With snow already on the ground and subzero temperatures, it’s undeniable that the autumn has already switched to winter. One of the biggest real estate shifts this year was the introduction of laneway houses in Toronto which has an apt program name: Changing Lanes.
Given the high cost of housing and low vacancy rates, collecting rental income for a room in the house or secondary suite has been crucial for many home buyers. The laneway/coach house has been a much talked solution to increase housing supply as home owners can create a dwelling unit separate from the main house. Laneway housing has already been approved many years ago in Vancouver and Ottawa.
When compared to creating a secondary suite in the basement, laneway houses will be more expensive and likely have a longer payback period.
For example, for a 600 square foot basement with existing 6.5’ ceiling height, it would cost about $40,000 to create a basement apartment. In East York, a 1-bedroom basement apartment could rent for ~$1,200/month. If lowering the basement is required, this would add another $20,000-$40,000. A basement apartment with 7.5’-8’ ceiling height in East York could rent for $1,500/month. The resulting payback would range between 3-4 years.
For laneway housing, the following are some of the key criteria:
- Maximum height – 6 metres (20 feet)
- Maximum width – 8 metres (26 feet)
- Maximum length – 10 metres (33 feet)
Note that there are minimum setback and landscaping requirements such as distance to back of the main house and laneway.
In East York, the average lot width for houses with laneway access is closer to 18 feet wide and lot depths of 110 feet so the largest laneway house would be closer to ~900 square feet (18 feet wide x 25 feet long) covering 2 storeys.
Assuming that the main level would still be used for parking with the 2nd storey used for a studio apartment, the cost of building could look like
Construction Costs: $180,000
Servicing Costs: $50,000
The rent for an above ground studio with access to roof top deck could be approx. $2,000/month. If we remove $50,000 for the parking, the inferred cost of building a laneway studio is $200,000 resulting in a 8-9 year payback. While this is more capital intensive with a longer pay back, we haven’t taken into account the basement space now being available for use plus valuing the privacy of not hearing noise or smelling burnt bacon from a lower level tenant not to mention holding your own late night parties.
As for Toronto’s October real estate results, sales increased significantly for detached properties and prices increased for all types compared to October 2018. Feel free to let me know if you’d like more details in a particular neighbourhood.
3 things I’m noodling through:
- I enjoyed having friends over on Hallowe’en and we debated our favourite treats. I was a big fan of Tootsie Pops and had to defend the merits of chips taking up valuable space in the pillow case. We were unanimous that nobody enjoyed receiving apples and dispelled the myth regarding razor blades being inserted into them. What are some of your favourite Hallowe’en treats/memories growing up? Do you still dress up for Oct 31st? I’ve been going as a civilian for the past 30 years.
- Shen’s brother and 2 friends came in from Boston last weekend specifically to enjoy Toronto’s Chinese cuisine. We took them to Skyview Fusion for Peking Duck and dim sum, had a large seafood feast at Fishman’s Wharf, did Congee Queen for breakfast and ended up at DaiLo for a tasting menu before rushing them to Billy Bishop for their Sunday evening flight. What are your favourite hotspots to taking out-of-towners?
- At time of writing, today is Remembrance Day. A lot of what I learned about this day was in my primary school years. I remember reading and memorizing In Flanders Fields, standing in silence for a minute in the school gym for our Remembrance Day service. Although I remember the poppies, the trumpet solo and the poem vividly, I recently read up again on the history of this day. This day is a memorial day observed in Commonwealth member states to remember the members of their armed forces who have died in the line of duty. It became a tradition inaugurated by King George V in 1919 to recall the end of hostilities of First World War on that date in 1918. Hostilities formally ended “at the 11th hour of the 11th day of the 11th month” (Paris time), in accordance with the armistice signed by representatives of Germany and the Entente. This morning as I was watching on TV the faces of the veterans in the crowd, it made me wonder which friend or relative they were remembering who died way too young on the battlefield, so we could celebrate peace on our shores.
It seems like the year has flown by. I hope it has been a good one for you. As the end of 2019 approaches, you may be making plans for the coming year and thinking about what the new year will bring for you and your home.
You may, for example, be thinking of doing some renovations or redecorating. You may even be considering making a move in 2020, or at least exploring the possibility. No matter what you’re planning, it’s not too soon to take some initial steps.
If you’re considering looking for a new home in the spring, this is the ideal time to start doing some preliminary work – such as determining the market value of your current property, getting a prearranged mortgage, and identifying neighbourhoods you’d like to consider.
Spring can be a very busy time in the real estate industry, so the relative calm of November and December can be the perfect time to get some plans in place. I’m here to help if you need me.