House of pain: Leaside house prices have doubled in six years – how long will the boom last?
House prices in Toronto are now swelling faster than a gland in puberty. It’s the epicentre of excess. The feeding frenzy of the wantonly indebted. This, in short, could be HGTV’s finest, last hour.
It costs between $5,000 and $10,000 to stage the average house — and virtually every worthy single-family home in the 416 gets the treatment. Vendors pay to have all their furniture moved out (they often move, too, for a week or so), the new stuff comes in and, suddenly, it’s perfect. Granite countertops are enhanced with a splayed Italian cookbook opened to seafood recipes, held down by an expectant corkscrew. Rooms are upsized with downsized groupings of white sofas and contrasting leather ottomans. Pictures of trout and babes on velvet are replaced with Cezanne knockoffs and Picassian horses. A virginal white cotton comforter cradles an Emily Brontë novel, casually discarded. And there is not a dog hair anywhere.
“What’s really interesting,” a North Toronto agent told me, “is that I’m seeing the same furniture over and over again.” Of course. Because it works.
The average home price in Toronto topped $512,000 for the first time this month. It topped half a million just last month. The average single-detached home in the 416 is $798,892, down a little from four weeks ago, but any hint of a cooling market for houses has not hit the sweet spots such as North Toronto.
On Tuesday at 6 p.m., a home in Leaside goes up for auction. Asking price: $1.2 million. Leafy, sitting in an in-demand school area and looking like the set for a Leave It to Beaver episode, it’s a current object of desire. Scores of couples have tromped through. There’ll likely be a dozen or more offers, all of them over the asking price. In fact, the owner turned down $1.41 million days before the bidding war was set to begin.
Houses in this ’hood — on lots just 30 feet wide — have doubled in value within the last six years. They’re no mansions, either. The two-storey, 80-year-old structures get rear additions, reducing yards to the size of area rugs. Bungalows are snapped up by contractors and sell for the land value of about $800,000.
The number of new listings on the Toronto market has risen
substantially over the first three months of 2012
The families desperate to move here are not all headed by millionaires. Their average income is north of $120,000, but you can’t earn that, afford two kids and amass a million in savings. So, thank God for Mark Carney. Without the governor of the Bank of Canada, the owner of a Leaside home might be forced to amend her sked and entertain a bully offer, rather than spurning it.
To borrow a $1 million with a 3.2 per cent value range marketing (VRM) and a 30-year term takes only $4,300 a month and an income of $150,000. It’s just too tempting. And the longer emergency interest rates are in effect following the global financial crisis, the more people expect them to remain. Big mistake. “For consumers, the rate hikes would lead to tighter lending conditions, which should help curb growth in household debt — not necessarily a bad thing, as this is an area that the central bank cites as the number one risk to the Canadian economy,” says Dina Cover, in a TD economics report.
“Ultimately,” say economists Craig Alexander and Leslie Preston, “moving the timetable for higher interest rates forward adds to our conviction that home sales and home prices are headed for a correction in 2013.”
Will this make any difference in Leaside? Can you argue with a gland?