[Rocky]

Considering the current changes in the real state market for toronto condos, what would be the effect on the pre-construction project in terms of pricing. For instance if a condo was available for 270 K today with occupancy slated in 2012, would the current situation change or reduce its pricing ? I guess what i am trying to ask is would the prices for the pre construction condos go down, and could there be a situation where for example i bought a condo today ) during pre construction and the sellers might sell the same type of condo in the same building for less to the new buyers ? I am not too sure if buyers can do that, does anyone have any further insight to this

 

[AKS]

I don't think the builders will drop prices. They might give incentives. If you bought it at VIP, it won't be any cheaper than that. If there are not enough sales, they'll just cancel the project and sell the land or build it later.

 

[TKTKTK]

I don't think the builders will drop prices. They might give incentives. If you bought it at VIP, it won't be any cheaper than that. If there are not enough sales, they'll just cancel the project and sell the land or build it later.

They may drop prices. Most of the prices were predicated on extemely high land values,which haven't really changed, and extremely high construction costs (labour and materials) which have actually come down.

If builders are able to renegotiate their construction contracts, it's conceivable (though unlikely) that even new, pre-construction, condos could sell for less than they did during VIP previews (which for most of these buildings were during the absolute peak of the market).

Food for thought...

 

[Hydrogen]

Projects introduced at the crest of the price rise may get screwed. I wonder how many buyers of pricey 550 square-foot units are now suffering from sticker shock?

 

[alafleur]

I'm leaning more towards supply being cut before prices are.

Incentives will be increased, parking thrown in for free etc, but prices being cut will be seen as an absolute last option.

I think in the next 6 months we will see a few high profile projects be canceled and that will instantly eliminate a couple thousand units from the pipeline.

The most vulnerable projects will be those launched in the last 4-6 months that are less than 50% sold.

Even projects that are 70% sold or more could be at risk simply because financing is so difficult to secure right now.

Developers can't extend the economic viability dates forever so they will delay it for as long as possible but eventually some will just have to concede defeat and cancel the projects altogether.

 

[Solaris]

Projects introduced at the crest of the price rise may get screwed. I wonder how many buyers of pricey 550 square-foot units are now suffering from sticker shock?

I am thinking here ........... ICE, 300 Front, Fly, U, Emerald Park, 1BE

 

[AKS]

I am thinking here ........... ICE, 300 Front, Fly, U, Emerald Park, 1BE

Well if you include those, you might as well include Aura and L tower.

I think if there is material/labour drop. If it does get built, the builder might pass it onto the purchaser in a discount at the end of the sale. When I bought West One, a year or two before closing, I got a letter from concord saying there was cost savings in material so they would deduct 1.25% from my purchase price at closing.

 

[cdr108]

Well if you include those, you might as well include Aura and L tower.

I think if there is material/labour drop. If it does get built, the builder might pass it onto the purchaser in a discount at the end of the sale. When I bought West One, a year or two before closing, I got a letter from concord saying there was cost savings in material so they would deduct 1.25% from my purchase price at closing.

Wow, that's nice of Concord.

IMO if the developers of projects in the pipelines do renegotiate their contracts (and I'm sure many are doing so since raw material costs have dropped ~50% or more for copper, nickel, aluminum, crude, etc) I highly doubt many would pass the savings to the consumer - just more profit for them.

 

[condoboy]

I'm leaning more towards supply being cut before prices are.

Incentives will be increased, parking thrown in for free etc, but prices being cut will be seen as an absolute last option.

I think in the next 6 months we will see a few high profile projects be canceled and that will instantly eliminate a couple thousand units from the pipeline.

The most vulnerable projects will be those launched in the last 4-6 months that are less than 50% sold.

Even projects that are 70% sold or more could be at risk simply because financing is so difficult to secure right now.

Developers can't extend the economic viability dates forever so they will delay it for as long as possible but eventually some will just have to concede defeat and cancel the projects altogether.

How long can they delay before realizing the project will be a no-go? Is it in the purchase agreement usually?

 

[cdr108]

How long can they delay before realizing the project will be a no-go? Is it in the purchase agreement usually?

Definitely check the PSA and speak with your lawyer.
It lists the details, and it may give them several chances to delay before ultimately pulling the plug.

If any projects do get cancelled, at least all purchasers will get their deposits back so no financial loss to them.

 

[condoboy]

Definitely check the PSA and speak with your lawyer.
It lists the details, and it may give them several chances to delay before ultimately pulling the plug.

If any projects do get cancelled, at least all purchasers will get their deposits back so no financial loss to them.

Thanks...I just hope they realize it sooner rather than later. Then again, my money is probably safer with the builders lawyer (in trust) than with any stock, bond, mutual fund, etc...it could be worse!

 

[cdr108]

Thanks...I just hope they realize it sooner rather than later. Then again, my money is probably safer with the builders lawyer (in trust) than with any stock, bond, mutual fund, etc...it could be worse!

That's my thinking, plus you'll get some interest too (although very little).
When did you buy? When is proposed completion?
Do you recall the approx $$$ PSF?

Considering what will eventually happen to Canada's RE market, you might be able to buy a completed resale for the same $ or less in the next year, if the builder decides to cancel.

 

[condoboy]

That's my thinking, plus you'll get some interest too (although very little).
When did you buy? When is proposed completion?
Do you recall the approx $$$ PSF?

Considering what will eventually happen to Canada's RE market, you might be able to buy a completed resale for the same $ or less in the next year, if the builder decides to cancel.

Yeah....I know all about interest paid from my last purchase, it was a "so-called" credit that isn't even worth mentioning. If things don't turn around, then I definitely think that my project may get canned...which may not be such a bad thing considering today's economic environment. It was $450 per square foot and completion is proposed for 2010. However they plan on building two buildings and I'm not sure they are going to go through with the project if the other building doesn't get sales, which is very possible. Imo, I think they'll wait and see what happens next year and then decide. Even though I think it's a great location, great layouts, ammenities, etc.etc. The stark reality is that people are too afraid to buy (rightfully) despite of all of the positives I just mentioned. We'll see what happens. It's "Southbeach" at Lakeshore and Parklawn.

 

[cdr108]

Yeah....I know all about interest paid from my last purchase, it was a "so-called" credit that isn't even worth mentioning. If things don't turn around, then I definitely think that my project may get canned...which may not be such a bad thing considering today's economic environment. It was $450 per square foot and completion is proposed for 2010. However they plan on building two buildings and I'm not sure they are going to go through with the project if the other building doesn't get sales, which is very possible. Imo, I think they'll wait and see what happens next year and then decide. Even though I think it's a great location, great layouts, ammenities, etc.etc. The stark reality is that people are too afraid to buy (rightfully) despite of all of the positives I just mentioned. We'll see what happens. It's "Southbeach" at Lakeshore and Parklawn.

I don't know the "southbeach" project, but have they broken ground yet to even think a completion of 2010 - that's only 1 year, well almost 2 if year end, away ?!?!?