Boomers or Bust: Part 2 - Building a City
It is no secret that the real estate market in Toronto is thriving. The average price of detached homes surpassed $1 Million this past year, and developers and investors are capitalizing. Investors in particular are keen to make large returns, maximizing their equity. Part of this big boom (no pun intended) is caused by the inevitable mass change of ownership happening as a result of boomers opting to downsize living spaces as they move towards retirement. And with that, poof! A new generation of homeowners is emerging.
Though properties are changing hands, the values and lessons from the houses in the city remain constant – embedded in each home is diversity and care, two bastions that Toronto was built upon. Investors must remember the homes on the market are the same ones that were built to cater to what the boomers valued. Many investors can look back fondly and reminisce about the splendors of childhood, and the nostalgia emanating from the homes that their families lived in. The same warm feeling is the also happens to create value for prospective buyers.
Often, the first thing that people remember is where they grew up. Although this may sound like broken record (for people who still enjoy records), the first thing that must be addressed is the notion of location. As the old saying goes, “location, location, location”. This saying may sound played out, but it acts as an important reminder to investors and buyers alike. Buyers often invest in prestigious neighbourhoods, but often fail to respect each neighbourhood’s history and diversity – it is important to pay respect to the past. We’re not necessarily talking about building condominiums in suburban neighbourhoods, just don’t overdo things – respect the history of the area to maximize value. According to a study by the Globe and Mail, budgets are often wasted by overdoing projects in ways that do not respect the history and diversity of areas. The result is diminished returns on investment. Be conscientious of your surroundings when looking at potential means of profit.
The next thing to value is the special feeling of being at home. Homes are the settings for countless memories, and investors should pay attention to this by focusing on the details. According to the Journal of Marketing, houses in which investors splurged on assets that depreciate slowly had greater rapport in viewings. This actually makes a lot of sense – many people can remember their family homes down to materials and fixtures. A good place to start is with natural elements such as stone and woods. Many homes from the boomer’s era utilized these materials or materials that closely emulated them. Though initially expensive, natural elements retain their value much better than high-tech assets, and in terms of value are equally as important as features such stainless appliances, or heated. Natural elements are great starting points to invest in, as they create the best impressions and patina well over time. These assets are particularly valuable because they are appreciated at both a conscious and subconscious level. In addition their ability to age gracefully is timeless and adds lasting value.
The boomers taught valuable lessons, but in the case of real estate, it is particularly important to understand the values that they taught. The boomers valued quality and craftsmanship in their homes, as well as respect for diversity and culture. Investors should keep these values alive when working with assets that will trigger the same feelings into the next generation of homeowners and residents. In the grand scheme of things, not much has changed. The boomers played a pivotal part in building the city, and the newer generations should take note.
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