So, you are ready to buy a property and you want to know where to get the best bang for your buck.
No matter if it’s your first property, you’re downsizing or you are looking for a good investment, prices, especially in and around large urban cities like Toronto can be prohibitive. Finding the best deal that you can get, in the best area that you can afford, for the best price possible is just a smart business decision. How do we do that in this competitive marketplace?
One way to do that is to try to spot the next ‘hot’ neighbourhood before it becomes trendy. That way you get a great property cheaply in one of the most desirable spots in town.
Investing in an up-and-coming neighbourhood can put buyers way ahead of the trends. Often these neighbourhoods are run down, neglected and might even have high crime rates.
Think of Queen Street West or Leslieville in Toronto, Gastown or Yaletown in Vancouver, or the Old Port or Mile End in Montreal.
The challenge is identifying the next hot neighbourhood and not buying in an area that you think might be revitalized, and it never happens.
Here are some things to look for in distressed areas than might be on the brink of a resurgence:
- Look for areas that house large numbers of Artists and Musicians. Both artists and musicians are typically ahead of the property curve because they look for cheap rental units to live and work in and then, because they make the area seem cool, other business opportunities follow. Restaurants, coffee shops and bars show up, night life becomes interesting and people want to be near that kind of energy. Eventually the area starts to build up as more and more people move in. The neighbourhood becomes desirable and home values rise.
- Look for new government or community investment in an area. In Toronto the Eglinton LRT line is making a number of neighbourhoods more accessible and therefore more desirable. The area of Rockcliffe-Smythe is high on the list of under-the-radar neighbourhoods enjoying a huge transition because of this project. The Junction Triangle and The Distillery Area have both had massive revitalization when both of their former industrial cores have been substantially renovated.
- The closeness to other trendy neighbourhoods can also be an indication that an area is due to change. Development expands outward, especially as prices in the neighbourhood core starts to increase. Rents and home values go up, so the artists and musicians move outward still seeking cheap rent. And the cycle continues, think Leslieville east between Leslieville and the Beach. It’s still a little rough around the edges but the prices are good while it’s in the process of gentrification.
- Look to areas that are a bit seedy but have older historically significantly styled homes because they are some of the earliest properties to be renovated in a changing neighbourhood. Look also to neighbourhoods that have a large stock of empty warehouses or buildings that can be repurposed into residential or commercial properties. Trendy loft apartments could be on their way!
- Look primarily for accessibility! Michael Corbett author of ‘Before you Buy’ says, “In dense metropolitan areas, the neighbourhoods that are downtrodden but still convenient are those primed for wholesale remodelling.” The areas proximity to public transportation is one of the most revealing factors.
Other issues to consider are:
- Declining crime rates – Corbett says “ Especially in transitioning areas if safety is increasing, that is a powerful sign that the marketplace is beginning to open up to a broader spectrum of buyers – more families, more young buyers and more single women.”
- New shops, restaurants, coffee shops and bars opening – Whether large Big Box retailers or trendy organic coffee shops and independently owned restaurants, new bustling activity indicates an area in the early stages of transition.
- Rapidly declining “Days on the Market” (DOM) – The decline in a properties days on the market on the MLS can occur way before home prices themselves actually increase. That means that keeping an eye on those statistics can help you get in an area while it is still affordable.
So talk to your real estate agent, walk around areas that interest you and take a ride on the subway to the next stop close to that neighbourhood and look for the tell tale signs of the next jewel before anyone else spots it. You might be very happy down the road that you did! If you have any questions or if you need help in your search, reach out to me at 416-834-3688 or at email@example.com.