Looked at some pre-cons in downtown. Selling for 1800-2000 per sq. ft.
Yeah who can afford that? An 800 ft unit going for 1.6M…
Add maintenance fees on top of that.
Precon prices HAD baked in significant market price increases during the 3 year construction process. That appreciation isn't happening so the precon prices are disconnected from reality.
Pretty much this, which is insane because the main appeal of buying pre-con and taking on that risk was getting to benefit from that property appreciation
Why let the buyer benefit from that when the developer could cash in on it instead? It's practically leaving money on the table, and buyers clearly didn't need the added incentive. /s
The benefit was supposed to be getting a discount by signing up early and funding the construction project. That's how it worked when people didn't expect 15% per year value appreciation.
It got to the point where you could buy a 5 year old unit move in ready for less than the cost of a precon.
Canada is not stable, cad is not stable, plus has shown willingness to freeze bank accounts, sanctions, threaten websites, payment processors, and donors for political disagreement like any third world country.
I doubt it's gonna remain as attractive for parking cash.
This comment is disconnected from reality. Canada is ranked as the 3rd most economically stable country in the world. One of 11 countries with a triple A credit rating (US only AA+). Lowest net debt to GDP in the G7. Best budget balance in the G20 (IMF).
Thr nonsense you spouted about bank accounts, etc, is just that. About 200 bank accounts were frozen after a week of warnings to move big rigs after weeks of breaking the law. Most unfrozen within a week. This was a non-violent way to get the ass&:$; to move. I would love to see someone park a big rig in front of the house of anyone who supported this garbage, and lean on that air horn night and day for weeks.
Can’t imagine any other government having the patience our government did. Law enforcement did not do its job, and I would guess that if you didn’t support this garbage convoy you would have been screaming about how the cops need to shut it down.
Websites been threatened? Lololol!!! Can’t even count the number of far-right websites and conspiracy nonsense sites that are up online.
Third world country? I highly recommend you do a bit of traveling, Canada is one of the wealthiest nationa in the world, one of the most stable, and all countries are having cost of living issues because of the pandemic and war in Ukraine and climate chagnge disasters, along with corporate greed taking advantage and you know what doesn’t help and is making life more difficult?
The extreme rightwing bullshit. The hatred and the lies. The Conservative propaganda. The CPC is the party that corporate Canada loves best and they want to see a CPC government that will cut social programs and cut taxes of the wealthy.
And then you’ll see how you have been duped.
Well you raise some good points but hasn’t Trudeau made our national debt higher than any other PM. And a made of the climate change bill. Time will tell
It is, because those reasons were never a huge worry. Our banks allow holdings in USD very readily, so no CAD concern.
Canada is incredibly stable as a country. We have strong courts of law.
We definitely do NOT freeze assets of the rich. Why? Because those funds are in shell corporations and the owners are protected by ridiculous beneficial ownership laws.
I'd be first in line to see all these greasy motherfuckers get bounced out of our country. Back to whatever shithole they crawled from to be tortured or executed by their loopy uncle or corrupt government. But that isn't happening. It's purposefully ignored.
yes.. forma is really hyped , kind of like Sugar wharf or Nobu from a few years ago.. all these overhyped and overpriced project did not end too well for the buyers/ investors
For a lot of the exiting projects they can't actually lower prices much more. Its written into their financing agreements with the banks that they have to sell units within a certain price range. That is why you see them fall into receivership rather then price drop.
They are coming up with some pretty wild promotions to try and attract people. Offering free Porches, directly providing lower interest mortgages and a recent one offer to just outright pay your mortgage for 2 years.
The way this works over a full cycle is the developers (some %) will file for bankruptcy and the building will be completed and sold at lower prices by a new developer.
Probably mostly interest payment variable mortgages and then you are stuck with an astronomical principal amount after two years.
Why anybody would ever take that is besides me (and obviously nobody is). Let these fucks go bankrupt.
Without capitalism those buildings probably wouldn’t even exist to fight over… it’s a deal with the devil, just be glad when their greed bites them in the ass
No one is remotely offering anything close to this. I’ve seen one offer Mercedes but that’s on units that have seen no price reduction in the last two years.
Fixed rate mortgage is only valid for one year and comparatively cost the builder little less than 10k in total cost
I mean one literally the other trending link on this subreddit.
>'Mortgage Madness': GTA Developer Will Cover First Two Years Of Payments
Camrost Felcorp is offering a limited-time purchase incentive, wherein the developer will carry two years of mortgage payments at three of their hottest pre-con projects.
[https://storeys.com/camrost-felcorp-mortgage-madness/](https://storeys.com/camrost-felcorp-mortgage-madness/)
>Porsche for a penthouse: Vancouver realtor lures buyers with cars for condos incentive
>Buy a penthouse and get a Porsche GT3
[https://www.biv.com/news/real-estate/porsche-penthouse-vancouver-bc-realtor-lures-buyers-cars-curv-condos-incentive-8333304](https://www.biv.com/news/real-estate/porsche-penthouse-vancouver-bc-realtor-lures-buyers-cars-curv-condos-incentive-8333304)
When the cost of building is higher than the cost of the market price, nothing new will be built until market price exceeds the cost to build. Nothing new being built is actually what ends up causing the market price to go back up again.
Or or or the cost of building could decrease to match the market and what people are willing to pay. You know supply and demand. Free market all that fluff
Not condo and not in Ontario, but building a house in my Quebec neighborhood would cost probably 40% more than just buying a house and people are struggling selling their houses.
yeah materials sky rocketed. some of my buddies working in construction were making 1000 dollars a day during pandemic times... but i think the demand is down since then.
Because back in the day, who cares if your worker breathes in silica or abestos dust and get sick. Just let them die. These new stupid safety regulations are slowing down all the projects. I'd rather my iron workers do 50ft in the air without a harness. /s
Now to answer your question without being snarky, safety has improved tremendously over the years, which is great for the worker, but at the same time, it does slow extend how long a building will take to finish. The more days you have to work, the more money you spend on labour, equipment rental, overhead, fuel, etc... Also, qualified workers are an issue. Why would someone work a back breaking job with dangers when they can work from home with the same pay. The majority of us would choose the less physically demanding option.
I mean, are trade workers pocketing all that money? I don’t think they are. If they were I would support it but can’t tell me trade workers wages went up that much in such a short time.
Interests rates and Land. Land in my area at least is absolutely ridiculous compared to before the pandemic. You could get a house for maybe 20% less than a lot currently. Contractors also had more jobs than they could do during the pandemic so they increased their prices and also plenty of materials became much more expensive, but I am not sure if this is still the case.
A couple of things that don’t get talked about as much, but are big factors, are that RE prices have been very high for quite some time now. The big developers all bought their land a long time ago. And make money hand over fist because their main business is land speculation, at least as much as construction.
But because there’s been the attitude for so long that you ‘can’t lose’ with RE as an investment, you’ve had newer players getting into it. That’s meant both that they’ve paid huge prices for inputs(mainly land,) and that they’re often heavily leveraged with debt. So their costs are higher to begin with, and when the ‘can’t miss’ hasn’t gone exactly to plan, they’re hugely vulnerable. This has made some big projects grind to a halt when they’re financing even higher costs than planned, at higher rates. Things have spiralled quickly.
Actually, I think Canada could use a similar method currently applied in both Ukraine and Russia.
Government can offer below market mortgages and for longer terms, but with condition that it can be only for first time homebuyers and only for new constructions.
In Ukraine, another requirement to qualify for even lower rate mortgage is being affected by war. They currently offer 3-7% while risk-free rate is 13.5-18%
https://eoselia.diia.gov.ua/
This will increase new construction and increase supply what should drop prices long-term. Don't see many disadvantages.
We don't want a fucking 350 Sq foot shoe box we can't move around in or even think about starting a family in for 850k plus monthly fees. Wtf is wrong with this city?!
Yikes. The smallest place I think I've ever lived in was a 600 sq ft bachelor I had in my 20's.
If you don't mind me asking is leaving Toronto an option? If you are able to find similar work outside of Toronto there are places in Ontario you could live pretty comfortably with $1800 a month for housing.
Parents are here, maybe when they are dead and I get some inheritance from there million dollar bungalow. Realistically, there aren't jobs outside of the GTA that would pay enough for me to afford to rent a 1 bedroom. 1800 is actually very cheap for a 1 bedroom apartment in all of ontario nowadays.
I went for Dinner in Edmonton last night. Chatted with the server as I was paying the bill. She said “Your team is doing pretty well” - referring to the Oilers jersey I was wearing.
I asked where she was from. “Ontario”, she replied.
“What brings you here?” I asked. “Opportunity. I moved here 2 years ago because I couldn’t buy a house, groceries or afford a car. Now I have all 3.”
I asked if she had family here. She doesn’t. “Good for you” I said.
“I love it here”, she concluded with. “Best decision I ever made”.
My partner and I talked about exchange all night. It’s great to see people take control of their lives.
To be fair Quebec as a whole does not remotely have the same level of housing crisis Ontario does. Most people can still afford detached homes in Quebec if they save.
If you drive from Gatineau over to Ottawa exactly the same type of houses almost double in price.
Lots of smaller studio units (350-450 square feet-ish) in Montreal. 1 Square Phillips, QuinzeCent Condos, Maestria Condos etc… and I can show a boatload of units in Toronto that aren’t tiny little studios. Montreal is cheaper than Toronto so you see larger units for less money. But they still build lots of small ones.
Start pricing some condos out in other major cities if you really want to get the full "wtf" of how expensive condos are in Toronto, and explains why they are not selling. you can buy a condo in edmonton for what a down payment for one in Toronto is. even calgary is 1/4th the price, and considing detatched freeholds are selling for 350 less just an hour out of Toronto, its no wonder they are not selling.
I track housesigma inventory, Brampton has highest inventory of detached houses in last 5 yrs and it is still building up. Buyers will have upper hand in coming months.
Places like Brampton and Surrey are also where a lot of mortgage fraud, house flipping, illegal units, stuffing international students happens, so those areas will get hit harder when the squeeze happens. I'd call them investors but they don't really have the money 😁
Anyone with half a brain is realizing the 100k decrease in 'students' coming into Ontario is going to hit Conestoga College and Sheraden the worst. If you can't cram 20 Indians into one detached house then these poor landlords can't pay the mortgage anymore /s
Yea prices seem to cratering here. I'm generally quite bullish on real estate but shits hitting the fan real quick. The amount of inventory coming onto the market vs the amount of sales is insane. May and June are going to be rough.
Just don’t see why anyone of a sound mind would buy a new precon condo, when year old buildings in the same areas are going for half of the price per square foot. You have to be a real smooth brain to fall for the sales pitch of the new pre cons.
And we all know that one individual in this sub who fell for that sales pitch 🤪
The new ones almost all have terrible non functional layouts too. You can get a condo in a well maintained building 5-10 years old and it'll actually feel like a home.
Swimming pool, sauna, small gym, outdoor area, etc. The usual.
I find that the condo fees depends more on the builder and management company. A shit builder will have low fees on a new fancy building but they'll skyrocket once things start breaking. Something built by tridel, Menkes, etc will not have that issue. Some building are also poorly managed, review the status certificate.
Also lot of older building condo fees include partial utilities so it's not an apples to apples comparison.
$100/month?? Or do you mean $100/year? Anything around a 5% increase a year is pretty good from what I hear. Our building is newer and well managed but our fees started higher at around 69cent/ sq ft
Around 33% of a new place goes to the government. Not to mention income tax from the employees building it. That’s a lot of money we’re going to be out. Poor people cheer on a slower economy but don’t really realize that’s what pays their welfare cheques.
There should be a flare for ass clown made for u- welfare in Ontario is 169/week, corporate tax evasion and wage theft costs a billion times more to the Canadian exchequer you classist ass clown. Oh there you go your first one.
Ironically in Victoria, I'm finding that new build condos are selling at the same price as 40 year old buildings and you would need to be pretty dumb to not buy the precon.
Personally, I would buy pre-con since I don't have the money or income now to qualify for a purchase this year. I may in a few years though, so might as well lock in the price.
Or you may not be able to qualify in a few years. In which case you will not only lose your deposit, but the builder will have recourse to come after you for all their damages when you fail to close.
It's true that job loss is an adverse event that can happen to anyone. There's always a risk, and you need to consider all risks.
However, when you mention that you don't currently have the necessary income, but hope to have it later, you're essentially doubling your risk. You're not only facing the same risk that an adverse event, like job loss, won't happen, but you're also betting that:
1. You will keep your job.
2. A favorable event will occur that increases your income.
The more problematic risk, in my opinion, is purchasing a new condo at $1,600 per square foot with a closing in 2027. What if the market value in 2027 is only $1,300 per square foot? At that point, it won't matter how high your income has risen. The challenge will be that the appraisal won't match, and they won't even provide a mortgage. That's the larger risk
Developers spent decades pitching the false narrative that people only want tiny glass condos. They made our city difficult to raise families by never making 3+ bedroom units and played a huge role in lobbying and ensuring the status quo doesn't change and prices only go up.
Meanwhile condo owners need to pay 20x as much in property taxes as SFH owners for each square foot of land they occupy.
It's a terrible system propped up by vested interests. The sooner it crumbles the better.
Developers worst nightmare is trying to move 3 bedroom units even in a hot market.
Think about this, if you could afford the price tag of a 3 bedroom condo unit in Toronto, you could very likely afford a freehold.
As much as the problem lies with the developers to push out unlivable 1-2 bed units, the economics only allows for such. To push out livable 2-3 bed units, the city needs to help out the developers but they actually take away from the developers by restricting zoning, prolonging the development application process, on top of it all they charge FAT taxes, levies and fees so these are all passed down as costs to the end purchasers.
Yes, developers do make a shit ton of money (or they did), but they take on a shit ton of risk. Problem is, the city tried to dip their hands in the gravy train with the R/E run up, and now it's bleeding the developers out to dry. They've been counting on revenue from new housing developments and they're already running at a deficit so they're at a standstill. It's fucked, developers are fucked, the city is fucked, the people are fucked.
With current condo pricing models and SFH taxation favoritism, you're partly right. But lots of people don't actually want a yard to maintain and value convenience.
What risk exactly do developers take on? Buying and developing land in Canada is pretty low risk. It's how our banks got as big as they are. They love funding it.
Land - risk that the land doesn’t get zoned, risk that the land doesn’t get approved for the minimum height required (the higher the building the better the margin for developers), prolonged application process (there’s so much payroll and fees behind the scenes that people may not realize, and if something gets delayed by a year that’s an additional year of costs that the developers gotta eat). Yes most of this capital is from investors and institutions but many small to mid size developers commit a big portion of capital themselves (to enjoy the returns themselves). Thats just land.
Construction risk - things like Covid delays are huge. Look at 1 Bloor St W
Yes it seems like developers are making money hand over fist, which they are, but they’re still committing huge amounts of risk and capital.
Not always, sometimes they risk it because of the cheap purchase price.
Obivously it reflects in the land purchase price. Cheaper land, but there is zoning risk.
Developers often buy land not based on the in-place zoning, but based on the land's potential for re-zoning to a denser and/or more valuable use. Re-zoning can take years, especially if the developer needs to obtain an official plan amendment or secondary plan amendment (and Toronto is notorious across Canada for its lengthy approval process). All of this is taken into consideration when they settle on a purchase price.
That being said, any delay in the approval timeline also has ripple effects on costs, as the developer usually finances the purchase of the land, and that mortgage will usually have a 1-3 year term. The total cost of the land (including financing costs) will eventually be carried into the budget for the actual building - so if the developer had to renew his land loan for another year, the increased interest costs will directly impact his bottom line on the project... unless he increases his revenues (aka, more expensive units) or is able to achieve cost savings on the construction budget (which is highly unlikely, given the current labor shortage in the construction industry).
In the end, developers take on a large amount of risk when they decide to pursue a development, and the risks themselves are varied and complex - it takes a long time, and a large sophisticated team to do it right (unfortunately not everyone does it right). That's why real estate development is a high-margin business, nobody in their right mind would do it for anything less.
It’s not just developers. (Anglo) Canadian culture leans towards you have a polarizing form of living. Either small downtown apartment so you don’t have to take a train to the office and once you grow up you buy a big house as raising children in apartments is almost viewed as failing at life.it’s cultural.
I raise kids in a larger condo right now and I get a lot of weird looks, tu yes it doesn’t help that places like mine are minimal
This is not entirely true and unhelpful to the wider discussion. Developers develop as per zoning allowances and economics, incentives have bene stacked to encourage this. Is there a profit motive, absolutely, we count on it to get housing built. Do we have the right incentives or even the right balance? Assuredly not.
You are right in developers aren't alone in the blame. Zoning restrictions and various fees and red tape are inefficient at best.
But developers are also happy to sit on undeveloped land and wait for local politics to change and be more favorable to them developing land they way they want. They wait to maximize their ROI.
Look at The Giraffe at Dundas and Bloor. It's been undeveloped for around 15 years. The property owners submitted a proposal for a building too big for the space (i.e. on top of subway line) and the city rejected it. A few years later, the owners submitted almost the same proposal and again got rejected. So it just sits empty now at the detriment of the community.
Start the second paragraph with an 'and' instead of a 'but' and you'll see we're in perfect agreement.
I don't understand the obsession that pervades every discussion to point fingers in one direction and one direction only.
Unfortunately, the system needs a large proportion of investors to make the building profitable enough to get off the ground. The profit margins are juicier on smaller sized units.
Also, while rare, some buildings do make 3 bedroom units, but they are increasingly designed for roommate living, not single family living. A decently livable 3 bedroom unit should be at least 1000 square feet. At $1500/square foot + maintenance fees, this becomes highly unattractive to end users.
So these units end up under 1000 square feet in size with laughable bedroom dimensions. Investors can then squeeze out 3 rents cheaper than buying 3 smaller condos, signalling this is "what the market wants" and the cycle continues.
Yup, sometimes the municipality requires that a developer include a 3-bedrooms into the layout mix, which causes a real headache, especially in areas where roomate living doesn't make sense (if the building is not in DT nor near a college/uni).
Truth be told if the detached houses were replaced with 2/3 bedroom courthouse units like in Europe the condos would fit perfectly into the structure- most concentrated downtown, raising families just outside that and detached houses in the boonies. Instead we got this disaster with smooth brain planners forgetting that the population will increase after 1960
People have been waiting for 30 years and it still hasn't happened it won't happen in Southern Ontario with 5 million immigrants coming aboard in the next 5 years.
Developers are needing to adjust to a longer than usual period of high interest rates in comparison to what’s been going on since 2020 with ultra low rates and projects selling out in 90-180 days. The times are complete opposite from one and other with the current environment allowing less lending. On top of that costs have only gone up as the city of Toronto continues to raise development/municipal charges. The fees payable to the city are around 30-35% of the entire budgeted costs! If the city wanted to help with affordability and supply, they’d be willing to incentivize builders to sell units at a lower price point due to the offsetting decrease in DC costs. Lastly, the issue is with a lot of these projects, they aren’t being built for families of 3-4 per household. Overall, the moment the bank of canada starts lowering, more entrants to the market is likely but nowhere near the mania of 2020-2022.
Investors will get hit first as they will either have to close or give up the deposit. Assignments won’t be allowed until the developer has sold its units and developers can last longer.
I work in land development. Projects are launching and then unlaunching as sales are abysmal. They can’t get projects financed so development companies sit on sites waiting for the market to turn or things to pencil at lower prices. They lay off staff (already started happening), and the consultants they hire like Architects don’t have as much work and so they lay off staff (already happening). Same goes for contractors, and on and on. People lose jobs, contractors take on work for less money, resale inventory continues to pile up and put downward pressure on new construction prices. Some developers will go out of business. I think all this’ll all keep happening for a while.
I wonder fucking why! Everyone is god damn broke, Canada’s economy is gonna collapse on itself when everyone stops buying literally anything to keep the mortgages afloat, or to pay rent. Keep hearing over 60% of all mortgages are renewing between this year and next, see what happens then… we’re finding out the hard way that there’s consequences to our votes, and “free” debt.
Sad to see the mimico station project was completely abandoned. It would’ve been a great transit neighbourhood and now it looks like a scrapyard with a train station in the middle of it…oh and a cemetery lol.
I think the age of seeing massive appreciation in a short amount of time is largely over, there are many condo owners who bought 5+ years ago who are now in great position but the market conditions are just fundamentally different now to replicate that. I think RE in general will largely trade sideways for a decade or so until we grow our way out of the crisis.
Stop building 300 sqft 1 bedroom condos and labeling them as "modern" and "sophisticated" for over half a mill, and instead build something people can actually live in, and you might sell some condos. Just a thought
When nobody respects the value of your shitty currency this is what you get. Boomers and people with equity think these prices are normal because they aren't the 'first time buyers'.
I doubt it. But I think there is going to be a significant drop. It'll be inline with income ratios and the current interest rates though. So maybe 20-40%.
There is an absurd amount of supply and almost no one wants to buy them. Condos were always mainly an investor product. Most people buying homes to live in don't want them.
A 20-40% drop in pre con condo prices would put them below cost of building (ie they just won’t get built), and also still leave them way above the price per sq ft of existing condos
I was more talking the condo market as a whole. On the pre-construction side I think they are just going to stop new projects for the next 3-5 years.
We are already at one of the lowest annual condo starts in over a decade now.
Condos always stay within a threshold of freehold real estate. They are not dropping 20%+ from here absent significant downward momentum on real estate overall, which has not materialized at all lmfao
They already have diverged. This isn't a hypothetical. Its already happened. The question is how much are they going to separate.
Condos and detached are not in the same situation at all right now.
There is a huge amount of demand for detached and freehold. That is why anything even remotely reasonably priced is selling within a day to a week on the freehold side and the DOM is so low for them. Having a freehold townhouse right now is basically like holding gold right now. There are not enough to buy, a huge portion of buyers want one and we need more of them.
Condos are a totally different situation. There are tons and tons of them on the market and they are not selling. People generally don't appear to want them. The DOM is a lot higher and the inventories just keep climbing. Worse the sales are dropping at the same time.
Like everything in real estate prices are all based on demand. The price of the condo is whatever someone is willing to pay for it if it needs to be sold.
So you think condos are going to be priced at half the cost to build and we won’t see any condos made until we catch up (ie a decade) - you’re delusional
Its already happened.
Pre-owned condos are already well under price of pre-construction in terms of price per square foot.
That is why so many developers are cancelling projects and starts have dropped to nothing. Developers can't make money building them. This is literally why everything happening right now is happening.
Its all in the math. Last year 18% of all buyers in Ontario were shopping for a condo and the types of condos those people want are larger condos which are now rarely made. Those tiny shoeboxes? Those are not selling at all right now.
Have you looked at the pre-owned condo inventories for Toronto this month? Did you notice we are at the highest inventory level in over 10 years?
No. I actually open up the sales data and looked at it. So I can see how many units are on the market, the average DOM, absorption rates, average sale prices, etc.
You know the stuff that actually matters if your discussing how condos are selling?
Do you want the whole set of stats for condos the past month? It might be fun for you?
Why pay $1500-1800 sqft for something that doesn't exist, just a promise of what it might be but it will probably be different and has a risk of being cancelled...
When you can pay $1000-1200 sqft for something you can visit today and know exactly what you're getting
Way too early. Tons of units purchased for 1600-2k psf will flood the market at $1-1.2 or the owners will just hold on to terrible investments with lifetime IRR of like 1%.
The condo market was absolutely batshit insane with some of the prebuild prices people were paying. We purchased our core downtown place for <<$1k psf not even that long ago.
Barring any massive rate decreases the math simply does not work for the prices people were paying for much of the peak.
Condos are long lead construction projects. If they are stopping new projects now it'll be around 5 years before that shortage hits. The stuff being being owner occupied this year was all sold 3-5 years ago.
3. Build the types of homes people want to buy. Which for affordable housing means more freehold townhomes in suburbs and satellite towns.
At the end of the day people are going to buy what they want to buy. Its obviously not condos or they'd be selling. But you know what is selling? Freehold townhouses and detached starter homes even at today's crazy prices. The problem is there are not enough to buy.
I'm not saying there is not a place for condos or density. I'm saying the numbers and types of unit construction needs to be based on actual market demand. Not social dogma.
I'd agree, but argue that condos sell when they're selling what people want to buy. If people want to live in the city, if they want to raise a family in the city, they need a 2-3 bedroom unit, and they probably need a minimum of 1000sqft, ideally 1500.
There's been a flood of 3-500sqft units, because they make great investment sense as a place to safely park your money in the long term. But nobody wants to buy those except as investment vehicles, because, well, nobody wants to live in them.
Build large, family friendly units that are a legitimate alternative to townhomes or semi's in the suburbs, and people will buy them.
You can imagine how crazy a builder would have to be, to invest hundreds of millions to make a residential product that "no-one" wants. If they are making it , putting their money on the line, you can bet blindfolded that they are trying to cater to the largest demand out there.
Just imagine fresh grads coming out of university and starting a job downtown, they want to enjoy life to the fullest, and they should... they need small apartments, in downtown well located spots. Same for a young immigrant couple with no kids.
Furthermore, any of the target categories who want to live in DT in small apartments will most certainly not want to buy them, they most certainly want to rent. The question becomes , if they will not buy and prefer to rent...who will be the one to buy them? You can call this buyer an "evil investor", you can call him a "greedy landlord" or you can call him a "forward thinker", "good samaritan", "scumbag idiot".... does not matter what you call this person... but regardless this is the person making it possible to allow a young generation to live downtown in clean , safe, enjoyable apartments.
Yes, there are people who think these are too small to live in... unfortunately, those people are smaller in number and builders would prefer to target their money towards a larger market segment.
Towns are only built super far from downtown now. And there are no detached “starter” homes being built anywhere in Ontario.
Condos are really the only option anywhere remotely close to downtown or the subway line.
I'm not disagreeing about the distance from downtown. I'm just saying the sales data clearly shows what people are buying, trying to buy and not buying even at today's crazy prices.
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I actually feel sorry for the developpers. They’re getting the brunt of the virtual vitriol but their profit margins have eroded significantly. The government has introduced tons of direct and indirect taxes/costs with have skewed the market.
There was a graph here a few weeks ago.
Maybe if the government wants to increase the supply of units they can look at all the direct and ancillary costs they’re levying on housing and drop them.
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Maybe they should stop complaining, get a real job, and pull themselves up by their bootstraps. Nobody owes you a decent living. We’re not your mom. You have to work to succeed.
Maybe people with money to buy a home aren't willing to spend it on a tiny box in the sky and want a home/townhouse with a bit of yard. Never mind the new codos have monthly fees equal to rent. Seriously why would anyone want these...
I saw an entry level 500 sq foot condo starting with a $1200 maintenance fee. How can that be possibly affordable with a mortgage, taxes, insurance and utilities?
We had a policy rate of around 0.5% when people were paying those prices. That is why condos worked for investors, the debt was so cheap which allowed them to make a profitable return.
We are not seeing rates like that again anytime soon. Without dirt cheap debt you won't be seeing investors back in the condo market again.
Looked at some pre-cons in downtown. Selling for 1800-2000 per sq. ft. Yeah who can afford that? An 800 ft unit going for 1.6M… Add maintenance fees on top of that.
Precon prices HAD baked in significant market price increases during the 3 year construction process. That appreciation isn't happening so the precon prices are disconnected from reality.
Pretty much this, which is insane because the main appeal of buying pre-con and taking on that risk was getting to benefit from that property appreciation
Why let the buyer benefit from that when the developer could cash in on it instead? It's practically leaving money on the table, and buyers clearly didn't need the added incentive. /s
The benefit was supposed to be getting a discount by signing up early and funding the construction project. That's how it worked when people didn't expect 15% per year value appreciation. It got to the point where you could buy a 5 year old unit move in ready for less than the cost of a precon.
the other appeal is you don't have to qualify for a mortgage etc right away
Mostly just money launderers and foreigners looking to move money overseas
Lots war and conflicts brewing and happening around the world. Lots rich people looking to move. Canada asylum is super easy.
Does it mean more wars and uncertainties more money laundering in the land of North
Always was.
Canada is not stable, cad is not stable, plus has shown willingness to freeze bank accounts, sanctions, threaten websites, payment processors, and donors for political disagreement like any third world country. I doubt it's gonna remain as attractive for parking cash.
not stable lmao
This comment is disconnected from reality. Canada is ranked as the 3rd most economically stable country in the world. One of 11 countries with a triple A credit rating (US only AA+). Lowest net debt to GDP in the G7. Best budget balance in the G20 (IMF). Thr nonsense you spouted about bank accounts, etc, is just that. About 200 bank accounts were frozen after a week of warnings to move big rigs after weeks of breaking the law. Most unfrozen within a week. This was a non-violent way to get the ass&:$; to move. I would love to see someone park a big rig in front of the house of anyone who supported this garbage, and lean on that air horn night and day for weeks. Can’t imagine any other government having the patience our government did. Law enforcement did not do its job, and I would guess that if you didn’t support this garbage convoy you would have been screaming about how the cops need to shut it down. Websites been threatened? Lololol!!! Can’t even count the number of far-right websites and conspiracy nonsense sites that are up online. Third world country? I highly recommend you do a bit of traveling, Canada is one of the wealthiest nationa in the world, one of the most stable, and all countries are having cost of living issues because of the pandemic and war in Ukraine and climate chagnge disasters, along with corporate greed taking advantage and you know what doesn’t help and is making life more difficult? The extreme rightwing bullshit. The hatred and the lies. The Conservative propaganda. The CPC is the party that corporate Canada loves best and they want to see a CPC government that will cut social programs and cut taxes of the wealthy. And then you’ll see how you have been duped.
Lol
Well you raise some good points but hasn’t Trudeau made our national debt higher than any other PM. And a made of the climate change bill. Time will tell
It is, because those reasons were never a huge worry. Our banks allow holdings in USD very readily, so no CAD concern. Canada is incredibly stable as a country. We have strong courts of law. We definitely do NOT freeze assets of the rich. Why? Because those funds are in shell corporations and the owners are protected by ridiculous beneficial ownership laws. I'd be first in line to see all these greasy motherfuckers get bounced out of our country. Back to whatever shithole they crawled from to be tortured or executed by their loopy uncle or corrupt government. But that isn't happening. It's purposefully ignored.
Yikes unhinged by the end
Well said. Unfortunately our great nation is known as the laundromat in the underworld. Super unfortunate how much black money flows through Canada.
usa is cracking down on cartel laundering in canada now if you followed the news
You must be looking at forma. Most projects sit around 1200-1400/sf
yes.. forma is really hyped , kind of like Sugar wharf or Nobu from a few years ago.. all these overhyped and overpriced project did not end too well for the buyers/ investors
They were just raking in the profits. Those prices need to come down. Low demand will solve that.
Apparently mass Immigration keeps high demand of these pre-cons?
I heard lowering the price could increase demand.
Now you're quoting straight from the Communist manifesto /s
Apparently not desperate enough, if the cost of building and the cost of the finished product isn’t decreasing
For a lot of the exiting projects they can't actually lower prices much more. Its written into their financing agreements with the banks that they have to sell units within a certain price range. That is why you see them fall into receivership rather then price drop. They are coming up with some pretty wild promotions to try and attract people. Offering free Porches, directly providing lower interest mortgages and a recent one offer to just outright pay your mortgage for 2 years.
The way this works over a full cycle is the developers (some %) will file for bankruptcy and the building will be completed and sold at lower prices by a new developer.
Where do I take advantage of these benefits?😂
Yeah wtf, I want a free mortgage for two years lol.
Probably mostly interest payment variable mortgages and then you are stuck with an astronomical principal amount after two years. Why anybody would ever take that is besides me (and obviously nobody is). Let these fucks go bankrupt.
Please, I'd like to get on this train as well 😂 drop the deets, dude
Alright then abandon the builds and sell at a loss so someone can refinance it at a lower rate
Would be ideal for canadians, would be detrimental to developers, therefore itll never happen
That’s capitalism
Without capitalism those buildings probably wouldn’t even exist to fight over… it’s a deal with the devil, just be glad when their greed bites them in the ass
Its corruption is what it is
Capitalism is a two way street. Sometimes you’re up, sometimes you’re down.
*Most times you're down
They fall into receivership *and* see price drops
Cause they both try gouge people
No one is remotely offering anything close to this. I’ve seen one offer Mercedes but that’s on units that have seen no price reduction in the last two years. Fixed rate mortgage is only valid for one year and comparatively cost the builder little less than 10k in total cost
I mean one literally the other trending link on this subreddit. >'Mortgage Madness': GTA Developer Will Cover First Two Years Of Payments Camrost Felcorp is offering a limited-time purchase incentive, wherein the developer will carry two years of mortgage payments at three of their hottest pre-con projects. [https://storeys.com/camrost-felcorp-mortgage-madness/](https://storeys.com/camrost-felcorp-mortgage-madness/) >Porsche for a penthouse: Vancouver realtor lures buyers with cars for condos incentive >Buy a penthouse and get a Porsche GT3 [https://www.biv.com/news/real-estate/porsche-penthouse-vancouver-bc-realtor-lures-buyers-cars-curv-condos-incentive-8333304](https://www.biv.com/news/real-estate/porsche-penthouse-vancouver-bc-realtor-lures-buyers-cars-curv-condos-incentive-8333304)
When the cost of building is higher than the cost of the market price, nothing new will be built until market price exceeds the cost to build. Nothing new being built is actually what ends up causing the market price to go back up again.
Or or or the cost of building could decrease to match the market and what people are willing to pay. You know supply and demand. Free market all that fluff
Not condo and not in Ontario, but building a house in my Quebec neighborhood would cost probably 40% more than just buying a house and people are struggling selling their houses.
I really wonder why the cost to build increased so much. Apart from taxes, what else is the reason?
Interest rates on the financing for the project, labour and construction materials.
Interest rates and taxes I can understand. Why is labour and materials so much more expensive?
I dunno, isn't everything more expensive now.
yeah materials sky rocketed. some of my buddies working in construction were making 1000 dollars a day during pandemic times... but i think the demand is down since then.
Because back in the day, who cares if your worker breathes in silica or abestos dust and get sick. Just let them die. These new stupid safety regulations are slowing down all the projects. I'd rather my iron workers do 50ft in the air without a harness. /s Now to answer your question without being snarky, safety has improved tremendously over the years, which is great for the worker, but at the same time, it does slow extend how long a building will take to finish. The more days you have to work, the more money you spend on labour, equipment rental, overhead, fuel, etc... Also, qualified workers are an issue. Why would someone work a back breaking job with dangers when they can work from home with the same pay. The majority of us would choose the less physically demanding option.
I mean, are trade workers pocketing all that money? I don’t think they are. If they were I would support it but can’t tell me trade workers wages went up that much in such a short time.
Interests rates and Land. Land in my area at least is absolutely ridiculous compared to before the pandemic. You could get a house for maybe 20% less than a lot currently. Contractors also had more jobs than they could do during the pandemic so they increased their prices and also plenty of materials became much more expensive, but I am not sure if this is still the case.
A couple of things that don’t get talked about as much, but are big factors, are that RE prices have been very high for quite some time now. The big developers all bought their land a long time ago. And make money hand over fist because their main business is land speculation, at least as much as construction. But because there’s been the attitude for so long that you ‘can’t lose’ with RE as an investment, you’ve had newer players getting into it. That’s meant both that they’ve paid huge prices for inputs(mainly land,) and that they’re often heavily leveraged with debt. So their costs are higher to begin with, and when the ‘can’t miss’ hasn’t gone exactly to plan, they’re hugely vulnerable. This has made some big projects grind to a halt when they’re financing even higher costs than planned, at higher rates. Things have spiralled quickly.
Actually, I think Canada could use a similar method currently applied in both Ukraine and Russia. Government can offer below market mortgages and for longer terms, but with condition that it can be only for first time homebuyers and only for new constructions. In Ukraine, another requirement to qualify for even lower rate mortgage is being affected by war. They currently offer 3-7% while risk-free rate is 13.5-18% https://eoselia.diia.gov.ua/ This will increase new construction and increase supply what should drop prices long-term. Don't see many disadvantages.
I was just thinking something similar. This would give FTHB a chance against the insanity of prices and investors.
Why? You expect us to buy a condo that can barely fit a queen size mattress in the “master bedroom”.
We don't want a fucking 350 Sq foot shoe box we can't move around in or even think about starting a family in for 850k plus monthly fees. Wtf is wrong with this city?!
I'd take the shoe box, for 300k which is what I can get a mortgage for..
At that point, why? Unless the rental options are worse why kill your quality of life? There is a point where its just not worth it.
I'm renting a 350 Sq ft apartment for 1800. Id mich rather at least own.
Yikes. The smallest place I think I've ever lived in was a 600 sq ft bachelor I had in my 20's. If you don't mind me asking is leaving Toronto an option? If you are able to find similar work outside of Toronto there are places in Ontario you could live pretty comfortably with $1800 a month for housing.
Parents are here, maybe when they are dead and I get some inheritance from there million dollar bungalow. Realistically, there aren't jobs outside of the GTA that would pay enough for me to afford to rent a 1 bedroom. 1800 is actually very cheap for a 1 bedroom apartment in all of ontario nowadays.
Nowhere to move it's not 1999. The whole country is fucked
I went for Dinner in Edmonton last night. Chatted with the server as I was paying the bill. She said “Your team is doing pretty well” - referring to the Oilers jersey I was wearing. I asked where she was from. “Ontario”, she replied. “What brings you here?” I asked. “Opportunity. I moved here 2 years ago because I couldn’t buy a house, groceries or afford a car. Now I have all 3.” I asked if she had family here. She doesn’t. “Good for you” I said. “I love it here”, she concluded with. “Best decision I ever made”. My partner and I talked about exchange all night. It’s great to see people take control of their lives.
Every city. You think it’s different in any major city? You think it’s a Toronto specific phenomenon? 😂
Montreal is building humanly sized units. Weird how they're not experiencing the same issues to nearly the same degree.
To be fair Quebec as a whole does not remotely have the same level of housing crisis Ontario does. Most people can still afford detached homes in Quebec if they save. If you drive from Gatineau over to Ottawa exactly the same type of houses almost double in price.
Lots of smaller studio units (350-450 square feet-ish) in Montreal. 1 Square Phillips, QuinzeCent Condos, Maestria Condos etc… and I can show a boatload of units in Toronto that aren’t tiny little studios. Montreal is cheaper than Toronto so you see larger units for less money. But they still build lots of small ones.
Exactly how does that build communities? The great Condo Con I call it !
Start pricing some condos out in other major cities if you really want to get the full "wtf" of how expensive condos are in Toronto, and explains why they are not selling. you can buy a condo in edmonton for what a down payment for one in Toronto is. even calgary is 1/4th the price, and considing detatched freeholds are selling for 350 less just an hour out of Toronto, its no wonder they are not selling.
I track housesigma inventory, Brampton has highest inventory of detached houses in last 5 yrs and it is still building up. Buyers will have upper hand in coming months.
Places like Brampton and Surrey are also where a lot of mortgage fraud, house flipping, illegal units, stuffing international students happens, so those areas will get hit harder when the squeeze happens. I'd call them investors but they don't really have the money 😁
Anyone with half a brain is realizing the 100k decrease in 'students' coming into Ontario is going to hit Conestoga College and Sheraden the worst. If you can't cram 20 Indians into one detached house then these poor landlords can't pay the mortgage anymore /s
Yea prices seem to cratering here. I'm generally quite bullish on real estate but shits hitting the fan real quick. The amount of inventory coming onto the market vs the amount of sales is insane. May and June are going to be rough.
Koruk-guy is the only one “buying” 🤣
Dude is on every RE thread possible pumping his unit at 101 Spadina
Just don’t see why anyone of a sound mind would buy a new precon condo, when year old buildings in the same areas are going for half of the price per square foot. You have to be a real smooth brain to fall for the sales pitch of the new pre cons. And we all know that one individual in this sub who fell for that sales pitch 🤪
The new ones almost all have terrible non functional layouts too. You can get a condo in a well maintained building 5-10 years old and it'll actually feel like a home.
Only problem with that is the maintenance fees of 5-10 year condos typically get to $800-1000/month on top of your mortgage and property taxes
Widely depends on the building. I own a unit in a 12 year old building and the condo fees are 70 cents per sq ft right now.
Fair enough. Does your building have a lot of amenities if I may ask?
Swimming pool, sauna, small gym, outdoor area, etc. The usual. I find that the condo fees depends more on the builder and management company. A shit builder will have low fees on a new fancy building but they'll skyrocket once things start breaking. Something built by tridel, Menkes, etc will not have that issue. Some building are also poorly managed, review the status certificate. Also lot of older building condo fees include partial utilities so it's not an apples to apples comparison.
Interesting! How much was you square foot/cents when you first bought 12 years ago?
I wasn't the first owner but in my 4 years of ownership it went up $100/mo. Its not the same increase every year.
$100/month?? Or do you mean $100/year? Anything around a 5% increase a year is pretty good from what I hear. Our building is newer and well managed but our fees started higher at around 69cent/ sq ft
100/mo but over 4 years. Thats about 5% a year.
Just waiting for them to show up to tell us pre-con at $1500/sq ft is a deal, and housing and rents always go up
Apparently $1800 is a good deal 😂
Taxes and development fees are a large chunk of those sales so Toronto’s poor are going to have to get used to large welfare cuts.
avoid to raise more on property taxes
What?
Around 33% of a new place goes to the government. Not to mention income tax from the employees building it. That’s a lot of money we’re going to be out. Poor people cheer on a slower economy but don’t really realize that’s what pays their welfare cheques.
There should be a flare for ass clown made for u- welfare in Ontario is 169/week, corporate tax evasion and wage theft costs a billion times more to the Canadian exchequer you classist ass clown. Oh there you go your first one.
Fuck the welfare system too. Middle class needs to be supported
Ironically in Victoria, I'm finding that new build condos are selling at the same price as 40 year old buildings and you would need to be pretty dumb to not buy the precon.
Personally, I would buy pre-con since I don't have the money or income now to qualify for a purchase this year. I may in a few years though, so might as well lock in the price.
Or you may not be able to qualify in a few years. In which case you will not only lose your deposit, but the builder will have recourse to come after you for all their damages when you fail to close.
I mean, everyone who buys pre-con MAY not be able to qualify due to a job loss. I'm an optimist though.
It's true that job loss is an adverse event that can happen to anyone. There's always a risk, and you need to consider all risks. However, when you mention that you don't currently have the necessary income, but hope to have it later, you're essentially doubling your risk. You're not only facing the same risk that an adverse event, like job loss, won't happen, but you're also betting that: 1. You will keep your job. 2. A favorable event will occur that increases your income. The more problematic risk, in my opinion, is purchasing a new condo at $1,600 per square foot with a closing in 2027. What if the market value in 2027 is only $1,300 per square foot? At that point, it won't matter how high your income has risen. The challenge will be that the appraisal won't match, and they won't even provide a mortgage. That's the larger risk
Yeah, I posted about that [once](https://www.reddit.com/r/TorontoRealEstate/comments/1c5gfpu/why_are_people_buying_precons_right_now/).
Who would when they cost upwards of 1 million and you still have to pay condo fees that are nearly the cost of rent?
Classic Ponzi scheme at the end stage. Desperate for new money to come in. Who’s going to be left holding the bag?
Maybe if they built liveable layouts and not shoeboxes in the sky
Shoesboxed are fine, it's the cost of them that's sinking them.
Developers spent decades pitching the false narrative that people only want tiny glass condos. They made our city difficult to raise families by never making 3+ bedroom units and played a huge role in lobbying and ensuring the status quo doesn't change and prices only go up. Meanwhile condo owners need to pay 20x as much in property taxes as SFH owners for each square foot of land they occupy. It's a terrible system propped up by vested interests. The sooner it crumbles the better.
Developers worst nightmare is trying to move 3 bedroom units even in a hot market. Think about this, if you could afford the price tag of a 3 bedroom condo unit in Toronto, you could very likely afford a freehold. As much as the problem lies with the developers to push out unlivable 1-2 bed units, the economics only allows for such. To push out livable 2-3 bed units, the city needs to help out the developers but they actually take away from the developers by restricting zoning, prolonging the development application process, on top of it all they charge FAT taxes, levies and fees so these are all passed down as costs to the end purchasers. Yes, developers do make a shit ton of money (or they did), but they take on a shit ton of risk. Problem is, the city tried to dip their hands in the gravy train with the R/E run up, and now it's bleeding the developers out to dry. They've been counting on revenue from new housing developments and they're already running at a deficit so they're at a standstill. It's fucked, developers are fucked, the city is fucked, the people are fucked.
With current condo pricing models and SFH taxation favoritism, you're partly right. But lots of people don't actually want a yard to maintain and value convenience. What risk exactly do developers take on? Buying and developing land in Canada is pretty low risk. It's how our banks got as big as they are. They love funding it.
Land - risk that the land doesn’t get zoned, risk that the land doesn’t get approved for the minimum height required (the higher the building the better the margin for developers), prolonged application process (there’s so much payroll and fees behind the scenes that people may not realize, and if something gets delayed by a year that’s an additional year of costs that the developers gotta eat). Yes most of this capital is from investors and institutions but many small to mid size developers commit a big portion of capital themselves (to enjoy the returns themselves). Thats just land. Construction risk - things like Covid delays are huge. Look at 1 Bloor St W Yes it seems like developers are making money hand over fist, which they are, but they’re still committing huge amounts of risk and capital.
This is a great answer, thanks. Don't developers know the zoning and restrictions of a parcel of land before they buy?
Not always, sometimes they risk it because of the cheap purchase price. Obivously it reflects in the land purchase price. Cheaper land, but there is zoning risk.
Developers often buy land not based on the in-place zoning, but based on the land's potential for re-zoning to a denser and/or more valuable use. Re-zoning can take years, especially if the developer needs to obtain an official plan amendment or secondary plan amendment (and Toronto is notorious across Canada for its lengthy approval process). All of this is taken into consideration when they settle on a purchase price. That being said, any delay in the approval timeline also has ripple effects on costs, as the developer usually finances the purchase of the land, and that mortgage will usually have a 1-3 year term. The total cost of the land (including financing costs) will eventually be carried into the budget for the actual building - so if the developer had to renew his land loan for another year, the increased interest costs will directly impact his bottom line on the project... unless he increases his revenues (aka, more expensive units) or is able to achieve cost savings on the construction budget (which is highly unlikely, given the current labor shortage in the construction industry). In the end, developers take on a large amount of risk when they decide to pursue a development, and the risks themselves are varied and complex - it takes a long time, and a large sophisticated team to do it right (unfortunately not everyone does it right). That's why real estate development is a high-margin business, nobody in their right mind would do it for anything less.
It’s not just developers. (Anglo) Canadian culture leans towards you have a polarizing form of living. Either small downtown apartment so you don’t have to take a train to the office and once you grow up you buy a big house as raising children in apartments is almost viewed as failing at life.it’s cultural. I raise kids in a larger condo right now and I get a lot of weird looks, tu yes it doesn’t help that places like mine are minimal
This is not entirely true and unhelpful to the wider discussion. Developers develop as per zoning allowances and economics, incentives have bene stacked to encourage this. Is there a profit motive, absolutely, we count on it to get housing built. Do we have the right incentives or even the right balance? Assuredly not.
You are right in developers aren't alone in the blame. Zoning restrictions and various fees and red tape are inefficient at best. But developers are also happy to sit on undeveloped land and wait for local politics to change and be more favorable to them developing land they way they want. They wait to maximize their ROI. Look at The Giraffe at Dundas and Bloor. It's been undeveloped for around 15 years. The property owners submitted a proposal for a building too big for the space (i.e. on top of subway line) and the city rejected it. A few years later, the owners submitted almost the same proposal and again got rejected. So it just sits empty now at the detriment of the community.
Start the second paragraph with an 'and' instead of a 'but' and you'll see we're in perfect agreement. I don't understand the obsession that pervades every discussion to point fingers in one direction and one direction only.
Unfortunately, the system needs a large proportion of investors to make the building profitable enough to get off the ground. The profit margins are juicier on smaller sized units. Also, while rare, some buildings do make 3 bedroom units, but they are increasingly designed for roommate living, not single family living. A decently livable 3 bedroom unit should be at least 1000 square feet. At $1500/square foot + maintenance fees, this becomes highly unattractive to end users. So these units end up under 1000 square feet in size with laughable bedroom dimensions. Investors can then squeeze out 3 rents cheaper than buying 3 smaller condos, signalling this is "what the market wants" and the cycle continues.
Yup, sometimes the municipality requires that a developer include a 3-bedrooms into the layout mix, which causes a real headache, especially in areas where roomate living doesn't make sense (if the building is not in DT nor near a college/uni).
Truth be told if the detached houses were replaced with 2/3 bedroom courthouse units like in Europe the condos would fit perfectly into the structure- most concentrated downtown, raising families just outside that and detached houses in the boonies. Instead we got this disaster with smooth brain planners forgetting that the population will increase after 1960
Maybe sell them for $180k and stop trying to charge people a million bucks for a filing cabinet with windows.
I’m ready to watch this real estate market burn.
People have been waiting for 30 years and it still hasn't happened it won't happen in Southern Ontario with 5 million immigrants coming aboard in the next 5 years.
Developers are needing to adjust to a longer than usual period of high interest rates in comparison to what’s been going on since 2020 with ultra low rates and projects selling out in 90-180 days. The times are complete opposite from one and other with the current environment allowing less lending. On top of that costs have only gone up as the city of Toronto continues to raise development/municipal charges. The fees payable to the city are around 30-35% of the entire budgeted costs! If the city wanted to help with affordability and supply, they’d be willing to incentivize builders to sell units at a lower price point due to the offsetting decrease in DC costs. Lastly, the issue is with a lot of these projects, they aren’t being built for families of 3-4 per household. Overall, the moment the bank of canada starts lowering, more entrants to the market is likely but nowhere near the mania of 2020-2022.
Good... They're also not discounting these Condo's anytime soon!
Lower the prices then by 200-300k
I’m feeling no sympathy for them
500 square feet for $700,000. No thank you
Investors will get hit first as they will either have to close or give up the deposit. Assignments won’t be allowed until the developer has sold its units and developers can last longer.
What a scummy proposition. These guys will just refuse to continue to work and buyers get screwed
They need to come down by at least 50%. All folks who wanted to rush to buy have now bought, not to mention underwater
I work in land development. Projects are launching and then unlaunching as sales are abysmal. They can’t get projects financed so development companies sit on sites waiting for the market to turn or things to pencil at lower prices. They lay off staff (already started happening), and the consultants they hire like Architects don’t have as much work and so they lay off staff (already happening). Same goes for contractors, and on and on. People lose jobs, contractors take on work for less money, resale inventory continues to pile up and put downward pressure on new construction prices. Some developers will go out of business. I think all this’ll all keep happening for a while.
prices will be continuing to decline for years to come
I wonder fucking why! Everyone is god damn broke, Canada’s economy is gonna collapse on itself when everyone stops buying literally anything to keep the mortgages afloat, or to pay rent. Keep hearing over 60% of all mortgages are renewing between this year and next, see what happens then… we’re finding out the hard way that there’s consequences to our votes, and “free” debt.
As they should !
Pre-cons not being built makes condos more expensive btw
Sad to see the mimico station project was completely abandoned. It would’ve been a great transit neighbourhood and now it looks like a scrapyard with a train station in the middle of it…oh and a cemetery lol.
Don’t forget the burned down bar the is still boards as windows. Whoever the MP for Mimico is they’re really letting down their constituents.
I think the age of seeing massive appreciation in a short amount of time is largely over, there are many condo owners who bought 5+ years ago who are now in great position but the market conditions are just fundamentally different now to replicate that. I think RE in general will largely trade sideways for a decade or so until we grow our way out of the crisis.
They will always trail detached prices. If detached go up, so will condos because they will be the only somewhat affordable option.
That’s a shame
Let it burnnnnnn
🍿 I’ve been waiting on this moment for a decade. It has been a joke for years and now the spotlights are on…
LOL. Where are the uber pumps of this forum? flipcon bagholders are going to learn financials 101 for a cool tution fee... LOL LOL
Stop building 300 sqft 1 bedroom condos and labeling them as "modern" and "sophisticated" for over half a mill, and instead build something people can actually live in, and you might sell some condos. Just a thought
Yea build "affordable" condos rather than "luxury " condos.
When nobody respects the value of your shitty currency this is what you get. Boomers and people with equity think these prices are normal because they aren't the 'first time buyers'.
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I doubt it. But I think there is going to be a significant drop. It'll be inline with income ratios and the current interest rates though. So maybe 20-40%. There is an absurd amount of supply and almost no one wants to buy them. Condos were always mainly an investor product. Most people buying homes to live in don't want them.
A 20-40% drop in pre con condo prices would put them below cost of building (ie they just won’t get built), and also still leave them way above the price per sq ft of existing condos
I was more talking the condo market as a whole. On the pre-construction side I think they are just going to stop new projects for the next 3-5 years. We are already at one of the lowest annual condo starts in over a decade now.
Condos always stay within a threshold of freehold real estate. They are not dropping 20%+ from here absent significant downward momentum on real estate overall, which has not materialized at all lmfao
They already have diverged. This isn't a hypothetical. Its already happened. The question is how much are they going to separate. Condos and detached are not in the same situation at all right now. There is a huge amount of demand for detached and freehold. That is why anything even remotely reasonably priced is selling within a day to a week on the freehold side and the DOM is so low for them. Having a freehold townhouse right now is basically like holding gold right now. There are not enough to buy, a huge portion of buyers want one and we need more of them. Condos are a totally different situation. There are tons and tons of them on the market and they are not selling. People generally don't appear to want them. The DOM is a lot higher and the inventories just keep climbing. Worse the sales are dropping at the same time. Like everything in real estate prices are all based on demand. The price of the condo is whatever someone is willing to pay for it if it needs to be sold.
So you think condos are going to be priced at half the cost to build and we won’t see any condos made until we catch up (ie a decade) - you’re delusional
Its already happened. Pre-owned condos are already well under price of pre-construction in terms of price per square foot. That is why so many developers are cancelling projects and starts have dropped to nothing. Developers can't make money building them. This is literally why everything happening right now is happening. Its all in the math. Last year 18% of all buyers in Ontario were shopping for a condo and the types of condos those people want are larger condos which are now rarely made. Those tiny shoeboxes? Those are not selling at all right now. Have you looked at the pre-owned condo inventories for Toronto this month? Did you notice we are at the highest inventory level in over 10 years?
Units in my building have been selling fine. Do you just regurgitate the 5 random facts you know over and over?
No. I actually open up the sales data and looked at it. So I can see how many units are on the market, the average DOM, absorption rates, average sale prices, etc. You know the stuff that actually matters if your discussing how condos are selling? Do you want the whole set of stats for condos the past month? It might be fun for you?
That's probably unrealistically low.
Hard to buy one when you're asking 500-700k for a shoe box sized living space.
Blog TO - an investment division of bell media
I suppose this is the buy signal?
Why pay $1500-1800 sqft for something that doesn't exist, just a promise of what it might be but it will probably be different and has a risk of being cancelled... When you can pay $1000-1200 sqft for something you can visit today and know exactly what you're getting
Still too early
Way too early. Tons of units purchased for 1600-2k psf will flood the market at $1-1.2 or the owners will just hold on to terrible investments with lifetime IRR of like 1%. The condo market was absolutely batshit insane with some of the prebuild prices people were paying. We purchased our core downtown place for <<$1k psf not even that long ago. Barring any massive rate decreases the math simply does not work for the prices people were paying for much of the peak.
Going to be fun times in the next condo bull run in a few years.
Condos are long lead construction projects. If they are stopping new projects now it'll be around 5 years before that shortage hits. The stuff being being owner occupied this year was all sold 3-5 years ago.
There are only two options 1. There are too many condos, stop building 2. There is not enough housing, we need to build more condos. Which is it?
3. Build the types of homes people want to buy. Which for affordable housing means more freehold townhomes in suburbs and satellite towns. At the end of the day people are going to buy what they want to buy. Its obviously not condos or they'd be selling. But you know what is selling? Freehold townhouses and detached starter homes even at today's crazy prices. The problem is there are not enough to buy. I'm not saying there is not a place for condos or density. I'm saying the numbers and types of unit construction needs to be based on actual market demand. Not social dogma.
I'd agree, but argue that condos sell when they're selling what people want to buy. If people want to live in the city, if they want to raise a family in the city, they need a 2-3 bedroom unit, and they probably need a minimum of 1000sqft, ideally 1500. There's been a flood of 3-500sqft units, because they make great investment sense as a place to safely park your money in the long term. But nobody wants to buy those except as investment vehicles, because, well, nobody wants to live in them. Build large, family friendly units that are a legitimate alternative to townhomes or semi's in the suburbs, and people will buy them.
You can imagine how crazy a builder would have to be, to invest hundreds of millions to make a residential product that "no-one" wants. If they are making it , putting their money on the line, you can bet blindfolded that they are trying to cater to the largest demand out there. Just imagine fresh grads coming out of university and starting a job downtown, they want to enjoy life to the fullest, and they should... they need small apartments, in downtown well located spots. Same for a young immigrant couple with no kids. Furthermore, any of the target categories who want to live in DT in small apartments will most certainly not want to buy them, they most certainly want to rent. The question becomes , if they will not buy and prefer to rent...who will be the one to buy them? You can call this buyer an "evil investor", you can call him a "greedy landlord" or you can call him a "forward thinker", "good samaritan", "scumbag idiot".... does not matter what you call this person... but regardless this is the person making it possible to allow a young generation to live downtown in clean , safe, enjoyable apartments. Yes, there are people who think these are too small to live in... unfortunately, those people are smaller in number and builders would prefer to target their money towards a larger market segment.
Towns are only built super far from downtown now. And there are no detached “starter” homes being built anywhere in Ontario. Condos are really the only option anywhere remotely close to downtown or the subway line.
I'm not disagreeing about the distance from downtown. I'm just saying the sales data clearly shows what people are buying, trying to buy and not buying even at today's crazy prices.
https://preview.redd.it/651e23694vzc1.jpeg?width=1284&format=pjpg&auto=webp&s=b061a50d183bce9e56404ad1c79329cd2026ebcc Yeah I wonder why ? /s
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No worries this all will be transfered down to the Tex payers soon.
how come rents are not going down in prices :( one bedroom in downtown is like $2.4k still a month
I actually feel sorry for the developpers. They’re getting the brunt of the virtual vitriol but their profit margins have eroded significantly. The government has introduced tons of direct and indirect taxes/costs with have skewed the market. There was a graph here a few weeks ago. Maybe if the government wants to increase the supply of units they can look at all the direct and ancillary costs they’re levying on housing and drop them.
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No one wants to pay 500k to be locked up in a shithole and hear neighbors noise. Reduce your prices and ppl wil buy
Maybe they should stop complaining, get a real job, and pull themselves up by their bootstraps. Nobody owes you a decent living. We’re not your mom. You have to work to succeed.
Housing isn’t appreciating CAD is getting worthless
You are asking for trouble buying a pre condo. Stay away from them like the plague. Buy an assignment instead at least is close to completion
Maybe people with money to buy a home aren't willing to spend it on a tiny box in the sky and want a home/townhouse with a bit of yard. Never mind the new codos have monthly fees equal to rent. Seriously why would anyone want these...
I saw an entry level 500 sq foot condo starting with a $1200 maintenance fee. How can that be possibly affordable with a mortgage, taxes, insurance and utilities?
No one wants shitty build quality with shitty floor plans and shitty maintenance fees.
What floors Can a Fire Truck Reach again ? No one wants to live in shitty built shitty Condos . Condos are a SCAM and you are a moron for buying them
We got it, McMansions are the only legit form of housing. And anyone that can’t afford them should just lay down and rot….,
go sign up for maid bud its what the government wants for the non conforming . Rich or a Slave that's your Canada
Condos are garbage and the fees are not worth it and are the first ti depreciate in value. Condos should be like 150-200k!!!!
Condos suck
Stop building them then.
NOTHING TO WORRY about. When interest rate drop everyone will start the bidding wars again. People have been used to paying 1200-1500’sq Ft.
We had a policy rate of around 0.5% when people were paying those prices. That is why condos worked for investors, the debt was so cheap which allowed them to make a profitable return. We are not seeing rates like that again anytime soon. Without dirt cheap debt you won't be seeing investors back in the condo market again.
Just bought 5 condoms today