National Post
Wednesday, December 07, 2005 

Toronto's 'east end discount' has vanished: Beaches, East York homes fetch 102% of asking price

Toronto's real estate market set another record last month, while offering further confirmation the 'east end discount' has vanished.

'Years ago, to think you'd pay $1-million for a house in Riverdale, people would laugh,' said John Meehan, president of the Toronto Real Estate Board.

'The east end discount? It's gone.'

One Riverdale home recently sold for $1.3-million -- $150,000 over asking price. The neighbourhood was among those hardest hit in October's Municipal Property Assessment Corporation notices, with many homes increasing 38% or more in value over the previous assessment.

Across the GTA, a record 6,646 homes were sold in November, up 5% over November, 2004, although prices were down about 1%.

The real estate board noted that north city neighbourhoods, including Downsview and Willowdale, were also hot last month. Both those areas saw overall sales volume rise 31% over the previous November.

In Richmond Hill Centre, the number of sales was up 50%.

In all three east-end Toronto districts -- including Riverdale, the Beaches and much of East York -- houses, condos and townhouses went for at least the asking price. In Riverdale, both semis and detached houses went for 102% of asking.

'What used to be inexpensive is now more expensive. You have to go further and further from the city core to get lower prices,' Mr. Meehan said.

He chalks it up to branding -- any place with a recognizable, positive identity tends to increase in value -- and also to the transformation of the Danforth into a destination dining and retail district.

'People love that neighbourhood,' said Mr. Meehan, who used to work on the strip and lives nearby in East York. 'Riverdale has increased in value just on the cachet of it being Riverdale.'

Mr. Meehan notes that the boundaries of Riverdale are changing, as are the boundaries of the Beaches. The two hot neighbourhoods, technically miles from each other, now almost meet around Coxwell Avenue.

He notes the same kind of thing is happening in Leaside and elsewhere. 'People are expanding the boundaries of the blue-chip neighbourhoods just to cash in on it.'

Yesterday, the Bank of Canada raised interest rates by another quarter point, to 3.25%, nearly a 21/2-year high. They are expected to continue rising in the new year.

"It appears that the palatable period of low interest rates is coming to an end," according to Invis, a major Canadian mortgage brokererage firm. "With at least two more rate hikes expected in 2006, it's enough to make many homeowners feel a little apprehensive."

Mr. Meehan said he expects the rate hikes will have little effect on real estate prices. 'The market isn't just interest-rate driven.'

He noted the market continues to blaze, despite many predictions of a cooling.

The real estate board expects Toronto home prices will have risen 7% by the time 2005 ends.

Meanwhile, the Montreal real estate board also reported strong sales of existing homes last month, while Statistics Canada reported an unexpectedly strong increase in home-building plans in October.