It seems like the all the heated sales in the core that characterized the first quarter of 2011 are starting to slow down a touch. As the weather gets nicer, there is more and more inventory hitting the market, which will give buyers more choice and more time to make informed purchase decisions. On the income property side, most properties in prime spots that have 5.5% returns or better are stilled getting snapped up quickly. It seems like living and investing in duplexes and triplexes is still a valid option for many of the buyers out there. This month I will look at a few of the income property sales from January through March of this year to give you all a sense of what has been going on.
The first three months of this year saw quite a few duplexes and triplexes trade for over asking price. It seemed for awhile that the list price was irrelevant. Once a property was holding back the offer date it was almost a given that the list price was just a starting point. Bids would invariably exceed the list price by a fair bit and often have no financing or inspection conditions. I was involved in several multiple offer situations, including one in the College & Dovercourt area that had twenty offers and sold for almost $200K over asking.
There were thirteen sales in the Riverdale/Danforth/Leslieville/Beach neighbourhoods that had three or more kitchens. Of these sales, five of them traded for over asking price, including a triplex in Leslieville that listed at $599K and traded for $702K. There was also a sale of a converted house into five units in the Greenwood & Danforth area that traded for $1.25M. That must be a residential price record for a house in that area.
In the downtown C01 & C02 areas (west Yonge, from St. Clair down to the lake), there were twenty-four sales of properties with three or more kitchens. The average sale price was around $650K and most of these properties got 98% of their asking price.
In midtown (C04, C09 & C10), there were only four sales with three or more kitchens in the first quarter. Two went above the asking price and the other two got very close to the list price. At the moment there are very few midtown duplexes or triplexes for sale, which is quite odd for this time of year. I suppose that’s why we Plex agents have to cover the entire Central core to find opportunities for our buyers.
Coincidentally, there were also twenty-four sales in the west districts of Roncesvalles, High Park and Bloor West Village. Like the downtown sales, quite a few went over list price and the ones that didn’t still often sold very quickly. There was a fourplex in Parkdale listed for $729K (which I admit did strike me as quite low), which ultimately sold for $871K. Even though this property needed significant renovations, the final price really wasn’t that high. Fourplexes on Avenue Road often sell over $1.1M, and the rents there are not really that much higher than what people are paying downtown. The average sale price for these properties on the west side was around $600K, so about $50K less than similar properties downtown.
I expect that these income property stats will be similar for the next few months. There isn’t a ton of quality listings at the moment, although we do expect to see more in April and May.
I often find myself explaining Toronto’s Second Suite Bylaw to a lot of my newer clients. In the City of Toronto, it is permissible to have a second accessory apartment in your property, provided it meets certain conditions.
Some of the conditions of creating a second suite (which is perfectly legal) include:
• the suite must be self-contained with its own kitchen and bathroom;
• the house, including any additions, must be a least 5 years old;
• the square footage of the second suite must be less than the remaining unit;
• generally, homes with a second suite must have a least 2 parking spaces. In parts of the former City of Toronto – R2, R3 and R4 districts – these suites are exempt and only require 1 parking space;
• any new second suites must comply with the Ontario Building Code and need building permits. Existing suites must comply with the Fire Code and zoning/property standards.
For more information, please go to: www.torontorealestateboard.com/consumer_info/gov_programs/suite_qa.htm
For properties that have three or more suites, we usually have to ensure that the continued use of the third suite is not a problem. If it has been pre-existing for several years and meets fire code requirements, generally there isn’t an issue. It is when you have two suites and you quietly add in a third without permits that things can go wrong. I also always recommend getting legal advice prior to doing any significant changes to the status of your property.