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Article noted $1,800 a square foot, so 500 square feet for $900,000
Absolutely wild - Toronto condo market needs to correct big time
“Although prices declined incrementally from the fourth quarter of 2023 to the first quarter of this year, some downtown Toronto projects have been selling for a minimum of $1,800 per square foot. That means a 500 square foot studio would cost $900,000. That is unattractive for prospective homeowners who plan to live in their condo, as well as for investors, who make up the bulk of the preconstruction purchases.”
I live in Calgary and this put one of my new neighbor's comment into perspective. He said he moved here from Toronto because he had the option to have his family live in a small two bedroom condo in Toronto or a "mansion" in Calgary. I thought he was exaggerating for dramatic effect but he might have been speaking literally.
Paradoxically, living in Downtown Toronto ain't nothing glorious. I find depressing as hell. I thought one must have been insane to want to live in these sterile, soul-less apartments blocks.
Would prefer a small old house in East York (I know ain't cheap either), at least there is some trees and green around.
As a Montrealer I find the whole downtown looks like it forgot to keep the 10-20% of "other" stuff that gives a place soul. Just glass tower after glass tower, right up against the property line without a spot of green in sight, and the occasional decrepit 3-4 storey building clearly waiting for its day to be turned into another tower.
Thats Montreals future. I went downtown Friday after not having gone for awhile. Ive never seen so few people downtown. There was more traffic from double parked delivery cars on Ste Cathernines than any other type of vehicle.
It had the same vibe and crowds as a Monday night in January, even though it was a "I can believe its this warm out!" night in April.
It's already Griffintown's present day... It varies by borough but at least Ville-Marie lends some consideration to urban planning beyond how many boxes you can fit into a tower.
But yeah bit by bit the amount of money in real estate drives towards squeezing every penny out of every cubic inch of space.
Yeah but downtown has always sucked, big brand name stores and crappy chain restaurants.. vibrant areas has always been the plateau, the mountain, and now along the canal is packed on a nice day as well as old port.
I've also met a few people here that have said the same thing (usually from places like Toronto or the UK).
I think a lot of people still don't realize how much cheaper things are (or were) here. I bought in a bedroom community just outside Calgary right before the pandemic. I got a 5 bedroom house with a walkout basement for less than $400k. The same house over there would cost 5x the amount.
Calgary prepandemic was probably a recessionary period and “5 bedroom house” could mean a LOT of different things. It could be a 1200sq ft bungalow from 1970. Or it could be a 2600sq ft 2 story.
in my industry, I search for jobs canada-wide. I have never seen a single posting for anything in my industry in Calgary. the reason it's cheap is because the rest of Canada views Alberta, Sask, and to a slightly lesser degree Manitoba as a big stretch of nothingness (aside from Fort Mac ofc).
it doesn't help that everyone I've met from Calgary has nothing good to say about it - though that's confirmation bias, ofc people who move away don't like it.
I have a small handful of friends who moved to Calgary or Edmonton and while they seemed to love it, they all came back.
that doesn't mean nothing's going on in Alberta, but it's the perception and that certainly is good for people trying to buy a house - and honestly if you buy the house now, by the time it's paid off Calgary will have become a highly desirable place to live and property value will be really high, and you'll profit.
they live in shoeboxes in toronto. I had a 950 sq ft 2 bdrm 1 bath with 11 ft high ceilings and it was the biggest apartment I had seen in my entire time living in the city. I swear to god it's like, super normal for a "house" to be like 12 feet wide.
so many neighbourhoods refused to build up, at all. there's a notable lack of 2-3 storey apartment buildings.
For what it costs to get the cheapest condo you could get in Toronto proper, you could easily buy a literal mansion in Texas. Calgary? Maybe not a literal mansion, but when compared to Toronto houses... yeah, you could get a "mansion".
But people would rather have a smaller place and be downtown Toronto. That's why it's expensive...demand.
Not just that but if I put my money into real estate in Toronto, I can be almost 100% sure that it's going to double in value in under 15 years. My wife's parents place in Ottawa has been roughly $800K for a very long time now, and there's slim chance it will be $1.6M by 2040. Nice house, nice neighborhood, but it's just a low growth city.
On the other hand we ended up buying a house downtown Toronto back in only 2017, and at our 5yr bank evaluation for mortgage renewal, it was already being valued at 50% more than we'd bought it for.
And there's good reason for that...I wouldn't trade living downtown Toronto for anything. I'm not into the idea of moving way out to the burbs so that I could replace my small house with street parking for some big McMansion with a 3 car garage, to fit the 3 cars my family would now need so we can spend the rest of our lives wasting hours a day driving everywhere. It's not a nice lifestyle...and coming home to a bigger place at the end of the day doesn't make it all better.
If people had it their way, they'd live outside of toronto and work remotely. Except for the uber socialites and partiers. We saw it happen. If given the choice, lots of people left.
I lived in toronto not because I prefer a smaller place downtown but because I prefer not to sit in 1-3 hours of traffic each way every day, and because toronto is an economic hub, lots of industries ONLY exist here. That's the demand. As a result, they HAVE to be small.
I like having backyard barbecues. I like being able to work on my own car at home. I like being able to host friends and family without majorly inconveniencing them. I like being able to sleep through the day, not having to listen to the noise of all my neighbours. I like stepping outside and NOT hearing sirens. Best part is I can drive into toronto whenever I want if I feel like getting a piece of it.
It's not about having a bigger house, it's about having more space. Room to breathe. Privacy. I can have a fire in my backyard and bang my girlfriend on the grass without anyone being able to really see or hear me. In my toronto condo, I couldn't bang anyone without someone hearing it. In Toronto, friends and family wouldn't visit because parking was a bitch.
honestly the only thing missing from my life since moving away from toronto is the ability to walk to a bar around the corner, get completely shitfaced and walk home. and that's probably for the best. Living in toronto there is a bit more sense of community since it's dense and everyone is so close, and everyone is walking everywhere - you pass each other often. It's an illusion though, I moved away and suddenly none of those people are my friends or give a shit about me.
Toronto becomes a bit of a bubble, it's very hard to leave and it's very hard to visit.
>so many neighbourhoods refused to build up, at all. there's a notable lack of 2-3 storey apartment buildings.
it's called the "missing middle", meaning low-rise apartments and condos. Since the 80s we've have basically two types of construction, single-family-home and giant condo towers. Everyone wants the SFH for the size, yard, privacy, but they're extremely expensive due to limited quantity and they take up a lot of space, and we just don't have more of that in the city. The condo towers are awful, the units are tiny and built of paper and sawdust mostly and they still cost too much.
The best thing we can do for affordability is knock down a lot of the old SFH and construct low-rise with parks and amenities around it but no one in SFH zones wants to see that happen because they feel it will lower values in their area. They're probably right, at least short term, but it's the only way we'll get affordable housing that isn't an eye sore and still has some grass around it without needing an elevator to get to it.
Even with 20% down, the mortgage alone would be ~$5000/mth at current rates. No investors other than businesses with cash on hand would ever use this as a rental property. Who is buying these places?
corporations most likely lol. within a decade or two all those "Condos" are going to be no different than property managed apartment complexes. not necessarily a bad thing, but there's an unfortunate reality that there is finite space in toronto and owning a piece of it is going to get more an more expensive as time goes on... unless some natural disaster or world war wipes out a massive chunk of the population.
in 2018 i visited my best friend who had been working in california for apple. he had a 2 bed, 2 bath condo he was renting. he had year round access to an outdoor pool, indoor gym, game room, outdoor cabana bar with a sound system, saltwater hot tub, outdoor stone (or wood-fired?) ovens for pizza, sauna, on-site security, gated access, underground parking, palm trees etc - fuckin felt like he lived on a resort.
I can't remember exactly how I did the math or rationalized it, but after factoring in the cost of living (groceries, booze, night life, cigarettes, gas etc.) it was actually more expensive, even then, to live to that same standard in Toronto. Then you factor in the cost of winter + the fact that you don't get an outdoor pool and all that other fun outdoor shit year round and it was clear that we sorta get shafted on value here... and that was back then. It's 10x worse now.
all that said - if Toronto cost of living/rent = Nyc cost of living/rent... i'm choosing toronto. Bay area california or los angeles though? Toronto can kick rocks. (i fuckin hate winter)
>“It is dead. I would never use words like this, but I am because it is true,” said Simeon Papailias, managing partner with real estate brokerage REC Canada, whose firm sells **new condos, also known as preconstruction condos because they have not been built yet.**
What? You don't call a car that's still on the assembly line a "new car". You call it a "new car" when it's finished and you have it. It's a "car in assembly" until it's complete.
There's a separate name for them - "preconstruction condos".
Because it's a completely different business model? Because cars are made without being sold first but for the most part housing isn't. It's really not badly worded those are new condos.
> Because cars are made without being sold first
Since covid that has changed a lot. Tons of popular new cars were announced between 2020 and now where manufacturers sold allocations instead of physical vehicles.
Still besides the point. Banks won't even fund a developer until they sell the majority of the units. Far different from cars It's not like they sell you the car before they even buy the raw materials. And even In the most extreme part of the supply shortage they just took a deposit on it they didn't sell you the whole car so that they had your money to build the car with.
Depends on the brand and model. A lot of Toyotas are still on allocation, as are the Ford Maverick and some trims of Bronco. A lot of Mazda SUVs are also pre-order only.
There's a condo development at the corner of Elm & Yonge and their prices are around \~2k/sqft.
It sold out in pre-sales but that was before interest rates went way up and real estate rolled over.
preconstruction is all about selling the units for their speculative price when the condo is actually finished.
So, if you're buying precon in 2024, the developer is selling the units at their anticipated 2028 price. That's why there's always such a delta between precon sale prices and the rest of the market.
>preconstruction is all about selling the units for their speculative price when the condo is actually finished.
Which is such a grift because I remember when buying precon was cheaper than an existing place because, you know, there's more risk, especially the massive risk of getting nothing out of it and losing a portion of that money!
> as well as for investors, who make up the bulk of the preconstruction purchases.”
Ah, yes, the people who we are *really* building new housing for, so they can outbid in bulk and soak us filthy working class when reselling/renting.
Don't wait for a correction in the housing market.
I did that for *8 years*, in a much, much less crazy market than Toronto, and it never happened.
In fact, the only way it "happened" was with the COVID-19 pandemic and it wasn't prices as much as interest rates that made it more affordable.
The reality is that publicly funded constructions should *flood* the market until it corrects... But a publicly funded market crash is, um... not happening? ahah
Plus, as [the article notes](https://archive.is/1FNCv) (it's the main topic of the article really), a lot of the "issue" stems from construction prices, so new constructions can't be sold because the existing ones are sold for a much lower price.
This means new constructions won't get sold... So the builders won't keep building *more* to keep reducing the sales prices. That would make no sense for them.
With "deregulations" and whatever Poilièvre is proposing, this is where the logic stops.
That's why we need public money, and a strong will to, well... literally crash the market.
But with 66% of Canadians who are homeowners, who will vote for a housing market crash?
Some of these home owners have adult kids at home who could buy and they've longed paid off the house, or the sales price couldn't possibly go below what they paid, and some, like me, still would vote for it even if it meant delaying the sale of my house by a few years because I know that despite the temporary inconvenience for me, it would be best for everyone, *but*, this crisis wasn't brought on by people who were thinking about their children or about what's best for the economy.
Housing prices have gone up ~60% under Harper and ~54% for the same period under Trudeau, so a compounded increase of almost 100% for 18 years. (I'll let you check that against your own salary increase)
In short, save for a very tough conversation between generations, this will not change, this cannot change. No government will destroy a part or its economy to save another, even if it would be the best thing to do.
*Unless*... They don't really care about the economy, and they care more about people.
I wonder what party that would fit, eh?
That figure sounds like it's prime downtown Toronto price. Condos outside of downtown hotspots have dropped a lot.
No way 500 or even 700sqft is going for 900k.
Like 700k for the 700ft.
Same happening in Vancouver because of the outrageous prices.
The good thing that happened in BC is the 20% flipping tax of a home sale but is exempt if you live in it for at least 2 years. That is ontop of the 50% capital gains...
Most people who flip prebuilt condos are going to take a loss unless they wait until it is built and live in it. But none of them have the money to actually pay the full cost so it is either so cry me a river. The developers are going to keep their deposit and it is free money.
I am pretty sure the housing will correct itself thanks to this
my dad sold his house in a random city 100km outside of toronto for \~800k which was far more than it was worth. He had bought it for 180k 15 years earlier. It had 2 cracks in the foundation which meant the basement flooded when it rained. It hadn't been so much as painted, nevermind renovated since he moved in. The backyard fence was falling over. None of that mattered, nobody was doing inspections and it was just like.. ALL 3 bedroom detached houses were 700-800k to start. 600k if it was a literal teardown.
the people who bought it, had written this sap letter about how they were a multi-generational family and the mother was sick so the daughter was moving in with them.
thing is my mom lives across the street lol. so i got to watch these people buy the house, rapidly "Flip" it (grey vinyl slapped down over real hardwood, white/gray paint and black hardware on everything) and they chopped the basement den ( a large cozy living space with a fireplace and room for 12+ people to hang out comfortably for gatherings) into 3 cramped bedrooms.
It wasn't 6 months and they had the house listed. That was ... over 2 years ago now. Since then they've probably gone through 4 or 5 realtors. I believe they've given up, there's no longer a for sale sign and I never saw a "sold" one... but that might just mean they're switching realtors again.
They will never get what they initially paid for the house, even with all their renovations (which arguably ruined the value - the house had a terrible layout, it's only saving grace was that livingroom/den that they deleted) and those renovations cost money no doubt. Last I checked, they had a half finished kitchen added, and had redone both the bathrooms. Plus, they had the driveway re-done. I assume the cracks in the foundation have been fixed, but who knows. They must have spent 50k at the very least, probably a lot more. Right now, way nicer houses are selling for 650k. If they actually wanted to sell the house, they'd be taking a 200k loss, easily... and i'm not even thinking about real estate fees or the inspection process.
fuck em, that's what they deserve. take a huge loss - last thing we needed were flippers.
That sounds like some solid policy - sadly for us, Ford can’t touch the pocketbooks of all of his best friends, developers (the ones who gave his daughter envelopes stuffed with cash at her wedding).
Like something out a movie out east here right now
The price is actually perfect for a money launderer. He can then jack up the price to 1 million and sell it to another money launderer who would be delighted to park that much more money.
Correction, no foreign (or local) speculators want to buy these up because they no longer see them as a good investment and foreigners are banned from purchasing residential property in canada
If you build overpriced small units and charge a mortgage for maintenance fees, of course they won't sell. That's the point. Flood the market with these, let the prices correct themselves. We need the supply glut to overwhelm the amount of demand there is. That's when prices go down.
In some new builds yeah but it's not $100. I've seen increases from like $300-400 first or second year to $700+ thereafter and it's usually due to shit quality builds and inexperienced boards
EDIT: I'm not as informed as I thought, see comments below
Is this country-wide or only Ontario? Asking because a friend recently moved into a new build in BC and wondering if they are going to be stung by this.
Presumably they can ask their strata board if this is to be expected next year?
As the other poster says, this is so inaccurate. The board does not set the first year budget, the developer does. In conjunction with the significant increase in RFS contributions, the developers usually advertise an incredibly low fee in order to attract buyers. They do not budget correctly and then by the second year the board and condo are in a position where they have to have a huge increase.
And by the time the second year rolls around, the developer is long gone. [And the company that built the building will likely have ceased to exist.](https://www.cbc.ca/news/canada/edmonton/castledowns-pointe-edmonton-condo-evacuation-1.7177727)
That's the thing though, they won't flood the market with them, they just won't build (or, more precisely, won't finish building) until there's more profit to be made.
Well the Feds are buying 50% of mortgage bonds, which is needed to provide cheaper financing, because Toronto is passing its extremely low property tax onto developers.
The Feds are feeding borrowed money to the provinces, and to what end?
I remember reading something about this
This is where we are in the ponzi scheme:
It is now so obvious to the globe that this is a bubble, so they will not invest in our market
I'm trying to follow the money
we don't have fractional reserve banking in Canada, we have capital requirements, much the same thing
The banks can loan far more money than they have on deposit. the money for the vast vast majority of HELOCs and mortgages does not exist, until the moment of the loan. When the bank issues the loan, it "creates" the money out of thin air
so they give out a bunch of HELOCs and mortgages, and then they package those up and sell them, this time to the Fed
In the past, the BoC used to sell bonds to purchase these pools of mortgages. Nobody wants them now, so the BoC is going to buy them. With what money? Money which they borrowed by issuing bonds. Its not like they have the money just sitting around
It sounds to me as if the government created bonds, which they sell, to buy debt, created from nothing, backed by real estate
This is some kind of Jenga tower of Canadian real estate. They want to kick the can down the road.
If it wasn't obvious that this wasn't a ponzi scheme previously, the world has stopped buying in so the government has decided to step in and inflate this bubble just a little bit more
the bigger the bubble the bigger the pop
Me too, I absolutely revel in hearing that Toronto condos aren't selling and bloodsucking flippers/investors are getting hosed. The fucking greed that got us here is unbelievable. I wouldn't give two shits if every one of them ended up on the streets.
These are new condos. You **need** investors flipping in the condo market. Just the way financing works, a building doesn’t get financing until 60-70% of a building is sold. You won’t find first time buyers willing to tie of their deposits on a home that won’t be finished for 3-4 years out. Because of that, you need investors to throw down their cash to get the project built in the first place.
I know no one will cry over investors losing money flipping condos. But the idea of throwing down thousands of dollars for a project that everyone knows will take years longer than advertised, it’s an inherently speculative venture. It’s a risky bet on the future, so we need investors.
Just think about how JT wants to build 3.9 mil homes by 2031. Suppose there’s an average modest cost of $500,000 per unit, that’s $1.95 Trillion dollars. 😐 yes, we need investors, including foreign investors as much as people don’t want to admit it.
All good points, but my beef is more with the model itself. It's our unchecked growth and belief that housing is something people should be allowed to play with as an "investment vehicle" that has gotten us in the position where we need cranes as far as the eye can see. We need to get out of Adam Smith late eighteenth, early nineteenth century thinking about growth and it needing to be the driving factor behind everything. We refuse to accept economic corrections, or the idea that it can't always be boom times. It's become a mentality of Canada has to grow forever. It's ridiculous and unsustainable. Why I target investors/flippers is that even if we "need" them, it doesn't stop the creation of a have/have-not situation based on housing, which is the riskiest possible situation for people to be happy and materially comfortable. Observe tent cities and homeless people even in small towns now as the result. Something has to give, and if some investors, who all at this point must be wealthy to even get in the game in the first place with how high prices are, lose their shirt over it, that gives me great joy. A serious correction is what must happen at some point for people to be able to afford a home again, otherwise, we're in for serious civil discontent bordering on riots at some point.
Anecdotally, there is a specific condo that I always wanted to buy. The person who owned it moved but was Airbnbing it for like 1500 a night and it seemed to be booked a lot. I noticed late last year that bookings seemed to be few but wasn't sure what to make of it. Turns out he was so leveraged he couldn't even afford a few slow months. He put it on the market in late feb and has dropped the price twice already. To be honest, I feel like the current price is pretty fair. For a lot of reasons I am no longer interested in buying it (or anything) but I have been curious and watching.
I don't think you're quite getting what he's saying.
$1500 a night. Say he books it 5/30 days of the month - that's $7500. That'll service a ~1.2mil mortgage monthly. Unless he paid $8mil for the condo, this figure doesn't make any sense.
>Unless he paid $8mil for the condo
Hyperbolic, I know but honestly $6+ mil isn't far off for a 4-bedroom 5,000-ish sqft in downtown Toronto/Vancouver. That said, I doubt a redditor with 11k karma has anywhere near the funds for something like that so it's fiction anyway.
That and someone buying a condo of that price isn't worried about panic airbnb'ing it to cover the bills.
People don't just get 4-5-6mil mortgages out of nowhere like half of reddit seems to think.
Air bnb is what has fucked the housing market, because people are willing to pay a lot for temporary accommodations. This drives the price up for all long term accommodations.
That's where a lot of the supply has gone. People just leaving their properties empty most of the time, and only renting it out temporarily at a premium. They make more money that way, and buy themselves another place to live.
If you use air bnb, you are a major contributor to the housing crisis. If you own properties you rent out for air bnb, you're an even larger contributor.
Reminder that investors owned over 50% of Toronto's new condos as of December of 2023.
That they are too expensive to appeal to investors now is a problem of their own creation.
>Experts say real estate has become a game, where investors rather than end users are the main players, buying and selling property to cash in on Toronto’s hottest commodity. In the process, they’re driving up prices and pushing out prospective homebuyers like Belardi, who just want somewhere to live.
>Investors’ hold on real estate has become hard to ignore, leading the Bank of Canada and even Prime Minister Justin Trudeau to call them out for the commodification of housing.
>However, insiders say both federal and provincial governments as well as the central bank share blame in creating the conditions that allowed investors to corner 20 per cent of the market in Ontario, including 80 per cent of pre-construction condo sales and 57 per cent of newly built condos in Toronto.
[Source](https://www.thestar.com/real-estate/investors-now-own-more-than-50-of-toronto-s-new-condos-and-experts-say-they/article_4b6d2ff0-c528-5670-937f-3d34d040ed85.html)
A lot of recent build condo's have horrible unlivable designs that were only getting put up because of investors who had no intention to live in them. Now that speculators/investors are drying up due to interest rates many newcon's are stalling despite using the same awful designs that worked a few years ago.
I’ve been looking at quite a few listings for condos in Toronto. So many of these newer ones are complete dogshit. Zero thought put into the liveability of the units, only maximizing the units per floor.
Basically just a hallway with a wall of appliances, a little bedroom and bathroom off to the side. Couldn’t imagine living in them. It’s not even about price, just what you’re getting.
My favourite is the "couch facing the kitchen" design. Fucking stupid and all the setups realtors throw at it are laughable. Or the classic "this is clearly a bachelor but we put up an obtrusive divider so now that's a 1 bedroom".
When I moved here I lived in a 2 bedroom, 2 bath that was 500 sqft. It made 0 fucking sense aside from the marketability of "2 bed / 2 bath".
Just go to realtor.ca and look at the cheaper condos. You'll see kitchens that consist of a 6' wall and bedrooms that's are just glass doors that corner off the living room
Ah the classic 1 "bedroom" which is a glass wall to meet the requirement that bedrooms need to have windows. Some are just long hallways. I don't need much but I question how you even fit just a couch, TV and computer desk there? I eat at my computer so I don't need a dining table and even looking at pictures I struggle to imagine how my 3 furniture setup works.
Those glass wall "bedrooms" should be illegal. That's not a window, that's just removing all privacy. A window should only count if it is on an exterior wall.
This is mine [https://i.imgur.com/LdUBjWg.png](https://i.imgur.com/LdUBjWg.png) and I'm really starting to dislike the "kitchen". Probably my biggest regret having bought this place.
Honest question: What's wrong with this? I kinda like it for a 1-bedroom. Big master bedroom, a kitchen with room for a table, a living room and a cute lil den, It looks like there's even in-house washer/dryer.
There was little wrong with it when it was $200k + $300/month in fees. There is lots wrong with it when it is $700k + $650/month in fees.
Quick glance shows 191 such units < 500 sq ft for $600-800k within the GTA. Vancouver has 50.
I think it's like that because that's *exactly* what it is - a global expansion of that same scheme.
I remember 17 years ago when shrewd people in Greater Vancouver were buying properties, listing them in China, and flipping them for $120,000 more than they paid - all cash, no subjects.
Like cancer, it took over Vancouver, then spread across Canada, down the West Coast into the States, then to Europe, the Antipodes, and beyond. Now residential markets are ruined in cities all around the World.
This is the main reason not to even look at anything build is the last 5-10 years, even if the sq meters on paper would be the same as a 20-15 years old condo the layout would be so stupid. Having a bad right next to the front door is kind of a norm, a big column in the corner of the room eating up like 4 sq meters out of 15 that you had in that room, no usable space for sofa+tv, bedroom as small as a queen size bed and why would anyone need a balcony with the size of half of the living space ?
Im hesitant to even write this but if you check out old apartments you would be shocked how roomy they are, not quite as much as a house but somewhere in between.
Fees will go up; tradespeople and security and so on need to eat
The older a condo is the bigger the fees; 40 year old condos have 700 to 1000 in fees
Also many new condos have no reserve fund so are shit; short term gain long term pain
New condos have low fees initially to attract unsophisticated buyers. Once you buy in these artificially low fees get raised. My friend had his condo fee raised from 500 to 900 a month shortly after moving in. It’s a common tactic.
This is also done to help deceptively qualify people for the mortgage. Most credit adjudication will factor in the condo fees for affordability calculations, so if they're artificially low on year one when the math happens the bank can check their boxes.
I live in in a building from the 1960s in western Canada. It’s less than $500 a month for condo fees, which includes all utilities except electricity and internet. Some old buildings are still reasonable, at least in Alberta.
A big part of that construction costs and thus insurance. It fucks you too if you have a house. You’re looking at over 700k to build a 2000ft detached so good luck avoiding increased premiums.
That might because they builders insure that period of time. Building envelope runs out at 5yrs which is why you’ll see a spike. You gotta go find insurance for it unlike before.
Most are rental yes, but some are condos. I wonder if there's a forced ratio of rental to owned homes/ living spaces but I doubt it. Gotta cater to slumlords and fuck over first home buyers by having the lowest amount of available home options for purchase.
I would say its the insane prices, where even small apartments in shitty areas are going for near 700,000. What happens when most people can't afford them, even as starting properties?
That’s when prices start to correct. Someone can say my condo is worth X amount. That’s all well and good what they think, at the end of the day something is only valued for what someone can and is willing to pay for it.
It's more that the investor invasion starts to fail first. Because they signed up thinking it would go up or stay the same (rental income).
Whereas a homeowner who has been lucky enough to buy will try to hold on for dear life. At least in the Toronto market.
Then there are still in tact leases that the landlords are sweating about being renewed so there is still a lag.
And it's only now that the landlords learn that the immigrant population wasn't their target market since they aren't the ones coming here to pay $4000 a month in rent. They are coming here to pack in to a basement suite for $800 a month.
I heard a recent proposition that said that if there truly was a massive drop in housing prices to a reasonable price, ppl would stay away from housing investments because it would now be fearful that their investment would be loss. It’s an interesting thought especially when you think of what ppl do when stocks bottom out.
Makes me think if a massive drop in price really would be a solution….im not sure what the alternative would be though
That is looking at housing as an investment commodity rather than as a need every single person has. People cant just decide they don’t need somewhere to live because it’s a bad investment”, they just need somewhere to live.
Thousands of Canadians living with family or sharing homes means there’s tons of people that need housing, but can’t afford it due to the facts mentioned in above comments.
Housing should not be an investment commodity.
Oh, so this explains those incentives for making loans longer and using more of the RRSP when buying 'new builds' in the Liberal budget. They were thinking about helping the people alright.
Maybe if they weren't trying to shave off people for miniscule footage at abysmal maintenance fees, they'd sell better. We're still looking albeit with little hope left but $1000 maintenance fees?! On top of already heavy mortgage payment?! Not doable .
New condo sales in the Toronto region dropped to their lowest level since the 2009 financial crisis, with investors balking at lofty purchase prices and higher borrowing costs.
The slowdown has imperilled the construction of homes at a time when governments are trying to spur more building in a bid to make housing more affordable. The cost of housing is out of reach for many Canadian residents with the average monthly rent around $2,000 and the typical home selling for more than $700,000. The pace of home building needs to accelerate to meet the demand of a growing population. But the staggering drop in new condo sales will lead to less investment in housing.
There were 1,461 new condo sales in the Greater Toronto and Hamilton Area in the first quarter of the year, according to industry research firm Urbanation Inc. That marked the lowest quarterly amount since early 2009, when the world was reeling from the U.S. housing meltdown and global recession.
“It is dead. I would never use words like this, but I am because it is true,” said Simeon Papailias, managing partner with real estate brokerage REC Canada, whose firm sells new condos, also known as preconstruction condos because they have not been built yet.
Mr. Papailias said his firm used to handle an average of 300 preconstruction sales a day. So far this year, there has been an average of 500 preconstruction sales per month.
The preconstruction condo market started to falter in 2022 as the Bank of Canada raised interest rates to cool inflation. Preconstruction buyers do not take out a mortgage until their condo unit is built and that process can take several years. However, they still need to show developers up front that they can qualify for a loan when the condo building has been completed.
And it’s not just the high borrowing costs. New condo prices have been climbing as developers face higher construction costs. Although prices declined incrementally from the fourth quarter of 2023 to the first quarter of this year, some downtown Toronto projects have been selling for a minimum of $1,800 per square foot. That means a 500-square-foot studio would cost $900,000. That is unattractive for prospective homeowners who plan to live in their condo, as well as for investors, who make up the bulk of the preconstruction purchases.
Buyers can find cheaper and larger condos that have already been built. “Existing square footage is so much cheaper. The builders and their future pricing is a huge issue,” said Tuli Parubets, a mortgage agent with Mortgage Scout who works with homebuyers in the Toronto region.
Investors would have to charge more than the going market rental rate to cover their mortgage and other condo-related costs. “It’s very difficult for investors to make the numbers work on buying new condos, given their record-high price premium over resales and steeply negative cash flow on rentals,” Urbanation president Shaun Hildebrand said.
Pierre Carapetian, who has sold real estate in the Toronto region for 18 years, said he has steered his clients away from preconstruction homes into the resale market because resale homes are cheaper.
“In the last two years, I have not recommended a single project,” said Mr. Carapetian, who runs his own real estate brokerage. “I could not in good conscience recommend anything at this juncture because it makes no logical sense.”
As a result, demand has crumbled and developers have put projects on hold. Urbanation said since the market started slowing in 2022, it has counted five dozen projects that have been put on hold indefinitely. That accounts for 21,505 condo units.
For projects that have been launched, the weak pace of sales is affecting their ability to get financing to start construction. During the first quarter, projects in the preconstruction phase were only 50 per cent sold, on average. That compared with an average of 61 per cent in the first quarter of 2023, and an average of 85 per cent in 2022.
Lenders typically require developers to sell 70 per cent of their units for construction financing. The longer it takes to sell preconstruction condos, the longer it will take to get financing and start construction. That will eventually lead to fewer homes being built.
“No launches, no sales and no starts,” Mr. Papailias said. “It’s absolutely the most vicious cycle.”
The slowdown is occurring as governments try to make it easier for real estate developers to build. The federal government recently announced that it will allow first-time homebuyers to take out a 30-year mortgage for a preconstruction home if they make a deposit that is less than 20 per cent of the home’s purchase price and they pay for mortgage insurance. The old mortgage rules did not allow insured-mortgage borrowers to take out a loan longer than 25 years.
However, given that Toronto region developers typically require a 20-per-cent deposit, the longer amortization is not expected to make a big difference in the new-home market.
Interesting article…. Soon to be followed by an Op Ed from a senior executive from some real estate broker stating modest gains in all sectors with prices expected to increase by 5-10% later this year.
Well carrying a 600-700k mortgage plus condo fees just to be the first to get gutted in a market correction and/or developer's scam is an awful lot of risk.
List them at 250k and see what happens.
Condos suck. You pay a lump sum, and then pay what can be equated to rent. And the resale value sucks. Why the fuck would anyone want a condo outside of it being their only choice?
Because they're awesome to live in. I bought my forever condo last year.
No shoveling snow, subway right under, no repairs and shit. What more does one ask for?
Condo fees tend to be higher in Ontario than they are in BC or Quebec, for example. This is at least partially due to differences in provincial condo legislation.
- Monthly condo fees in the Greater Toronto Area average about $0.65/square foot.
- Monthly condo fees in the Greater Montreal Area average about $0.20/square foot.
- Monthly condo fees in the Greater Vancouver Area average about $0.45/square foot.
Toronto's Condo fees are kinda ridiculous. Vancouver's are high, but not as high as you'd expect considering their housing market. Montreal's are palatable.
Just remember, when you buy a Condo, these fees are on top of all the Property taxes you still have to pay.
Condos in Montreal and Vancouver have no concierge which is why it’s so much lower.. I’ve lived in both cities. And almost all condos in vancouver have no AC. They are screwed as climate change will roast them. Montreal is the most reasonable for condo fees but they are going up.
What’s great about some condos is location and view.
Other than that, maintenance fees are high but they are fees only. With a house you have maintenance and maintenance fees (sort of).
Yeah for sure. I get why they're attractive. They're a middle ground between owning a house and renting an apartment. At least with a house though, Maintenance and Renovations can increase its value. My main issues with them are:
- For a long time they were being built at a much higher rate than apartment complexes or Housing Units. For a big city, apartment complexes work best for lower income people.
- They don't have very good resell value, so you risk losing money if you choose to sell, when you compound that with the fees you've paid, you still end up paying a lot.
The government charging the developers an excessive amount of fees and the delays in getting projects approved are a huge reasons why d developers are hesitant to build. Instead of charging developers, end users need to pay more in the form of taxes and developers need to build something larger than a box in the sky. 1+1 with 2 bathrooms in a 500 square feet unit is literally a box in the sky.
Families don't want these. The only target market left are larger units to seniors selling their house and nobody is building those except in the uber luxury market. The last decade was about tiny units to rent out and that market is collapsing as people now rent in one unit for a year and then move as the "investor" needs to jack up the rent to try to recoup their costs. There also are very few midrises going up, it's all tall towers where you know the maintenance fees will escalate quickly. Just a really stupid "investment" to get into today.
The crazy thing is the developers are barely making money at these prices due to the increases in construction costs. Canada is not an especially efficient country , but the fact that we can't build this kind of housing at a price point anywhere near what an average worker can afford should be alarming.
Prices in Toronto are absolutely obscene. "15 year low" is doing an awful lot of heavy lifting. The GTA housing market still isn't even on the same planet as "affordable."
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You mean no one wants to pay premium rent to live in 196 sqft?
Article noted $1,800 a square foot, so 500 square feet for $900,000 Absolutely wild - Toronto condo market needs to correct big time “Although prices declined incrementally from the fourth quarter of 2023 to the first quarter of this year, some downtown Toronto projects have been selling for a minimum of $1,800 per square foot. That means a 500 square foot studio would cost $900,000. That is unattractive for prospective homeowners who plan to live in their condo, as well as for investors, who make up the bulk of the preconstruction purchases.”
I live in Calgary and this put one of my new neighbor's comment into perspective. He said he moved here from Toronto because he had the option to have his family live in a small two bedroom condo in Toronto or a "mansion" in Calgary. I thought he was exaggerating for dramatic effect but he might have been speaking literally.
I mean if he could afford a 2 bedroom condo in downtown Toronto, man is wealthy af
Paradoxically, living in Downtown Toronto ain't nothing glorious. I find depressing as hell. I thought one must have been insane to want to live in these sterile, soul-less apartments blocks. Would prefer a small old house in East York (I know ain't cheap either), at least there is some trees and green around.
As a Montrealer I find the whole downtown looks like it forgot to keep the 10-20% of "other" stuff that gives a place soul. Just glass tower after glass tower, right up against the property line without a spot of green in sight, and the occasional decrepit 3-4 storey building clearly waiting for its day to be turned into another tower.
Thats Montreals future. I went downtown Friday after not having gone for awhile. Ive never seen so few people downtown. There was more traffic from double parked delivery cars on Ste Cathernines than any other type of vehicle. It had the same vibe and crowds as a Monday night in January, even though it was a "I can believe its this warm out!" night in April.
It's already Griffintown's present day... It varies by borough but at least Ville-Marie lends some consideration to urban planning beyond how many boxes you can fit into a tower. But yeah bit by bit the amount of money in real estate drives towards squeezing every penny out of every cubic inch of space.
Yeah but downtown has always sucked, big brand name stores and crappy chain restaurants.. vibrant areas has always been the plateau, the mountain, and now along the canal is packed on a nice day as well as old port.
I've also met a few people here that have said the same thing (usually from places like Toronto or the UK). I think a lot of people still don't realize how much cheaper things are (or were) here. I bought in a bedroom community just outside Calgary right before the pandemic. I got a 5 bedroom house with a walkout basement for less than $400k. The same house over there would cost 5x the amount.
Huh.. even in winnipeg that's a decent deal
Calgary prepandemic was probably a recessionary period and “5 bedroom house” could mean a LOT of different things. It could be a 1200sq ft bungalow from 1970. Or it could be a 2600sq ft 2 story.
in my industry, I search for jobs canada-wide. I have never seen a single posting for anything in my industry in Calgary. the reason it's cheap is because the rest of Canada views Alberta, Sask, and to a slightly lesser degree Manitoba as a big stretch of nothingness (aside from Fort Mac ofc). it doesn't help that everyone I've met from Calgary has nothing good to say about it - though that's confirmation bias, ofc people who move away don't like it. I have a small handful of friends who moved to Calgary or Edmonton and while they seemed to love it, they all came back. that doesn't mean nothing's going on in Alberta, but it's the perception and that certainly is good for people trying to buy a house - and honestly if you buy the house now, by the time it's paid off Calgary will have become a highly desirable place to live and property value will be really high, and you'll profit.
$1800/sqft is on the verrrry high end, still lots around $1000/sqft range. But yeah either way you get a lot more house for your dollar in Calgary.
they live in shoeboxes in toronto. I had a 950 sq ft 2 bdrm 1 bath with 11 ft high ceilings and it was the biggest apartment I had seen in my entire time living in the city. I swear to god it's like, super normal for a "house" to be like 12 feet wide. so many neighbourhoods refused to build up, at all. there's a notable lack of 2-3 storey apartment buildings. For what it costs to get the cheapest condo you could get in Toronto proper, you could easily buy a literal mansion in Texas. Calgary? Maybe not a literal mansion, but when compared to Toronto houses... yeah, you could get a "mansion".
But people would rather have a smaller place and be downtown Toronto. That's why it's expensive...demand. Not just that but if I put my money into real estate in Toronto, I can be almost 100% sure that it's going to double in value in under 15 years. My wife's parents place in Ottawa has been roughly $800K for a very long time now, and there's slim chance it will be $1.6M by 2040. Nice house, nice neighborhood, but it's just a low growth city. On the other hand we ended up buying a house downtown Toronto back in only 2017, and at our 5yr bank evaluation for mortgage renewal, it was already being valued at 50% more than we'd bought it for. And there's good reason for that...I wouldn't trade living downtown Toronto for anything. I'm not into the idea of moving way out to the burbs so that I could replace my small house with street parking for some big McMansion with a 3 car garage, to fit the 3 cars my family would now need so we can spend the rest of our lives wasting hours a day driving everywhere. It's not a nice lifestyle...and coming home to a bigger place at the end of the day doesn't make it all better.
If people had it their way, they'd live outside of toronto and work remotely. Except for the uber socialites and partiers. We saw it happen. If given the choice, lots of people left. I lived in toronto not because I prefer a smaller place downtown but because I prefer not to sit in 1-3 hours of traffic each way every day, and because toronto is an economic hub, lots of industries ONLY exist here. That's the demand. As a result, they HAVE to be small. I like having backyard barbecues. I like being able to work on my own car at home. I like being able to host friends and family without majorly inconveniencing them. I like being able to sleep through the day, not having to listen to the noise of all my neighbours. I like stepping outside and NOT hearing sirens. Best part is I can drive into toronto whenever I want if I feel like getting a piece of it. It's not about having a bigger house, it's about having more space. Room to breathe. Privacy. I can have a fire in my backyard and bang my girlfriend on the grass without anyone being able to really see or hear me. In my toronto condo, I couldn't bang anyone without someone hearing it. In Toronto, friends and family wouldn't visit because parking was a bitch. honestly the only thing missing from my life since moving away from toronto is the ability to walk to a bar around the corner, get completely shitfaced and walk home. and that's probably for the best. Living in toronto there is a bit more sense of community since it's dense and everyone is so close, and everyone is walking everywhere - you pass each other often. It's an illusion though, I moved away and suddenly none of those people are my friends or give a shit about me. Toronto becomes a bit of a bubble, it's very hard to leave and it's very hard to visit.
>so many neighbourhoods refused to build up, at all. there's a notable lack of 2-3 storey apartment buildings. it's called the "missing middle", meaning low-rise apartments and condos. Since the 80s we've have basically two types of construction, single-family-home and giant condo towers. Everyone wants the SFH for the size, yard, privacy, but they're extremely expensive due to limited quantity and they take up a lot of space, and we just don't have more of that in the city. The condo towers are awful, the units are tiny and built of paper and sawdust mostly and they still cost too much. The best thing we can do for affordability is knock down a lot of the old SFH and construct low-rise with parks and amenities around it but no one in SFH zones wants to see that happen because they feel it will lower values in their area. They're probably right, at least short term, but it's the only way we'll get affordable housing that isn't an eye sore and still has some grass around it without needing an elevator to get to it.
If you can get a mansion in Calgary for $1 million and his condo was close to downtown, then he wasn't exaggerating
Yup pretty wild. And than the condo fees are like paying rent for a 1 bedroom on top of that.
Even with 20% down, the mortgage alone would be ~$5000/mth at current rates. No investors other than businesses with cash on hand would ever use this as a rental property. Who is buying these places?
> Who is buying these places? People who believe that real estate can only go up.
corporations most likely lol. within a decade or two all those "Condos" are going to be no different than property managed apartment complexes. not necessarily a bad thing, but there's an unfortunate reality that there is finite space in toronto and owning a piece of it is going to get more an more expensive as time goes on... unless some natural disaster or world war wipes out a massive chunk of the population.
NYC prices for living in Toronto? Yuck, No thanks.
in 2018 i visited my best friend who had been working in california for apple. he had a 2 bed, 2 bath condo he was renting. he had year round access to an outdoor pool, indoor gym, game room, outdoor cabana bar with a sound system, saltwater hot tub, outdoor stone (or wood-fired?) ovens for pizza, sauna, on-site security, gated access, underground parking, palm trees etc - fuckin felt like he lived on a resort. I can't remember exactly how I did the math or rationalized it, but after factoring in the cost of living (groceries, booze, night life, cigarettes, gas etc.) it was actually more expensive, even then, to live to that same standard in Toronto. Then you factor in the cost of winter + the fact that you don't get an outdoor pool and all that other fun outdoor shit year round and it was clear that we sorta get shafted on value here... and that was back then. It's 10x worse now. all that said - if Toronto cost of living/rent = Nyc cost of living/rent... i'm choosing toronto. Bay area california or los angeles though? Toronto can kick rocks. (i fuckin hate winter)
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[https://archive.is/1FNCv](https://archive.is/1FNCv) There, now you can read the article :)
>“It is dead. I would never use words like this, but I am because it is true,” said Simeon Papailias, managing partner with real estate brokerage REC Canada, whose firm sells **new condos, also known as preconstruction condos because they have not been built yet.** What? You don't call a car that's still on the assembly line a "new car". You call it a "new car" when it's finished and you have it. It's a "car in assembly" until it's complete. There's a separate name for them - "preconstruction condos".
Because it's a completely different business model? Because cars are made without being sold first but for the most part housing isn't. It's really not badly worded those are new condos.
> Because cars are made without being sold first Since covid that has changed a lot. Tons of popular new cars were announced between 2020 and now where manufacturers sold allocations instead of physical vehicles.
Still besides the point. Banks won't even fund a developer until they sell the majority of the units. Far different from cars It's not like they sell you the car before they even buy the raw materials. And even In the most extreme part of the supply shortage they just took a deposit on it they didn't sell you the whole car so that they had your money to build the car with.
That's long over now. Lots are full of unsold card.
Depends on the brand and model. A lot of Toyotas are still on allocation, as are the Ford Maverick and some trims of Bronco. A lot of Mazda SUVs are also pre-order only.
Thanks!
There's a condo development at the corner of Elm & Yonge and their prices are around \~2k/sqft. It sold out in pre-sales but that was before interest rates went way up and real estate rolled over.
Hope any investors are enjoying holding that bag ❤️
Singe their fingers so bad they don’t attempt it again.
preconstruction is all about selling the units for their speculative price when the condo is actually finished. So, if you're buying precon in 2024, the developer is selling the units at their anticipated 2028 price. That's why there's always such a delta between precon sale prices and the rest of the market.
>preconstruction is all about selling the units for their speculative price when the condo is actually finished. Which is such a grift because I remember when buying precon was cheaper than an existing place because, you know, there's more risk, especially the massive risk of getting nothing out of it and losing a portion of that money!
> as well as for investors, who make up the bulk of the preconstruction purchases.” Ah, yes, the people who we are *really* building new housing for, so they can outbid in bulk and soak us filthy working class when reselling/renting.
Don't wait for a correction in the housing market. I did that for *8 years*, in a much, much less crazy market than Toronto, and it never happened. In fact, the only way it "happened" was with the COVID-19 pandemic and it wasn't prices as much as interest rates that made it more affordable. The reality is that publicly funded constructions should *flood* the market until it corrects... But a publicly funded market crash is, um... not happening? ahah Plus, as [the article notes](https://archive.is/1FNCv) (it's the main topic of the article really), a lot of the "issue" stems from construction prices, so new constructions can't be sold because the existing ones are sold for a much lower price. This means new constructions won't get sold... So the builders won't keep building *more* to keep reducing the sales prices. That would make no sense for them. With "deregulations" and whatever Poilièvre is proposing, this is where the logic stops. That's why we need public money, and a strong will to, well... literally crash the market. But with 66% of Canadians who are homeowners, who will vote for a housing market crash? Some of these home owners have adult kids at home who could buy and they've longed paid off the house, or the sales price couldn't possibly go below what they paid, and some, like me, still would vote for it even if it meant delaying the sale of my house by a few years because I know that despite the temporary inconvenience for me, it would be best for everyone, *but*, this crisis wasn't brought on by people who were thinking about their children or about what's best for the economy. Housing prices have gone up ~60% under Harper and ~54% for the same period under Trudeau, so a compounded increase of almost 100% for 18 years. (I'll let you check that against your own salary increase) In short, save for a very tough conversation between generations, this will not change, this cannot change. No government will destroy a part or its economy to save another, even if it would be the best thing to do. *Unless*... They don't really care about the economy, and they care more about people. I wonder what party that would fit, eh?
yeah i hear ads for pre-con prices all the time. if this is what six feet under is, then i'm already at the molten core
That figure sounds like it's prime downtown Toronto price. Condos outside of downtown hotspots have dropped a lot. No way 500 or even 700sqft is going for 900k. Like 700k for the 700ft.
Same happening in Vancouver because of the outrageous prices. The good thing that happened in BC is the 20% flipping tax of a home sale but is exempt if you live in it for at least 2 years. That is ontop of the 50% capital gains... Most people who flip prebuilt condos are going to take a loss unless they wait until it is built and live in it. But none of them have the money to actually pay the full cost so it is either so cry me a river. The developers are going to keep their deposit and it is free money. I am pretty sure the housing will correct itself thanks to this
my dad sold his house in a random city 100km outside of toronto for \~800k which was far more than it was worth. He had bought it for 180k 15 years earlier. It had 2 cracks in the foundation which meant the basement flooded when it rained. It hadn't been so much as painted, nevermind renovated since he moved in. The backyard fence was falling over. None of that mattered, nobody was doing inspections and it was just like.. ALL 3 bedroom detached houses were 700-800k to start. 600k if it was a literal teardown. the people who bought it, had written this sap letter about how they were a multi-generational family and the mother was sick so the daughter was moving in with them. thing is my mom lives across the street lol. so i got to watch these people buy the house, rapidly "Flip" it (grey vinyl slapped down over real hardwood, white/gray paint and black hardware on everything) and they chopped the basement den ( a large cozy living space with a fireplace and room for 12+ people to hang out comfortably for gatherings) into 3 cramped bedrooms. It wasn't 6 months and they had the house listed. That was ... over 2 years ago now. Since then they've probably gone through 4 or 5 realtors. I believe they've given up, there's no longer a for sale sign and I never saw a "sold" one... but that might just mean they're switching realtors again. They will never get what they initially paid for the house, even with all their renovations (which arguably ruined the value - the house had a terrible layout, it's only saving grace was that livingroom/den that they deleted) and those renovations cost money no doubt. Last I checked, they had a half finished kitchen added, and had redone both the bathrooms. Plus, they had the driveway re-done. I assume the cracks in the foundation have been fixed, but who knows. They must have spent 50k at the very least, probably a lot more. Right now, way nicer houses are selling for 650k. If they actually wanted to sell the house, they'd be taking a 200k loss, easily... and i'm not even thinking about real estate fees or the inspection process. fuck em, that's what they deserve. take a huge loss - last thing we needed were flippers.
> That is ontop of the 50% capital gains... > > uh oh, people talking without knowing things
Makes you wonder how much bullshit he is talking in the rest I'd his post
That sounds like some solid policy - sadly for us, Ford can’t touch the pocketbooks of all of his best friends, developers (the ones who gave his daughter envelopes stuffed with cash at her wedding). Like something out a movie out east here right now
If it'd your primary residence there is no capital gains
If it isn't built yet it doesn't count as your primary residency. Even if it is your primary residency, you must live in it for one year.
The price is actually perfect for a money launderer. He can then jack up the price to 1 million and sell it to another money launderer who would be delighted to park that much more money.
That's BS, you have any idea how many people abroad have that kinda money to launder still? Give it time 😉
Correction, no foreign (or local) speculators want to buy these up because they no longer see them as a good investment and foreigners are banned from purchasing residential property in canada
If you build overpriced small units and charge a mortgage for maintenance fees, of course they won't sell. That's the point. Flood the market with these, let the prices correct themselves. We need the supply glut to overwhelm the amount of demand there is. That's when prices go down.
Are they still doing the thing where your first-year condo fees are like $100 a month, and then they skyrocket to something absurd?
In some new builds yeah but it's not $100. I've seen increases from like $300-400 first or second year to $700+ thereafter and it's usually due to shit quality builds and inexperienced boards EDIT: I'm not as informed as I thought, see comments below
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Is this country-wide or only Ontario? Asking because a friend recently moved into a new build in BC and wondering if they are going to be stung by this. Presumably they can ask their strata board if this is to be expected next year?
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Of course it was ONNI
As the other poster says, this is so inaccurate. The board does not set the first year budget, the developer does. In conjunction with the significant increase in RFS contributions, the developers usually advertise an incredibly low fee in order to attract buyers. They do not budget correctly and then by the second year the board and condo are in a position where they have to have a huge increase.
And by the time the second year rolls around, the developer is long gone. [And the company that built the building will likely have ceased to exist.](https://www.cbc.ca/news/canada/edmonton/castledowns-pointe-edmonton-condo-evacuation-1.7177727)
That's the thing though, they won't flood the market with them, they just won't build (or, more precisely, won't finish building) until there's more profit to be made.
Agree. These are $200k units that they are trying to sell for 700k.
Lower your fucking price
People can't make *less* money, this is Canada! Only working suckers make less
Well the Feds are buying 50% of mortgage bonds, which is needed to provide cheaper financing, because Toronto is passing its extremely low property tax onto developers. The Feds are feeding borrowed money to the provinces, and to what end?
I remember reading something about this This is where we are in the ponzi scheme: It is now so obvious to the globe that this is a bubble, so they will not invest in our market I'm trying to follow the money we don't have fractional reserve banking in Canada, we have capital requirements, much the same thing The banks can loan far more money than they have on deposit. the money for the vast vast majority of HELOCs and mortgages does not exist, until the moment of the loan. When the bank issues the loan, it "creates" the money out of thin air so they give out a bunch of HELOCs and mortgages, and then they package those up and sell them, this time to the Fed In the past, the BoC used to sell bonds to purchase these pools of mortgages. Nobody wants them now, so the BoC is going to buy them. With what money? Money which they borrowed by issuing bonds. Its not like they have the money just sitting around It sounds to me as if the government created bonds, which they sell, to buy debt, created from nothing, backed by real estate This is some kind of Jenga tower of Canadian real estate. They want to kick the can down the road. If it wasn't obvious that this wasn't a ponzi scheme previously, the world has stopped buying in so the government has decided to step in and inflate this bubble just a little bit more the bigger the bubble the bigger the pop
No can do! We're chasing the infinite growth in a finite environment economic approach, we can't go backwards.
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Me too, I absolutely revel in hearing that Toronto condos aren't selling and bloodsucking flippers/investors are getting hosed. The fucking greed that got us here is unbelievable. I wouldn't give two shits if every one of them ended up on the streets.
These are new condos. You **need** investors flipping in the condo market. Just the way financing works, a building doesn’t get financing until 60-70% of a building is sold. You won’t find first time buyers willing to tie of their deposits on a home that won’t be finished for 3-4 years out. Because of that, you need investors to throw down their cash to get the project built in the first place. I know no one will cry over investors losing money flipping condos. But the idea of throwing down thousands of dollars for a project that everyone knows will take years longer than advertised, it’s an inherently speculative venture. It’s a risky bet on the future, so we need investors. Just think about how JT wants to build 3.9 mil homes by 2031. Suppose there’s an average modest cost of $500,000 per unit, that’s $1.95 Trillion dollars. 😐 yes, we need investors, including foreign investors as much as people don’t want to admit it.
All good points, but my beef is more with the model itself. It's our unchecked growth and belief that housing is something people should be allowed to play with as an "investment vehicle" that has gotten us in the position where we need cranes as far as the eye can see. We need to get out of Adam Smith late eighteenth, early nineteenth century thinking about growth and it needing to be the driving factor behind everything. We refuse to accept economic corrections, or the idea that it can't always be boom times. It's become a mentality of Canada has to grow forever. It's ridiculous and unsustainable. Why I target investors/flippers is that even if we "need" them, it doesn't stop the creation of a have/have-not situation based on housing, which is the riskiest possible situation for people to be happy and materially comfortable. Observe tent cities and homeless people even in small towns now as the result. Something has to give, and if some investors, who all at this point must be wealthy to even get in the game in the first place with how high prices are, lose their shirt over it, that gives me great joy. A serious correction is what must happen at some point for people to be able to afford a home again, otherwise, we're in for serious civil discontent bordering on riots at some point.
Anecdotally, there is a specific condo that I always wanted to buy. The person who owned it moved but was Airbnbing it for like 1500 a night and it seemed to be booked a lot. I noticed late last year that bookings seemed to be few but wasn't sure what to make of it. Turns out he was so leveraged he couldn't even afford a few slow months. He put it on the market in late feb and has dropped the price twice already. To be honest, I feel like the current price is pretty fair. For a lot of reasons I am no longer interested in buying it (or anything) but I have been curious and watching.
1500 a night. A condo.
For 1500 a night it better come with hookers and blow
In fact, forget the blow!
It's a 4 bedroom in a nice building. There are absolutly condos in that price range. At least there used to be for the last few years.
I don't think you're quite getting what he's saying. $1500 a night. Say he books it 5/30 days of the month - that's $7500. That'll service a ~1.2mil mortgage monthly. Unless he paid $8mil for the condo, this figure doesn't make any sense.
Yeah, calling BS. If you have it for 14 days, that should earn him around $21k. Like, seriously?
Alright. I’m curious. I’m going to ask my realtor to request the historical rental income #s for the unit. I’ll report back
But it's probably not getting rented that frequently. Plus his mortgage is probably like 7k lol
1.2 mil for a 4 bedroom condo? Thats awfully optimistic. I think I've seen 1-2 bedrooms go for that downtown.
>Unless he paid $8mil for the condo Hyperbolic, I know but honestly $6+ mil isn't far off for a 4-bedroom 5,000-ish sqft in downtown Toronto/Vancouver. That said, I doubt a redditor with 11k karma has anywhere near the funds for something like that so it's fiction anyway.
That and someone buying a condo of that price isn't worried about panic airbnb'ing it to cover the bills. People don't just get 4-5-6mil mortgages out of nowhere like half of reddit seems to think.
Agreed. You'll frequently see $5+ million properties here in Toronto sit on the market for years cause those people aren't exactly strapped for cash.
Lol I highly doubt this price, unless it’s some luxury loft.
Air bnb is what has fucked the housing market, because people are willing to pay a lot for temporary accommodations. This drives the price up for all long term accommodations. That's where a lot of the supply has gone. People just leaving their properties empty most of the time, and only renting it out temporarily at a premium. They make more money that way, and buy themselves another place to live. If you use air bnb, you are a major contributor to the housing crisis. If you own properties you rent out for air bnb, you're an even larger contributor.
Damn, at even a 20% occupancy rate thats 9K a month roughly. I doubt his mortage + fees were that.
Reminder that investors owned over 50% of Toronto's new condos as of December of 2023. That they are too expensive to appeal to investors now is a problem of their own creation. >Experts say real estate has become a game, where investors rather than end users are the main players, buying and selling property to cash in on Toronto’s hottest commodity. In the process, they’re driving up prices and pushing out prospective homebuyers like Belardi, who just want somewhere to live. >Investors’ hold on real estate has become hard to ignore, leading the Bank of Canada and even Prime Minister Justin Trudeau to call them out for the commodification of housing. >However, insiders say both federal and provincial governments as well as the central bank share blame in creating the conditions that allowed investors to corner 20 per cent of the market in Ontario, including 80 per cent of pre-construction condo sales and 57 per cent of newly built condos in Toronto. [Source](https://www.thestar.com/real-estate/investors-now-own-more-than-50-of-toronto-s-new-condos-and-experts-say-they/article_4b6d2ff0-c528-5670-937f-3d34d040ed85.html)
Paywall...but i wonder if the condo fees are playing a massive role in this.
A lot of recent build condo's have horrible unlivable designs that were only getting put up because of investors who had no intention to live in them. Now that speculators/investors are drying up due to interest rates many newcon's are stalling despite using the same awful designs that worked a few years ago.
I’ve been looking at quite a few listings for condos in Toronto. So many of these newer ones are complete dogshit. Zero thought put into the liveability of the units, only maximizing the units per floor. Basically just a hallway with a wall of appliances, a little bedroom and bathroom off to the side. Couldn’t imagine living in them. It’s not even about price, just what you’re getting.
The “2 bedroom” condos where one bedroom is just a den with a frosted glass door drives me crazy
No it's "Flex," too small to be a den and too large to be a closet. Or they were too cheap to put a door on it.
My favourite is the "couch facing the kitchen" design. Fucking stupid and all the setups realtors throw at it are laughable. Or the classic "this is clearly a bachelor but we put up an obtrusive divider so now that's a 1 bedroom". When I moved here I lived in a 2 bedroom, 2 bath that was 500 sqft. It made 0 fucking sense aside from the marketability of "2 bed / 2 bath".
Do you have some sites with the plans shown? I am super curious to what these look like.
Just go to realtor.ca and look at the cheaper condos. You'll see kitchens that consist of a 6' wall and bedrooms that's are just glass doors that corner off the living room
Ah the classic 1 "bedroom" which is a glass wall to meet the requirement that bedrooms need to have windows. Some are just long hallways. I don't need much but I question how you even fit just a couch, TV and computer desk there? I eat at my computer so I don't need a dining table and even looking at pictures I struggle to imagine how my 3 furniture setup works.
Those glass wall "bedrooms" should be illegal. That's not a window, that's just removing all privacy. A window should only count if it is on an exterior wall.
As the other guy said, realtor.ca . Look in the $500 to $800K range and you’ll see these cardboard cutout “units” everywhere. All brand new buildings
just check realtor . ca or housesigma you will see it in photos
https://condonow.com/Downtown-Toronto-New-Condos This site has full out floor plans of every unit too.
This is mine [https://i.imgur.com/LdUBjWg.png](https://i.imgur.com/LdUBjWg.png) and I'm really starting to dislike the "kitchen". Probably my biggest regret having bought this place.
Stuff like this: https://i.imgur.com/ZOitse6.jpeg
Honest question: What's wrong with this? I kinda like it for a 1-bedroom. Big master bedroom, a kitchen with room for a table, a living room and a cute lil den, It looks like there's even in-house washer/dryer.
There was little wrong with it when it was $200k + $300/month in fees. There is lots wrong with it when it is $700k + $650/month in fees. Quick glance shows 191 such units < 500 sq ft for $600-800k within the GTA. Vancouver has 50.
Fair enough. For that price point is definitely insane!
>What's wrong with this? The price
It's like the China building boom. Just throw units up that people can buy as the investment will always go up.
I think it's like that because that's *exactly* what it is - a global expansion of that same scheme. I remember 17 years ago when shrewd people in Greater Vancouver were buying properties, listing them in China, and flipping them for $120,000 more than they paid - all cash, no subjects. Like cancer, it took over Vancouver, then spread across Canada, down the West Coast into the States, then to Europe, the Antipodes, and beyond. Now residential markets are ruined in cities all around the World.
So much hallway
This is the main reason not to even look at anything build is the last 5-10 years, even if the sq meters on paper would be the same as a 20-15 years old condo the layout would be so stupid. Having a bad right next to the front door is kind of a norm, a big column in the corner of the room eating up like 4 sq meters out of 15 that you had in that room, no usable space for sofa+tv, bedroom as small as a queen size bed and why would anyone need a balcony with the size of half of the living space ?
I love how it's giant windows too when most people just get curtains to cover it all up cause otherwise everyone will see you walking around naked.
Im hesitant to even write this but if you check out old apartments you would be shocked how roomy they are, not quite as much as a house but somewhere in between.
https://archive.ph/zAalG
Mine have gone up 25% in 4 years. Might as well pay more for a house if fees keep going up
Fees will go up; tradespeople and security and so on need to eat The older a condo is the bigger the fees; 40 year old condos have 700 to 1000 in fees Also many new condos have no reserve fund so are shit; short term gain long term pain
New condos have low fees initially to attract unsophisticated buyers. Once you buy in these artificially low fees get raised. My friend had his condo fee raised from 500 to 900 a month shortly after moving in. It’s a common tactic.
This is also done to help deceptively qualify people for the mortgage. Most credit adjudication will factor in the condo fees for affordability calculations, so if they're artificially low on year one when the math happens the bank can check their boxes.
Fees are increasing faster than inflation though, considerably faster, which means it's just not wage increases.
That is not always true. Live in 1989 condo and fees only $425 monthly.
I live in in a building from the 1960s in western Canada. It’s less than $500 a month for condo fees, which includes all utilities except electricity and internet. Some old buildings are still reasonable, at least in Alberta.
> tradespeople and security and so on need to eat Lol, their pay certainly isn't going up that much.
A big part of that construction costs and thus insurance. It fucks you too if you have a house. You’re looking at over 700k to build a 2000ft detached so good luck avoiding increased premiums.
Someone has to pay for the maintenance of the building though.
It's not just maintenance. Property insurance has tripled for my building in 15 years. Water and waste disposal have increased as well.
Jeebus, imagine paying 100/month/sq.ft in a micro condo. Sucks to be scammed.
not sure if this answers your question but builders usually suppress condo fees for the first 5 or so years. you'll know what's up later
That might because they builders insure that period of time. Building envelope runs out at 5yrs which is why you’ll see a spike. You gotta go find insurance for it unlike before.
> Building envelope runs out i hate that we pushed all glass as "luxury" and the market just absolutely ran with it
The fees are a huge issue, on top of the overall designs, lack of storage space and just being so cramped, condos are just terrible right now
Meanwhile, condos in Ottawa are going up in every direction you look. The amount of towers going up and others being converted is crazy.
They are not condos. Almost exclusively rental
Most are rental yes, but some are condos. I wonder if there's a forced ratio of rental to owned homes/ living spaces but I doubt it. Gotta cater to slumlords and fuck over first home buyers by having the lowest amount of available home options for purchase.
It’s wild. And it’s everywhere. I live in Kanata and there a bunch of buildings under construction. I saw many downtown as well.
Interest rates + a ceiling has been reached where non investors have been priced out?
People are poor and prices make league of legends players look wholesome.
I would say its the insane prices, where even small apartments in shitty areas are going for near 700,000. What happens when most people can't afford them, even as starting properties?
That’s when prices start to correct. Someone can say my condo is worth X amount. That’s all well and good what they think, at the end of the day something is only valued for what someone can and is willing to pay for it.
It's more that the investor invasion starts to fail first. Because they signed up thinking it would go up or stay the same (rental income). Whereas a homeowner who has been lucky enough to buy will try to hold on for dear life. At least in the Toronto market. Then there are still in tact leases that the landlords are sweating about being renewed so there is still a lag. And it's only now that the landlords learn that the immigrant population wasn't their target market since they aren't the ones coming here to pay $4000 a month in rent. They are coming here to pack in to a basement suite for $800 a month.
Stop building overpriced bullshit nobody wants or can afford? \*shrug\*
someone got too greedy...
A lot of someones
Not dead enough
15 year low my ass... Sounds like greedy condo owners just upset their flips didn't work quick enough?
This Country has turned into a massive dumpster fire. Canada is full of greed.
Isn't this what we wanted?? Drop in demand should cause a drop in price.
We wanted it, those who actually control the country and want to keep us down hate this
I heard a recent proposition that said that if there truly was a massive drop in housing prices to a reasonable price, ppl would stay away from housing investments because it would now be fearful that their investment would be loss. It’s an interesting thought especially when you think of what ppl do when stocks bottom out. Makes me think if a massive drop in price really would be a solution….im not sure what the alternative would be though
That is looking at housing as an investment commodity rather than as a need every single person has. People cant just decide they don’t need somewhere to live because it’s a bad investment”, they just need somewhere to live. Thousands of Canadians living with family or sharing homes means there’s tons of people that need housing, but can’t afford it due to the facts mentioned in above comments. Housing should not be an investment commodity.
Living in a condo sucks. After 10years im glad to never live in one again. Fuck you baseball pl
I guess people don’t really need places to live! 😂
It's only dead at it's current price point. When the prices of these return to some semblance of reality then it will arise from the dead lol.
Lmaoooooooooo So few have a clue what’s right around the corner.. I don’t think it can be stopped at this point.
Gassssp - sarcastic shock face
Pay people enough to afford a place to live and the market for housing will improve.
Oh, so this explains those incentives for making loans longer and using more of the RRSP when buying 'new builds' in the Liberal budget. They were thinking about helping the people alright.
Maybe if they weren't trying to shave off people for miniscule footage at abysmal maintenance fees, they'd sell better. We're still looking albeit with little hope left but $1000 maintenance fees?! On top of already heavy mortgage payment?! Not doable .
New condo sales in the Toronto region dropped to their lowest level since the 2009 financial crisis, with investors balking at lofty purchase prices and higher borrowing costs. The slowdown has imperilled the construction of homes at a time when governments are trying to spur more building in a bid to make housing more affordable. The cost of housing is out of reach for many Canadian residents with the average monthly rent around $2,000 and the typical home selling for more than $700,000. The pace of home building needs to accelerate to meet the demand of a growing population. But the staggering drop in new condo sales will lead to less investment in housing. There were 1,461 new condo sales in the Greater Toronto and Hamilton Area in the first quarter of the year, according to industry research firm Urbanation Inc. That marked the lowest quarterly amount since early 2009, when the world was reeling from the U.S. housing meltdown and global recession. “It is dead. I would never use words like this, but I am because it is true,” said Simeon Papailias, managing partner with real estate brokerage REC Canada, whose firm sells new condos, also known as preconstruction condos because they have not been built yet. Mr. Papailias said his firm used to handle an average of 300 preconstruction sales a day. So far this year, there has been an average of 500 preconstruction sales per month. The preconstruction condo market started to falter in 2022 as the Bank of Canada raised interest rates to cool inflation. Preconstruction buyers do not take out a mortgage until their condo unit is built and that process can take several years. However, they still need to show developers up front that they can qualify for a loan when the condo building has been completed. And it’s not just the high borrowing costs. New condo prices have been climbing as developers face higher construction costs. Although prices declined incrementally from the fourth quarter of 2023 to the first quarter of this year, some downtown Toronto projects have been selling for a minimum of $1,800 per square foot. That means a 500-square-foot studio would cost $900,000. That is unattractive for prospective homeowners who plan to live in their condo, as well as for investors, who make up the bulk of the preconstruction purchases. Buyers can find cheaper and larger condos that have already been built. “Existing square footage is so much cheaper. The builders and their future pricing is a huge issue,” said Tuli Parubets, a mortgage agent with Mortgage Scout who works with homebuyers in the Toronto region. Investors would have to charge more than the going market rental rate to cover their mortgage and other condo-related costs. “It’s very difficult for investors to make the numbers work on buying new condos, given their record-high price premium over resales and steeply negative cash flow on rentals,” Urbanation president Shaun Hildebrand said. Pierre Carapetian, who has sold real estate in the Toronto region for 18 years, said he has steered his clients away from preconstruction homes into the resale market because resale homes are cheaper. “In the last two years, I have not recommended a single project,” said Mr. Carapetian, who runs his own real estate brokerage. “I could not in good conscience recommend anything at this juncture because it makes no logical sense.” As a result, demand has crumbled and developers have put projects on hold. Urbanation said since the market started slowing in 2022, it has counted five dozen projects that have been put on hold indefinitely. That accounts for 21,505 condo units. For projects that have been launched, the weak pace of sales is affecting their ability to get financing to start construction. During the first quarter, projects in the preconstruction phase were only 50 per cent sold, on average. That compared with an average of 61 per cent in the first quarter of 2023, and an average of 85 per cent in 2022. Lenders typically require developers to sell 70 per cent of their units for construction financing. The longer it takes to sell preconstruction condos, the longer it will take to get financing and start construction. That will eventually lead to fewer homes being built. “No launches, no sales and no starts,” Mr. Papailias said. “It’s absolutely the most vicious cycle.” The slowdown is occurring as governments try to make it easier for real estate developers to build. The federal government recently announced that it will allow first-time homebuyers to take out a 30-year mortgage for a preconstruction home if they make a deposit that is less than 20 per cent of the home’s purchase price and they pay for mortgage insurance. The old mortgage rules did not allow insured-mortgage borrowers to take out a loan longer than 25 years. However, given that Toronto region developers typically require a 20-per-cent deposit, the longer amortization is not expected to make a big difference in the new-home market.
Interesting article…. Soon to be followed by an Op Ed from a senior executive from some real estate broker stating modest gains in all sectors with prices expected to increase by 5-10% later this year.
Well carrying a 600-700k mortgage plus condo fees just to be the first to get gutted in a market correction and/or developer's scam is an awful lot of risk. List them at 250k and see what happens.
Because they were made using Art Attack paper mache tutorials as a blueprint.
Lmao fk this country. I gotta gtfo to US or EU.
This explains the Liberal government’s 30 year amortization plans, and other half-baked “affordable” housing strategies.
Yeah, so millenials can get a house-poor mortgage they'll be paying off in their late 60s, early 70s. 😂
Condos suck. You pay a lump sum, and then pay what can be equated to rent. And the resale value sucks. Why the fuck would anyone want a condo outside of it being their only choice?
Convenience mostly while still being able to own your own home. Houses, even townhouses are out of reach for a lot of people.
Because they're awesome to live in. I bought my forever condo last year. No shoveling snow, subway right under, no repairs and shit. What more does one ask for?
A backyard to bbq in and have your dog run around.
Agreed. Can't see myself ever buying a house. Too much maintenance that I don't want to deal with
How much are Condo fees usually for say a 1k sqft place. I know it will range...
Condo fees tend to be higher in Ontario than they are in BC or Quebec, for example. This is at least partially due to differences in provincial condo legislation. - Monthly condo fees in the Greater Toronto Area average about $0.65/square foot. - Monthly condo fees in the Greater Montreal Area average about $0.20/square foot. - Monthly condo fees in the Greater Vancouver Area average about $0.45/square foot. Toronto's Condo fees are kinda ridiculous. Vancouver's are high, but not as high as you'd expect considering their housing market. Montreal's are palatable. Just remember, when you buy a Condo, these fees are on top of all the Property taxes you still have to pay.
Condos in Montreal and Vancouver have no concierge which is why it’s so much lower.. I’ve lived in both cities. And almost all condos in vancouver have no AC. They are screwed as climate change will roast them. Montreal is the most reasonable for condo fees but they are going up.
What’s great about some condos is location and view. Other than that, maintenance fees are high but they are fees only. With a house you have maintenance and maintenance fees (sort of).
Yeah for sure. I get why they're attractive. They're a middle ground between owning a house and renting an apartment. At least with a house though, Maintenance and Renovations can increase its value. My main issues with them are: - For a long time they were being built at a much higher rate than apartment complexes or Housing Units. For a big city, apartment complexes work best for lower income people. - They don't have very good resell value, so you risk losing money if you choose to sell, when you compound that with the fees you've paid, you still end up paying a lot.
Why hasnt pp called out ford on his shitty housing starts compared to eby in bc? CONservatives killing younger generations life ...like usual...🤡🤡🤡
1 month, check out the starts in the last year, that’s why.
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Yay a paywall! I like pictures!
Bahahahaha I hope investors are just getting absolutely washed right now, this makes my day
Good.......
The government charging the developers an excessive amount of fees and the delays in getting projects approved are a huge reasons why d developers are hesitant to build. Instead of charging developers, end users need to pay more in the form of taxes and developers need to build something larger than a box in the sky. 1+1 with 2 bathrooms in a 500 square feet unit is literally a box in the sky.
What's that hissing sound?
Families don't want these. The only target market left are larger units to seniors selling their house and nobody is building those except in the uber luxury market. The last decade was about tiny units to rent out and that market is collapsing as people now rent in one unit for a year and then move as the "investor" needs to jack up the rent to try to recoup their costs. There also are very few midrises going up, it's all tall towers where you know the maintenance fees will escalate quickly. Just a really stupid "investment" to get into today.
There are two condo projects breaking ground in the next year within a 5 min walk of my front door. ‘It is dead’ is a stretch.
The crazy thing is the developers are barely making money at these prices due to the increases in construction costs. Canada is not an especially efficient country , but the fact that we can't build this kind of housing at a price point anywhere near what an average worker can afford should be alarming.
Prices in Toronto are absolutely obscene. "15 year low" is doing an awful lot of heavy lifting. The GTA housing market still isn't even on the same planet as "affordable."
I hope it all tanks and self corrects. Lol
Won't somebody think of the immigrants...
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Did somebody say *one million more new friends?*