We always talk about investing along the subway line, but there are actually 75 subway stations in Toronto, so which one should you pick?
75 is a big number, but in reality, most condo investors would only focus on 15 stations.
Why those 15?
Let me give you 3 requirements and you will clearly see why.
#1 The station must be on Line 1. That’s the yellow line that runs directly through the downtown core in the U, so you can get to downtown without changing platforms.
#2 The condo must be within a 10 minute walk to the subway station.
#3 The condo must be less than 5 years old.
I’m setting this age requirement because the majority of investors like to invest in newer condos and this would give us a more relative price comparison between resale and pre-construction condos.
Let’s start with resale condos.
We’re going to look at the sold prices of 1 bedroom units, around 500 square feet, with no parking spots. This will give you an idea of the entry level price around different subway stations.
We will be using sold prices within the first 3 months of 2021.
Now there are quite some price jumps even from January to March and of course things like exposure, layout would make a difference in the price.
Keep in mind that the focus here is not on the specific prices.
My goal is to give you a general idea on the approximate entry price points at different stations so you have the knowledge to make a judgement call for your investment.
Let’s start at the Finch station.
Remember our 3 requirements?
Yellow line, within 10 minute walk and less than 5 years old.
There are lots of condos around the Finch station but none actually fits all 3 requirements.
That really tells us we’re running out of land in the area.
So the more recent developments have been focused on the 2 stations south of Finch, the North York Centre and the Sheppard-Yonge stations.
The 2 stations are actually just 10 minute walk from each other and so the 1 bedroom prices around them are similar, both at the $580,000’s range.
The next station that fits all 3 requirements is Eglinton in midtown.
Lots of new condo developments in the area and the entry level 1 bedroom price is also in the $580,000’s range, similar to North York.
Nothing at the next 4 stations.
Then we’re already downtown at Yonge and Bloor.
Here’s the U that goes through core downtown.
Let’s start with the most expensive ones.
There are 5 stations where you need at least $700,000 to get a 1 bedroom unit.
Yonge & Bloor. No surprise, as that’s right next to the most expensive Yorkville area.
A 1 bedroom on a high floor at the 1 Bloor condo recently sold for $750,000.
The next station is Union Station.
A 1 bedroom unit on a high floor with no lake view at the Harbour Plaza recently sold for $743,000.
Let’s go onto the other side of the U, along the University Avenue.
St. Andrew station by the entertainment district.
Taking the 2 year old 87 Peter St condo as an example, a recently sold 1 bedroom was at $728,000.
There are many different buildings in the entertainment district and prices will vary but the newer buildings will be around the $700,000 ball park.
St. Patrick station, right at the heart of the University Ave with all the hospitals, $739,900 at 488 University.
Museum station. That’s one of the stations closest to the University of Toronto and still has new buildings around it.
One bedroom unit at the U condo on Bay street got sold at $700,800.
How about the $650,000 to $700,000 range?
Osgoode station. That’s an area in between the heart of the University Ave and the entertainment district.
Just a little bit away from the heart of the actions, so the price is also a little bit lower, at around $660,000.
Going back to Yonge street, Wellesley station, at around $650,000.
One station south to College, just under $700,000.
Then we have Massey Tower at Queen. $682,000.
You can see that it’s also just a few minutes walk to the Dundas station.
If you go along Dundas for about 7 minutes, you’ll hit the Dundas & Jarvis intersection.
There are 3 big condo towers there now.
They are very popular nowadays because you can still get a 1 bedroom just under $600,000 and yet you can walk to Yonge & Dundas within 10 minutes.
King station is at the heart of the financial district.
Queen’s Park and St. George are stations on the campus of the University of Toronto.
Generally speaking, you would need a budget between $600,000 to $700,000 to get a 1 bedroom unit along the subway line in downtown.
Let’s get out of downtown. Our next station is Yorkdale.
The other stations in between are older neighbourhoods.
The Yorkdale neighbourhood is also under revitalization and a 1 bedroom unit is around $460,000.
Wilson station is similar, at around $480,000.
Then we go through York University and arrive at the terminal station at the Vaughan Metropolitan Centre.
A 1 bedroom unit at Transit City 1 recently got sold for $492,100.
You see, Vaughan, Wilson and Yorkdale are the only stations where you can still get a less than 5 years old 1 bedroom unit below $500,000.
I would pick Vaughan over the other 2 because it’s going to be a brand new downtown built from scratch with today’s technology, so the neighborhood amenities will simply be unbeatable.
And that means lots of growth potential.
If you take a look at the Finch and Vaughan stations, they are very similar, one on each end of the subway line.
You go straight from Finch to Union in 30 mins and you can also go straight from Vaughan to Union in 40 mins.
But the Finch and Sheppard area will cost you $100,000 more than Vaughan.
You see, Vaughan is equipped with everything to grow to the Sheppard level.
In fact, I would say that Vaughan is going to surpass Sheppard in the future because of the master plan development, everything is going to be new and modern.
Speaking of new developments, let’s talk about pre-construction prices.
Here’s a simple rule of thumb you can use to estimate the pre-construction prices.
You take the resale price in the neighborhood and you add 10 to 15% to it, that’s the pre-construction price you should expect.
For example, 1 bedroom resale at Vaughan is around $490,000. You would then expect a 1 bedroom pre-construction to be around $550,000.
So why is pre-construction more expensive than resale?
You’re buying a product that’s going to take 4 to 5 years to build.
Do you think labour costs, material costs and government charges are only going to increase 10 to 15% in the next 4 to 5 years?
Probably a lot more than that, right? Because we are already seeing a 20% price jump on a lot of things compared to their pre-pandemic prices.
You see, it’s actually a good deal to buy pre-construction now because you’re only paying 10 to 15% more for a product 4 to 5 years down the road.
And you’re not even paying full price now, you’re only paying 20% of the price.
This is the exact reason why pre-construction condo is such a popular investment nowadays.
And this is also the exact reason why you need to pick the developer carefully.
Let’s suppose the cost of glass suddenly increased 30% 12 months down the road.
An experienced developer has connections with the trades and would have locked in the price right up front so they wouldn’t be affected by the price increase.
Even if there are unforeseeable price increases, they would still continue to build because they cannot destroy their reputation.
An inexperienced developer, on the other hand, would unlikely be able to lock in the material costs up front and a 30% cost increase can totally kill them.
Even if they can survive, but the profit margin is not good, they might just cancel the project since they don’t care about their reputation.
If you have been following me, you know that I’m very picky about developers and I strictly only recommend projects from very reputable developers.
There is a value buy on the market right now at the Vaughan subway.
It’s developed by Menkes.
Menkes has 65 years of experience and many of those residential and commercial towers at Yonge & Finch and Yonge & Sheppard were actually built by Menkes.
If you’re looking for a value buy, I have some great investment units for you. You can click the link below to schedule a call with me.