Welcome to my blog which focuses on Canadian architecture, landscape, design, products, and real estate. If you're new to it - most of the articles are researched and written by students and recent graduates who are passionate about the many facets of shelter - but my own healthy obsession in all manners of housing and home, including posts on Toronto where I make my living as a realtor - do make an appearance on occasion. Like today, when I explore one of Canada's predominant housing styles - the bungalow!
A two-bedroom, one-bath bungalow is a common housing style spanning from the 1920s through the 1960s, not only in Toronto (of which this piece focuses on most) but across Canada. Many date from the mid-1920s, and would have been constructed by one of the early suburban developers who were part of the building boom post-World War One. Let’s take a look at the history of the bungalow!
The History Of Bungalows
The bungalow is a housing style that dots the streetscapes in both the city and the suburbs alike. Here are some interesting facts about how bungalows emerged and evolved in Canada.
Bungalows first came onto the housing architecture scene in Bengal, India in the 19th century, when India was under British rule. These single-storey, small footprint homes were initially built with the intention of becoming vacation homes; That is in part why the bungalow design often exudes a “cottage” feel. They were favoured largely because their small size and straightforward footprint could be built quickly and efficiently.
Over the years, this housing style gained popularity in the United Kingdom and then later in North America as an affordable, practical dwelling primarily marketed primarily to the working class. In Toronto, although there are some striking examples of Victorian cottage-like bungalows in Cabbagetown and Corktown, as well as several working-class bungalows located downtown near Trinity Bellwoods Park and in Little Portugal, one is more likely to see this housing type in the early working-class suburbs of the 1920s and beyond. Areas such as Swansea, South Kingsway, and Mimico to the west and neighbourhoods like East York, Leaside, and North Toronto were filled with these economically modest bungalows. These really took off in popularity thanks in part to national housing programs which helped the post-war economic recovery and provided affordable housing for returning vets. Given the age of many of these homes, you will often find a number of character details from bungalows built during this heyday; those constructed in Toronto during the 1920s through 1940s will often have gumwood trim, etched glass doors, coved plaster ceilings, and leaded glass window details on opposite sides of their brick fireplaces. Those constructed post-WW2 - in the 1950s and after - tend to be smaller, and found in tract housing developments, sometimes spanning miles!
*Top photo courtesy of Bill Gladstone Geneology, with thanks.
In Canada - and the suburbs of Toronto in particular - most of the bungalows were built just before and just after WWII, to house those working in war-related industries. They were often federally funded and based on government-approved floor plans. (Have you read my post on the birth of Toronto’s suburbs Exploring COVID-19, Urban Planning, And Toronto Real Estate?) These bungalows were usually simply adorned and smartly laid out; they had a low, unfinished basement, a large, central living/dining space, a small utilitarian kitchen, a single washroom, and one-bedroom (or sometimes two). Those designed with a steeply pitched roof were often sold with an unfinished attic that had the potential to accommodate another two bedrooms in the future. Their design simplicity is intentional; as with the bungalows originally built in Bagal, the housing type was favoured in Canada because it took less time and less money to build. As such, they grew in popularity as soldiers returned from war and were great starter homes for young families.
Did you know over 46,000 bungalows were constructed across the country during that period? Here's the Globe & Mail's, "By The (Pattern) Book: How The Humble Mid-Century Bungalow Shaped Canadian Neighbourhoods" as well as "HISTORY CORNER: Wartime Houses Built For Workers, Returning Soldiers" on Toronto.com.
Today, bungalows are a popular choice for people with mobility issues, single and 2-person households, and for those aging in place. Because of their efficient design, bungalows are more economical to cool and heat. However, today their small footprint and age leave few options for renovation or upgrading - at least without extensive investment, and the capital to expand up, or out. So, if you intend to sell your bungalow, what should your plan of action be? Here are my thoughts.
Consider Recent Area Sales For Similar Properties
If your intention is to sell sooner than later, and your focus is on the Return On Investment, you should first consider where values are landing for existing bungalows that are similar to your own, and see if you're in an area where these homes are either being upgraded or renovated within their existing footprint, 'topped up' where a second storey is being added (and often extended out, too), or if they're being torn down because the value of the property lays more in the land than in the now obsolete dwelling. This is often the case with bungalows in particular, given their smaller size and the spatial relationship to the land they're located on.
First, assess what bungalows being sold in 'as-is' condition are selling for, and drive-by any sales over the past two years to see if the demand for these reflects whether they are being torn down, topped up, or renovated.
Second, determine what the sale prices are for bungalows which are being sold that have been improved, and review those sales in detail to identify the scale and scope of improvements, including those with small extensions and/or finished basements and/or on-trend renovations, including the opportunity for a lower level non-conforming income supplement.
Third, if former bungalows in your neighbourhood have been topped up or torn down, see what those are selling for so you can determine the top end of the market value for these new properties, which are likely being sold to a new demographic. One word of caution: when you are planning extensive renovations and/or additions and extensions, from an ROI standpoint, transforming a dwelling so it becomes one of the more expensive properties on your street or neighbourhood tends not to offer the highest return - so this is something to bear in mind when looking at your property in relation to neighbouring properties and assessing your options.
It’s becoming more and more common in Canadian cities - particularly Toronto, where land is scarce and the vintage housing stock is aging - for small-scale developers to purchase a home for land value, tear the existing home down, and build another home in its place. This can be especially appealing if the existing home needs substantial work, both from a design, size, and structural component point of view.
What might your home be worth in terms of land value? The mitigating factors for determining land value include the width, depth, and ease of accessibility of the lot, onsite parking, and the footprint/condition of the existing foundation.
Beyond land value, there are other options for selling your bungalow, but it is important to understand the likely target market, the potential ROI, and the budget outlay to make these changes happen.
Here are three considerations in terms of determining the potential market value of your dwelling:
• As-Is Where-Is Condition
Depending on the age and condition of your bungalow, if listed and sold in 'as-is, where-is' condition, the target market would predominantly be renovators and small-scale developers who would approach the site strictly as land value.
Here is my post on Understanding The Six Essential Layers Of Property which outlines the layers by which consumers approach a property, while this post explains How Toronto Real Estate Is Shifting From ‘Fixer-Upper’ Flips To ‘Tear Down’ New Construction.
Assuming that many of the building components need to be replaced (as is often the case with the age of much of this type of housing stock in Toronto), this buyer group would likely retain the structure but demolish almost everything else. The front and side elevations - including much of the foundation - would be stripped to their shell and then the property would be substantially rebuilt.
Generally, when one is looking to maximize a return on value, one might consider a cosmetic refresh to present the property is in its best light economically. Sometimes it is just enough to inspire a buyer with the potential of your home and to convince them to buy.
A refresh would comprise doing simple but impactful things for your home, like decluttering, completing any necessary maintenance and repairs, and executing some value-added upgrades including, fresh paint, broadloom, light fixtures, and appliances, for example. We encourage one to tend also focus on curb appeal, including exterior landscaping, paint, and new decking or stairs. These are all essential things to communicate the care (and value!) of a home. Here's my post on How To Prepare Your Home For Sale which, in addition to some guidance on what to do, including what my Urbaneer Team does in Toronto to show a property in its best light.
While a refresh is effective, one potential drawback in regards to the sale of an older bungalow is that typically the size of the dwelling no longer aligns with the value of the land; furthermore, if any of the building components are wearing thin, the home may naturally be nearing the end of its life expectancy, which would represent a substantial cost to repair or replace for a potential buyer, which might create obstacles in trying to fetch a higher sale price.
Here is a post called Dear Urbaneer: Should I Replace My Vintage Windows When My House Is Considered A Teardown? that explains several of the mitigating factors which determine what a property is worth, and On Flipping – Or Building Equity – For Toronto Real Estate Buyers that addresses some of the risks.
Although costs vary for this option, depending on the current state of your home, these are usually under the 100K range. Be aware that when you embark on this process, you may discover other issues, like water management causing mold, the presence of asbestos, or even knob and tube wiring. These kinds of factors could see your costs spiral, making this approach less financially viable. I'm sure you've heard lots of renovation professionals discuss how tackling any old home can be a bit of a Pandora’s Box. Always build a contingency fund in your budget for surprises.
Essentially, if your land value + the costs of refreshing are close to what comparable bungalows are selling for in your area, this is not an ideal approach, as you are hovering dangerously around the breakeven point. It comes back to the budget and what you realistically can garner for your home, based on recent activity in your neighbourhood. As with all real estate returns, the idea is to maximize the spread between your margins.
For an example of a recent bungalow sale in Toronto, we recently sold this Sun-Kissed Vintage Charmer In The Upper Beach. Offered for $799,000, the house underwent a cosmetic refresh and was professionally staged prior to it being listed. The property, located on a small lot that limited its potential redevelopment options, garnered five offers and sold for $952,000.
• Elevated (With Substantial Investment)
Another option is to elevate the property to its new and highest best use. This would generally mean undertaking major renovations and/or expansion, so the costs with this option are more substantial.
It can be challenging to assess potential profit margin without determining specifics and it can be difficult to gauge now due to the impact on workflow from COVID-19. Your city may have a backlog on committee approvals and issuing Building Permits. Also, of note, the availability of consultants and trades is challenging right now given the demand for home improvements as well as delays in the supply chain and skyrocketing costs for materials - which is something to keep in mind.
That said, if you are considering this direction, let us look at a scenario to help you determine your budget and plan of action.
I would aim to build as large an envelope as possible with mid-grade finishes potentially leaving some areas partially finished - such as a lower level. In other words, your total soft and hard costs for the transformation, contingency fund, selling costs for the property (which would be at or less than 5% + HST depending on whether staging the dwelling would be necessary), should always be a little below the ceiling set by other recent sales in proximity to yours. Yes, it's feasible in markets where prices are increasing that you could generate a larger return, which is what every seller hopes for, but you must remain prudent and without emotion when tackling a renovation project when it's all about generating a return on investment.
In this post called Toronto Real Estate, Yellowbelt Zoning & The Missing Middle: Part One - and also addressed in How To Strategically Purchase An Income Producing Property - I share how I often recommend creating a property that provides the owner (and future buyer) with the most flexibility and possibility for the highest return on investment. My personal favourite is the three-unit multi-dwelling (or one that can become one because the computations and permutations of the layout, lifestyle, and income potential are the greatest) which I call “Accordion Dwellings” meaning that they can expand and contract with ease, depending on the needs of the current owner. The dwelling which can be used solely as a single-family or easily divided into multi-units so its intelligent design makes it appealing to the broadest number of potential buyers will sell the fastest and for the highest dollar as it will appeal to a broad range of target markets, whether they are a single-family user seeking a nanny or teen suite, an investor seeking turn-key multi-unit incomes, a pair of co-housing buyers looking for two similar-sized units, or a multi-generational family looking to shelter different ages and stages of life.
And, also relevant today would be paying attention to How COVID-19 Will Likely Change How We Design Our Homes including the creation of a dwelling with a separate but accessible Home Based Business Work Environment.
There are many possibilities!
Whether you are buying or selling, a data-driven, tactical strategy is essential in order to achieve your real estate goals. With decades of experience navigating the -at times- turbulent currents of Toronto real estate, I have 28 years of experience, perspective, and negotiation skills to steer you on your path forward. If you have questions and live anywhere in Canada, I welcome doing my best to offer assistance. Pop me an email at Steve@urbaneer.com!
And thanks for reading my post!
~ Posted by Steven Fudge, the purveyor of houseporn.ca and proprietor of Urbaneer.com, a division of Bosley Real Estate Ltd., Brokerage.