Today we had a conversation with a reporter from the Globe and Mail, for an upcoming article on laneway housing.
The question that came up? How much value does a laneway house bring to a property – either before it’s built, or after it has been completed?
It’s a great question, and one we are not entirely sure has been answered – yet.
As part of our daily routine here, we scour the Toronto real estate listings every single day, looking for properties listed for sale that qualify for laneway houses. And with every one we find that appears to qualify (we can rarely tell 100% just looking online, but we know if they likely qualify with varying degrees of certainty, depending on what we see) we send a note out to the listing agent reminding them that they might have a rare gem on their hands.
After all, less than 1% of all Toronto properties qualify for a laneway house build. The reaction we get from the listing agents varies. Some politely acknowledge our note, some contact us to ask more questions or to order a closer analysis (we charge for that site visit), and some simply don’t reply.
But increasingly, we see more awareness, and we see more people taking interest in these rare properties.
Which brings us to value. If we have two more or less similar properties on the same street or in the same neighbourhood, but only one qualifies for a laneway house build, and one does not (usually due to fire access regulations), does the qualifying one immediately have more value?
We think it does, but we are still perhaps too early in what we expect to be a laneway house boom, to know what that value difference is. At least for now.
Now, we already know that almost all laneway house builds are going to cost between $200,000 and $500,000. That’s now fairly clear as we analyze the dozens that have already been built or are underway.
So the question might be here, if my property qualifies for a laneway house build, but my neighbour’s doesn’t, can I expect to sell my house for more, with the buyer being secure in the knowledge that they can build a laneway house? Again, we are not quite sure – yet.
Finally, we have many people ask us if, say, they build a $300,000 laneway house on their property, how much more value does their property have? Is it now worth $300,000 more? Or less, or more?
And I’m afraid the answer to that is still “we are not sure”, because we have not seen a property sell that has both the original house and the brand new laneway house on the same property. Again – yet. We eagerly await that first sale, and of course any subsequent ones to help better understand these value questions.