Natalie Fitzgerald and her husband Devin Schaffner bought their first home, a postwar brick bungalow at the corner of Broadview and O’Connor in Toronto, in 2016.

But they sold this spring after a financial adviser confirmed the couple was drowning in debt, compounded by a yearlong maternity leave and the expense of the house. Fitzgerald, 37, and Schaffner, 36, were using loans to stay afloat.

Fitzgerald had joked that it was her love of new pyjamas causing the financial strain, but the adviser said it was much more serious than that.

“‘It’s not the pyjamas that are killing you,’” Fitzgerald recounted. “‘It’s everything. It’s your fixed expenses. It’s paying your minimum monthly payments.’ Which I guess was very validating that we had to move.”

The house, however, turned out to be a great investment. They bought it for $830,000; after three years, the couple sold it for over a million — $200,000 above their asking price.

“We have paid off all of our credit card debt, and all of our lines of credit, and that felt really good,” said Fitzgerald.

They moved to Chatham, halfway between London and Windsor, and now live in a historic home they purchased for $260,000, with their daughter Fitz, who will be four in October.

Life without debt has been “unbelievably freeing,” said Fitzgerald. “Like I can breathe.”

One of the reasons the bungalow sold so well, earning the couple a more than 20 per cent return on their investment, is that buyers are willing to pay a premium to live in a desirable neighbourhood.

MLS sales data for 2018 analyzed by the Star shows that the couple’s neighbourhood of Broadview North was one of 50 areas in the city where buyers paid significantly above asking last year — anywhere from $13,556 to $178,700 more, on average. Many of those neighbourhoods are close to subway lines or the downtown core.

At the highest end was the neighbourhood of Playter Estates, north of the Danforth and east of the Don River, where homes not only sold an average of $178,700 over asking but within an average of seven days.

In neighbourhoods such as North Riverdale, purchasers paid $154,846 more. In the Greenwood-Coxwell area, that number was $84,909. To the west in Roncesvalles, purchasers paid an average of $121,150 more and in the Junction neighbourhood, that number was closer to $80,000.

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One reason buyers may be paying more than asking in these areas is because realtors are underpricing homes, said John Pasalis, the founder of Toronto real-estate firm Realosophy. The tactic can be used to initiate bidding wars.

But even if homes in those areas were priced at what they were worth, he said, they would still get over asking.

“I think we’re seeing a shift in the mindset of today’s generation of buyers, where detached and lot size are not the most important things,” said Pasalis. “What’s more important is accessibility to schools, walkability of the neighbourhood and to downtown.

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“And the compromise is actually a much smaller home.”

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Pasalis said house prices did drop in those desirable neighbourhoods when the market declined, but they “held their value a little bit better, that’s for sure.”

In areas of Scarborough and Etobicoke, where houses sold for close to asking or under, it’s likely the homes were priced closer to what they were worth, he said.

Some of the largest shortfalls were in neighbourhoods with multimillion-dollar homes, such as Forest Hill South, Bayview Village and the Bridle Path-Sunnybrook area, but Pasalis said overpricing could be to blame.

“So many are priced way above what they’re worth to begin with,” he said, “partly to see what the market will give you. They’re unique properties. It’s not as cookie-cutter as a typical three-bedroom semi.

“It’s the right strategy to price high and then eventually decrease,” Pasalis said. “And even when they sell, because it’s a three or four million dollar home, it’s still going to sell for $200,000 or $300,000 under asking, which as a percentage of the sale price isn’t that high.”

What he finds more fascinating is that people can still afford homes in this price range.

“That’s what’s astonishing,” he said. “There’s relatively decent demand,” although he notes it’s typically buyers who’ve amassed wealth through a successful business and often are trading up from an existing home.

Today, Pasalis said, there is “no slump” in the Toronto-area market, which is still fairly competitive. Home sales were slow in the first three months of 2019, but they picked up in April, he said.

That’s about the time Fitzgerald and Schaffner sold their home. Like many first-time buyers in the Toronto area, the couple was only able to afford the house in the Broadview North neighbourhood because of a cash infusion from parents.

They chose Chatham because it’s where Schaffner grew up, and he still has family there. The municipality of Chatham-Kent started a campaign five years ago to attract millennials who once called it home, and the couple has friends who moved back before they did.

Fitzgerald, a health economist, has been able to keep her same job at the Canadian Partnership Against Cancer. She works from home three days a week and commutes to Toronto for the other two.

Her husband, a wood worker who designs housewares, shares studio space in Chatham with an established shop owner who is giving him space for “almost nothing, because he said he knows what it’s like to be young and just starting out and he wants him to get on his feet,” she said.

“That local support has already been just unbelievable.”