As summer comes to a close, September welcomes in the new school year which also means more traffic. Seems like us Torontonians are constantly battling traffic only to wrangle for parking once we reach our destinations.
When purchasing a home, whether to include parking in the search is a trade off my clients often face. This is how I calculate the cost of parking for my clients.
For condominiums, the prices are more transparent. Parking spots for pre-construction condos start at $50,000 and in prime locations can only be purchased with larger units.
For existing condos, we can derive the value by comparing similar units with and without parking. Depending on location, the inferred value of typical North York spots start from $35,000 with downtown spots closer to $50,000.
Parking spots in condos also sell on the open market although the buyer needs to already own a unit in the building. Since the beginning of 2018, there have been 15 condo parking spots sold through the MLS system. Prices ranged as low as $21,000 in the suburbs to $90,000 at the Shangri-La with the average being $39,550.
While these prices may seem expensive, it’s a better alternative than renting a spot in perpetuity or worse if there aren’t enough spots available to be rented. For those renting spots in their condo for $175-$200 per month, the present value of these payments comes out to over $100,000.
With freehold properties, it’s more difficult to isolate the value of parking spots because freehold properties can significantly differ in lot & house size, style and overall improvements despite being in the same neighbourhood. The following are my thoughts on a bottoms up approach to value downtown freehold parking:
Depending on whether a property owner already has access to parking or whether they are getting permit parking for convenience, street permit parking ranges from $18-$65 per month. The city charges you a lower rate, ie. $18/month if your property does not include on-site parking. If you do have parking on site but need additional spots, then the city will charge you the higher rate, ie, up to $65/month.
The present value of these payments works out to be $12,000 – $40,000. $12,000 is a small price to pay when compared to condo rental rates but depending on where you are, you may need to park a few blocks away from your home. The premium attributable to enjoy parking on your own property instead of playing bumper cars with your neighbours differs from person to person. As such, my contention is that a single parking spot is worth at least the $40,000 convenience parking permit fee. Coincidentally, this amount falls in line with the average condo MLS parking cost of $39,550.
For my clients that are looking to build a single garage in the back off the rear lane or mutual drive, some of my clients have had them built for approximately $25,000.
In summary, valuing condo parking spots are much more straight-forward and are mostly dependent on location. For freehold properties, the derived value for an uncovered parking spot should be worth at least $40,000; with single covered spots at least $65,000.
As for the results of Toronto’s August 2019 real estate market, the lower level of new listings compared to last year resulted in an overall increase in the freehold and condo market. If you’d like to know specifically how your area is doing, feel free to drop me a line.
3 things I’m noodling through:
- I recently read an article where a local food bank was down to only 2 baskets of food on their shelves. “When we’re sitting on a patio … it’s harder to remember that other people are struggling.” https://www.cbc.ca/news/canada/toronto/food-bank-summer-struggles-1.5264572The article included a call for donations. As someone who does not experience food insecurity, my immediate reaction was to go to the nearest supermarket to pick up food and drop off to a local food bank. I also came across another article which challenged me to think deeper on how I can best use my resources to help others. https://nationalpost.com/opinion/im-begging-you-stop-donating-canned-goods-to-food-banksWhile being generous with what we have is a value that most people would agree with, I would agree with this article has the best course of action is to donate money to organizations that help those who are struggling. The writer includes many good reasons to do so: the staff would know best what types of food their clients need, have someone who can procure larger quantities at better prices and need less resources dedicated to sorting out the good useable food from the bad.
- As the stars flock to the Toronto International Film Festival this week, I had the opportunity to hold my own film fest as a few friends indulged me in watching a double feature including my all-time favourite movie, Midnight Run. Spoiler alert – this movie was released in 1988 so if you haven’t seen it yet, you had over 30 years to do so. I’m a bit of an idealist and love how in the end, the principled protagonist gets rewarded for doing the hard and right thing even though he thought by doing so he would have been left with nothing.
- I opted not to purchase a hybrid version of my car when I leased it 3 years ago and was planning to buy it out at the end of my lease term. With the push to reduce energy and non-renewable fuel consumption, car manufacturers are making it economically sound to buy the hybrid or electric versions of the same ‘regular’ model. Currently the hybrid version of my car costs only $3,000 more than the regular gas one. I’m contemplating switching towards the hybrid one but it will mean another 4 years of lease payments.
September is typically a busy month for homeowners.
Kids go back to school. Work increases at many businesses as the fourth quarter looms. Major home renovation projects are in the midst of wrapping up, and smaller projects may be about to start!
If there’s anything I can do to help with questions, contractor referrals, advice, or information related to real estate, give me a call.
In fact, that’s the reason I stay in touch with you on a regular basis. I want to continually remind you that my services don’t end once I’ve helped you buy or sell a home. In the months and years in between transactions, I’m dedicated to helping you enjoy your home and understand your real estate options.