You’ll have to excuse the frankness right at the onset, but the overwhelming answer to this question is an emphatic “yes” if you’re looking to buy in the Toronto market.
Wait, that’s not entirely true, as there are cases where compromises aren’t necessary, so let me ask a quick question:
Do you have an unlimited budget?
If the answer to this is “no,” then I’m sorry, but I was right the first time!
Excuse the tough love here, folks, but you’ve got to have a sense of humour about these things if you’re looking to transact in the Toronto market.
Did you know we’ve got our own real estate podcast? Listen to the Last Honest Realtor Podcast right here or wherever you get your podcasts!
Here’s the Thing About Buying a Home in Toronto and Human Nature
Simply put: every buyer in the Toronto market ends up giving up something on their wish-list, but if you choose to turn this around and look at it more positively, then consider that the best way to get into the market in the first place is to seek out compromises.
I often muse that every buyer, regardless of their budget, is always looking for something that’s just outside their price range. My $1,000,000 home-buyers are looking for something that’s probably going to cost $1,150,000, but that’s totally normal, because my clients with a $3,000,000 budget can’t find anything that they would buy, under $3,300,000.
Is this simply a function of our ever-increasing wants disguised as needs? Or is this a function of the ever-increasing price of Toronto real estate?
Thinking about diving into the Toronto real estate market? If you’re looking to buy a new home now or in the future, here are a few other blogs that you might find helpful:
- Offer Tips for Buyers: How to Win in Any Market
- Why Waiting for the Market to Improve Doesn’t Make Sense
- Do You Really Need a Buyer’s Agent?
Needs Vs. Wants When Buying a Home
In my experience, most buyers don’t necessarily “need” everything on their list, and I always coach buyers to sit down and differentiate between the “must-haves” and the “nice-to-haves,” since quite often, these are confused.
When a buyer approaches me with a budget and a “must-have” list, the first thing I do is look at sales in their chosen area over the last four months, that check their “must-have” list and meet their budget. If I email them a list of twenty sales, then they’re on the right track. But if I send them one listing for a sale two months ago, then the point is made: they’ll have compromise on something.
Do you have more questions about buying a home in Toronto? Download our buyer’s guide right here.
So, What are the Biggest Compromises that Buyers Make?
Location.
This is either the best compromise that a buyer can make, or the worst. It’s all about perspective. If a buyer is looking at three neighbourhoods but only one will meet their needs and budget, then the question is simple: “Do we buy in this one area, even though it’s lower on our list? Or do we compromise on other features of a home so we can get into our top area of choice?”
Semi vs. Detached.
For home-buyers, this choice is often made for them. There are many areas and price points where a buyer can’t get into a detached and has to “settle” for a semi-detached. But for the buyer who can afford a detached home, but wants a better location, more bedrooms, and better condition, then the question becomes: “Would I rather have a detached house that needs work, maybe doesn’t have a parking space, and perhaps is on a smaller lot? Or would I rather get everything I want but in the form of a semi-detached house instead of a detached?” See, we’re making compromises already!
Buying a home requires a lot of decision-making. If you’re on the fence about things, here are some more blogs that can help:
- New Construction Vs. Resale Home: What’s Best For Me?
- Should You Buy a House with a Pool?
- Should You Buy a “Tear Down” in the City of Toronto?
Bedrooms.
Many of the “move-up” buyers who are coming from a typical 3-bedroom, 2-bathroom semi-detached home will accept nothing less than a detached, 4-bedroom, 4-bathroom home for their next purchase, but could they do with a 3-bedroom, provided the house has everything else they want – and is in their desired location? What if the fourth bedroom was in the basement? When it comes to condominium, many buyers will opt for a 1-bed-plus den instead of a true 2-bedroom, since they don’t really “need” the second bedroom, but rather want to use it as a home office. Speaking of which…
Home Office.
When I moved into my second condominium, I set up this incredible home office in the “den” with a glass desk, a swivel chair, and all the comforts of the office – printer, file cabinet, and office supplies. But it wasn’t more than a year later that I found myself working from my laptop at the dining room table since I wanted to be closer to my wife, as the evenings were the only time we spent together during the week. She would watch TV while I would work. It was a perfect marriage! Many condo buyers today assume that they need a large home office, either via a second bedroom or a dedicated den, but I can tell you from experience that despite all your planning, you don’t really know how you’ll choose to work from home – until you start spending time there.
Are you a first-time homebuyer? Read our Ultimate Guide to Buying Your First Home right here.
Outdoor Space.
This one is really important in the condominium world where one unit could have a beautiful outdoor terrace and the next unit could have nothing but a Juliette balcony. As somebody who has had large terraces at both condos I’ve lived in, I’m clearly biased toward the feature. But I will freely admit that the space was only used four months per year and commanded a ton of upkeep! Not everybody has to have an outdoor space along with their condo unit, and buyers need to think about whether or not they’d actually benefit from that small, 10-foot by 4-foot “balcony” or whether it would simply collect dust – and pigeons! When it comes to entry-level freehold properties, many buyers are coming from condos and demand a large backyard. But how often will you use it? Maybe you’re putting a premium on “entertaining space” and yet a small flagstone patio will do the trick in lieu of 75-feet of grass?
Bathrooms.
I remember selling a condo to a young couple at 230 King Street East years ago that was a rare 1-bed-plus-den, 2-bathroom model. They raved about the second bathroom that offered a standing shower, but when I sold the condo for them five years later, they smiled and confessed, “Neither of us has ever used that shower.” They put such a large premium on the presence of a second shower when they purchased the unit, but in practice, it didn’t offer the value that they assumed it would. When it comes to entry-level homes, a 3-bedroom, 1-bathroom house can be purchased for significantly less than a comparable 3-bedroom, 2-bathroom house, and allows buyers to get into that property within their price range. It also allows those buyers to add value down the line if the lack of a second bathroom is because the basement is unfinished. Speaking of which…
Basement.
When my brother purchased his first home in Riverdale, he was only able to get into that neighbourhood and that property type within budget because the home had an unfinished basement. But he and his wife didn’t need the space down there – at least, not yet. Four years later, with a toddler and another child on the way, and with an expanded budget, he was able to renovate the basement and add a fourth bedroom, a rec-room, and an extra bathroom, all to his specifications and design choice. Compromising on features today but allowing for them tomorrow is a great way to get into a home within budget.
Do you have more questions about buying a home in Toronto? Read these posts next:
- When is the Best Time to Buy a Home in Toronto?
- What Are the Elements of a Real Estate Purchase Agreement?
- What Not to Do When Buying a House
Parking.
When I started in this business in 2004, it seemed as though every single condominium unit came with an owned parking space, and perhaps they did! But back then, a new development building 400 condo units might also build 400 or 500 parking spaces. Today, a 400-unit building might build only 50 parking spaces. One of the biggest compromises that a condo-buyer can make in today’s market is to do without parking. The days of keeping a car downtown and saying, “I only use it on Sundays when I drive to Richmond Hill to visit my parents” are long over, and the cost of an owned parking space can instead be applied to interior square footage, an outdoor space, a view, or the ability to get into the market altogether. For freehold buyers, maybe that coveted private driveway is too costly and one-car parking off the laneway is a compromise that can be made?
Finishes.
For some people, this is the most important feature of a house or condo. For others, it’s the very first compromise that can be made. Many buyers will offer, “I refuse to pay for somebody else’s finishes” and yet some buyers say, “I simply don’t have the time to renovate.” To each, their own. But if you found the dream home in your desired area and was within budget, but needed an aesthetic overhaul, perhaps it’s worth sacrificing a year, or two, or five of living in a 1990’s time warp in order to obtain everything else on the list?
There are countless compromises that buyers can make in this market, but the above represent the ones that I witness most often.
What happens if you’ve compromised too much and you regret your home purchase? Read this post to find out.
Would You Rather…
If you’re a buyer in this market, play the “would you rather” game.
Would you rather have an owned parking space with your condo or a 300 square foot terrace with a gas BBQ line?
Would you rather have a detached home on a busier street or a semi-detached home on a quieter street?
Play one criteria off the next, over and over, and you’ll start to see where you place the value in your property search and how you can compromise.
Because everybody compromises in the real estate market. Trust me – I’ve done so with every, single property I’ve purchased…
Are you ready to get started or do you have more questions about buying a home in Toronto? Give us a call at 416.642.2660 or email us directly at admin@torontorealtygroup.com.
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