Toronto Condos – Two Bedroom Units

When only two will do – Toronto Star

The two bedroom unit — this one is from West Harbour City — is growing in popularity.


Facts and figures» In 2002, one-bedroom units accounted for 48 per cent of GTA condo sales. In the first nine months of 2006, the percentage was just 43.
» Sales of traditional one-bedroom units have decreased, while sales of two-bedroom-and-den units have risen proportionately.
» In 2002, two-bedroom units accounted for 38 per cent of sales in the GTA. In the first nine months of 2006, sales of two-bedroom units claimed a 46-per-cent market share.
» Sales of bachelor units have declined in recent years, partly because fewer are being built, especially in the downtown core.
» In recent years, studios have averaged 450 square feet.
» Studio units now have an average starting price nearly on par with the starting price for one-bedrooms in 2002 – about $150,000 to $160,000. In 2002, the average starting price for a studio was approximately $125,000.
» In September, the average index value for a new highrise unit in the GTA was $350 per square foot. In 2002, the average index value hovered below $300 per square foot.
» One-bedroom and one-bedroom-with-den units started at $160,000 in 2002. Prices, depending on location, now start between $190,000 and $200,000.
» The size of one-bedroom units has changed little over the past four years, averaging about 650 to 700 square feet.
» In September, two-bedroom units (including ones with dens), started at $250,000 downtown. Similar condos started at $220,000 in 2002.
» The average size of a two-bedroom unit is between 850 and 900 square feet.BARRY LYON CONSULTANTS LTD. AND REALNET CANADA INC.

The reign of the one-bedroom unit appears to be over in the GTA, as buyers demand bigger suites and dens

January 13, 2007


Special to the Star
It may be a city filled with one-bedroom condominiums, but the two-bedroom unit is becoming king.

If you believe the experts, more and more Torontonians are moving up to bigger condos that include at least two bedrooms in the floor plan.

Both builders and consultants agree – there is an increased demand for two-bedroom and two-bedroom-and-den condominiums by singles and childless couples in the Greater Toronto Area. In fact, over the past four years, the number of new two-bedroom condos sold in the city increased by 8 per cent, while one-bedroom sales fell by 5 per cent.

“We are seeing the evolution of the marketplace,” says Barry Lyon, the owner of a real estate research and consulting firm.

“As the new condo market moves from small specialty (i.e. bachelor and one-bedroom) to mainstream housing, we are seeing a shift in consumer choices, right across the GTA.

“Builders build to sell and two bedroomers are in demand right now, so these types of units are obviously being constructed,” he says. “This trend is being made by a number of individual decisions taken by developers working from their own sales data. There isn’t a master plan; this is a business purely responding to market needs.”

Survey results supplied by N. Barry Lyon Consultants Ltd., show that the proportion of sales of two-bedroom units (including two-bedroom and two-bedroom-and-den) has risen over the past four years. In 2002, 5,990 new two-bedroom units were sold, accounting for 38 per cent of all sales. In just the first nine months of 2006, 6,383 two-bedroom units were sold, accounting for 46 per cent of the new condo market.

A breakdown of the two types of two-bedroom units shows the greatest growth coming in those that include dens.

It’s a diverse group of people buying the larger condos – empty nesters, childless working couples, one-bedroom condo owners moving up and new Canadian families. They’re all visiting the model suites.

“We have seen a shift in the demand toward larger condo units,” said Linda Mitchell, vice-president of sales and marketing for Monarch Development Corp., which has built more than 5,000 condos in the GTA. “We, of course, are responding to the change in the marketplace. It depends on where we are building in the city, but certainly in the ‘burbs, we are building more two-bedroom-and-den units than we were just five years ago.

“I would say we don’t track numbers that closely, but when we began, our buildings were 60 per cent one-bedrooms (and one-bedroom-and-den) and only about 40 per cent were two-bedrooms (including units with dens),” she says.

“Now we are getting closer to a 52-to-48 ratio. Where we have buildings that are attracting empty nesters (older couples getting out of the house market), like our Gothic Avenue project in High Park, the split is getting close to 50-50.”

The company is marketing condos in 11 projects throughout the GTA, all of which have one- and two-bedroom units.

The industry is well aware that Toronto is North America’s condominium capital. According to Lyon, what makes the city remarkable is that there are projects in every part of town and this diversity has fuelled the two-bedroom trend.

“There is no part of Toronto that doesn’t have a condo, except the islands. This is very unusual – you don’t see it anywhere else in North America,” Lyon says.

“As the city ages, people are looking for a way to stay in the community that they live in. It is not just first-time buyers any more. Empty nesters want to be close to their roots and people who have lived in a one-bedroom for a few years (and have made money on their investment) want to stay but need more room.”

In the 1990s, as house prices rose, there was a large move toward lower-cost high-density urban development. First-time buyers and investors, anxious to own something in the city, bought into the burgeoning condo market by snapping up 650- to 750-square-foot bachelor suites and one-bedroom condos even before they were built. A decade later, those first-time buyers have often outgrown their digs. They tend to have more possessions, more equity to work with and maybe even a career that requires a home office – all things that have helped fuel the move-up phenomenon.

But it doesn’t appear as if the market shift toward two-bedroom units has taken hold in the resale market, according to Wendy Craven of the Toronto Real Estate Board.

“We looked at sales numbers in the C01 district (downtown core) from June ’06 to date and compared them with the same time frame in `05,” Craven says.

“One-bedroom condo sales have gone up 10 per cent over last year, to 760 from 688. Two-bedroom condo sales have declined marginally, to 343 from 344 last year.”

But TREB president Dorothy Mason figures that the slightly smaller demand for two-bedroom units is an anomaly that will correct itself.

“Our sampling of data indicates the demand for two bedroom units is unchanged from the previous year,” Mason says. “This could be a reflection of various factors such as available inventory of this housing type.

“At the very least, it’s accurate to suggest that the demand for two bedroom condominiums is in line with the entire resale housing market, which remains strong and stable.”

In any given complex, bachelors, one-bedroom and two-bedroom condos usually have many of the same fixed costs such as appliances and sinks. But the smaller the unit, the more those costs are reflected in the price, making the two-bedroom a better buy.

“The biggest turning point (in the emergence of the two-bedroom condo) has been the market’s acceptance of an inside bedroom without a window,” Monarch’s Mitchell says.

“When you have an inside bedroom, we are bound legally to provide some natural lighting. What you are seeing are opaque sliders (doors) into the inside bedroom. It is no big deal, you are getting natural light and investors prefer the extra bedroom. They are able to get a higher rent for these units.”

The “wide-shallow split” is probably the most popular two-bedroom condo design in Toronto right now. This layout places the living room and dining area between the bedrooms, and all rooms have windows.

“Right now, we are selling the two-bedroom units two to one,” says Nestor Repetski, senior partner at Winick Realty Corp., which represents the West Harbour City project east of the Canadian National Exhibition grounds. “For every one-bedroom-and-den we sell, we move twice as many two-bedroom condos. Five years ago, we weren’t even building two-bedrooms; now our advertising slogan is `big corner suites.’

“About a year ago, we looked at what purchasers were saying in our sales centre and what was happening in general in the marketplace, and it became obvious that this is where the market is going,” Repetski says.

“It is more than just demographics … sociology plays a big role too. It says that young people are factoring a number of social issues into their buying decisions – the price of gas, the cost of automobiles, thinking green and, of course, lifestyle plays a huge role. too.”

“The two-bedroom-and-den trend hit Oakville sometime ago,” said Mark Cohen, vice-president of marketing and sales for Tribute Communities. “Five years ago we may not have built any, but at our new Courtyard Residences at Oak Park, they make up one-third of our suites. The units have been quickly absorbed by emptynesters and young buyers who just want more space. The singles are still going fast, attracting first-time buyer attention.”

While builders are making bigger living space available, they aren’t finding many young families moving in. Even as the square footage for two-bedroom-and-den units now rivals starter townhouses in the suburbs, there is a reluctance among Canadians to rear their children in a highrise.

But there are signs that might be starting to change. Downtown, young couples who have been living in condos sans offspring for a decade, are now having children.

While many make a white-picket fence decision and move outside the city, a few opt to raise baby in a loft or tower. Daycares have begun to appear around condominium sites and new schools are being planned near large developments.

It depends on your mindset, explained Veronika Belovich, director of sales and marketing with Crystal Blu, a soon-to-start 35-storey tower in Yorkville.

“Our project will have 138 units, 70 per cent of which will be two-bedroom suites. We are seeing interest from buyers with children. Most appear to be moving to Toronto from outside of Canada and don’t have any preconceived bias against raising children in a luxury building.”

“This concept that you don’t raise children on an upper floor will soon end,” Lyon says. “Toronto is a fertile ground for raising a family.

“As a nation, we say that we want to limit sprawl. We should be raising children in two-bedroom condos – it only makes sense.”

Yossi

Yossi Kaplan is a Toronto Real Estate Agent, Mortgage Agent and a Real Estate investor. Call Yossi with any question regarding investing in and selling your Toronto Real Estate.

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