of inspection, a certified check for $35K, no love letter, and only occasional bidding wars.
  • All the new condo buildings with tens of thousands of units are 1 and 2 bedroom  units with less than a thousand square feet in a high rise 50+ story building.
So the mysteries are:
  1. Who buys houses and condos in Toronto?  Is it Torontonians moving up, people moving into the area, new immigrants?
  2. Where do the buyers get the money?  The down payment has to be at least $100K and the mortgage would be approximately $4500 at today's 3.5% rate and will go up as rates rise.
  3. Why is there so little available?
Our agent does not seem to know why, Canadian newspapers are full of speculation, there are no government statistics that I can find.  We will continue to explore the triangle in search of a place to live and hope we come out OK.
The Bermuda Triangle of Toronto Real Estate

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