[borgos]

I heard a radio interview with Christopher Hume yesterday. He mentioned that the quality of new condos is so poor that he expects that many of these new buildings will require substantial repairs in 15-20 years. He also quoted an unnamed builder who told him that most condo units only cost about $50,000 to build (he didn't say if this included land cost but I assume that it does since he was suggesting that condo builders make an outrageous profit on each unit). Can anybody in the industry reading this please respond?

 

[Mike in TO]

That $50,000 figure is ridiculous... in many buildings downtown it cost $25,000+ to build a single parking space sometimes even more on difficult sites or ones on the waterfront (many builders actually take a loss on parking spaces - but are required by the city to sometime build more than are needed or bought by consumers - therefore taking a loss on those that remain unsold) Development charges, various municipal fees and taxes alone on a single unit cost tens of thousands of dollars eating up as much as 20% - 25% of the purchase cost on a unit.

Land is incredibly expensive... the former police station that Great Gulf is proposing a tower was on sale for $9 million at one point (I don't know what they actually paid for it), then the builder has to pay for the cost of demolition which will run into the millions of dollars - all this before a single shovel is put into the ground.

Condo prices have remained fairly steady due to competition the last year or so, but development charges have gone up drastically - in some jurisdicitions up by over 100% the past year. Material and land costs are going up far faster than selling prices are as are labour costs. Therefore margins in many cases have actually been shrinking as builders are trying to keep the actual selling prices down.

$50,000 a condo unit would not even cover the pre-construction, land, marketing and soft costs prior to a shovel being put into the ground.

If Christopher Hume is suggesting condo units only cost $50,000 to build he clearly doesn't have a clue what he is talking about.

 

[EnviroTO]

^ All of your points don't talk about the cost of BUILDING a condo unit except perhaps the parking space figure. The cost of BUILDING the condominium is the cost of construction which does not include land cost, development charges, demolition, etc. In a discussion about the quality of construction factoring in the non construction costs makes no sense. To determine the cost of building an individual condo unit you take the total cost of construction divided by the portion of the building's private space which is contained in the unit (and parking space if purchased).

My question is how much does the construction of a home cost and how does it compare?

 

[Ed007Toronto]

Material and land costs are going up far faster than selling prices are as are labour costs.

Material costs are going to keep increasing rapidly. The New Orleans reconstruction is going to put huge demand on building materials.

 

[mark simpson]

I do get the impression Hume is often confused by construction cost and overall costs

and LOL no way does it cost $25000 to build a parking spot

 

[rbtaylor]

My question is how much does the construction of a home cost and how does it compare?

I know that most of the homes in the Lawrence and Avenue area can be built for about $100k as a one-off, but don't make that your offer if you try to buy one that is already built.

 

[thx1038]

people have to make money. if the builders weren't making money they won't make em.

No one wants to do it for free.

 

[Mike in TO]

Enviro,

Points well taken, I'll try to dig up some actual construction costs... but I mentioned those figures as the original post in the thread gave the impression that after a $50,000 per unit investment builders were walking away with the rest as profit, which is complete nonsense.

Land costs in some cases actually cost more than construction. Taxes and carrying costs and soft costs also take a considerable portion of the unit costs.

As Ed mentioned there is a worry in the industry about building material supplies in the wake of Katrina. There were more homes destroyed in New Orleans that need to be re-built than the entire per year Canadian New Home starts which have been just over 200,000 the past couple of years.


Mark Simpson,

It doesn't cost $25,000 a parking spot in an easy site going down one or two floors. But on sites by the waterfront where there is dewatering, cassion walls and numerous other complications costs skyrocket. Also the deeper a builder has to dig the costs start to jump up significantly for each floor going down. Some new condos downtown on tight sites are planned to have 7 floors of underground parking - going down from the 6th to the 7th floor cost a lot more than going from the 2nd to the 3rd. These buildings going that deep are going to have costs per space well above $20,000 and possibly even around that $25,000 figure or more. Some sites going down that deep are hitting bedrock and having to do some serious blasting - this isn't just digging in the dirt anymore once those depths are reached. Many builders take a loss on underground parking, especially outside the core where parking doesn't command a $20,000+ price tag.

 

[lizthevw]

As to the repairs issue, 15-20 years is standard replacement age for a number of expensive components. Has been for a long time. Especially roofing and caulking. Both are labour intensive on tall buildings. Caulking in particular can be a huge pain on a tower, and work out to be expensive, even though the actual caulking is cheap...

 

[MrOttawa]

Lizthevw,

The caulking material actually lasts 50 - 75 years. The problem with condos and high rise towers is the a) poor application-workmanship and b) extreem difference in expansion differential between building materials i.e. glass, concrete and aluminum all expand and contract at different rates.

 

[The Burgher of TO]

don't blame premature caulking failure on the tradesman. the largest factor going towards 'premature' failure is that the material suppliers are citing lifetime under ideal circumstances, and under ideal application, which you never really get in the field. you're always either caulking a wall that's way too hot (on account of the Sun), or way too cold (on account of our winters). added to that are problems like humidity, frost, particulate matter, improperly treated surfaces, and absolute pain in the ass conditions (have you ever tried caulking a joint whilst sitting 300 feet up in a boatswain's chair, while the wind is battering you side to side in a 50ft arc? no? i didn't think so)

maybe if you're applying it in a climate controlled factory, with stringent environmental controls in place you might get your 50-75 years, but you'll never, ever, ever get that if you're using it in the field

 

[mark simpson]

"(have you ever tried caulking a joint whilst sitting 300 feet up in a boatswain's chair, while the wind is battering you side to side in a 50ft arc? no? i didn't think so"

not 300, but 200

 

[bizorky]

My mother's house is twenty years old and has had the front door replaced, three new windows installed, a new high-efficiency furnace added and will soon need a new roof, a new patio door, two more new windows and repairs to the driveway. All this from a builder cited for its quality by the previous New Home Warranty program. So, is this poor products, regular maintenance or indicative of a demand for higher quality materials today?

So condos will need maintenance work done to them; does Hume mention what type of work?

 

[hongman1]

We moved into a brand new condo about a year ago built by Tridel 'builder of the year' and everything looks good, but I will NEVER!!! buy another Tridel condo. Why? Sound issues. I've lived in other appartments and condos in the past and I cannot believe how bad the soundproofing is. I don't mean bass from a sound system. When I lie in bed, I can totally hear my neighbours talking and can make out what they are talking about. It is really like sleeping in a park, but for this privilage, I had to fork over $300K. Also, I cannot tell you how many times I've woken to screams when they have sex. Yes, it was fun the first night, but it is REALLY annoying. Also, my neighbours stay up until 3am during the week, and 6am on weekends...my prime sleeping hours.

I thought I was moving up when I bought that condo, but I actually spent more and got way way way less.

 

[ganjavih]

Yes, it was fun the first night...

:lol