Scott Reiart

My name is Scott Reiart and I am a realtor with the Real Estate Brothers at Keller Williams Advantage in Leslieville. I grew up in the Beaches in a home that has been in my family for over 90 years, and I recently moved to Birchcliff just a stone’s throw from the Lake when we found a project and piece of land that we couldn’t resist. As for the next move… well, better to ask the wife! My passions are my family (my wife Emily and I have 2 kids and counting), sports (beer league hockey and softball and fantasy NFL football), cooking (my meat smoker is my third child), my work (I have had real estate investments since my early 20’s) and writing. Read More ..

Thoughts On The Fair Housing Plan

Thoughts On The Fair Housing Plan

Overheard recently at Starbucks.

Exasperated Buyer (loser of 8 bidding wars): I’ve had it. My wife is 7 months pregnant and I am sick of spending every Saturday with you. I want to bid $1.8 on the semi on Prust Ave.

Well Meaning (but increasingly desperate) Agent: You mean the one listed at $1.2, with the leaky basement and knob and tube??

Exasperated Buyer (loser of 8 bidding wars): Yep, that’s the one.

Well Meaning (but increasingly desperate) Agent: Ok. But you know, there were some recent changes to the industry that I should probably tell you about.

Exasperated Buyer (loser of 8 bidding wars): Oh yeah, like what?

Well Meaning (but increasingly desperate) Agent: Well, to name a few…

There is now a 15% Foreign Buyer Tax and they are cracking down on “speculative flippers”.

The have expanded rent control for all buildings, including post 1991, and there are new initiatives to stimulate the construction of rental buildings.

And best of all, they are going to take a hard look at “realtor practices”, which will involve the tarring and feathering of douchebag agents that continue to list houses at $699k when they know they will sell for over a million.

Isn’t this great?

Exasperated Buyer (loser of 8 bidding wars): Dude, aren’t you listening to me? I don’t give a rat’s ass about foreign buyers looking to jack up rents. I want to bid $1.8 on the semi on Prust Ave listed at $1.2.

Well Meaning (but increasingly desperate) Agent: Great, let’s do it!

And the market will bravely march forward unchanged. Have fun house hunters.

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The Trump Effect

The Trump Effect

Well, America actually did it. They did it. My beloved America went and left the biggest turd in the toilet bowl you could ever imagine. Or in the words of Michael Moore “the biggest f%&k you in the history of America”. Probably the history of mankind. And now I have to stare at that god awful hairdo for another 4 years.

I will not wade into the politics at all in this little entry, but suffice to say as the father of a daughter (and as somebody who believes in equality in general) you can gather what side I am on. I can find Trump moderately amusing as a buffoon in a boardroom firing people, but this is next level.

No, the matter at hand is the Trump effect and real estate. The question I have been asked again and again over the past couple of days is “how will this affect our real estate market?” Some people are genuinely concerned (frightened even) on a macro level about the effect he will have on the world as a whole, and on a micro level about the effect he will have on our real estate market. One past client called me and is convinced Trump is going to drag the entire world into the shitter, and that the ripple effect is that the Toronto real estate market will flush right down with him.

So could this possibly happen?? I really don’t believe it could, and I think we all just need to take a deep breath and relax a bit. Brew up a nice mug of hot cocoa and listen to some Anne Murray. Happier times.

Some industry people actually think Trump’s election will have a positive effect on our market, for 2 main reasons. The first is that there will be an influx of our desolate neighbours to the South looking to buy in Toronto, and the second is that interest rates will stay low as a hedge to offset the chaos a Trump presidency is expected to create. I am skeptical that either of those things will help. First off I don’t believe there will be a mass exodus out of America (again, relax people). And secondly low interest rates are one of the main culprits that keep pushing prices up an unattainable rate.

So what do I believe will happen? Honestly I don’t know, and that’s what is kind of scary about this whole thing. Trump has been so unpredictable up until now, crazy even, to the point that nobody can really say they have a firm grip on what he will (or won’t do). Even his closest advisors don’t know what he is going to do. He probably doesn’t even know what he will do.

So while I don’t think the real estate market will crash, as I stated above, I do think there is the chance it could behave erratically in the coming year. It could very well soften if buyers become reluctant to increase their financial exposure in the context of a muddled America and world economy. Buyers may decide they no longer have the stomach to pay $900k for a smallish 3 bed semi with a crappy basement and a narrow mutual drive on Milverton. Or things could remain unchanged, and prices keep shooting up as bullishly as ever. The point is that nobody truly knows as I write this just a couple of months before Trump is elected. Call it the Trump Effect, and Wednesdays are now officially Trump day (sorry hump day). Thanks again America.

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Holy Bungalow!!

Holy Bungalow!!

The meteoric increase in real estate prices across the GTA has certainly been well documented, in some cases ad nauseam with certain media outlets. Being in the business, it seems every week I have some variation on the same conversation, usually “Holy crap, did you see what 123 Main St. sold for last night? Those people must be nuts!!” Every night new sale records are set, with no end in sight. The poor buyers have the deck stacked against them like never before.

In this environment, I would argue that no house is more coveted than the humble East York bungalow. These bungalows are hot, white hot. Think Margot Robbie hot in the Wolf Of Wall Street, and you get the idea.

 Take Lankin Ave in East York as our test street. Our team listed a standard issue bungalow for $639k in April of this year, and we expected it to sell for anywhere from $750k to $775k. Offer night came and with a flood of offers, 12 in total. When the dust settled the winning bid came in at $861k, or approximately $100k more than we expected. We were shocked and our lovely seller was even more shocked. A new high bar was set for the street, for about 6 minutes. August 30th saw a new record set, and this time the number was $999,000!!! That’s an increase of $138,000 in about 4 months, and we now officially live in looney land.
Lets look at some sales of bungalows on the street since 2014.
Bungalow A – sold for $676k in December of 2014.
Bungalow B – sold for $747k in June of 2015.
Bungalow C – sold for $861k in April of 2016.
Bungalow D – sold for $999k in August of 2016.
 So who is buying Bungalow D at this kind of price? It’s certainly not the flippers anymore. Interestingly Bungalow A was flipped by being “topped up” with a second storey, and re-sold for $1,246,000 in July of 2016. This sale also happens to represent the high sale on Lankin Ave for this year. But that was 2014 (for the purchase) and this is now, and these flips just don’t happen anymore. There simply isn’t any margin for profit, no “spread” to make money.
Lets look at Bungalow D again in the context of a potential flip.
1) Purchase price of $999k
2) Renovation / permits / soft costs (realtor fees, land transfer) of $400k
Total investment of $1,400,000. Most flippers insist on a profit of $250k in this scenario, meaning it needs to sell for $1,650,000. The market is blazing, for sure, but not $1,650,000 blazing. Keep in mind the high sale for 2016 is $1,246,000 as mentioned above. A flipper making money is a bigger longshot than the pimple faced geek scoring with the prom queen.
Clearly, then, the bungalows are being snapped up by end users. End users who don’t mind overpaying and being over exposed. The real shame in all of this is that the buyers for whom bungalows make the most sense are priced out of the market. That would be first time buyers (who can`t afford an $800k mortgage) that want a 2 bedroom home they can grow into and expand over time, and the aging baby boomers who are starting to feel overwhelmed by climbing stairs and hate the idea of living in a condo. I feel bad for these buyers in this market. In fact I feel bad for all buyers.
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Gimme Some More, Gimme Some More

Gimme Some More, Gimme Some More

It seems appropriate to kick this blog off with a tip to Busta Rhymes and his pulse pounding hit “Gimme Some More”. Between this song and his meaty supporting role in “Finding Forrester” (who hasn’t pined to see Busta and Sean Connery in the same movie), Busta was on top of the world. But just as quickly as he rose he soon fell, flying too close to the sun with his blingy wings.

Now for the matter at hand. As we all know mortgage rates are at historically low levels, and this has been one of the principal factors that has driven up prices and created such intense competition in the purchasing process. There are MORE buyers than ever, and FEWER houses for sale than ever. The math becomes simple in this scenario, but this is not the point I want to cover in this blog. Instead I want to offer some practical advice.

Sometimes buyers will come up with their purchasing budget before they ever visit a bank or see a broker. They will do this crunching monthly payment numbers (there are scores of websites now where you can do this) and figuring out what is comfortable. For this example let’s just say they determine that $800,000 is their “comfort” number. They will then go to their bank and apply for a mortgage that will facilitate a purchase up to $800,000, and not a penny more. Sounds rational and safe, right? But they are actually making a mistake that could cost them their dream home.

I always tell my buyers to apply for as much money as the bank will give them. Go for that “max” approval. In most cases the banks will give people higher mortgage amounts than they ever imagined, and that’s ok. It doesn’t mean a buyer has to borrow more than they want, or spend more than they want. But they should always know their “push” number, and ensure they can swing the payments if push comes to shove (which is unfortunately common in our current market).

Let’s go back to the buyers that applied for $800,000 and not a penny more. They start shopping and find the perfect house. All is good, until they realize on Sunday night that they won’t be able to buy the house unless they can offer $850,000. Offers are Monday afternoon, and anything conditional on financing won’t be considered. They don’t have enough time to go back to their back to arrange financing for $850,000, and they miss out on the house. The kicker here is that they could have afforded the house, and if only they initially applied for a higher mortgage amount they would have been armed with that confidence.

Just like the morning after a suicide chicken wing binge this is a terrible feeling, and one I hope my buyers never encounter.

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July 2016 Market Report – WTF???

July 2016 Market Report – WTF???

When speaking with buyers, particularly first time buyers with very fixed budgets, I am often asked if they should wait to make a purchase. Again and again I will hear statements like, “this market is overheated”, or “this can’t last forever” or (best of all) “prices HAVE to go down”. I wish this was true, for all the bargain seekers, but all evidence points to the contrary.

With interest rates holding steady until 2017 at minimum (and likely longer), and more active buyers than ever in Toronto, prices will continue to shoot up like Mercury on a hot day. The sales data for the month of July was just released, and it tells a familiar (and troubling) tale. According to the published sales data from TREB (Toronto Real Estate Board), the average selling price as a whole in Toronto was $709,825. This represents a whopping increase of 16.6% from July of 2015. You certainly don’t need an MBA to see where this is going.

The Numbers

What this means is that the potential buyer “waiting out” the market is really just throwing away money each month (and day) they delay. As the numbers above illustrate, the house that cost $608,875 in July of 2015 shot up to $709,825 in July of 2016. That’s a freaking spike in value of $100,000! So right off the hop the “waiting” buyer missed out an increase in equity of $100,000. I dare you to show me any other investment that provides that type of return, or rather show me one that doesn’t involve moving truckloads of drugs across borders.

Worse yet, assume this same buyer is paying a relatively modest $1200 per month in rent. Add this up over a year and you have (or rather don’t have) $14,400 – a disheartening amount of money to pay towards somebody else’s mortgage. Add this $14,400 to the aforementioned $100,000 and that year of sitting on the sidelines ultimately ends up costing $114,400. You could buy a lot of tequila and fish tacos with that chunk of change.

 So if you have the means and desire, get in the game and make a purchase! In the Toronto real estate market good things don’t come to those who wait.

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The Tale Of 2 Offer Nights

The Tale Of 2 Offer Nights

I’m not going to sugar coat things in this Spring market of 2016. For buyers it is certainly the toughest market that I personally have seen, and I am sure many other agents would say the same thing. But even in this insanely hot market a buyer can sometimes catch a (relative) break, and there are still times when you just never know…

Recently I found myself in bidding wars on consecutive nights with two different buyers. The first property was a renovated detached house in the Beaches on Waverley Rd with a very nice yard. It was listed for $1,399,000, which wasn’t absurdly low, and I figured it would attract 4 to 5 offers (which counts as a slow night these days). My buyers had a (seemingly) strong offer, and I felt a real chance. But then out of nowhere came 12 offers, and we ended up losing by a margin that can be counted in hundreds of thousands!

The property on night two was a character detached on Woodfield, south of Queen St. The location was prime, backing on a park, and it had legit 2 car lane parking and a still spacious backyard. The list price was $999,000, and I had a feeling of dread that day as I expected another 12 offer debacle. However on this day luck was shining upon us. When I texted the agent for the final offer count I was shocked (and thrilled) to find out we were one of only four offers. 90 minutes later my buyers had the winning bid of $1,200,000 – a true bargain buy if there ever was one.

The moral of the story is stay in the game, and eventually things will go your way. Sometimes we see “buyer fatigue”, when people expect a property to go crazy and they decide to sit it out. And sometimes the potential winning bidder breaks his leg on his way to sign the offer. You just never know.

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The “Pocket” Listing

The “Pocket” Listing

In this blog I am going to talk about pocket listings, and how they are a real estate occurrence that can be mutually beneficial to both buyers and sellers, but particularly buyers (as we will see later).

A “pocket” listing, in the simplest layman terms, is when we have a client that wants to sell but DOES NOT want to list their house on MLS. Now, at this point it would be totally reasonable (and expected) to ask why the hell somebody wouldn’t want to list their house on MLS, and go to the open market in the hottest real estate market ever. All I can say in response is that it happens, and sellers have their reasons:

  • Some people might be hoarders and can’t bear the thought of disposing of all of their old Playboys from the 70’s
  • Some people have kids and they don’t want to disturb their day to day routine with prospective buyers coming through the house at all hours of the day.
  • And some people simply have a sale number in their mind, and they are happy to achieve that without taking on the hassle and hard work that inherently comes with getting a house ready for market.

A recent pocket listing I had is an extremely informative real life example, and it illustrates a significant swing in value that would have greatly benefitted the eventual buyer.

Whenever I start working with new buyers I always ask them to provide me with a list of their “dream” streets. This is mandatory, because I then either knock on every door or call each address on the streets in an attempt to find somebody that is willing to sell off MLS or exclusively with our team. The advantage to a buyer in this approach is obvious, as it allows them to avoid getting into a bidding war and they can negotiate one on one (presumably more pleasant) with the seller.

Last Fall I had buyers that narrowly lost in a bidding war (less than $3k) on a 3 bedroom semi in the West end on the subway line. Coming so close really stung for them – the disappointment was palpable and I can still remember the extended pause on the phone when I told them what the house sold for. Rather than cry in our beer I of course went back to the area where we lost and knocked on every door to tell our story. After about 5 days of doing this I finally hit paydirt.

On a bitterly cold Thursday afternoon I knocked on Frank’s door, and eventually he answered (step 1 in door knocking success). I told him why I was there, and he was kind enough to invite me in out of the cold. The first thing that struck me was how similar his house was to the one that sold in the Fall, albeit somewhat cluttered and in need of a paint job (no big deal). The second thing that struck me was when he told me he would sell his house today for the right number. So, (drumroll for effect) what was that number?

A lot of times when pocket sellers tell you their number it is completely ludicrous, and the listing stays in your pocket for good reason. They want $1 million when the house is barely worth $600k. But in this instance Frank was totally realistic, in fact he was low. He told me he simply wanted to “clear” $700k, which would put the sale price at $739,550 when you factor in realtor fees and HST. I liked Frank, and I told him he could get more. Frank thought for a minute and told me that was fine and dandy, but at the end of the day that was what he wanted and if he could get that without the bother of going to MLS he would be happy. I shook his hand and quickly pitched it to my buyers.

Unfortunately for my buyers, their life situation had changed dramatically and their search was now on hold indefinitely. They would have to let this one pass. I pitched it to other buyers I had, and ultimately they all passed as well. Too bad but all part of the game. I went and saw Frank again in person, and told him that at this point in time I didn’t have the right buyer. Frank thanked me for my efforts and told me to keep in touch. As Frank said, “you never know…”

A couple of months later Frank came back into my life. He had been keeping his eye on the unbelievable sale prices, and he had now softened his stance about going to MLS. In fact he now wanted to go to MLS, and he wanted our full service package! So a few weeks later (and with a bit of de-cluttering, staging and painting) we went to MLS with a list price of $699k. A week later the house attracted multiple bids and sold for $826k, or $127k over the list price. Or to think about this another way (buyers pay attention), the same house that could have been purchased for $739,550 two months earlier ultimately ended up costing $826k!!

If you do the math this represents a swing in value of $86,450, or about a year’s worth of salary for most folks. This sale certainly demonstrates the fluidity of the real estate market, without a doubt. A month or two is a lifetime. But for buyers, more than anything, it shows the value of tenacity and hard work from their realtor, and the need to seize an opportunity and run with it. This market demands nothing less, unless you feel like paying more…

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Stop The Insanity

Stop The Insanity

It seems like the topic of bully offers just keeps coming up in this blog, and believe me when I say I am sick of writing about it, much like I’m sure Tom Petty is sick to death of playing “Free Fallin” every night to a crowd of paunchy middle-aged sad sacks. But the reality is that it has become sadly inevitable, so here we go.

This blog is (as usual) being written with mixed feelings. On the one hand I am thrilled for today’s sellers, as they are routinely netting more money than they ever believed possible. But on the other hand I am always mindful of the buyer side of the equation, and in this instance the “winning” bidder paid a huge amount of money and lobbed a big, juicy spitball in the eye of all future buyers in the area.

The property in question was a 3 bedroom semi located in the West end of the city reasonably close to the subway line. I had showed the house to a prospective buyer and they were interested, but we feared it would sell beyond our means (we were certainly proven right). The house was undeniably nice and smartly renovated and ideal for a family. It was a very good house, and we expected it to perform well. But man did we NOT expect what unfolded after only 2 days on market.

The house was listed at $599k with an offer holdback – par for the course for the product and the area. With the right kind of week we thought it would approach $700k and that “felt” right. It came out on Monday, and by Tuesday all hell was freaking breaking loose (again). The first bully offer came in on Tuesday afternoon but wasn’t accepted. I was told it was a very good offer but not quite good enough to foresake the offer date in the hottest real estate market imaginable. Fair enough.

The next morning another bully offer came in from a different agent, and at this point the offer date disappeared faster than a lush who mistakenly stumbles into a Church group. When the price was finally posted I couldn’t believe it…$800k!!! That’s right, 800 freaking k. To put this in perspective the previous street record sale was $725k, and that was for a fully renovated DETACHED with front pad parking. Clearly this sale price was incredibly high, and my buyer was a country mile away on this one.

I never like to say somebody overpaid, because in real estate (like art) a house is ultimately worth what somebody will pay. But in this case, I can’t help but feel the other buyers were overly aggressive and put extra money on the table. You might say it was somewhat akin to walking into Subway and voluntarily paying $10 for a $7 footlong cold cut sub. My only sound reasoning is that the house ticked off every single box they ever had on their wish list, and they plan to live there for the next 30 years. Or maybe they had lost 9 times in competition and were simply overwhelmed by the agony of the process. In any event good luck with the appraisal.

The Sold Over Asking rider has become a staple in this market. I think we now need a new one, something to the effect of: Sold Way The F@#k Over Asking, To A Scorned Yahoo Buyer. It’s not a bad idea really, because I have a feeling there will be need for it again in the very near future.

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The Upper Beach Blow Up Part 1

The Upper Beach Blow Up Part 1

The Upper Beach just blew the f%*k up. There is no other way to put it, no more eloquent words. It blew up real good, like the American Embassy during the fall of Saigon or the Hindenburg over the sky of New Jersey. A street sale record was set (by a staggering $194,000), north of Kingston Rd shot up to prime Beach status, and in the process smashed buyers’ hopes were left in the billowing smoke. There was also plenty of drama along the way – including an attempted bully offer and a 3 barrel bidding war that was ultimately decided by less than half of a percentage point!

Our listing on this quiet street in the Upper Beach was a classic case of the right house at the right time, and of course the right buyers. The house was a massive 3 storey detached with a rear extension and it ticked off all the boxes – 5 bedrooms, front pad parking, finished and dug down basement, family room with fireplace, a second storey laundry room and a third storey master with a sprawling walk-in closet. The house had what we call “great bones”, and was lovingly maintained and updated in key areas by the owners over the years they lived there. It was completely move in ready but not “done up”, so there was tons of potential for the next owner to personalize it to their own taste (kitchen, new floors etc.), and not pay through the nose for finishes they don’t like.

Securing the listing had also been a major coup for our team and a sterling example of old school prospecting. Success in this manner boils down to a simple (and never changing) reality, which is that you do something 100 times and 99 of those times you get kicked squarely in the groin. But lo and behold 1 time you don’t.

That “1 time” started when I cold called one of the owners in September of 2014. Diane answered and right away her warmth and kindness came through the phone. I explained that I was trying to help a buyer get settled, and I asked if she knew of anybody in the area that might be considering a sale. She said she didn’t at the moment, but that her family would in fact be selling the following Spring. I asked when I should call again and sent her my card in the mail, and then called her back on the exact date she requested. We chatted again for a good 20 minutes, and the following week my partner Sean and I had a listing appointment. It really can be that simple, if you can take the 99 kicks…

The next week Sean and I sat at Diane and her husband Mitch’s dining room table and hit it off instantly. Diane is a retired teacher and Mitch a retired lawyer, and good luck finding nicer people. The business side went perfect – they loved our marketing proposal, and on the personal side Diane was very interested in Sean’s violin playing, while Mitch and I found common ground with our love of NFL football (there is no bigger Bills fan than Mitch). As we left they thanked us and said they would be in touch in a couple weeks as they still had several other agents to interview. Sean and I felt good but certainly not overly confident in getting the listing, as this house is in an area that tends to be dominated by a select few big names. It turned out we need not worry, and about 10 days later we heard back and they told us we had the listing. This was their retirement fund and the house they had loved for almost 20 years, and now they had entrusted us to see the sale through.

As soon as we put the sign on the lawn (at the end of April) with the Coming Soon rider we knew we had something special. We were flooded with calls right from the get go, and people couldn’t wait to see the house. “Can you get me through early??” “Can you get me through early??” I kept hearing that again and again, and suddenly I was more popular than a grade 8 kid with a dime bag of weed in the ravine. Some last minute fix-ups delayed us in going to market for a week, and it turned out to be the best thing that could ever happen. The pent up demand went into overdrive – buyers desperately wanted a hit, and we had the good stuff.

Oh, and the price?? At the time of our first meeting in February $950k felt right, and both Mitch and Diane said they would be more than happy if this is what they ultimately sold for. Just a few short weeks in an absurdly inventory starved market later, however, it was now clear that number was low. Thus we came out at $950k with an offer holdback, and it would now be disappointing if it didn’t crack $1,025,000.

The listing hit MLS on Tuesday mid-afternoon, with offers set to be reviewed the following Tuesday. From the get go it was crazy, with over 15 viewings booked over the first day and a half. On Thursday we had our evening open house, and as we were getting prepared for that we received a page in the late afternoon that a bully offer had been registered! This page also went out to every agent that had either showed the property or had a showing booked, and now all hell officially broke loose, which I will document in part 2 of this blog.

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Can You Afford Not To Buy?

Can You Afford Not To Buy?

“Can you afford not to buy?” It is a question that is coming up with my buyers over and over again, and as always it is being driven by extremely low inventory.

The market report for March told a great tale for sellers, but a grim one for buyers. In March the average sale price across the GTA was $614,000 – which is 10% HIGHER than the March 2014 average of $558,000. Think about that for a second – 10%!! It’s a tale of two extremes for those that bought and those that waited.

Those That Bought

Joe Buyer purchased his home for $558k and and put $60k down. Now his home is worth $614k, or approx $60k more than when he purchased a year ago. That’s almost 100% return on his investment (I know this doesn’t factor in land transfer and other closing costs but I am proving a point), and it will probably be up another 10% in March of 2016. Show me another investment with that kind of return, or at least one that doesn’t involve moving massive amounts of drugs.

Those That Waited

Joe Waiter decided to let things cool down and hope for prices to come back to earth. Instead it is a year later and he is still renting, and he is now further behind the market than he was a year ago. Most people simply can’t afford to save at the rate prices are going up, and the 3 bedroom house they could have bought a year ago is now a 2 bedroom without parking.

It’s a bitter pill for most buyers to swallow, a damned if you do damned if you don’t type scenario. If you wait you end up costing yourself money, and if you do decide to jump in you are looking at a heaping dose of compromise. You may want to live on Grant St but guess what?? You can barely afford to be on Sammon Ave, or even (shudder) Scarborough.

Whether this upward price spike will continue is really anybody’s guess. In the mentime I will continue to wait it out, and keep telling my buyers about the abundant charm of Pickering.

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About Me

About Scottie.