Homebuying activity in the top end of the Greater Toronto Area's (GTA) exceptionally robust real estate market has taken a definite turn in 2015 as affluent purchasers look to York Region to maximize value, according to luxury realtor Barry Cohen.
The trend explains the recent surge in average price in York Region, where demand for two-storey homes built prior to 2000 in well-established neighbourhoods north of Steeles Ave., has soared. Of the estimated 400 older homes sold in the Greater Toronto Area over the $2 million price point in the first six months of 2015, 22 per cent (90) were located in York Region -- up significantly over the 11 per cent (30/265) of the market they represented during the same period in 2014.
"It appears that cash-strapped first-time homebuyers aren't the only purchasers looking for a deal," says Cohen, a high-end specialist with RE/MAX Realtron. "Frugal millionaires are also seeking value for their hard-earned dollars -- and they're taking advantage of opportunities that present themselves in the form of older, two-storey homes in York Region."
Overall GTA sales of two-storey homes built prior to 2000, over the $2 million price point, rose an estimated 52 per cent in the first half of 2015, compared to the same period in 2014 (402 vs. 265). Older, two-storey homes represented close to 47 per cent of all sales over $2 million. The data captured older homes that ran the gamut, from properties requiring substantial renovation to those that have been thoroughly gutted and some that were returned to their original splendour.
"A growing segment of the market is clearly looking to cash in on older product, particularly the monster home trend of the 80s and 90s, explains Cohen. "These homes are large, structurally sound, and sitting on prime real estate. Many are dated, but when compared to the cost of a new home, these properties represent tremendous savings. With a little TLC, they can easily rival the newer product currently available for sale."
Construction costs for luxury homes have climbed significantly in the past decade, with the cost per square foot now sitting at $325 to $500. When combined with the escalation in land value, the finished product can be a very costly proposition.
For example, one of the most expensive homes currently listed for sale in York Region is an 18,000 sq. ft. natural stone estate, situated on a well-treed, double lot (268 ft. by 222 ft.), on one of the most sought after streets in Thornhill/Markham. The opulent home features a 25 ft. atrium, floating glass staircase, elevator, state-of-the-art home theatre, indoor squash and basketball court, exercise room, billiards room, wine cellar, separate servant's quarters, and an eight-car garage. Outdoors, the resort-like oasis includes mature trees and foliage, putting green, tennis court, gunite pool, two hot tubs, and a cabana/guesthouse.
"Land value alone is upwards of $5.2 million. Replacement costs on the bricks and mortar would run about $12 million. When you factor in the $1.5 million for landscaping, you'd be looking at close to $19 million new," explains Cohen. "The property, located on 20 Steele Valley Rd., is listed for $7.995 million. At that price point, you have a substantial renovation budget and the beauty of a home that's 20 to 30 years old is that the renovations -- which tend to be more cosmetic in nature -- can be done slowly, over years, if need be."
Some of York Region's most prestigious enclaves have experienced a resurgence in 2015 as a result of the cost savings, with demand reinvigorating neighbourhoods like Bayview Woods (Bayview north of Steeles), Bayview Hill (Bayview and 16th), and Woodland Acres.
The benefits of living north of Steeles Ave. are numerous, including no land transfer tax -- an immediate savings of approximately two per cent on the purchase price of the home. The property tax base is also lower for older homes, irrespective of their finishes. And last, but not least, adds Cohen, the more affordable price point overall is helping to move housing product within the region.