Rise of the Suburbs
Suburbs At The Forefront
Investing in downtown is your long-term, “blue chip stock” but there are areas that may see a greater jump in appreciation over the shorter to medium term and the Toronto suburbs are the answer.
So why should you put suburban investment at the forefront of your radar? Let’s do the math with a side-by-side comparison of a unit in a new development in downtown Toronto and a unit in the phase 2 development of Oakville Condos by Minto.
The first, a 1 bedroom plus den condo with parking located in a new development built by Pemberton, a great builder with a long track record similar to Minto, going up at Portland and Richmond in the King West area in downtown Toronto. This unit is 665 square feet and is listed for $851,990. The parking spot is $79,000 and the lot itself is $779,990. The second, a 1 bedroom plus den with parking spot, same size, in Oakville is listed at $447,990. The price of the downtown Toronto location is 90% more than the unit in Oakville. The next question is, am I getting 90% more rent in downtown Toronto? What’s the real difference between the two?
The expected rent for the 1 plus den in downtown Toronto, is $2,700 per month. The 1 plus den in the second phase of the Oakvillage development, as well as a similar new development in the Dundas and Trafalgar area, is renting for $2,050 per month. The downtown location is getting 32% more in rent than the condo in Oakville. You’re paying a premium to purchase downtown but not getting it back in rent which means that, if you want your money to worker harder for you, the actual cash flow numbers are much better in Oakville. That being said, downtown Toronto is your blue chip stock and I do recommend having some in your portfolio.
An Attractive Investment
With all the suburban areas in Toronto, such as Scarborough, Ajax, Whitby, Vaughn, Richmond Hill, Markham, Mississauga, etc, you may be wondering why the focus has been on Oakville as an investment opportunity. The 1 bedroom plus den with parking condo in the Minto Oakvillage project is under $700 per square foot whereas the other nearby areas are over $800 per square foot. Not only are you investing in the number 1 voted place to live, but you’re getting it at a much lower price than some of the other suburban areas.
The average price of a detached home in Oakville is $1.322 million and the average price of a condo is $557,000. With such a massive difference of 139% between the value of a condo and the value of a detached property being at an all-time high, there is a lack of affordability on the housing side. Freehold properties have flat-lined and people can’t afford to buy houses now that the fair housing measures, tax implications, and stress test were put in place. This forced people to migrate into condos creating a jump in condo values and there is a huge opportunity for appreciation with condos.
The vacancy rate in the Halton region is at 0.6% versus downtown Toronto which stands at 0.7%. There is a scarcity of these properties and a lack of rental product in that area. With people focusing on condos, as they are much more affordable for the majority of the population living in and coming to Toronto, investing in the Oakville developments is the perfect opportunity to diversify your portfolio and create a positive cash flow.
Let’s Talk!
If you have any questions or are interested in investing in upcoming Oakville developments, please send me an email at contact@alexjwilson.com or you can give me a call/text me at (416) 996-5181.
I’m here to make your real estate dreams come true in helping you build generational wealth and financial freedom.