[M5Vgirl]

No matter what city I've called home I have always lived in the downtown core as I recognize the value of location, convenience and having an awesome social life! Despite all the recession talk in the last year I haven't really noticed a price drop or more inventory in the downtown market. If anything, as of recent, the prices seem to have increased slightly and I've been told by numerous realtors that I should expect to pay $600/sqft. (When I bought a year ago I was paying $500/sqft and that $100 jump seems to be quite high given the state of the economy now.) I started this post hoping to generate discussion among BUYERS. I have my own opinions based on experience and observation and I've talked to enough realtors/sellers already so I'm interested in the other (buyers) side. Is the bidding war game going to start all over again? Buyers: are you really paying $600/sqft and not thinking twice about it. Ultimately, buyers really are the ones dictating the market value and generating multiple offer situations. Also isn't it fair to say that the bigger the unit the less it should cost per sqft? For example, I consider a big unit anything over 1000 sqft so is it really worth $600K? I know there are plenty other factors to consider like upgrades, what floor, parking, etc. but I'm speaking in general terms because upgrades are subjective. I've seen people put in $50K into their place and made it worst or they are in the penthouse but one side faces a brick wall!

 

[Catapult]

We just paid $460/sq ft for a great place in Corktown and with multiple offers. There are lots of good neighbourhoods in TO where you can pay less than $500/sq ft. We just sold our condo in Mozo (St. Lawrence Mkt) for about $480 / sq ft.

I don't know how you can say it's buyer that dictate the price. This goes against the whole concept of supply/demand. The reality is that there hasn't been a lot of supply over the last few mths hence fairly decent prices so in many ways it's the sellers that are setting the price.

 

[JayBee]

Bidding wars have already started. I talked to an agent who handed me a list of properties that had sold in the last month or so. Most of them were sold for no less than 99% of asking price and many were sold for 10-30% more than the list price. Friend of mine looking for a house was in the middle of a number of bidding wars. The prices have gone up because there's a major lack of inventory. I can see them dropping slightly in the spring/summer as a lot of condos will register around that time.

 

[Eug]

Yes bidding wars started quite some time ago, but $600/sq.ft. is not necessary. If your agent is saying that $600/sq.ft. is necessary, then you might want to consider getting a new agent.

It does depend upon the the kind of property of course, but I personally would not even consider paying $600/sq.ft anywhere in Toronto. I personally don't go for ultra-luxurious places though, since I think the cost premium is an incredible waste of money, 9 times out of 10.

BTW, some bidding wars are worse than others. I sold my condo a while back in a bidding war, for 5-6% over what I considered fair market value (and 5-6% over a near exact comp from a couple months prior). That I suppose is reasonable as a buyer, if you really want/need the place. However, some people go crazy and spend way more, and I personally think that's foolish. The question of course is how you decide what "fair market value" is for a property.

 

[zeeden]

It depends which area you're looking at. Judging by your name, I'm going to assume you love the m5v downtown area. I saw a 645 sqft unit at the Hudson (King and Spadina) with parking go for $430K and the same layout on a lower floor listed at $400K no parking. Not sure if it sold but I'm pretty sure it will if it didn't yet.


If you look at London on the Esplanade, which is not in the M5V area but still a building in high demand.
There have been some assignments being listed around $600 psf. There are a lot who love that building and and they are willing to pay for it.

http://www.urbantoronto.ca/showthread.php?t=10855

 

[Eug]

Yet, there are nice resale buildings and townhouses in the M5V postal code area (or nearby) that are under the $500 sq. ft. price range, including hard-wood floors, etc.

P.S. My townhouse (which had a private terrace with gas BBQ) was in the M5V postal code and when I sold in 2007 (in a bidding war, after over 40 viewings) it was under $400/sq.ft, including connected parking (2-car private garage, shared with an adjacent townhouse). If it was sold again today, it'd be higher, but still well under $500/sq.ft.

What it didn't have though was a pool or guest suites or stuff like that, although it did have a party room in the condo building portion of the complex and a (limited) gym. If you absolutely want that stuff, they you're gonna have to shell out for it. However, before I bought, I specifically searched for a place without guest suites, pool, or squash courts, because I'd never use them anyway.

 

[zeeden]

Don't forget to factor in maintenance fees. There are some units that are price well <$500 psf but the maintenance fees are high. Especially the units west of bathurst on King. Some of those older buildings don't even have ensuite laundry.

Using the psf caluclation to determine value on a unit is not effective. There are so many factors that come into play when a buyer makes their decision to purchase.

 

[Eug]

Don't forget to factor in maintenance fees. There are some units that are price well <$500 psf but the maintenance fees are high. Especially the units west of bathurst on King. Some of those older buildings don't even have ensuite laundry.

Using the psf caluclation to determine value on a unit is not effective. There are so many factors that come into play when a buyer makes their decision to purchase.

Very true.

However, a lot of the units with high PSF pricing also have very high maintenance fees.

The townhouse I sold had comparatively low maintenance fees, but didn't include the cost of heating and electricity, but even after considering those, still ended up being lower cost per month for maintenance fees on a PSF basis compared to many luxury buildings, because of the lack of a pool, guess suites, and squash courts, etc.

I wouldn't get a place without en-suite laundry either, but basically all the newer places include this.

I just mention the stuff above since I see some younger people new to the market who get overly distracted by granite countertops, stainless steel appliances, and squash courts and won't look at any building that doesn't include that up front. Buying custom countertops for a small kitchen and getting stainless steel appliances really isn't that expensive in the greater scheme of things, and I suspect 95% of people in buildings with squash courts never actually use them.

 

[Exodus]

the bidding wars have already started. given that there are not that many listings to choose from, pent-up demand from buyers, first-time home promotions from the government, and attractive interest rate, many downtown places go into bidding wars and are off the market 1-2 days after they are listed.

 

[interested]

We have all heard the expression "buyer's remorse". Just because people get caught up in the moment and bid alot does not establish this as value. Realty now is however as the previous poster said that too many people are chasing too little product. Unless one has to buy, one should establish a value in their own mind of living downtown and the property he/she wishes, and if that value is met, they should purchase. If not, a calmer head should prevail and the buyer should walk. the last thing he/she should do is be "bullied" by a realtor to move now or it will be too late. Condos in downtown are like streetcars, there is another one available in 10 minutes (with the above proviso of not having to purchase in the immediate time frame.)l

 

[Johnzz]

Condos in downtown are like streetcars, there is another one available in 10 minutes.

True.

But the “choicest†locations are quickly disappearing (just look in Yorkville) and, with the HST next year, purchasing “new†simply costs more.

You never know, but I think the days of cheap condos flooding Toronto are history.

My last condo purchase was Aura this past summer. Even with a purchase price of nearly $700/sqft, I have no regrets. I paid for the views (above the 70th floor) and unique finishes like 7 1/2 foot solid interior doors and curtain-wall windows. I don’t mind paying the extra if compensated with superior product. Seems to me though, many developers now charge $600-$700/sqft without providing a superior product or unique location.

Admittedly, developer costs have skyrocketed these last few years (including financing cost) and the only way to normalise profit margin (which is now almost nonexistent) will be to raise prices. If people refuse to pay up however, we’ll simply see fewer units built (which might actually be a good thing…).

 

[interested]

Johnzz

I agree that choice locations are disappearing. I also concur alot of developers are simply asking $600/sq. ft without providing "superior product". That said, there is still a few years of Class A buildable land in downtown TO. Good locations within the core though perhaps not of the caliber of your choice.

congratulations on your Aria purchase. It will be a spectacular place to live no doubt and beautiful. I am sure you will agree that is an end user building however as the economics of renting at that price ($700/sq. ft) become suspect at best. and yet, alot of people I gather bought to "flip" and I am just not sure we won't see a dip as these units become available as people wish to get out. The question is on $600-700/sq.ft, how much upside potential is there.

Let me preface the above by saying that I have purchased an 1100 sq. ft condo in Shangrila in May 2007 at about $870/ sq.ft I will have a partial view (which will be somewhat blocked by boutique's 35 floors (I am below that in the 20's) and potentially totally eventually) but it is now close to $1100/sq.ft. So I do not say the above lightly as I believe I may be similarly affected.

Will TO go the way of many major cities. Eventually yes and only the wealthy and the very poor will be able to afford the city (those subsidized). In that regard, I believe you are correct. Over time, the core will become more valuable.

 

[Johnzz]

I have purchased an 1100 sq. ft condo in Shangrila in May 2007.

Ah, Shangri-La, one of my favourites!

I almost bought there. In fact, I still have their 100 page glossy brochure up on the shelf. Very nice.

 

[interested]

thanks. Looking forward to it but it won't be a 70 story view like you will have. that said, I do believe the finishings will be spectacular though I was a bit suprised that it will only be 9 foot and not 10 foot ceilings (reserved for the multimillion dollar estates above). what appealed to me was the 54 cent condo fees "guestimate" which seemed incredibly reasonable for the caliber of what I hope we will get.

 

[Eug]

what appealed to me was the 54 cent condo fees "guestimate" which seemed incredibly reasonable for the caliber of what I hope we will get.

So, how long will that last? 54 cents per square foot is not exactly cheap, when you consider that condo fees have a nasty habit of increasing significantly after a couple of years.