[The Condo Observer]

I have often seen 400 to 450 psf as a range. But was quite surprised to learn that there have been resales at Thornwood in Rosedale in the 630-660 psf range. (Smaller units). I am sure the larger units fetch a lower psf price. I guess the premium is due to location.

There were a couple listings at the Polo Club 1 at 1055 Bay (an older but well run and maintained building) in the 410 psf range this week. I think this is a great value for investors.

 

[TorontoMike$$]

I have often seen 400 to 450 psf as a range. But was quite surprised to learn that there have been resales at Thornwood in Rosedale in the 630-660 psf range. (Smaller units). I am sure the larger units fetch a lower psf price. I guess the premium is due to location.

There were a couple listings at the Polo Club 1 at 1055 Bay (an older but well run and maintained building) in the 410 psf range this week. I think this is a great value for investors.

Yes I'm seeing 450 to 500 a foot on average for average buildings. But when you look at older buildings like you find on bay you will notice price psft is much lower compared to newer construction on bay where u will pay 550-600 a foot to start
I have also seen some buildings like London on the Esp. On resale for 625-650 a foot and I see some of the other high end builds like Maple Leaf Square coming in higher possibly closer to 700 a foot.
I guess it all depends on what your investment goals are: rental income or appreciation.

 

[TorontoMike$$]

Any way you look at it its a great time to buy as an investment.

Prices are good, rates are better and rental rates are stable.

Some guys on this board will tell you otherwise and they are entitled to their opinions but realistically they have been saying the same thing over and over for years and they have missed some of the best oppourtunity in decades

Good luck!

 

[The Condo Observer]

A unit in The Loretto, (Brunswick in the Annex) reportedly sold for over 650 psf last week. I find it incredible that Maple Leaf Square is re-selling at 700 psf! Has that been confirmed via mls, or other source?

 

[kondoz]

That is what people are trying to sell MLS units on assignment. I think it is a tad too high.

With the amount of units coming to the market all at once as soon as it registers I think 600 psf is more realistic. Still it was a great investment.

 

[TorontoMike$$]

A unit in The Loretto, (Brunswick in the Annex) reportedly sold for over 650 psf last week. I find it incredible that Maple Leaf Square is re-selling at 700 psf! Has that been confirmed via mls, or other source?

The last few one and dens at MLSQ were listed on MLS and sold in Dec and Jan for around 425k for 601 sq ft with parking

 

[JayBee]

The last few one and dens at MLSQ were listed on MLS and sold in Dec and Jan for around 425k for 601 sq ft with parking

No offense to anybody but that's ridiculous.

I'm really not that impressed with MLSQ

 

[TorontoMike$$]

No offense to anybody but that's ridiculous.

I'm really not that impressed with MLSQ

You have not even been inside. I was inside a couple times and its awesome ...

And its not completed yet!! Will be there tomorrow AM to do a PDI for a client

700 a foot is now when not completed ... what will it be completed

 

[madmolecule]

Besides location, and finishes in the unit, another factor affecting price/sq.ft. is the monthly maintenance fee... All things being equal, a higher maintenance fee would lower the price people are willing to pay for the unit. Older units tend to cost less per sq. ft. as well (e.g., the Polo which you mentioned), probably based on the assumption that older buildings are more likely to see hikes in the maintenance fee, due to the likelihood of repairs being required.

 

[interested]

Any way you look at it its a great time to buy as an investment.

Prices are good, rates are better and rental rates are stable.

Some guys on this board will tell you otherwise and they are entitled to their opinions but realistically they have been saying the same thing over and over for years and they have missed some of the best oppourtunity in decades

Good luck!

Mike, are you a realtor? I ask because in fairness it would hardly be fair to expect you to say the opposite as your livelihood would be tied up in this position if so. I am not saying or intimating that you do not believe your position, just saying it would be hard to put forth a contrary one as you would be saying don't buy, and I don't want to earn a living. If you are not a realtor, then I appreciate my comments are not applicable. I ask because in another post, you state you did a PDI for a client so I jumped perhaps incorrectly to this conclusion. I feel in the interest of full disclosure, it would be fair to make this clear. By the way, I am not a realtor for the record.

At some point, would you not agree that if prices are good, rates are better, and rental rates stable, all the good news as it were is already factored in and therefore the upside potential would be limited and the downside risk more prominent. Please don't say it is "different this time" as real estate has always been cyclical. That said, I am not calling for a big crash, just lateral movement or slight decrease (10%) of prices from their current levels over the next 2 to 3 years before any further upswing in price may recommence. In fact, alot of builders I am told are not increasing the prices and choosing/being forced to absorb the PST component of the new HST. This to me does not suggest prices at least at present and present values, can in the short term continue their upwards march.

I agree with your later post that alot of people have been doom and gloom for a long time. The only thing I would say is that eventually there will be some form of correction (just as it was in late 2008) and it may not respond as quickly(or frankly unjustifiably as it did in the last year in my opinion). All I am saying is one should not be suprised if there is some correction and one should have a longer term horizon (say 5 years) and remove making buying for further appreciation at todays prices for the near term and concentrate on rental rates (which I believe will stagnate and even drop 10% over the next 2 years as product (I am referring to condos) in the downtown Toronto core comes to market.

 

[simuls]

Any way you look at it its a great time to buy as an investment.

Prices are good, rates are better and rental rates are stable.

Some guys on this board will tell you otherwise and they are entitled to their opinions but realistically they have been saying the same thing over and over for years and they have missed some of the best oppourtunity in decades

I hope you're not talking about me! I've been gung ho on condos for the past 6-7 years and have taken advantage of the opportunity you've mentioned on several occasions and my retirement will be happier because of it, however, in the past 6 months I've turned decidedly doom and gloom and am more certain than ever that it's coming. Just being out on the weekend and looking at numerous properties, the almost doubling of listings in the past 2 months, the fewer instances of bidding wars and the gross over-pricing of many units I saw, indicates that this, imo, is probably the absolute worst time to buy in the past 15 years. Rents are not stable, and in fact are dropping (are less than they were in 2001 NOT including inflationary decreases), and huge numbers are coming on the market. If this is your business, I appreciate that you need to sell/help to buy in order to make a living, but I have to wonder if you really, truly believe what you're saying given the fact that there are no numbers to support the continued elevation of this market.

 

[CN Tower]

. Rents are not stable, and in fact are dropping (are less than they were in 2001 NOT including inflationary decreases), and huge numbers are coming on the market.

This alone is reason enough to avoid the entire sector. It proves that real demand for apartment living has not kept pace with supply. Ultimately this factor will be the market's undoing but when is anyone's guess.

 

[interested]

This alone is reason enough to avoid the entire sector. It proves that real demand for apartment living has not kept pace with supply. Ultimately this factor will be the market's undoing but when is anyone's guess.

I don't know that I would quite go that far. However, I would work the numbers assuming a 10 to 15% nominal rent drop in 2011-2013 from todays rents: for eg. if a 1 bedroom is $1500 today, call it $1350 to $1400 in 2011 or 2012 and work your figures based on this. Remember, we are still in a low interest rate environment and the only way there will be a real spike is if the economy is overheating, doing very well. If that is the case, presumably wages would rise and along with it as the costs go up and hopefully, the cost could be passed on to the tenants. All this assumes no stagflation. It also assumes there is enough demand and so far, condo vacancy is 1% (though older apartments are 5%). Clearly there is a disconnect between the 2 and people clearly prefer newer condos with the newer amenities but renters are price concious and at some point will sacrifice their desires for the condo for a markedly better apartment deal.

That said, I posted above and agree with you that only buy if you are prepared for low returns over several years. Again, the returns elsewhere are going to be in the single figures as well, be it stock market or bonds (if positive at all) and therefore comparing to previous cap rates of 8 to 10% in the past may not be a fair mark to aim for. what I am saying is in general the last decade has been one of very high expectations (until the tech crash and the 2008 fiasco) and people were expecting returns of 10% and beyond. going forward, 5-6% is likely more sustainable and with $1400 for a 1 bedroom if prices fall back to $400/sq. ft. the economics may make sense. I am not sure they do at $500-600 and certainly are questionable for $650-700 unless talking luxury and even then it is questionable at best. the luxury market is another kettle of fish and it remains to be seen when all the product hits the market how much is made available for rent and how much demand there will be for this particular product and at what price.

 

[interested]

From REMAXCONDOSPLUS: I put in the following quote. I find this interesting as until now, Mr. Johnson who writes this blog has been quite bullish. He also has provided useful data (No, this is not a staffer propping up his boss: no business/personal relationship) in the past.
In his market commentary, he puts the following:

"The biggest CMHC change is with investors. After April 19, investors will need to have a 20% down payment for rental properties - read condos in our market. But how many developers have sold pre-construction condos to investors with only 10 or 15% down, two and three years ago? Now these investors won't be able to get a mortgage unless they come up with more money down on closing. Watch as more investors try to off load their units during the Assignment window or worse, give them back to developers. The impact will be for prices to back off and actually decline for some types of units, and in some condo buildings. This could make the second half of the year far more active than many of us thought at the start of the year."

I don't know if he is correct but at least the argument is cohesive and logical. I know that in the development I bought in Plazacorp required 25% from investors, at least in the first phase but none the less those projects which were done marginally with 10% may well affect those buildings and by extrapolation, the other buildings around them and lower values.

 

[simuls]

To my knowledge, any investor who bought prior to Flaherty's announcement will not have to meet the new 20% downpayment requirement as long as the P&S was signed before the announcement, so the above wouldn't apply. However, the sheer number of investor bought units in 2007 (I'd guess around 50% of all new units vs. a more normal 20-30%) means that gargantuan availability is coming and if they can't rent it out, it'll go on the market, etc....