We made money on the Toronto housing market. Now what?


One family sold their home in Toronto’s hot market only to move back. Here’s how they rebounded financially.

We made money on the Toronto housing market. Now what?

Photo by Jill Evans on Pexels

We had a plan. We considered the bank’s low interest rates, the rising real estate prices and record low inventory and thought it was the perfect time to cash in on the Toronto real estate market by moving out of the city. My husband and I were going to move from Ontario to Manitoba, selling our East York detached home and moving back to my hometown of Winnipeg, with our 15-year-old son in tow. We were aware Winnipeg home prices were also on the rise—but still nowhere near Toronto levels. And, since we had purchased our home in 2007, we were poised to make a substantial profit on the sale. This was our chance to be mortgage-free and able to actively save for retirement.

The house went up for sale in April 2021 and sold in early May for $1,075,000. After realtor fees, closing costs and other debts were paid, we walked away with about $688,000. Our plan was to buy a three- or four-bedroom home in Winnipeg, with a large yard and a pool. We were prepared to spend between $500,000 and $550,000 on a new home, leaving us with some money to spend on furniture and a new car and to invest the rest. Plus, with no mortgage, we were going to be able to put away a substantial amount of money for retirement every month. (Want to know if it makes sense to sell in a larger city and buy in a smaller one? Read this.)

House hunting in a new market: Expect the unexpected

At the end of May, I boarded the plane to Winnipeg to start hunting for our dream home in the Prairies. However, instead of snapping up a sprawling house with a pool like I’d envisioned, my search was a struggle. Turns out, the Winnipeg real estate market had more in common with Toronto’s market than I thought. Both markets were fraught with bully offers, bidding wars and low supply. I looked at as many houses as I could in the neighbourhoods of my choice, but they all had deal-breakers, like train tracks steps from the backyard, located on a busy street or a transit stop on the front lawn. The best of the worst? The house that had an entire fish store in the basement. Have you ever smelled a lot of fish in a confined space? If not, consider yourself lucky. 

Rethinking our original plan

That’s when I started to take our lifestyle into deeper consideration. My husband loves to walk everywhere and hates driving. Living in Winnipeg meant buying a second car, so he could get around. Our son can easily navigate the city on the TTC, but I envisioned a life of driving him everywhere in Winnipeg. Sure, once he got his license, he could drive himself, but that also meant giving him the keys to my car or helping finance one of his own. Working in the media, I was also better off in Toronto where I would have access to events and opportunities within the city. (Read more about the real costs of leaving the city.) Living in Winnipeg would mean frequent travel back and forth between the cities. Plus, my son, who is close to graduating high school, said he would want to move back to Toronto for his post-secondary education. He’s our only kid. Did I want to live a province away from him? 

After about a month of coming up empty-handed, I had an idea: What if we just stayed in Toronto? After all, we both work from home, so it’s not like moving to Winnipeg was written in stone. Staying in Toronto meant my son could stay in his school with his friends, we could stay close to our circle of friends, not need another car, and live in a city that had amenities and opportunities at our doorstep. There were definitely pros to staying in Toronto but now the real question was: Could we even make this new plan work? 

I mean, we just sold our house. And the house prices in Toronto were climbing, almost daily. I wondered if we were too late. Maybe we had priced ourselves out of the Toronto market. And, if the only house we could afford in the city was small and had the same issues as our last home—like no parking or storage—was there any point in staying? I’d be lying if my heart hadn’t broken at the thought that we had just made the biggest mistake of our lives.

But, there was only one way to find out: Trying to make it work. My husband quickly called our realtor to start searching for houses in Toronto. If we were going to make this happen, we wanted to make this pivot worthwhile. That meant it couldn’t be a lateral move—or worse, a step in the wrong direction, financially, or in terms of our living conditions. We’d now be trying to squeeze into the Toronto market, the very thing we were set to leave. 

So, we compiled a list of “asks”: Stay in our east-end neighbourhood, get a house with more square footage and legal parking for under $1.2 million. We knew it would be a challenge, which is why we enlisted Taylor Jones, a realtor who specializes in east-end real estate. For any buyers trying to navigate the real estate market, finding a realtor who specializes in your desired location is key—especially in a competitive market. 

“You want to deal with someone local who has many years of experience in both buying and selling real estate in the area,” says Jones. “More experience should give a buyer more confidence that a realtor has their best interests in mind and is willing to get them the best price possible.”

Making our pivot a reality

And our (local) realtor got us off to a good start: We came across a semi-detached home in the Monarch Park area that had been on the market for eight days, with a list price of $1,129,000. The house checked all our boxes: It was in a phenomenal area, steps away from Danforth Avenue, close to shops, cafes and the subway. It had a beautiful front porch that overlooked the tree-lined street and a garage in the back, accessible via the laneway.

But, being in Toronto, of course there were some drawbacks. It had dated fixtures and it needed cosmetic fixes to update it and bring it back to life. And, the market being what it is, the sellers received two offers on offer night, both of which they declined. 

We decided to offer $1,180,000, and they countered back with a figure of $1,235,000. Our bid was higher than the budget we originally set, so we decided to walk away and continue our search. 

Buying a home can be an emotional transaction, but it’s important to hold your ground when it comes to budget. After all, if you buy above your means, will you even enjoy the house if you get it? 

While this house was located in a great neighbourhood, due to the upgrades required, the sellers were overpricing the home. Jones, who is well-versed in the market value of the neighbourhood, advised us to hold off. He was watching the market daily to ensure no one else was bidding on the property and advised us to be patient. 

About three weeks later, after losing out on other bids, we circled back to the house, which was still sitting on the market—for the now raised price of $1,239,000. We decided to give it another shot, but this time, we went in even lower. After all, the house had now been on the market for over a month and through Jones’ communication with the sellers’ representative, we knew the homeowners were motivated to sell. 

Even if a house sits on the market for a long(ish) time—like this one, by Toronto real estate standards—Jones says it can actually be a good thing for buyers looking to get a house for less than asking. In our case, he was watching the market daily to ensure no one else was bidding on the home. He also kept in touch with the listing agent every day to ensure we did not miss a beat. 

“Patience can be key sometimes when a home has an unsuccessful offer night,” says Jones, who says sometimes waiting it out can be a great way to find some true gems in great areas. “People get caught up in offer-night scenarios and the emotions involved with them. A home sitting on the market longer might be due to it being priced too high, or updates that are needed, which could be a great buying opportunity. Some homes slip through the cracks and only require smaller updates—like paint—to improve the look and value. Not all homes are magazine-worthy, and these are the ones to target when looking for a deal. I’m talking [about] sweat equity.”

We bid $1,150,000 and, after some negotiations, we signed off on the house at $1,175,000—$5,000 less than our original first bid. 

The end result: A new home with income potential

While, today, we are not mortgage-free, I still feel buying this house was the best long-term option to set us up for retirement. Why? Not only is the average price of a semi-detached home in the area going for more than $1.4 million, but the house is primed for building a laneway house, which could be a great way to build passive income. 

If we applied for a permit to build a two-storey laneway house—with the bottom level being for parking and the upper level being a two-bedroom, one-bathroom unit—we could rent the upper unit for $2,500 to $3,000 a month, depending on finishes and demand at the time. 

If we developed two separate units—and forgo parking altogether—we could have a two-unit laneway house or a larger one-unit house with two-storeys. The entire two-storey home would rent similarly to a full house for about $4,250 to $5,000 a month. 

The basement also has a separate entrance and it could easily be converted into an apartment to rent, for approximately $1,300 a month.

While those plans are well in the future, we’re happy today we decided to stay in Toronto. My son loves being within walking distance of school and nearby friends, and we love being able to quickly walk up to the Danforth for coffee, dinner and shopping. 

While we didn’t get our sprawling backyard or pool, we love being so close to Monarch Park where we go on daily walks with our dog, Stanley. Afterwards, we relax on our porch and gaze at the changing leaf colours on the trees along the street. At night, we sleep soundly knowing we made a sound financial decision.

“Houses in Toronto are not going to get cheaper,” says Jones. “Toronto has a severe housing shortage. Therefore, your home’s value—and equity—will climb here much faster in Toronto, compared to Winnipeg.” Jones explains that equity can be used as a line of credit to pursue other investment opportunities. “There’s financial flexibility here that will allow you to build wealth for your family and get you better set to reach your retirement goals.” 

Looks like we have a new plan.