Which are the best neighbourhoods for buying a home in Canada?
I came across this interesting article on MoneySense who performed an analysis of Canada’s real estate market to find out which neighbourhoods are set to soar in value in Vancouver, Calgary, Edmonton, Toronto, and Montreal. Here is an edited version, but for the full-length article, please see http://www.moneysense.ca/property/buy/where-to-buy-now-2.
On one side, there are international economists — and their much publicized reports — declaring the market to be overvalued and due for a sudden, corrective crash. Then there are the local analysts who oscillate between doom-and-gloom predictions and the potential for a soft landing. Caught in the middle are prospective homeowners and real estate investors who are just trying to negotiate a good deal.
The first thing we looked for was value. Armed with detailed data from local real estate boards, we identified neighbourhoods where home prices are cheap when compared with adjacent areas and the city as a whole. Next we looked for momentum. By drilling down into one-year and three-year price appreciation statistics for various neighbourhoods, we were able to identify which areas of the city had the fastest rising home prices.
Our realtor panel, consisting of more than 35 experts helped us factor in the countless intangible factors that will impact these neighbourhoods over the next three years.
Vancouver
We all know how expensive real estate is in Greater Vancouver. But does it mean buying a home there is a bad investment? Not necessarily. At present, Vancouver’s unemployment, at 4.5%, is significantly better than the national average of 7%. While prices in the city have dipped, there are still neighbourhoods that are headed up.
Communities in New Westminster, Burnaby and Coquitlam all showed excellent long-term value, but the five neighbourhoods we feel will gain the most in the next few years are all inside the City of Vancouver. Best bets are Mount Pleasant (West and East), Fairview, Main and Fraser.
While the average price point for West Mount Pleasant (the area west of Ontario Street) was over $1.3 million, our realtors felt there was room for further increases. The west side of Mount Pleasant borders on Cambie Village and the SkyTrain’s Canada Line. It also has easy access to downtown, by transit, car or bike.
East Mount Pleasant, our number five neighbourhood, is also worth exploring. Houses just east of Ontario Street are typically 20% to 30% cheaper, with the average sale price in 2013 just over $800,000.
Those wanting to move closer to the beaches—but not pay Kitsilano or Point Grey prices—should check out Fairview. Located between Kitsilano and Mount Pleasant, Fairview’s average home price is 36% less than comparable homes directly to the west. This potential value and its proximity to downtown has meant an almost 6% appreciation in the last year alone.
Finally, consider Main — a residential area located a few blocks east and west of the popular Main Street strip. Like Mount Pleasant, homes on the east side sell for $300,000 to $400,000 less than their west-side counterparts, but both areas have great access to good schools, tons of independent shops and restaurants and Queen Elizabeth Park.
Calgary
The first on our list in Calgary is the Southwest (SW) community of Lakeview. Numerous biking and hiking trails are scattered throughout the 2.3 square kilometres of mostly single-family, detached homes. Despite everything this area has to offer, housing prices are 4% lower than the average home in the Southwest quadrant of the city, lending value to an already established neighbourhood.
The next neighbourhood on our list is Spruce Cliff. Established in 1950, Spruce Cliff is also located in the SW quadrant of Calgary. Unlike Lakeview, almost half of the dwellings in Spruce Cliff are condos or townhomes — testament to the amount of development and growth this area has experienced in the last decade.
Next on our list is Varsity Village — voted the best community to live in by local media in recent years. Located in the Northwest quadrant of the city, this pedestrian-friendly development was built 50 years ago. Varsity Village is close to the University of Calgary and Foothills Hospital, as well as the new Alberta Children’s Hospital.
Edmonton
While Edmonton is not exactly a flashy city, it’s enjoyed unprecedented growth in the past decade thanks to the resource industry and infrastructure projects, such as the building of a new ring road. According to our analysis, the best neighbourhoods to watch fall within the North Central and Northwest regions just outside the city’s downtown core. Topping the list is an area known as Zone 7, which includes the communities of Inglewood, Kensington, Westmount and North Glenora. On average, homes in these neighbourhoods were priced almost 8% cheaper than the rest of the city and in the last three years have appreciated by almost 13%.
Immediately to the east and closer to the downtown core is Zone 8. Known as Central Edmonton, the neighbourhoods with the most appeal include Prince Rupert and Queen Mary Park. The neighbourhoods are close to the Northern Alberta Institute of Technology, meaning many homes rent out basement apartments to students. It’s also close to the Royal Alexandra Hospital and Kingsway Mall, the second largest mall in Edmonton.
On paper the zone’s real estate prices dropped over the last three years, but this was due largely to a large number of newly built condos hitting the market and lowering average prices. While this may skew the numbers a bit, it’s also a great sign that the area is growing in popularity and value.
Toronto
Despite endless chatter about an overheated market, Toronto housing prices have continued to climb, with some homes attracting multiple bids and selling for $100,000 or more over list price.
While our top two Toronto neighbourhoods—Wychwood and the Junction Area—are no strangers to bidding wars, we still feel these areas offer great opportunities for near-future appreciation. Why? Despite Wychwood homes selling for almost 63% more than the average-priced Toronto home, these properties are still 19% cheaper than homes in neighbouring areas. That’s because Wychwood is nestled next to two of Toronto’s more expensive urban communities, Casa Loma and the Annex. Close proximity to wealthy neighbourhoods, access to transit and the downtown core, excellent green space, and a newly built community space (known as Wychwood Barns) all make this an under-appreciated area.
The Yonge-St. Clair neighbourhood is also seeing price momentum because of its proximity to wealthier neighbourhoods. Despite its steeper price tag—average homes cost just over $1.1 million — the area has realized a 30% price appreciation in the last year.
Two other neighbourhoods to consider are Englemount-Lawrence in the northwest, near the Allen expressway, and Moss Park, an area going through massive gentrification. Englemount-Lawrence is right beside the popular, and very expensive, Forest Hill neighbourhood. That means residents here can purchase a good-sized bungalow, on a fairly big lot, for as little as $600,000, as opposed to a Forest Hill semi for around $950,000. Based on our statistics, homes in the Englemount-Lawrence area were priced 40% lower than Forest Hill, on average, but with similar access to schools, shopping and transit.
For near-future appreciation Moss Park is the neighbourhood to buy. Every realtor we spoke to considered it an excellent area to invest, mainly because there’s been so much development, with more being planned. In the last year alone property values have appreciated by almost 12.5%, while the average price for homes in this area is still 27% less than the average-priced home in the City of Toronto.
Montreal
Montreal offers something for everyone—as long as you can find a job. While the national unemployment rate hovers at around 7%, Montreal’s unemployment rate sits at 8.2%. Still, the city saw a 4% rise in its population from 2011 to 2012 and announcements of inner-city rejuvenation — including the new McGill University Health Centre — are helping bolster property prices. Real estate is still cheap compared with other major Canadian cities—the average price of a home on Montreal Island is $481,386, and if you broaden the boundaries and look at the Greater Montreal Area, including the North and South Shores, the average home price is $324,595.
The best real estate opportunities right now are on the island itself. First on our list is the Rosemont/La Petite Patrie area, known locally as Little Italy. In the last three years, as the neighbourhood has become popular with buyers, prices have zoomed up 23%.
If the average property price of $468,000 is a bit daunting, consider our next top neighbourhood of Villeray/Saint Michel/Parc-Extension. The main draw is the neighbourhood’s affordability. Average property prices are more than $100,000 cheaper than neighbouring communities and the area is experiencing dramatic growth.
The third neighbourhood in our Montreal ranking was South-West (also known as Sud-Ouest). Homes in this area are 11% cheaper than the average Montreal Island home, but area prices have appreciated 40% in the last three years.
Two other neighbourhoods to consider are Verdun and LaSalle—both on the southern tip of the island. While Verdun is an older neighbourhood (originally settled by the Irish) it’s got a lot of potential. Despite a three-year appreciation of 22%, families may be leery of the area, given its high crime rate. Still, with its close proximity to the canal, downtown, the Métro (Montreal’s subway system) and Concordia University, it’s only a matter of time before the area experiences true gentrification.
Source: Romana King, MoneySense
