Neighbourhoods going modular
Thinking vertical new trend in bungalow renos
usiness is booming in modular home additions, with what's being described as a frenzy of second-storey addition building in some of Toronto's mature neighbourhoods as owners of 60-year-old bungalows go up instead of moving out when they need more space.
"It's become huge because the value of the bungalows has gone up hugely. I was buying bungalows 10 years ago for about $200,000, and now they're approaching $500,000 to $600,000," says Ali Hamid, a developer and the director of Modular Home Additions in Toronto.
"There's a bit of a frenzy happening now because the available stock of bungalows is decreasing rapidly. Builders are buying the bungalows and outbidding each other," he says.
A wall map in the company's offices on Bermondsey Road in Toronto's east end is dotted heavily with clusters of black pins showing numerous areas of the city where Modular has put up second storeys.
According to Hamid, Modular is "by far the largest infill builder in Toronto," putting up some 70 to 80 modular second-storey additions a year, mostly on post-war homes.
In the late 1940s there was a house-building boom in East York and North York as builders quickly erected neighbourhoods that were supposed to be temporary housing for veterans and their families after the war.
"The temporary housing has lasted 50 to 60 years and now what's happened is that because the value of the bungalows is so high, people are seeing the wisdom of living downtown instead of the suburbs," Hamid says.
"A lot of the bungalows were built on large lots; huge lots by comparison to today," says Toronto real estate lawyer Alan Silverstein. "The typical North York lot is 50 feet by 120 feet. And those little bungalows were underutilized."
"A lot of people these days don't want to move to new places, they'd rather get the necessary changes done and just stay," adds Ekta Kalia, office manager for Superior Home and Luxor Construction Corp. in Woodbridge.
The comfort factor is playing a big part in the second-storey boom.
"This (adding on) is a more cost-effective option and it does allow families to remain in a neighbourhood they're comfortable in," Ward 26 (Don Valley West) Coun. Jane Pitfield said in an e-mail interview.
"It speaks to commitment to these neighbourhoods, influenced by safety, good schools, a sense of community and a preference to remain in the city versus moving to the 905," she added.
Ward 31 (Beaches-East York) Coun. Janet Davis added that people in her ward have easy access to transit, schools and other amenities, and that's why they're choosing to pay for additions over real estate commissions.
"It's expensive to move. There's no question. You've got commission, you've got land transfer, you've got moving costs, legal fees, all the costs associated with arranging financing. It can get very, very costly," Silverstein says.
Kalia says Superior, which started in 2003, had to turn down several projects in 2005 because the company was too busy. It's not unusual for Modular Home Additions to have 30 projects going at the same time, Hamid says.
But there was a time when Hamid thought the idea of modular-home additions was "a crazy idea" of two tradesmen who were his best house framers.
"They came to me with the idea of doing second-storey additions, building the walls and roof in a factory and transporting them to the site. I said, 'This will never work'. I realized after they did seven houses that this was a great idea because, as a builder, I saved so much time. The houses were up in no time and I was ready to do the insides far quicker than normal," he says.
With modular-home additions, architects work from a homeowner's survey drawing, take physical measurements, and prepare computer-aided design (CAD) drawings.
Walls and roof components are built in a factory and then erected on the jobsite.
In a one-stop-shopping operation, modular addition builders will even look after the building permits. An addition can literally be up in a week.
"It's becoming pretty significant these days because people like the idea of prefabricated homes," Kalia says.
Bill Balamatsis, principal broker with East York Real Estate, says he first saw the addition trend starting to happen in 1996 and 1997.
He adds that the additions are accomplishing two things effectively - giving homeowners more space and boosting neighbourhood property values.
"The only downside is that for the people who don't have any intention of topping up, their land values go up so they'll have to pay more taxes down the road," he says.
Real estate prices are definitely a factor in the addition-building boom. According to Toronto Real Estate Board (TREB) data, housing prices in Toronto are averaging between $272,949 and $407,473, depending on the district.
Bungalows in old East York, Balamatsis says, are going for $290,000 to $320,000, and as much as $500,000 in Leaside, the upper-crust area of East York. Several years ago, prices ranged between $190,000 and $240,000. Bungalows that have been topped with an addition in Leaside are now selling for $800,000 to $1 million.
Addition costs range from $100,000 to $400,000, depending on what the homeowner wants done and the materials they choose, Hamid says.
Sometimes it's more cost-effective to buy new instead of adding on, but Hamid notes that a $50,000 real estate commission can get "almost half an addition done."
"The question is what are you going to be getting on the new place versus the added value based on the renovations or the additions that you're doing to the old one. And that's a cost analysis you have to do yourself," Silverstein says.
Although Leaside, East York, North York, parts of Scarborough and Lakeshore-Etobicoke are the main areas for addition-building, Hamid says they're not the only ones. Additions are being put on "anywhere in the GTA where there is available land or a house."
Hamid and Kalia say their respective companies are doing well because there aren't a lot of companies specializing in modular additions. Superior, Kalia says, is planning to move its offices to Scarborough from Woodbridge to be closer to the boom market.
Modular Home Additions started by just adding "four walls and a roof" on to typical East York bungalows but now is doing "much more complex homes" as well, says Hamid, who thinks the second-storey boom will soften over the next few years, but not end.
"I think there will always be room for this sort of work," he says. "People will always be having babies and wanting more room. I don't think there'll be a crash because money is still cheap and the population of Toronto is growing, it's not decreasing."
As a broker in Toronto, thought I mention that going modular is still a very good option for 2013. Homeowners who have seen their bungalow property values increase should consider making the addition. Not surprisingly, about 30% of my clients are looking for loans to build an addition. Interest rates are still low and I recommend when your mortgage term is up, refinance your home and include the cost for the addition. This will help to build your nest egg when you retire.
Mortgage Broker and Credit Report Advisor.
Posted by: Pat Drummond | Jan 2, 2013 4:05:07 PM
Luxor construction is basically going bankrupt and has unfortunately taken our money and left us high and dry without even a return phone call or email. Beware!
Posted by: Rachel | Sep 4, 2008 8:59:40 AM
As a Downtown Toronto Realtor, I thought it important to update some of the information provided in this older article.
Where the author writes about Leaside bungalows selling for $500,000 - I helped my clients sell their Leaside bungalow for $751,000 earlier this month.
Take a look at http://www.leasidebungalows.com to view some more up to date information!
Geoffrey P. Grace
Posted by: Geoffrey P. Grace | Feb 16, 2008 9:45:30 PM
I want to add a second story addition to my east york home but don't know where to start. How can I find a step by step guide for something like this??
Posted by: Tammy | Jul 4, 2007 1:42:00 PM
Hello my name's Felicia and i was wondering if i could find bungalows in the GTA but under $400,000.
Posted by: Felicia | Oct 1, 2006 2:52:49 PM