It was someone’s home for the better part of half a century — a classic postwar Toronto bungalow in Danforth—East York, with a gabled roof, a butter yellow kitchen with frilly curtains and arched doorways between rooms.
This house fell onto the real estate market like so many older homes do. The homeowner of 47 years had passed away, and their kids were handling the estate. They knew renovators were circling; one made an offer even before a For Sale sign was put up outside. But they decided to test the open market. “Move in and add your personal touch,” a listing lured, “or use the land and build a monster.”
Within days, the bids came flooding in. Two prospective buyers saw a home for their own families and made offers over the $699,000 asking price, recounted listing agent Michelle Walker. But they couldn’t compete with five renovators. While one bid under the asking price, the rest bid higher, with the home ultimately selling for $860,000.
The house changed hands in May 2018. Over the next few years, the new owner tore it down and built a luxurious two-storey house with 12-foot ceilings and quartz counters in the kitchen. In early 2021, it sold for $2.5 million.
Across the Greater Toronto Area, where nearly 30 per cent of existing housing was built in 1960 or before, this pattern has been repeating. Bungalows and other smaller single-family houses are increasingly disappearing into a cloud of construction dust, replaced by larger and more expensive homes.
To understand the impact on housing and prices in Toronto, the Star examined nearly 700 city hall permits to rebuild single-family homes issued in 2019. We identified 102 homes that had resold within 1,000 days of permit approval — a longer runway than is typical with house flips to account for pandemic delays — and where both pre- and post-rebuild home values were listed in sale records.
Of these homes, the average original purchase cost was $1.2 million. Post-reno, the average resale price jumped to more than $3 million. From permit application to resale, the flipping process took an average of 397 days.
Even factoring in the cost of building a house from scratch, this legal practice can quickly deliver a sizable profit. And it’s a trend that industry experts say is hastening the run-up of home prices, often without any boost to housing supply in a crunched market.
The Big Flip
Across Toronto, bungalows and small homes are disappearing, replaced by larger, more expensive single-family homes. In this series, the Star takes a look at the impact of house flipping on Toronto’s neighbourhoods and housing market.
“It slowly edges everything up,” said Walker, who recently sold a comparable East York bungalow for more than $1.1 million.
Just last week, Re/Max Canada flagged renovations and rebuilds as “one of the most underestimated factors behind escalating housing values,” and a contributing factor in how detached house prices across the GTA climbed 35 per cent from late 2019 to late 2023.
Wartime bungalows and smaller two-storey homes “continue to be primary targets, making way for custom builds that transform working-class neighbourhoods into up-and-coming hot pockets,” the Re/Max report stated.
To some, the practice is a welcome investment in aging housing, with potential ripple effects for broader neighbourhoods.
An infill home is under construction next to a bungalow on the edge of Scarborough.
R.J. Johnston Toronto Star
“Many homes have been enhanced improving the value of the property,” Tim Syrianos, owner of Re/Max Ultimate Realty, told the Star’s Clarrie Feinstein. That value stimulated commercial real estate, he argued, resulting in “more shops and amenities.”
But others warn the practice is pricing more people out of home ownership.
David Hulchanski, a housing expert with the University of Toronto, says the amount of profit extracted in recent years from the city’s single-family houses is “not historically normal.”
“A minority with the wealth and financial backing is making housing less affordable for everyone.”
The lure of the flip
In Birchcliffe-Cliffside, a Scarborough neighbourhood near the shores of Lake Ontario, there was once a brick bungalow with a wood-panelled basement and a new two-car garage.
When it hit the resale market, the sellers of the midcentury, two-bedroom home described it as “well-maintained” and “move-in ready.” In May 2018, sale records show it was snapped up for $875,000.
Online listings on HouseSigma indicate the home was then advertised for rent for a while. But a little more than a year later, city hall received an application to tear it down. The rebuilt home — a much larger four-bedroom modern home with vertical wooden siding and asymmetrical windows — then sold for more than $3 million in 2022.
Among the 102 homes in the Star’s sample, Birchcliffe-Cliffside was a hot spot for home rebuilds. Other areas with higher showings included Etobicoke’s Stonegate-Queensway and Islington, North York’s Bedford Park—Nortown and Banbury—Don Mills, and midtown’s leafy Lawrence Park South.
Not all the homes were in good shape; some were listed only with exterior photos and the promise of usable land. “Attention all renovators and DIYers with imagination. Opportunity knocks!” one Birchcliffe-Cliffside property listing promised. That home sold in 2019 for $540,000; once rebuilt, in 2020, it sold for $1.45 million.
Realtor Cory Matthews, who listed the “move-in ready” Birchcliffe-Cliffside bungalow, sees Toronto as a unique case. In the rest of the GTA, he says it’s imperative for flippers to find dilapidated properties — the kind most end-users won’t compete for — to truly increase their value. That’s what Toronto flippers also look for but he’s still seen some turn a profit when starting with a well-kept — if dated — home.
“In Toronto, the lot values are so high,” he said, noting that as long as the original home was under a million dollars, renovations usually turned a profit.
He says once one home is flipped, that acts as “a proof of concept” for the neighbourhood and “everybody starts investing there,” causing nearby property values — and listing prices — to rise.
Flipping “is yet another aspect of the financialization of the nation’s housing stock,” says U of T’s David Hulchanski. “It increases the income and wealth of a few, and housing stress and housing instability for many.”
R.J. Johnston Toronto Star
He doesn’t believe renovators inherently elbow out end users as flippers are constrained by their profit margins. But he has seen the process result in ordinary buyers paying more than they might otherwise in a competitive offer process.
“An end user might keep (the home) for 10 years so they can overpay, for lack of a better word,” he said, noting prices for Birchcliffe-Cliffside bungalows rose beyond the reach of most flippers within about five years of the first rebuilds taking shape.
For first-time homebuyers though, those higher prices are one factor keeping them out of the market.
While many home hunters don’t want older bungalows due to a lack of desire or expertise to manage a facelift, said Walker, the East York listing agent, often it’s also just a matter of not having the cash.
Demand for land in Toronto, which in these cases can often accommodate something much bigger, has contributed to prices rising by hundreds of thousands of dollars within years. “Nobody is saving at that rate,” she said.
The new owner of the flipped house in East York, whom the Star agreed not to identify as they were not involved in the rebuild, is grateful for what it offers to him, his wife and their two young kids. It was spacious — more than they really needed, he admitted — with ample room for their children to play, and a big kitchen for hosting friends. Buying new also meant they wouldn’t need to do renovations before moving, or run into the unexpected repairs of an older home.
While it was at the upper end of their budget, the couple was able to afford the $2.5-million price tag largely due to their own real estate investments — starting with a townhouse at Jarvis and Gerrard streets he bought in 2010 in his 20s, putting five per cent down on its roughly $350,000 price and renting a room to help with the mortgage. Over the years, he and his wife invested in several long-term rental units — as they worked day jobs in sales and teaching — and moved into a condo at Church and Carlton streets. When the pandemic spurred them to find more space, they sold everything to buy the house. And he knows how lucky they are, in contrast to other young families citywide.
“I have a very soft spot for people trying to buy homes these days,” he said, noting it felt “almost impossible” to get his foot in the door even in 2010. “The market has always been tough and it’s only gotten worse.”
How the math works out
Real estate investing is Andrew Parashis’s full-time passion and income source. He’s 37 and estimates he’s flipped or invested in roughly 150 properties. He has a YouTube channel called PropertyHustlers that breaks down the elements and costs of his projects.
The key to a successful flip, Parashis says, is seeking owners, properties or neighbourhoods in temporary distress.
That used to mean divorcees and widowers under threat of foreclosure or an area marred by a singular act of violence that made the news. Today’s market is rife with a new kind of distress triggered by looming mortgage renewals.
“How stressful is it to be paying more than what you bring in income every month? Some people, that just freaks them out. So they just want out of there, even if they’re going to make a financially reckless decision.”
Most flips, he says, don’t need to be complicated and don’t require permits. He encourages first-time investors to look for properties that don’t need more than cosmetic upgrades and elbow-grease, which can be turned around within a few months. Many buyers are still focused primarily on what they can see, says Parashis.
A growing number of home flippers who bought during the market peak are entering into power of sales or selling at substantial losses.
A growing number of home flippers who bought during the market peak are entering into power of sales or selling at substantial losses.
The Toronto native finances his flips through private lenders, paying roughly 10 to 15 per cent interest on private loans for short-term mortgages. To pay for the cost of renovations, taxes and legal fees, he turns to family and friends who are willing to dip into home equity lines of credit and savings for a chance to grow their money more quickly than they could through the bank.
“The whole idea of a flip is you want to turn things around as reasonably quickly as you can because of the financing costs,” explains Justin Sherwood, senior vice-president, communications and stakeholder relations at the Building Industry and Land Development Association (BILD), which oversees an accreditation program in Greater Toronto for contractors called RenoMark Canada. “Because typically they’re not doing it with their own money.”
Building from scratch is a more expensive pursuit. But the Star’s data still indicates a chance at hefty profits, with the highest construction cost estimate provided to city hall for permits around $690,000.
On the Star’s sample, Parashis warns against trying to extrapolate a profit margin based on the spread from purchase to resale price of a rebuilt or renovated home.
“If you’re flipping a house from, let’s say, $300,000 to $600,000 you want to budget on a minimum profit margin of about $50,000 or $60,000. But when you start flipping houses that are pushing $1 million, you need to start having margins of like $150,000 or $200,000. And the reason why your margins should increase based on price point is because if you don’t, your margins can be obliterated by just changes of the wind,” he said.
“On a $1 million property, a fluctuation of $100,000 is not crazy. So if there’s a slight dip in the market, if your margin expectation isn’t high enough, you risk to lose.”
Why city hall says yes
When the renovator who bought the East York bungalow applied for permission to tear it down, municipal records indicate they got the green light within weeks.
There are two kinds of applications to tear down a home: sheer demolitions, and demolitions to rebuild something specific.
If a homeowner wants to tear down a property with no plans to build anything else, they need to argue their case, said Toronto’s interim chief building official Kamal Gogna, with the decision resting with a local community council.
Not so for raze-and-rebuilds. In those cases, it’s simply a matter of meeting a standard list of demands — things like doing assessments of the impact on local tree cover, filing municipal road damage forms, issuing public notice of the construction efforts, meeting heritage or conservation authority requirements as necessary, and having a licensed builder at the helm.
If all boxes are ticked, Ontario’s Building Code Act is clear, Gogna said: “They’ll get a demolition permit.”
City data shows 4,600-plus permits issued to demolish detached, semi-detached and townhouse units from January 2019 to January 2024.
One caveat is if a builder wants to replace an existing home with something larger than what’s allowed. If seeking permission to build taller or closer to the lot line, for example, the builder would need to submit a proposal to Toronto’s committee of adjustment.
A neighbourhood changed
Looking at Toronto’s rapidly changing housing stock, urban planner Cheryll Case sees a symptom of market failure.
“These renovations and the doubling of prices is going to only further exacerbate market failure by making housing more unaffordable, without actually creating any more supply,” said Case, founder and executive director of CP Planning, a Toronto-based non-profit that unites public and private stakeholders on a human rights-based approach to urban planning.
“I think we’re going to see these types of changes more and more throughout the city, where postwar bungalows are going to start disappearing,” says Toronto realtor James Frodyma.
R.J. Johnston Toronto Star
“Increasingly even if you have a really good income and family wealth you’re going to have a hard time securing housing for yourself,” Case said. “By flipping houses, even moderate- to upper-income households won’t get into the market. Housing becomes an increasingly speculative product with more and more properties being owned by investors rather than end users.”
Hulchanski, the U of T expert, sees little that can be done to limit price inflation stemming from demolition flips. The best he believes city hall can do is ensure the new homes abide by the building code, though he sees higher governments as capable of more, suggesting greater oversight to ensure those reaping in profits from home flipping are taxed fairly.
He sees the trend not as the sole driver of unaffordability, but as a symptom of a “broken” housing system — where those who can afford to trade assets in the real estate market can make huge profits while sidelining individuals and families seeking a home to live in.
“It is yet another aspect of the financialization of the nation’s housing stock,” Hulchanski said. “It increases the income and wealth of a few, and housing stress and housing instability for many.”
Toronto realtor James Frodyma recently listed two modest homes inherited by the children of the past owners. Each one felt like a “time capsule” to the 1960s, he said, with leaks and repair problems, but it didn’t matter. “All of the bids that came in were people knowing they wanted to tear it down,” he said.
Frodyma, who said he understands someone wanting to revitalize a dated home or build larger to make space for a growing family, said the appetite for flip projects specifically has been dampened by higher interest rates that have made building more expensive. But he expects the trend to ramp back up.
“I think we’re going to see these types of changes more and more throughout the city, where postwar bungalows are going to start disappearing,” he said.
Standing outside his older home in Birchcliffe-Cliffside, Jim McKeown looked back on the comfortable life the neighbourhood had afforded him for more than three decades — with easy access to transit and a garden bursting with so many black-eyed daisies that he gifts plants to neighbours, all while being near the Coxwell and Danforth neighbourhood where he grew up.
He doesn’t take issue with the rebuilt houses, noting many had been purchased by growing families with young children who populate the local schools. He’s grateful their area seems to have evaded the trope of overwhelming “monster homes,” and knows each sleek addition raises the value of his own house. But if he had to enter the market today as a younger man, McKeown knows this cherished home would be beyond his reach.
“I don’t think I’d be able to afford it,” McKeown said. “The only reason I’ve got the equity in my home is that I was able to afford to get in and get started.”
