A client recently asked me about the five cheapest 2-bedroom condos in the downtown core, and asked me why they were so cheap, and whether or not the prices were "too good to be true."
I suppose that depends on your definition of "too good to be true," since you simply have to assume there's a reason why a condo would be cheaper than a similar alternative.
I figured this would be a good way to share with you, not only some of the reasons why a condo is cheap, but also some of the areas and buildings where you can find them.
The "reasons" are not all objectionable. In fact, in some cases, they represent an opportunity for good value…
Before I rattle off this list, it needs to be said: these are not bad condos, and they're not bad buildings.
They just happen to be the five cheapest 2-bedroom condos in the market in C01 and C08.
And it's my job, whether playing devil's advocate, or actually advocating for these five sellers, or the residents of these five buildings, to explain why they might be so cheap.
After ten years, and 2,000 blog posts, I know I'm everybody's favourite until I say something about their building, so forgive me in advance if you happen to live in one of these condos, but they are the cheapest in the downtown core.
This isn't intended to be a take-down piece; it's simply an examination of five buildings, all in very different areas, of different styles, and ages, in attempts to draw a conclusion.
So without further adieu, here are the five lowest-priced condos, currently available for sale, in C01 and C08 on TorontoMLS – and I won't provide the unit number, or photos, because of RECO and TREB's ridiculously outdated codes of ethics, et al…
1) 40 Homewood Avenue
Sherbourne & Carlton
$557.91/month fees, all inclusive
This condominium was registered in 1972.
And right there, you might have "reason" enough to move on.
Simply put, "old" doesn't sell in today's Toronto market. Buyers are attracted to what is new and shiny, hence why people are willing to sleep on the pavement overnight to get in line at a condo sales centre. You know how I feel about the silly pre-construction sales industry, but bottom line – newer sellers better, even in the resale market.
A friend of mine asked me the other day, "How do you like being a dad?" I jokingly said to him, "It's great, Maya listens to all my stories about winning back-to-back soccer MVP's in 1995 and 1996."
He then said, "Do you realize that when she's old enough to actually understand what you're saying, and know what year it is, that would be like our parents talking about 1962?"
Much of the buyer pool is made up of young buyers, who can't even comprehend the year 1972.
Tell me that's lazy, tell me they're ignorant, and tell me any multitude of things about "kids today," and I might agree.
But I can't control how the buyer market operates. Their tastes and preferences are not by design, but rather by nature. They like what they like.
And the age of the building isn't the only dislike here, nor is it the only red flag.
These units have electric baseboard heating, and most condo buyers simply expect forced air, gas.
Thankfully, the utilities are included in the maintenance fees, otherwise the owner might be paying $200/month for heating.
But without air ducts for forced air heating, it also means you have no ducts for central air conditioning. That's another feature of a condo that today's buyer pool simply expects. The result is a slew of ugly window units adorning all four sides of the building.
I think there's great value in this building, don't get me wrong. For the right buyer, 40 Homewood Avenue has a lot to offer.
2) 150 Sudbury Street
Queen & Dufferin
$370.85/month fees, plus heat, hydro, central air
Just as the simple statement "1972" need only be said about the first condo, here we only need say "Urbancorp," and I think many people can draw a conclusion on why units are so cheap.
You'll call me biased, since I've been complaining about Urbancorp for over a decade, but I wasn't wrong; they ceased operations in early 2016 after a massive scandal, and eventually, bankruptcy.
Believe it or not, Urbancorp once was a well-respected builder who put a quality product together. They built a complex at 119-139 Merton Street, which sells extremely well, in addition to iconic King West buildings like Electra Lofts.
But somewhere along the line, they started to build crap.
I'm sorry if anybody who owns at 150 Sudbury Street is reading this, but that is a very poorly constructed building.
And I know first-hand, because I owned an investment property in there, and watched it get built. It was probably one of the worst "new" condos I had ever seen in the city.
For those of you that have been reading my blog since the mid-2000's, I'll save you the recap of my epic stories that eventually led to the TRB feature, "The Friday Rant." That reminds me, I think I'm softening in my old age, as I haven't let loose a good rant in a long time…
But bottom line: it's not just me who thinks this condominium, and others like it, are poorly built. It's the whole real estate industry.
There's a reason why you can get a 2-bedroom condo for $340,000, and why everything Urbancorp built in the King West and Queen West area is so cheap.
This isn't a secret – the word is out, and the proof is in the pricing.
3) 36 Lisgar Street
$399.40/month plus hydro and HVAC rental (approx $70/month)
Did you read that – up above? 21 storeys, and a whopping 664 units?
This is not a small complex.
Although, all the units seem to be.
In this entire building of 664 units, guess how big the largest unit is?
901 square feet.
Yes, this is a building that was constructed and primarily sold to pre-construction condominium investors, and now it's mainly renters, and people buying, as the blog title suggests, the cheapest real estate in the downtown core.
Oh, and it's also another Urbancorp building, which is the real reason why units are so cheap, as I explained at length for #2.
There are currently 13 units for sale in this building, and if we were truly looking at the cheapest 2-bedroom condos in C01 and C08, then 36 Lisgar would own rankings #4, #5, #6, and #7, with 150 Sudbury Ave owning ranking #2, and #3.
But I'm going to be "fair" and only give one spot to each building. So we'll move on to the next two-cheapest, after 150 Sudbury and 36 Lisgar.
4) 415 Jarvis Street
$289.76/month fees plus heat, hydro, central air
So here's where the danger of writing about "cheap units" comes into play, since I absolutely love this complex, and the unit that is up for sale right now.
But we are talking about why units are cheap, and what makes them that way, thus the inclusion of a unit I love in a list of properties I'm speaking negatively about.
This is a 744 sqft condo for $419K. That seems too good to be true.
It's also in a townhouse complex, which makes the value even more hard to believe.
But there are two main reasons why this unit is so cheap:
1) It's a basement.
2) It's a basement.
No, you don't have double-vision, that's the same reason twice.
But what I mean by that is that on the whole, a buyer does not want to live in a basement. The thought alone makes many buyers say, "I'm not interested" before they even go for a viewing.
Secondly, everything that results from being "in a basement" adds to the difficulty in wooing the buyer, and thus the price suffers in the end.
Buyers don't want to feel like the live underground, so if there are elements present that give off that "vibe," finding the right buyer becomes an uphill battle.
With this particular unit, being in a basement means there's very little natural light.
And when you look at the size of the windows in the bedroom, you can see how a buyer might feel like they live in a windowless unit:
The master bedroom has a window that looks like it's 18-inches in width, and it's in a little nook in the corner of the room.
But not only is the window small, you're also, you know in a basement.
So what does that window look out at? Is it a window well?
In the second bedroom, the window is slightly larger, but still – you know you're underground.
Like I said – I love this complex, and I really like this unit, even though I'm providing reasons why a buyer would not like it.
It just takes the right buyer.
5) 320 Richmond Street
$422.39/month fees plus hydro and central air
Another building I love!
So why is this unit on our list?
Well first, let's talk about the building.
313-323 Richmond Street and 320 Richmond Street are always atop my list of "value buildings" in Toronto.
When it comes to the desirability and popularity of condos in the St. Lawrence Market area, I always say: "King Street gets an 'A,' Adelaide Street gets a 'B,' and Richmond Street gets a 'C.'"
Most people want to live on King Street, which is where the retail infrastructure is, as well as the TTC streetcar, but it's also far away from the rif-raff at Moss Park; something that Richmond Street is not.
But so long as you know this area, and you're aware that the people who frequent the shelters and missions across from Moss Park rarely, if ever, venture down to Richmond Street, then you can sleep well at night. Sure, the Tim Horton's at Richmond & Sherbourne can get interesting at times. But maybe I'm desensitized since I've been going there for over a decade.
In any event, units on this corner represent value plays, as does this one above, for $459,900.
Now why else is this unit so cheap?
Well for starters, that "second bedroom" might not be considered a second bedroom, to many buyers.
And I'm so happy that this unit came in at #5 on our list, because the "bedroom-not-bedroom" conundrum is one that is often responsible for a "cheap" 2-bedroom condos.
What is a bedroom, anyways?
It used to be a room with a door, a window, and a closet, but the loft-craze of the mid-2000's rendered all that moot, with the open-concept bedrooms in the middle of the condo, sliding doors and all, no windows to write home about.
So is a small enclave at the front of the condo, with a small closet, and a door, considered a "second bedroom?" With no window, and no natural light, maybe it's not a bedroom.
And I think a lot of buyers are scoffing at the size and layout of this bedroom, and looking for something more useable.
This unit is also on the 4th floor, facing east.
Do you know what's immediately east of this building?
A car dealership.
Car dealerships ALL end up being condos. I'm sure we could compile a list if we were so inclined.
This unit is facing directly into the future site of a magnificent hole in the ground – take a look at Google Street View:
It's not a matter of "if," but when the crane goes up.
Well folks, there you have it.
The five cheapest 2-bedroom condos in C01/C08, and the reasons why they're cheap.
Our true list would have been 40 Homewood Avenue, two units at 150 Sudbury, and two units at 36 Lisgar, but that would make for a boring blog, so I only counted each building once.
Ordinarily, the other Urbancorp buildings would be on this list – 68 Abell Ave, 20 Joe Shuster, etc. But I was just taking a snapshot today, and seeing what's what.
Remember – some of these are far from being "bad" units or buildings.
But I think the reasons we outlined today – a certain developer, poor workmanship, "stigma," age of building, heating/cooling, below-grade, lack of natural light, proximity to new developments – are all reasons to be on the lookout for, the next time you ask, "Is this price too good to be true?"
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