Location, Location……….Not Location, Anymore?

TorontoRealtyBlog

Or maybe "location" is no longer even two of the three most important criteria, as the saying goes.

Maybe now it's "size, age, location," or some combination of those.

Throughout 2018, I've seen a huge shift in buyer appetite away from location, and toward the overall offering in a home.

Let me explain, and give you a few case studies…

Do you value the "L" and the "V" on your handbag?

Louis Vuitton.  Come on ladies, some of you own one of theses pieces of magic!

$3,000 for this bag that transforms all your belongings into better belongings!  Your wallet is more special, your sunglass case is fresher, your package of Kleenex is more special.

It's why you drop $3,000 on a bag, instead of carrying a $400 Michael Kors alternative.

We could probably play this game all day long, and to be fair, I'm sure there are products or services that I value, that other people don't.

What I'm obviously getting at here is the value of a brand name, or if we're going to be completely honest, we wouldn't use "value;" we'd use "price."

A Louis Vuitton handbag carries personal effects, as does a Michael Kors bag, but one costs 7-8 times as much as the other.

So when it comes to the "brand-name" of a Toronto neighbourhood, how do you feel about paying the price?

And to circle back to the concept of value, if you do pay a higher price for what you could elsewhere at a lower cost, do you assign a value to that location?

The value of a brand-name is in the eye of the beholder.

Some people don't care if their neighbourhood has a "name," and others do.

Terms like "Leslieville" and "Davisville Village" weren't in the common vernacular 15-20 years ago, but real estate agents, and trendy residents wanted to have that panache that accompanies a homogenous, identifiable neighbourhood, and as an extension, the value.

You've probably heard this story at least 2-3 times before if you're a long-time blog reader, but I'm going to tell it again.

Circa 2004, I was at an extended family function in Burlington, whereby just about everybody attending was from Burlington, Hamilton, or Niagara.

There was one woman, however, who was from Toronto.  She, of course, didn't know that I was from Toronto as well.

When our mutual friend introduced us, I asked her where she lived.

"Leaside," she said, with a smile and obvious pride.

Leaside.

Yes, Leaside.

You all know where Leaside is, right?

Good.  So when I pressed her and said, "What street are you on?" I was quite amused when she said, "Chilton."

"Chilton?" I asked, with a backwards-jerk of the head.

"Chilton isn't in Leaside," I said, with a handful of her family members listening in.

"It's in East York," I told her.

She smiled, confidently, and said, "Ohhhh……south Leaside, David."

The member of my family, who was the link between myself and this woman, was absolutely beaming with delight.  This was her aunt, who she didn't much care for, and whom she always found to be pretentious and competitive.  Suffice it to say, she was enjoying my unintentional takedown of her full-of-sh!t auntie.

"Actually, south Leaside is bordered by Bayview, Eglinton, Moore, and Laird," I told her, trying to be helpful, believe it or not.  "Chilton is in the East York triangle.  Nice spot, but about 1.5 KM away from the Leaside border."

This was meant to be conversational in nature, on my part.  I had no idea that this woman had spent the last decade telling her out-of-town family that she lived in Leaside, when she did not.

Which brings me back to my point, today.

Do you care if your neighbourhood has a "name?"  Or better yet, a "brand name" associated with the neighbourhood?

What would you say to somebody who lived on Bloomfield Avenue?  It's a gorgeous street, tree-lined, one-way, very quiet, and two blocks from Greenwood Park.  But what is this area called?  Does it have a brand name?

Well, I guess real estate agents and residents have started to simply call it "Greenwood Park."  So maybe we can't escape the name-game.

I've noticed a trend through the first six months of 2018 whereby many of my buyers are shying away from the "name" areas and looking for more value elsewhere.

Once upon a time, buyers valued the name-areas, with the "better" schools, or access to retail, transit, parks, and amenities.

And I put "better" in quotations because the Fraser Institute ranking is not the be-all and end-all.  You also want to look into the class sizes, curriculum, outdoor space (tremendously important to me, since I want my kids to play outside and not play X-Box all day…), and extra-curricular activities.

So far in 2018, I've had at least 4-5 buyers end up in areas they did not think they'd be in, simply because the offering was superior.

I was recently working with a couple who started out in the west end, but couldn't really afford what they wanted.

So I took them to midtown, and introduced them to Davisville Village and Leaside.

I showed them a semi-detached house in North Leaside; 3-bedrooms, 2-bathrooms, finished basement, private driveway with a garage, fenced backyard, and on a very quiet street, with lots of kids, priced around $1.3 Million.

This house falls into the prestigious Northlea Public School district, which not only has the coveted French Immersion program, but also has an exceptional school ranking, and excellent facilities.

The house is about a 5-minute walk to the future Laird TTC subway station, and is 8-10 minutes from Serena Gundy Park.

As new parents, looking to grow their family, I thought this house was perfect.  And so did they!

Until they got to thinking, and realized what they really wanted, and both what was important to them – and what was not.

In the end, they determined that as gorgeous as Leaside was, what they wanted would cost them about $2.5 Million.

What they wanted just didn't jive with this location.

So they put location on the back-burner, and put the age, size, and style of the house at the forefront of the search – a trend that, as I said, is gaining momentum.

One week later, we were looking at a new-build at Eglinton and Victoria Park.  How's that for a change in location?

This house was brand-new, never lived in.  40-foot frontage, 4-bedrooms, 4-bathrooms, built-in garage, and massive finished basement.

But it wasn't just the "on paper" specs that put it in another category, ie. beds, baths, etc.  It was the extras!  Heated floors, security cameras, 200-amp panel, smart-home features, Pella windows, and everything aged 2018.

And how was the home priced?  Same as the one in Leaside.

My buyers loved the house.  They didn't care where it was.  They couldn't have possibly cared less about the location or brand-name of a "Leaside."  They simply wanted a larger home, with all the features they covet.  She got the massive walk-in closet she's always wanted, and he got the man-cave in the basement; two things they wouldn't get in Leaside unless they spent DOUBLE on the home.

Earlier this year, I had a similar experience with a couple who started their search looking up at Yonge & Blythwood with the "buy the worst house on the street, to get into the best area" mentality, but who eventually went in the complete opposite direction.

I showed them Riverdale, Leaside, Allenby, Bedford Park, and the like.

We bid on one house around February or March – a very narrow detached home on a 25-foot lot (that's small for this location!), built new in 1989.  This was a 3-bed, 4-bath home, which left something to be desired for the home itself, but was in a fantastic neighbourhood, highly coveted, and a great school district.

The house was built well above grade, with an elevated front porch.  So with three toddlers, the prospect of lugging a stroller up and down those stairs every day (no access to the garage from the house) wasn't looked forward to.  But the buyers were willing to overlook this daily grind to get the house……at a price.

Listed for $1,599,000, I think there was something like 12-15 offers, and the house sold for $1.95 Million.  We were well below that number, not even entertaining the idea that a house this narrow would fetch a price like that.

I continued to show them houses; Browning, Roselawn, St. Clements, Erskine, and eventually we ventured into Leaside and saw the Brentcliffe's, Donlea's, and Glenvale's of the world.

And then one day, they asked me about new builds in East York.

East York?  Really?

This was a far cry from Leaside!  Not even close to John Wanless Public School!  Without the same panache as Allenby!

But you know what?  They didn't care.

They wanted to buy a house, not an area.

We settled on a brand-new, detached, 4-bed, 4-bath on a 34-foot lot.

Private driveway, built-in garage, main floor family room, 5th bedroom in the basement, and one of the largest basement rec-rooms I have ever seen in a house this size.  29 x 20 feet!  That's one room!

I was instantly jealous.  The man-cave possibilities were endless, although my clients were thinking "kid's play room."

Try as I might to push them toward an 80-inch TV, pool table, 16-person sectional couch, and a couple of Lazy-Boys, they were unmoved.  This was an incredible kids' play area; one that was triple the size of what they might get in the other areas we were looking.

This house had also never been lived in, and at the risk of sounding naive, it was well-built, and the finishes were spectacular.  The finishes weren't just higher-than-average-end, but they were tasteful, and the buyers wouldn't need to change anything.

The flow of the house was excellent.  This wasn't a 1950's-built, thrice-renovated home that had been semi-gutted multiple times over 70 years, leading to awkward layouts.  This was a strategically-built home with the layout and flow that a 2018-buyer covets.

All-in-all, it was exactly what the buyers wanted, nay, dreamed of.  And that sounds cheezy, I know.  Any time I hear the word "dream" associated with real estate, I sigh.  But this house had everything they wanted, and then some, and would have cost double if it were in the areas we were previously considering.

The icing on the cake was that we paid $100,000 under the list price, after a series of drawn out negotiations.

This was a different world than the 12-15 offer melee we experienced only a couple of months earlier.

I had a similar situation with a couple who was looking in Roncesvalles earlier this year.

I'll save you the drawn-out story like the first two examples, but once again, we went from a 3-bedroom, semi-detached on anywhere from an 18 to a 22 foot lot, suddenly to a detached 4-bedroom in the Parlawn area.  Once again – same price.

Those who are big proponents of neighbourhood-value will say, "So what?  So you went outside of great areas into inferior areas to get a larger house.  This isn't rocket science."

No it's not.

But it's a trend, and the trend is gaining momentum, from what I can tell.

I would say the overwhelming majority of buyers still target location first and foremost.  But this has fallen from a near entirety to that majority, which is noteworthy, no matter what conclusion you want to draw…

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