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agree. it makes no sense to buy preconstruction any longer, since the price already includes expected appreciation in the next few years.
Compare the price of a preconstruction with a similar one next door, the precon is most likely to be priced at 20% higher on a per square basis.
stupid idea to buy those and expect to reap in some profit upon completion.
 
kkgg7 said:
agree. it makes no sense to buy preconstruction any longer, since the price already includes expected appreciation in the next few years.
Compare the price of a preconstruction with a similar one next door, the precon is most likely to be priced at 20% higher on a per square basis.
stupid idea to buy those and expect to reap in some profit upon completion.
Click to expand...

You are correct. It doesn't make sense to purchase pre-con at these prices. So why do "speculators" do it? Leverage and Time. By putting 10-20% down and having 3-5 years to wait, they are hoping that the unit will gain value. But this is a very dangerous game. This worked well when pre-con was priced less than resale, now it's the opposite. I know investors who buy pre-con in multiple projects playing the leverage and time game. What happens if there are project delays and multiple units have to close at the same time. What happens if there is a downturn and they can't sell? Will they be able to hold multiple -ve cash flowing units? Time will tell......
 
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I think he is referring to oversees investors.

Certainly however, they are not "most people" and if they are and PRECON is close to say 60-70% or higher foreign investors then we better hope for other foreign investors because if not the Ponzi scheme will have come to an end as certainly most income investors not counting on flipping for a profit stopped buying when the core hit $500/sq.ft. or they plan to hold for 5-10 years.
 
I realize wang888 meant, '(most) overseas investors pay cash' when he said, "most people pay cash". I just found it offensive, so I pointed it out.
 
I agree. Condo speculation, particularly in projects that appeal to overseas investors, have become a ponzi scheme and it's one that we will be paying for dearly at some point. Regulatory bodies need to clamp down on overseas speculative investment. What's worse, it's not uncommon for such speculators to evade capital gains tax when they flip by buying and assigning.
 
i think i read its estimated that 25% of condos are left vacant - that sounds like cash to me also
 
wang888 said:
i think i read its estimated that 25% of condos are left vacant - that sounds like cash to me also
Click to expand...

I am assuming that would be more relevant to the TO DT condo market (if the above is correct). I wonder if investors are only attracted towards the potential high $$$ return properties and not the ones outside of that DT zone. Curious if anyone think an investor might want to invest in a North York Condo ?
 
No one is disagreeing about whether or not these foreign buyers are paying cash, just that this foreign speculation/'money parking' has the net effect of destabilizing and hyper-inflating the market.
 
wang888 said:
i think i read its estimated that 25% of condos are left vacant - that sounds like cash to me also
Click to expand...

That was 25% not owner occuppied. There is good reason to believe a large majority are tenant occuppied.
 
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