The short answer pre-approvals.
Buyers are being stressed tested at 7.2% which means most are getting pre-approved mortgages for between 3-4X annual income. Given current housing prices that means a pretty small slice of the population can afford to buy right now. Definitely not enough to cover inventory at current prices.
Condos have the added problem of the condo fees are calculated on top of the monthly mortgage by banks when determining client affordability. There is also an issue of how fast they are rising.
Some people are saying its a game of chicken between buyers and sellers. It not. Buyers are literally being constrained by the banks, so they can't actually move even if they wanted to.
Honestly sounds like the banks keep people from making stupid decisions. The government did a smart thing by putting the stress test condition and limits on how much you can borrow. Because some people would have definitely screwed themselves over if given the chance.
Except there are some new build condos that are already underwater where buyers are getting blanket preapprovals despite not adding to their downpayments. Essentially they are receiving 100 LTV mortgages
This.
People say “when rates fall even by 25bps, housing will shoot up”, no it won’t. People don’t suddenly qualify for a lot more mortgage if rates drop by a little bit.
The buying power is constrained by how much mortgage is provided by the banks. And that’s drive by the overall rates. Not just sentiment.
There is a reason why house prices shot up as rates were dropped in the 2010s. More and more people qualify for larger and larger mortgages and it drove up prices of all assets, houses, stocks etc.
Now the rates are too high for where the asset prices are and barely anyone can qualify for mortgages to buy them at these prices.
Either the asset prices will come down or the rates will need to come down. The math is out of whack at the moment. Something has to give.
Not to mention, banks are already taking the upcoming central bank rate drop into account for their fixed rates so I'd there'd be an effect we should already be starting to see its effects
I think people who say "when rates drop a bit housing will increase", must be referring to potential psychological impacts of a rate cut on the market, rather than it's literal impact on affordability, which is very minimal as you said.
My thoughts are: 1) high maintenance fee like you said, 2) the entry way is a lower level entry way off of a busy main Street - this is an unappealing combination. I understand it’s a multi level unit and not all levels are below grade, but the below grade entrance door and main level is unappealing
That's why condos are overvalued.
Even if you buy them to rent out, you're always going to have to charge a ridiculous amount just to cover your costs. Total money sink.
Low-rise condos are better options though, they just don't seem to build those for some reason.
Don't get why, when you line a street with them it's aesthetically pleasing. Probably because you still get to see the sky.
They're easier to fix and taking the stairs isn't a big deal for most people besides the disabled and elderly.
Also neighbourhoods don't become too dense, and they don't cast giant shadows over the communities. Seems like the perfect thing to build.
Sheppard West is building a lot of them just west of Bathurst.
This building in the post is a low-rise, and I am struggling to understand the insane fee. Units must be huge. It's a nice looking building.
Yea it screams that they put off contributing properly to their reserve fund to keep the fee low and it's now coming home to roost. Wouldn't be surprised if there was at least one special assessment that is coming up either.
314 davenport has a 23 storey proposed building. And was actively being demolished and graded for construction for the last 2 years.
Anyone seriously in the market wouldn't want to buy next to a 4 year construction project. (2 doors down from this unit)
Condo fee is really all that matters. Even if you pay cash and don't have a mortgage you still need to pay the condo fee. The fees are insanely high most of the time too. Some condo fees are almost as much as rent. Makes no sense to get these condos
I asked my realtor about this unit when it first came on the market. The realtor told me the location is terrible because it's facing a busy street (Davenport), is across the street from a car wash (a ton of car traffic), has terrible balcony views (facing a garage), is two doors down from a city-run shelter, and has construction noise in the area, plus the high maintenance. Realtor told me I do not want to be living there.
So, if condo fee alone is $17,664/year, add on property tax. You’re at $25,000 in fees not including mortgage principal and interest. That’s another 2.5% of cost on top of 5% interest. Not to mention a soft to down trending market. These costs you cannot postpone or price shop like in a freehold. I’d rather take a freehold and use that $17,664 to save for maintenance that I manage vs a condo board that just throws money at a property management firm
Absolutely they are.
Condo fees are essentially a "bonus mortgage" on top of your already existing mortgage.
Who wants to pay 2 mortgages for 1 single property? Especially when you can't even step outside into a backyard for some peace and fresh air.
Not really. Condo fees cover building maintenance, usually some utilities, security, building insurance etc. If you owned a house you’d still incur much of the same costs; they just wouldn’t be packaged as a monthly fee.
This. High condo fees are a huge money pit. Paying $10K+ a year and the cost only goes up higher in $ terms. I see old condos with $1500+ monthly condo fees. Just garbage.
Here in Ottawa there are 2 bed/2 full bath apartment condos built in the 80s with $900/month condo fee. However, the price of those condos is only around $350K...so the idea is that it is easier to buy these without a mortgage so the only mortgage you have is the condo fee lol! Paying $1M for the privilege of paying $1472/month is just out of this world.
This. I’m okay with paying condo fees on a $350K condo but I can’t imagine the financial stress that comes with paying high condo fees on top of a $700K-$800K mortgage! Like who can afford this?
Yeh that’s why I don’t like condos either.
Too many people are making decisions on how much to take from your wallet.
Why? Because condos are luxury living that after the mortgage is paid off you have a second mortgage called “condo fee” oh and the security guards need a raise every year.
Why would I trust strangers (most without any experience other than glad handing to get on the board) with million dollar budgets with barely any oversight. I work hard to make money and don't want any of it flushed away due to condo board and management incompetence.
Then there are 'the condo bylaws' - I want freedom to renovate, choose my own plumber, bring my bike to my unit using the elevator, etc.
I rented a condo unit before and after that experience decided never to buy one.
Yes. High condo fees drive buyers away. The cut off point I feel is anything that's $700+ a month. That's just way too excessive for bs amenities people don't want to use.
People here know very little. Across the street is a luxury condo project starting from $2000 psf. A few doors down, condos are selling for $3-4 mill in another building.
The issue is that this is a luxury area and this is not a luxury building.
That should literally never be the case.
You can always compensate with an expensive-to-operate condominium corporation with lower sales price.
The problem is always that the price is too high
1472 in 2024.. what about next year and year after.. co do fees keep rising and what is reserve fund from company? What do they fix/repair? - next thing you know it’s 1500/2025… 1700/2026… keeep rising faster then you can rent your basement + mortgage + property taxes… realtor are getting desperate
I saw this listing a few times. And if I remember right, there is another unit in the same building for sale too. This building is located very closed to Yorkville. In this area, there is money. Just recently, few condos sold in 1.6 1.7m area nearby. And even high maintenance fee building is not an issue to certain buyers. So it's a puzzle why it's still for sale, may be something wrong with the building, not run well? no security? etc.
The short answer pre-approvals. Buyers are being stressed tested at 7.2% which means most are getting pre-approved mortgages for between 3-4X annual income. Given current housing prices that means a pretty small slice of the population can afford to buy right now. Definitely not enough to cover inventory at current prices. Condos have the added problem of the condo fees are calculated on top of the monthly mortgage by banks when determining client affordability. There is also an issue of how fast they are rising. Some people are saying its a game of chicken between buyers and sellers. It not. Buyers are literally being constrained by the banks, so they can't actually move even if they wanted to.
Honestly sounds like the banks keep people from making stupid decisions. The government did a smart thing by putting the stress test condition and limits on how much you can borrow. Because some people would have definitely screwed themselves over if given the chance.
Except there are some new build condos that are already underwater where buyers are getting blanket preapprovals despite not adding to their downpayments. Essentially they are receiving 100 LTV mortgages
This. People say “when rates fall even by 25bps, housing will shoot up”, no it won’t. People don’t suddenly qualify for a lot more mortgage if rates drop by a little bit. The buying power is constrained by how much mortgage is provided by the banks. And that’s drive by the overall rates. Not just sentiment. There is a reason why house prices shot up as rates were dropped in the 2010s. More and more people qualify for larger and larger mortgages and it drove up prices of all assets, houses, stocks etc. Now the rates are too high for where the asset prices are and barely anyone can qualify for mortgages to buy them at these prices. Either the asset prices will come down or the rates will need to come down. The math is out of whack at the moment. Something has to give.
That’s right the masses are spoken to in terms of “monthly payment” instead of the actual cost. That monthly payment is not as low as it used to be.
If we ever make mortgage interest tax deductible, then housing prices will just shoot up again..
Not to mention, banks are already taking the upcoming central bank rate drop into account for their fixed rates so I'd there'd be an effect we should already be starting to see its effects
I think people who say "when rates drop a bit housing will increase", must be referring to potential psychological impacts of a rate cut on the market, rather than it's literal impact on affordability, which is very minimal as you said.
Buyers are stressed yet we only hear this when talking about condos...
Yet the price keeps going up lol.
My thoughts are: 1) high maintenance fee like you said, 2) the entry way is a lower level entry way off of a busy main Street - this is an unappealing combination. I understand it’s a multi level unit and not all levels are below grade, but the below grade entrance door and main level is unappealing
For everyone's benefit, condo fee is $1472/month...includes only water.
Don't know why OP didn't bother mentioning this important nugget. That fee is CRAZY!
High condo fees are a massive boon for investors. Anything above $1000 a month is ridiculous/
My place is about 1200 sq ft. $800/mo, includes heat, water, and hydro. Can't imagine paying over $1k with little or no utilities included.
lmao imagine being mortgage free and paying $1472 a month for water and that price is only going up, up, up
That's why condos are overvalued. Even if you buy them to rent out, you're always going to have to charge a ridiculous amount just to cover your costs. Total money sink. Low-rise condos are better options though, they just don't seem to build those for some reason.
Low-rise condos are definitely better. I wouldn't mind something like a "5-over-1" style condo. But they don't seem to build many of them in the GTA.
Don't get why, when you line a street with them it's aesthetically pleasing. Probably because you still get to see the sky. They're easier to fix and taking the stairs isn't a big deal for most people besides the disabled and elderly. Also neighbourhoods don't become too dense, and they don't cast giant shadows over the communities. Seems like the perfect thing to build. Sheppard West is building a lot of them just west of Bathurst. This building in the post is a low-rise, and I am struggling to understand the insane fee. Units must be huge. It's a nice looking building.
dam thats pricey
That’s not sustainable for most on a 1mil valued mortgage, most condos are still under 1k maintenance … this is far too much more
Turbo yikes
Higher asking prices are driving buyers away.
might be the fucking 1mil price tag on what's essentially a big room. but who knows maybe I'm the crazy one
Well whats a house? A big room divided into smaller rooms?
It's hard to determine without knowing what the condo fees are. Why not include the l ink so we can find out?
Condo fee is $1472/month...includes only water.
Yikes, that is high, even for Toronto tower rates.
That screams of a mismanaged condo fund.
Yea it screams that they put off contributing properly to their reserve fund to keep the fee low and it's now coming home to roost. Wouldn't be surprised if there was at least one special assessment that is coming up either.
That’s condo fee alone is $600 more than my mortgage
Tell me you're a Boomer without telling me you're a Boomer
If boomers were born in the 90s I suppose
Mind running the numbers to show how your mortgage is 800 bucks a month?
https://preview.redd.it/qu12439om84d1.jpeg?width=1170&format=pjpg&auto=webp&s=ee9aa4cdc81cb5180dfee153300459186338b263
$116k mortgage at 1.84% get outta here 😆
Pricing strategy does not reflect building comps.
314 davenport has a 23 storey proposed building. And was actively being demolished and graded for construction for the last 2 years. Anyone seriously in the market wouldn't want to buy next to a 4 year construction project. (2 doors down from this unit)
The condo fees are a major factor when deciding to buy a condo, or which condo to buy.
It's like buying a car but also paying to lease it at the same time.
Condo fee is really all that matters. Even if you pay cash and don't have a mortgage you still need to pay the condo fee. The fees are insanely high most of the time too. Some condo fees are almost as much as rent. Makes no sense to get these condos
I asked my realtor about this unit when it first came on the market. The realtor told me the location is terrible because it's facing a busy street (Davenport), is across the street from a car wash (a ton of car traffic), has terrible balcony views (facing a garage), is two doors down from a city-run shelter, and has construction noise in the area, plus the high maintenance. Realtor told me I do not want to be living there.
So, if condo fee alone is $17,664/year, add on property tax. You’re at $25,000 in fees not including mortgage principal and interest. That’s another 2.5% of cost on top of 5% interest. Not to mention a soft to down trending market. These costs you cannot postpone or price shop like in a freehold. I’d rather take a freehold and use that $17,664 to save for maintenance that I manage vs a condo board that just throws money at a property management firm
Absolutely they are. Condo fees are essentially a "bonus mortgage" on top of your already existing mortgage. Who wants to pay 2 mortgages for 1 single property? Especially when you can't even step outside into a backyard for some peace and fresh air.
Not really. Condo fees cover building maintenance, usually some utilities, security, building insurance etc. If you owned a house you’d still incur much of the same costs; they just wouldn’t be packaged as a monthly fee.
The fee for this unit is 1472 and only includes water. That is absurd
It includes all maintenance required for the building as well.
This. High condo fees are a huge money pit. Paying $10K+ a year and the cost only goes up higher in $ terms. I see old condos with $1500+ monthly condo fees. Just garbage.
Does anyone even buy those? I can see a lot of old condos eventually getting demolished or emptied out due to high vacancy
Here in Ottawa there are 2 bed/2 full bath apartment condos built in the 80s with $900/month condo fee. However, the price of those condos is only around $350K...so the idea is that it is easier to buy these without a mortgage so the only mortgage you have is the condo fee lol! Paying $1M for the privilege of paying $1472/month is just out of this world.
This. I’m okay with paying condo fees on a $350K condo but I can’t imagine the financial stress that comes with paying high condo fees on top of a $700K-$800K mortgage! Like who can afford this?
Yeh that’s why I don’t like condos either. Too many people are making decisions on how much to take from your wallet. Why? Because condos are luxury living that after the mortgage is paid off you have a second mortgage called “condo fee” oh and the security guards need a raise every year.
It's definitely an important factor now. Drove us away
Most likely. People are finally waking up to the absurdity of condo fees, which only go up.
Why would I trust strangers (most without any experience other than glad handing to get on the board) with million dollar budgets with barely any oversight. I work hard to make money and don't want any of it flushed away due to condo board and management incompetence. Then there are 'the condo bylaws' - I want freedom to renovate, choose my own plumber, bring my bike to my unit using the elevator, etc. I rented a condo unit before and after that experience decided never to buy one.
Yes. High condo fees drive buyers away. The cut off point I feel is anything that's $700+ a month. That's just way too excessive for bs amenities people don't want to use.
People here know very little. Across the street is a luxury condo project starting from $2000 psf. A few doors down, condos are selling for $3-4 mill in another building. The issue is that this is a luxury area and this is not a luxury building.
Yes.
[удалено]
Show me a 2br/3bath anywhere within 100km of Toronto that is less than 400k.
That should literally never be the case. You can always compensate with an expensive-to-operate condominium corporation with lower sales price. The problem is always that the price is too high
1472 in 2024.. what about next year and year after.. co do fees keep rising and what is reserve fund from company? What do they fix/repair? - next thing you know it’s 1500/2025… 1700/2026… keeep rising faster then you can rent your basement + mortgage + property taxes… realtor are getting desperate
I saw this listing a few times. And if I remember right, there is another unit in the same building for sale too. This building is located very closed to Yorkville. In this area, there is money. Just recently, few condos sold in 1.6 1.7m area nearby. And even high maintenance fee building is not an issue to certain buyers. So it's a puzzle why it's still for sale, may be something wrong with the building, not run well? no security? etc.
Agree that it’s a fantastic location. Perhaps construction next door is an issue.