WHERE TO FIND A HOUSE UNDER $400,000

Best opportunity for value shoppers is near Leslie and Finch.

Sep 11, 2009 - Tony Wong, Business Reporter, Toronto Star

It's a tough lot being a first-time homebuyer.

Finding a property for less than $400,000 is a challenging proposition in a summer market that has been characterized by bidding wars, even on the most affordable homes.

Thanks to low mortgage rates, sales records have been smashed in the past two months in the Greater Toronto Area, while listings are down significantly.

So where do you buy that first home?

 

According to a study of the top 10 neighbourhoods for first-time buyers conducted by Coldwell Banker Terrequity Realty, the best spot in Toronto proper to buy a non-condo property is in the Leslie St. and Finch Ave. area of North York – about as far north of downtown as you can go without entering the 905 region.

 

One harsh reality is that first-time buyers pretty much have to give up the dream of living in a lowrise property if they want to live in downtown Toronto.

But go a little north and the opportunities open up.

The area bounded by Steeles Ave. on the north, Leslie St. to the east, Finch Ave. on the south and Pineway Blvd. on the west is close to parks such as Cummer and Cresthaven, with the subway accessible via one bus, either on Finch or Steeles avenues.

A semi-detached house would cost just under $400,000 in this neighbourhood, although you can likely get a condo townhome in the $319,000 range.

The other two Toronto locations suggested by Coldwell Banker are strictly in condo territory: the nearby Yonge and Finch area and St. Lawrence Market.

Proximity to public transit, shopping and parks were high on the survey's criteria. There are lots of neighbourhoods with properties under $400,000, but we felt these offered not just good value, but a true sense of neighbourhood.

The first-time buyer market has been driving sales for the past several months, as owning a home in Canada became more affordable for the fifth quarter in a row, according to a study this week by RBC Economics.

With a five-year mortgage available at 3.95%, potential homebuyers could put 5% down, or $20,000, and finance $380,000. That works out to a monthly mortgage payment of $1,988.

Still, analysts warn, interest rates will not remain at today's historically low levels.

While the Bank of Canada signalled its intention yesterday to hold rates steady for the time being, rising rates would mean higher monthly payments in the future, which could affect sales volumes and prices.

First-time buyers should be especially cautious about "biting off more than they can chew," said Sal Guatieri, senior economist at BMO Capital Markets.

"People have to factor in what interest rates will be three or five years from now when they will almost certainly be higher since we have nowhere to go but up." Guatieri said rates could easily rise by two to three percentage points over the next several years.

In the west end, Coldwell Banker selected the village of Islington in Etobicoke and the Mississauga neighbourhoods of Alderwood, Eglinton-Central Parkway and Churchill Meadows. To the east, Coldwell Banker picked Rouge Hill and Ajax Lakeside.