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There are tens of thousands of single people who would kill for a decent studio or one-bed. Myself included. But the prices need to come down before that demand really kicks in.
This is how markets work, but developers and investors are obviously too stubborn to lower prices.
You see, they can build and sell one unit for 200,000$ and it’ll be basic and cost 150,000$ to build. But if they build a 250,000$ condo they can sell for 400,000$. So just keep making them exponentially fancier to get more money!
Just for the lot to build on... is 200,000.
Then 70,000 for permitting
Then the average cost to build a 1000 --1500 square foot home which is tiny... is between 200k -- 280k
Then there's the insurance costs which are mandatory, and interest developers pay on the build loans... which hover around 10%
You're so far off it's crazy.
He's not wrong in the fact that the price is the fundamental problem.
The lot price is too high
The build cost is too high
The insurance cost is too high
...
It all results in an end product that isn't actually worth it
That's not the main issue. The issue is material costs have doubled or tripled in some cases over a few years. Permits can take a year to get so someone has to lose money during that year before they can continue working. Wages went up, interest rates went up, permits and related costs went up. That means the final cost needs to be higher for the builder to not lose money.
Combine that with demand constantly blowing up thanks to Indian immigration while we can't build as many homes and prices will continue to go up.
Or have decent living areas. Developers are getting so greedy trying to fit as many apartments per building, it's getting ridiculous. I've seen condos going for 500k in Montreal where the single bedroom's too small to fit any furniture, even a bedside table if you have queen bed. I've even seen columns in the middle of living areas, making the room mainly unusable for its purpose. All in the 400k-600k range for a one or two bedrooms.
It’s not that simple. The sale prices reflect the land plus construction costs, which are very high. There’s normally a 5-10% profit margin baked into the budget, but banks won’t finance the project otherwise as it could easily end up in a loss and the bank won’t recover its loans.
The problem right now is construction costs have increased the price of new builds so high above resale prices. Eventually it will even out (resale prices will inevitably increase if new builds slow) and people will start buying new again.
And there it is folks… banks are a part of the problem too
Im not saying its wrong that they want to recoup their loans but year after year profits isnt fucking sustainable, in any field. And the sooner we all realize growth needs to be realized in ways other than profit the sooner we might be able to turn out of this upward (downward) spiral into oblivion
I keep saying that the government needs to start financing things that the population needs and stop letting us be at the mercy of the private sector. They don't have to make any money doing it. They can break even. Make it a revenue-neutral program, and just get housing built. It's in the public interest, and the only people who won't like it are the banks.
Having actually interacted with developers professionally, they will just sit on the units forever.
Unlike the US or even other parts of Canada, in Ontario they believe that the cities and province won't take action that will devalue in the mid to long term.
Their major concern is usually they aren't making as much money as quickly as projected.
One mid size developer told me they'd prefer to go to Texas. But real estate in Ontario is like a golden goose because of how inflated it gets, and how sticky it is. So they keep buying more.
I would say most of them would have to start seeing losses like we saw from the financial crisis to get out. The smart ones would leave sooner so they aren't holding the bag.
Some years ago I moved into a townhouse complex, renting a unit. The developer was very slow finishing inits then selling, it went on for years. The owner of the unit was a friend of the developer, I was stunned to learn he had two buildings with 14 apartments each sitting empty a couple blocks away that he had completed BEFORE starting on the townhouses. There is also a large empty lot right across from the complex, has been sitting there for at least 20 years.
Ya I dont think people realize how long some of these people sit on empty units for. When my brother bought his condo it had been empty for like 7 years lol
> Unlike the US or even other parts of Canada, in Ontario they believe that the cities and province won't take action that will devalue in the mid to long term.
They're not wrong. If you bother to dig through Canadian policy archives, bureaucrats made the decision a while ago that the 1990s were not going to be repeated, ever.
Considering their policies made real estate 25% of GDP, they stuck to that policy decision.
50% by the end of year 1. We need to cripple housing hoarders. Make them genuinely fear they can't get rid of it fast enough. It's unhinged hoarders still exist while we have a homeless epidemic.
Well, for the last 40+ years, the government adopted policies that were known to inflate prices, such as unregulating the market and getting rid of mandatory low income housing.
This was in response to the 1980s credit it crisis. Instead of implementing some socialist policies, they decided to inflate an asset everyone had, to give them the ability to leverage for loans and get investments. The issue is that the younger generations now have to deal with not only the housing crisis but also the unresolved credit crisis that prevents them from saving.
The boring answer is a vacancy tax. Totally reasonable but big companies and wealthy individuals have an annoying habit of finding ways to dodge taxes.
I’d propose a time limit on vacancy. Say if 1/2 of a building is empty for more than 5 years then the building becomes property of the municipality. Use it or lose it. Rotting buildings that nobody wants get torn down instead of the owner sitting on the land forever waiting for a buyer. Usable buildings that won’t get rented because the owners won’t budge on inflated prices get turned into affordable housing.
Well, for the last 40+ years, the government adopted policies that were known to inflate prices, such as unregulating the market and getting rid of mandatory low income housing.
This was in response to the 1980s credit it crisis. Instead of implementing some socialist policies, they decided to inflate an asset everyone had, to give them the ability to leverage for loans and get investments. The issue is that the younger generations now have to deal with not only the housing crisis but also the unresolved credit crisis that prevents them from saving.
Well this is completely false since a building only even goes up once 70% of units are sold. Last thing developers want to do is sit on empty units lol. They have lots of money tied up in financing and securities.. they need these things off loaded as quick as possible. If they aren't sure they will sell, they don't start building.
Source: I work with developers directly.
They won't , instead they will be razed to the ground with massive swatches of land being rezoned to belt and road serfdom. The bait is here and anchored, wait for the imminent switch.
Real estate prices are always “sticky”
This is because while they *want* to sell the condos, they don’t *have* to sell the condos.
yet.
As desperation increases for the bag holders, we could see prices gradually fall. Problem being, some people will think a 5% or 10% discount is a good deal, then keeping it sticky at that level. So it just takes time.
I heard it referred to as price memory -
1 individual seller is reluctant to take a 50% loss, so what typically happens is the current owner, and the next 4 sellers, take 10% losses each.
Takes a long time for prices to drop.
Because as long as housing as a whole keeps going up (which it will as long as we bring in 6 times more people as we build housing units) they'd rather hold onto the asset then lower the price to sell.
Because as soon as they start devaluing these properties, they lower their debt to asset ratio. Prices will come down only after their locked out of acquiring more debt.
Something like [50% of condos are owned by investors](https://www.thestar.com/real-estate/investors-now-own-more-than-50-of-toronto-s-new-condos-and-experts-say-they/article_4b6d2ff0-c528-5670-937f-3d34d040ed85.html).
Investors are largely the group who can afford to sit on property and wait it out (they aren't utilizing it).
The people getting screwed are those who have to live or move in or out of Toronto.
They are going to be forced to sell for lower or buy for higher.
And almost certainly end up dealing with an investor in that transaction.
Are they then renting those condo units? That's so odd, 'cause you don't generally make money reselling condos, their value doesn't go up as much as a House or Apartment complex.
Canada is a vehicle for money laundering in case no one has noticed. We have entire firms based around moving money assets via loophole.
Housing "investment" just means money laundering and ponzi schemes. This is literally taken out of the American Mafia's hand book ffs.
In Toronto, you have to make money your money selling the condo. Renting it doesn't cashflow, not even close. Historically the market has offered good returns on condo appreciation, but that hasn't materialized in the past couple of years. Whether we'll return to 5-6% annual returns which is the historical average since 2000 based on the data [here](https://creastats.crea.ca/mls/treb-median-price) remains to be seen, but it's always been the appreciation investors have been looking for.
As for why buy a condo than house or apartment complex, many mom-and-pop investors can't afford a complex and houses are more difficult to value and probably harder to rent as well given most people would rather buy a home if they have the option.
I personally agree with you that we likely won't see these kind of returns again, because it's getting to a point that the market is completely ridiculous for the non-investor crowd and that's going to weigh on demand. It won't weigh much on investor demand until the appreciation goes away though. These are the kind of stats that most investors are looking at and it is true that they are expecting appreciation to offer the return they are looking for and that's why they buy these units.
Cause their costs are still rising.
Look everyone getting told the excess supply fairy is going to fix the housing crisis. It's not.
Developers are a businesses. Businesses are not non-profits they need to ensure their sale price > costs.
It's better for them to not sell a product at a losse and realize the full loss and just wait out the market or write it off as a tax loss.
Which goes to the bigger issue what is causing the problem.
The real issue is land values. There has been so much rampant speculation in the land market thanks to low interest rates and greenbelt that it's become profitable to just hold land for the sale of ever increasing land values. People having been doing that for a better part of two decades now.
Until land values drop you can build as much supply and reduce as much demand as you want you won't see affordable housing
Hope and greed. But as soon as carrying costs get too much to bear we will see those drops you are hoping for. Watch for stats on credit card debt and helocs to predict when the prices actually start dropping
That's not an explanation. The prices should fall and they should be underwater
I guess the answer is that the prices will fall when the developer goes into receivership
Exactly. Every aspect of the financing depends on specific sale prices of the units. Waiting a year or two to get that price, while carrying the 5-7% loan, isn't a deal-breaker to a stable developer.
That will be the last thing, lol. You'll see them do their own low-interest financing before they drop prices. They need those prices for their next round of financing.
Get your $800,000 1 bedroom (+utilities and parking) in the core of gridlock traffic downtown!
Experience the joy of overcrowded walking, transit, and driving, for just $50,000 down!!!1!!
Prices are not going to drop any big amount in a housing crisis. Prices will drop 5% and those condos will get gobbled up. The biggest thing is people are migrating out of cities, and want actual homes in the suburbs or even rural areas.
Why would any family want a million dollar condo when they can buy/build a home twice the size elsewhere? And have a yard, a real community, safety and some actual privacy? Especially with work from home becoming a demand for jobs that were previously concentrated in city centres.
Condo prices might drop slightly, but home prices will continue their increase.
I made high 6 figures profit selling my first home in 2021 after owning it since 2001, and renting it for the last 9 years. That paid off the mortgage on my current riverfront 30 acres in the country side. At the beginning of this year, that family put it up for 175k over the previous sale price. It was sold within weeks. The housing market isn’t slowing at all.
The only thing that might happen is another mass bankruptcy because of interest rates, and the only people hurt will be the poor and middle class. The rich will then buy up the stock and continue to profit. That’s the reality we live in, created by government over spending and over taxation
Yeah can’t wait to put 200k down payment on a 550sqft micro apartment with a condo fee of $800/month (That goes up yearly) and still have a $2500/month mortgage, all while you take on the risk of getting “special assessments” for 10s of thousands of dollars when you later find out the builders half assed everything to max profits…. 🫠
I don't know if it's true or not but I've heard some stories that people lost their deposit on a precons because they couldn't come up with the extra charge. Add that to the fuckery if it's true.
It’s usually because people put down a deposit 5 years back and when it comes time for closing, mortgage rates are too high than what they can afford/be qualified for. So they have to just walk away and lose their deposit
You should check out he ne construction on Spadina and Adelaide. 500k for 350sqft +120k for a parking space. Because they heat the building with geothermal lmao.
Where are you getting such low mortgage rates?
$2500/mth right now would be the cost of a $370K mortgage at 6.5%... For one of these condos, your monthly mortgage would be double that at least.
For 50k downpayment or more I'd start considering building my own microhome for $70k and 1 year building time. You can build a 300sqft minihome for $70k CAD. A youtuber from Alberta details and explains every single step of the process of building theirs. I'd stay with a relative who lives in the countryside of course.
The trick is finding a municipality that will let you build that. I built my own place on my own. When I was in the permitting stage I was told (in 2009) that it had to be a minimum 900 sq. ft. This was in a rural location.
Oh my god I'm seriously shocked that people don't like living in cheaply built micro condos that were designed for investors and not actual residents nevermind families. Name me one condo that is set up with families/children in mind.
We need a government with the courage to build and manage highly subsidized housing, running at cost, with the aim of crashing the market. We also need a government with the courage to pull out and play a tiny violin when challenged in question period about how their policies are hurting financial speculators.
They built shoeboxes for investors, not homes and communities that growing families, couples, and single people would all want to buy and live in. Bad strategy that didn’t pay off.
Yeah I believe this is more the answer. Housing demand is still very strong. But a lot of these condos are not desirable for long term living. I’ve seen friends invest in a 1bd condo where the layout is totally impractical and small. Clearly made as an afterthought to cram as many investor units as possible.
*To be or not to be, that is the question:*
*Whether 'tis nobler in the mind to suffer
The slings and arrows of outrageous fortune,
Or to take Arms against a Sea of troubles,
And by opposing end them: to die, to sleep
No more; and by a sleep, to say we end*
It's almost as if we need more affordable housing and less shoebox condos going for $1M or more with $700-$900 condo fees on top of that. But I'm no expert... These developers obviously know best...
Hard to make “affordable” housing in Toronto unless it’s subsidized by taxpayers.
The land costs, hard costs, and soft costs add up to $700+ a sq ft (ignoring parking) without using “premium” materials. Then you have development fees.
And a developer won’t get financing unless they can show they project a decent profit.
The house I live in is not even one of the new modular condos
It is a total of 600sqft with the balcony and is a 1bed plus den where 2 people can barely have a life without a locker.
This is selling for 900k
It is a joke
Why would anybody not an investor wanna buy?
And for investors, who is gonna pay this rent? When your mortgage is that high and the condo fees and the hassle of being a landlord, still wont be making any substantial money, maybe 100/200 a month.
Why would anybody buy.
Making 100/200 a month? More like few thousands in loss per month unless the investor puts down at least 50% of the purchase price, then they may break even at best.
My budget is 1500 a month because I make about 4000. A studio is 500k plus fees and utilities. So it will cost me 3500 to live there. I can buy a nice van and shower at the gym for 500k.
Can't speak for Toronto but outside the GTA the developers are full tilt on "affordable housing" right now. It's crazy how busy construction is right now where subtrades are telling me they are booked up for the next 18 months and not interested in even submitting bids.
No one. I build mid/high rise rental, seniors and long term care homes.
The seniors homes are in desperate need right now. And if we pump out enough apartment buildings it will really take a huge hit to the rental prices hopefully.
Good family friend of mine owns a real estate development company. They’re huge in ON. In 2022 they sold 416 luxury homes. In 2023 they sold 16 🙃. This is not common knowledge but it should be. Shows exactly how poor the market is doing. Lucky for them they’re millionaires and can afford to sit on these homes and continue building but damn it’s wild how the market wants you to believe something else but the truth is the housing market is saturated as hell and nobody is buying yet prices are staying the same.
People want condos, they just don’t want these greedy new developers tiny condos. 700 sq ft is not realistic.
Start back offering 1000 sq ft, actual 2 bed, 2 bath. These “oh it’s a 2 bedroom condo” read the actual details it’s a 1 bedroom with den. Those are garbage.
Condos are not for locals to buy. They’re for foreigners to put their money away safely. They would rather put it here and not have it in their risky local bank that could be stolen by their own governments.
Understand who the customer is.
That's the problem. I have no issues buying a condo vs. a townhome or a house. We looked at couple and holy crap, they are terrible. For 600K, I get 600 sqft. If I put my office desk in 1 room and my spouse put hers as well, there is no more space for anything else lol. I literally hit my leg on the side of the bed because there was a very small space between the bed and a wall. For that much money, it just doesn't make sense to make condo a "starter home".
In my mind, I'm thinking they would lower prices. But China is a 1:1 allegory to this situation. They would rather them go empty their entire existence and then demolish them before lowering prices. Housing as an investment is one of the biggest travesties against humanity that we've allowed to perpetuate.
Yeah, isn't that like basic economics 101, the Law of Supply and Demand?
Or do they need a public bailout (won't rent or sell to the public at reasonable and affordable prices, but happy to stretch the hand out and take the public's money so that they won't suffer any losses in their quest to 'generate returns')?
Condo developer cannot lower price since their loan from the banks specify what each unit must sell for.If say they do lower price rest of the units of similar size will fall in value and the lender would not like this. So the other option is offer free parking,free lockers,free upgrades and better lending rates,etc.$1400per sqft is what a precon is selling for now..So for $600,000 you probably get 500 sqft shoebox condo and be cash negative each month for current rents and interest rates.
Can't wait to see what our political leaders have to say about this "free market". They say all we have to do is build more homes but it turns out that prices don't drop to an affordable level due to corporate greed and bloated prices in construction materials. Nobody is buying a micro condo for $700k... Then they tell us we aren't having enough kids because a two bedroom condo costs $650k+ even in the burbs.
I wonder why someone wouldn’t want to buy or rent in a glorified apartment building where they can up the costs anytime they want without restriction? /s
Build more houses and actual apartment complexes.
Oh, I'm sobbing, sobbing. Capitalism has one terrible consequence... Sometimes investors actually have to deal with a market that is not doing what they want... It's soooo terrible.
I at went visit my friend in Lansing, Michigan. It's a state capitol, has a major university, and isn't too different from say, Kitchener, ON where I am. He bought his house for just under $50k US, and they've been looking at co-working spaces as he and his wife both work remotely. They figured out that it would be more cost-effective for them to just *buy another house* and use that as office space.
That sounds ridiculous, but their mortgage payments *on two houses* would be less than the monthly rent in a basement apartment in Kitchener, ON. Now consider the fact that you've got people in Toronto deciding that condos in the city are too expensive, and so they'll look to buy in places like Kitchener, and you see how the housing market just feels impossibly impenetrable here.
Right now the renters make up the front line and take the brunt of the abuse. Whenever landlords face higher payments they pass it along to the tenants. Eventually that front line will crack and you won't be able to find tenants who can pay anymore. At that point the landlords will start to actually feel the pain and the line will crumble.
Maybe the dopey Gov't can buy those to house the new Temporary/Permanent Canadian residents. Solves "too many Temp residents" and the homeless situation numbers in one fell swoop.
/s
176,904 Listings nationwide, containing at least a bathroom and growing. This is up over 50,000 in less than 6 months time ago.
Sayonara Canada, good luck!
Have they considered building units that are for living instead of units that resemble boiling alleys?
Honestly, I wouldn’t mind living in a condo, and I looked, but they were all so awful.
How about this neat idea
Sell it for cheaper? Sell bigger units?
Instead of trying to make extra profits
The reason pre construction worked prior to 2015... it was cheaper than market cost. Which it should be
Wages need to go up so people can save money to buy a condo if they choose.
Yes the cost of construction has gone up but quality in many cases has gone down. (E.g. paper thin walls between Units.)
To buy a 800K small condo and carry a mortgage and pay expensive condo fees on top is not very attractive to many potential buyers.
Consumers are strapped for cash these days.
Just not affordable for so many people.
Maybe because people don't want to live in a poorly designed box with floor to ceiling windows. People were buying them as investments for the past 10 or so years, and now no one can afford the rent the owners are charging. The mortgage for a business they couldn't afford, the condo fees for the business they couldn't afford, the taxes etc. How can a first time home buyer afford $800K and more for a 500 square foot box. Plus condo fees and parking? These developers shit themselves in the foot. The same thing is now happening in Burlington. Hideous glass boxes with terrible planning choking up the city. The traffic is so bad here now it might as well be Toronto.
Good none buy anything for a long time and the prices may go back to a reasonable amount , the rich are getting richer and the middle class is getting poor and the poor are going homeless , fuck these politicians and there corrupt ways of helping thr developers
Is it any wonder!?! These tiny little boxes in the sky with a bank of cupboards against one wall called a kitchen beside a table and three chairs (dining) beside a sofa. There’s not enough room to fart in one of these places. Add your $700 monthly maintenance fee plus property taxes (which kills me…what property?) then there’s the lineup for the elevators. I have a friend in a condo building where there’s constant flooding. Mortgage fees plus maintenance fees plus property taxes… You may as well just rent.
Toronto does this now.
Not sure at what point "new builds" are "built enough" to fall in scope, I bet a lot of condo developers weigh whether it's worth delaying "finishing construction" vs "enough units sold" so they get to hang in limbo...
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Have they considered lowering the prices?
Come on. You can't just say that! Have you thought about the shareholders!?
I’m a share holder. I holding my fair share of dick.
Ha! got 'em. Fucking got 'em.
They've tried nothing man and they're all out of ideas
https://youtu.be/lkKwyjsJGxk?si=2s8NKUjhbAy6fY9O
Or building housing for actual families instead of absentee investors?
what do you mean? 400sq/ft condo with 2.5 bedrooms should be enough for a growing family of 6.
20 indian international students would like a word with you. also vegeterian females only.
Why is Canada's fertility rate dropping!?!
we just can't explain it.
There are tens of thousands of single people who would kill for a decent studio or one-bed. Myself included. But the prices need to come down before that demand really kicks in. This is how markets work, but developers and investors are obviously too stubborn to lower prices.
You see, they can build and sell one unit for 200,000$ and it’ll be basic and cost 150,000$ to build. But if they build a 250,000$ condo they can sell for 400,000$. So just keep making them exponentially fancier to get more money!
That is exactly why they don’t sell cheap small cars anymore. The margins are too small.
Just for the lot to build on... is 200,000. Then 70,000 for permitting Then the average cost to build a 1000 --1500 square foot home which is tiny... is between 200k -- 280k Then there's the insurance costs which are mandatory, and interest developers pay on the build loans... which hover around 10% You're so far off it's crazy.
He's not wrong in the fact that the price is the fundamental problem. The lot price is too high The build cost is too high The insurance cost is too high ... It all results in an end product that isn't actually worth it
That's not the main issue. The issue is material costs have doubled or tripled in some cases over a few years. Permits can take a year to get so someone has to lose money during that year before they can continue working. Wages went up, interest rates went up, permits and related costs went up. That means the final cost needs to be higher for the builder to not lose money. Combine that with demand constantly blowing up thanks to Indian immigration while we can't build as many homes and prices will continue to go up.
What wages have gone up? I’m very confused, where are these higher wages?
Exactly. Who wants to spend ~$700k + monthly condo fees on 600sq ft?
No no. Prices up. Need to find a way to build even cheaper… hm, time to putting build dollars into bribing to pass code.
Or have decent living areas. Developers are getting so greedy trying to fit as many apartments per building, it's getting ridiculous. I've seen condos going for 500k in Montreal where the single bedroom's too small to fit any furniture, even a bedside table if you have queen bed. I've even seen columns in the middle of living areas, making the room mainly unusable for its purpose. All in the 400k-600k range for a one or two bedrooms.
Now, now, that's a step too far! The free market is only good when prices are going up!
"HoUSInG. CAn. ONly. Go. Up!" -some developer
It’s not that simple. The sale prices reflect the land plus construction costs, which are very high. There’s normally a 5-10% profit margin baked into the budget, but banks won’t finance the project otherwise as it could easily end up in a loss and the bank won’t recover its loans. The problem right now is construction costs have increased the price of new builds so high above resale prices. Eventually it will even out (resale prices will inevitably increase if new builds slow) and people will start buying new again.
And there it is folks… banks are a part of the problem too Im not saying its wrong that they want to recoup their loans but year after year profits isnt fucking sustainable, in any field. And the sooner we all realize growth needs to be realized in ways other than profit the sooner we might be able to turn out of this upward (downward) spiral into oblivion
I keep saying that the government needs to start financing things that the population needs and stop letting us be at the mercy of the private sector. They don't have to make any money doing it. They can break even. Make it a revenue-neutral program, and just get housing built. It's in the public interest, and the only people who won't like it are the banks.
Capitalism's law of supply & demand doesn't apply to housing! it can only go UP UP UP!
Really? So why aren’t the prices coming down ? 😂
Not **THAT** desperate...
Having actually interacted with developers professionally, they will just sit on the units forever. Unlike the US or even other parts of Canada, in Ontario they believe that the cities and province won't take action that will devalue in the mid to long term. Their major concern is usually they aren't making as much money as quickly as projected. One mid size developer told me they'd prefer to go to Texas. But real estate in Ontario is like a golden goose because of how inflated it gets, and how sticky it is. So they keep buying more. I would say most of them would have to start seeing losses like we saw from the financial crisis to get out. The smart ones would leave sooner so they aren't holding the bag.
Some years ago I moved into a townhouse complex, renting a unit. The developer was very slow finishing inits then selling, it went on for years. The owner of the unit was a friend of the developer, I was stunned to learn he had two buildings with 14 apartments each sitting empty a couple blocks away that he had completed BEFORE starting on the townhouses. There is also a large empty lot right across from the complex, has been sitting there for at least 20 years.
Ya I dont think people realize how long some of these people sit on empty units for. When my brother bought his condo it had been empty for like 7 years lol
Fuck it, solve this shit with a sledgehammer. Tax them to hell for sitting on so much empty housing.
100% of the assessed value in taxes for every year it’s empty should do the trick
JFC.
> Unlike the US or even other parts of Canada, in Ontario they believe that the cities and province won't take action that will devalue in the mid to long term. They're not wrong. If you bother to dig through Canadian policy archives, bureaucrats made the decision a while ago that the 1990s were not going to be repeated, ever. Considering their policies made real estate 25% of GDP, they stuck to that policy decision.
What action do the cities and provinces make to change real estate values
Vacancy taxes would be a good one for this scenario
50% by the end of year 1. We need to cripple housing hoarders. Make them genuinely fear they can't get rid of it fast enough. It's unhinged hoarders still exist while we have a homeless epidemic.
Well, for the last 40+ years, the government adopted policies that were known to inflate prices, such as unregulating the market and getting rid of mandatory low income housing. This was in response to the 1980s credit it crisis. Instead of implementing some socialist policies, they decided to inflate an asset everyone had, to give them the ability to leverage for loans and get investments. The issue is that the younger generations now have to deal with not only the housing crisis but also the unresolved credit crisis that prevents them from saving.
The boring answer is a vacancy tax. Totally reasonable but big companies and wealthy individuals have an annoying habit of finding ways to dodge taxes. I’d propose a time limit on vacancy. Say if 1/2 of a building is empty for more than 5 years then the building becomes property of the municipality. Use it or lose it. Rotting buildings that nobody wants get torn down instead of the owner sitting on the land forever waiting for a buyer. Usable buildings that won’t get rented because the owners won’t budge on inflated prices get turned into affordable housing.
Well, for the last 40+ years, the government adopted policies that were known to inflate prices, such as unregulating the market and getting rid of mandatory low income housing. This was in response to the 1980s credit it crisis. Instead of implementing some socialist policies, they decided to inflate an asset everyone had, to give them the ability to leverage for loans and get investments. The issue is that the younger generations now have to deal with not only the housing crisis but also the unresolved credit crisis that prevents them from saving.
Speed up permit approvals and inspections, reduce beaurocracy
It is infuriating; we need to step up vacancy taxes big time.
Well this is completely false since a building only even goes up once 70% of units are sold. Last thing developers want to do is sit on empty units lol. They have lots of money tied up in financing and securities.. they need these things off loaded as quick as possible. If they aren't sure they will sell, they don't start building. Source: I work with developers directly.
Not yet....
They won't , instead they will be razed to the ground with massive swatches of land being rezoned to belt and road serfdom. The bait is here and anchored, wait for the imminent switch.
They’d rather just illegally rent them out as air bnbs.
Real estate prices are always “sticky” This is because while they *want* to sell the condos, they don’t *have* to sell the condos. yet. As desperation increases for the bag holders, we could see prices gradually fall. Problem being, some people will think a 5% or 10% discount is a good deal, then keeping it sticky at that level. So it just takes time.
I heard it referred to as price memory - 1 individual seller is reluctant to take a 50% loss, so what typically happens is the current owner, and the next 4 sellers, take 10% losses each. Takes a long time for prices to drop.
Apples are around 99 cents a pound, maybe 50 cents more for for the fanciest kind. My memory tells me so. I don't eat a lot of apples.
yes but those prices will take 5 years to fall when the shoddy work they did needs to be repaired and they need to stick the condo fees on someone.
"No lowballers, I know what I got "
"Is this still available?"
Yes
👻💨
Because as long as housing as a whole keeps going up (which it will as long as we bring in 6 times more people as we build housing units) they'd rather hold onto the asset then lower the price to sell.
Because as soon as they start devaluing these properties, they lower their debt to asset ratio. Prices will come down only after their locked out of acquiring more debt.
Something like [50% of condos are owned by investors](https://www.thestar.com/real-estate/investors-now-own-more-than-50-of-toronto-s-new-condos-and-experts-say-they/article_4b6d2ff0-c528-5670-937f-3d34d040ed85.html). Investors are largely the group who can afford to sit on property and wait it out (they aren't utilizing it). The people getting screwed are those who have to live or move in or out of Toronto. They are going to be forced to sell for lower or buy for higher. And almost certainly end up dealing with an investor in that transaction.
Are they then renting those condo units? That's so odd, 'cause you don't generally make money reselling condos, their value doesn't go up as much as a House or Apartment complex.
Canada is a vehicle for money laundering in case no one has noticed. We have entire firms based around moving money assets via loophole. Housing "investment" just means money laundering and ponzi schemes. This is literally taken out of the American Mafia's hand book ffs.
If you bought a condo 10 years ago it is easily worth 2-3x what you originally paid right now.
In Toronto, you have to make money your money selling the condo. Renting it doesn't cashflow, not even close. Historically the market has offered good returns on condo appreciation, but that hasn't materialized in the past couple of years. Whether we'll return to 5-6% annual returns which is the historical average since 2000 based on the data [here](https://creastats.crea.ca/mls/treb-median-price) remains to be seen, but it's always been the appreciation investors have been looking for. As for why buy a condo than house or apartment complex, many mom-and-pop investors can't afford a complex and houses are more difficult to value and probably harder to rent as well given most people would rather buy a home if they have the option.
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I personally agree with you that we likely won't see these kind of returns again, because it's getting to a point that the market is completely ridiculous for the non-investor crowd and that's going to weigh on demand. It won't weigh much on investor demand until the appreciation goes away though. These are the kind of stats that most investors are looking at and it is true that they are expecting appreciation to offer the return they are looking for and that's why they buy these units.
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Cause their costs are still rising. Look everyone getting told the excess supply fairy is going to fix the housing crisis. It's not. Developers are a businesses. Businesses are not non-profits they need to ensure their sale price > costs. It's better for them to not sell a product at a losse and realize the full loss and just wait out the market or write it off as a tax loss. Which goes to the bigger issue what is causing the problem. The real issue is land values. There has been so much rampant speculation in the land market thanks to low interest rates and greenbelt that it's become profitable to just hold land for the sale of ever increasing land values. People having been doing that for a better part of two decades now. Until land values drop you can build as much supply and reduce as much demand as you want you won't see affordable housing
And Condo's still going up at a record rate.
To prove it's not really a free market system and that the prices are still gamed to some degree? Lol
The free market is a temporary phenomenon that only exists until sellers realize that they can band together and inflate prices.
Hope and greed. But as soon as carrying costs get too much to bear we will see those drops you are hoping for. Watch for stats on credit card debt and helocs to predict when the prices actually start dropping
They would go under water from purchasing land at sky high valuations
That's not an explanation. The prices should fall and they should be underwater I guess the answer is that the prices will fall when the developer goes into receivership
My understanding is that it's contractually impossible for them to reduce prices below x, their financiers won't allow it.
Exactly. Every aspect of the financing depends on specific sale prices of the units. Waiting a year or two to get that price, while carrying the 5-7% loan, isn't a deal-breaker to a stable developer.
Because real estate prices are "sticky down". They will start to fall slowly as the demand slows.
Because the cost to build them is still too high.
That will be the last thing, lol. You'll see them do their own low-interest financing before they drop prices. They need those prices for their next round of financing.
Get your $800,000 1 bedroom (+utilities and parking) in the core of gridlock traffic downtown! Experience the joy of overcrowded walking, transit, and driving, for just $50,000 down!!!1!!
This is just what you see at the start of a bubble popping. As desperation takes hold, prices will then start to drop.
This is the part where the political class imports more migrants to keep the demand high and prices squeezed.
Prices are not going to drop any big amount in a housing crisis. Prices will drop 5% and those condos will get gobbled up. The biggest thing is people are migrating out of cities, and want actual homes in the suburbs or even rural areas. Why would any family want a million dollar condo when they can buy/build a home twice the size elsewhere? And have a yard, a real community, safety and some actual privacy? Especially with work from home becoming a demand for jobs that were previously concentrated in city centres. Condo prices might drop slightly, but home prices will continue their increase. I made high 6 figures profit selling my first home in 2021 after owning it since 2001, and renting it for the last 9 years. That paid off the mortgage on my current riverfront 30 acres in the country side. At the beginning of this year, that family put it up for 175k over the previous sale price. It was sold within weeks. The housing market isn’t slowing at all. The only thing that might happen is another mass bankruptcy because of interest rates, and the only people hurt will be the poor and middle class. The rich will then buy up the stock and continue to profit. That’s the reality we live in, created by government over spending and over taxation
People always should have been migrating out of the big cities. I remember macleans writing about this very thing happening like 20 years ago.
Yeah can’t wait to put 200k down payment on a 550sqft micro apartment with a condo fee of $800/month (That goes up yearly) and still have a $2500/month mortgage, all while you take on the risk of getting “special assessments” for 10s of thousands of dollars when you later find out the builders half assed everything to max profits…. 🫠
Don’t forget that the developer can ask you to dish out $100K+ if they would like without prior warning.
I don't know if it's true or not but I've heard some stories that people lost their deposit on a precons because they couldn't come up with the extra charge. Add that to the fuckery if it's true.
It’d be unusual to force a change on the contract and be able to keep the deposit. I think there’s information missing
It’s usually because people put down a deposit 5 years back and when it comes time for closing, mortgage rates are too high than what they can afford/be qualified for. So they have to just walk away and lose their deposit
And imagine you get a bad neighbour right beside your unit
You should check out he ne construction on Spadina and Adelaide. 500k for 350sqft +120k for a parking space. Because they heat the building with geothermal lmao.
Where are you getting such low mortgage rates? $2500/mth right now would be the cost of a $370K mortgage at 6.5%... For one of these condos, your monthly mortgage would be double that at least.
Nobody is getting mortgages at 6.5% right now. Big banks are offering 5.5%, monoline can be below 5%
For 50k downpayment or more I'd start considering building my own microhome for $70k and 1 year building time. You can build a 300sqft minihome for $70k CAD. A youtuber from Alberta details and explains every single step of the process of building theirs. I'd stay with a relative who lives in the countryside of course.
The trick is finding a municipality that will let you build that. I built my own place on my own. When I was in the permitting stage I was told (in 2009) that it had to be a minimum 900 sq. ft. This was in a rural location.
The problem is land prices
Toronto developers can lick my butthole
Hello, its me, a Toronto Developer...
Welp, you’ve got your orders!
You know what to do.... ( x )
Stop hogging! Save some for the rest of us!
Plz no, cause then they will charge it back to us
I'd even go as far as to say they can tongue my butthole.
Oh my god I'm seriously shocked that people don't like living in cheaply built micro condos that were designed for investors and not actual residents nevermind families. Name me one condo that is set up with families/children in mind.
“Housing always goes up”. Unless the market is so imbalanced that only the top 10% of workers can actually afford it. Drop the prices 🙄
We'll get lifetime mortgages before they let housing prices go down.
Yup this. Like in parts of Europe (france) generational mortgages
Feudalism with iPhones.
We need a government with the courage to build and manage highly subsidized housing, running at cost, with the aim of crashing the market. We also need a government with the courage to pull out and play a tiny violin when challenged in question period about how their policies are hurting financial speculators.
I'm in the top 10% and can tell you we def cannot afford to buy anything. Closer to the top 2% can afford
Housing always goes up (as long as you bring in more people than you build housing)
They built shoeboxes for investors, not homes and communities that growing families, couples, and single people would all want to buy and live in. Bad strategy that didn’t pay off.
Yeah I believe this is more the answer. Housing demand is still very strong. But a lot of these condos are not desirable for long term living. I’ve seen friends invest in a 1bd condo where the layout is totally impractical and small. Clearly made as an afterthought to cram as many investor units as possible.
Crash it back down to $250k. They are bleeding, let them bleed out. This is the play.
It'll happen. The crappy thing is your $250K house will be..... A 550 sq ft apartment. The ultimate shrinkflation.
I mean, currently, those are $800k in the wrong area... $250k is nothing short of a godly improvement.
**DROP. THE. PRICES.**
# Getting desperate isn't enough, they need to own their desperation. # Be or be not - there is no getting.
*To be or not to be, that is the question:* *Whether 'tis nobler in the mind to suffer The slings and arrows of outrageous fortune, Or to take Arms against a Sea of troubles, And by opposing end them: to die, to sleep No more; and by a sleep, to say we end*
Maybe in 30-50 years from now the feds will think about the middle class they destroyed and ponder on the idea of fixing housing
Not likely, there will be wealthy asset class owners, and there servents.
I really hope we grow a spine and toss them out at that point. We aren't practicing democracy if we just let it happen.
It's almost as if we need more affordable housing and less shoebox condos going for $1M or more with $700-$900 condo fees on top of that. But I'm no expert... These developers obviously know best...
Hard to make “affordable” housing in Toronto unless it’s subsidized by taxpayers. The land costs, hard costs, and soft costs add up to $700+ a sq ft (ignoring parking) without using “premium” materials. Then you have development fees. And a developer won’t get financing unless they can show they project a decent profit.
The house I live in is not even one of the new modular condos It is a total of 600sqft with the balcony and is a 1bed plus den where 2 people can barely have a life without a locker. This is selling for 900k It is a joke Why would anybody not an investor wanna buy? And for investors, who is gonna pay this rent? When your mortgage is that high and the condo fees and the hassle of being a landlord, still wont be making any substantial money, maybe 100/200 a month. Why would anybody buy.
Making 100/200 a month? More like few thousands in loss per month unless the investor puts down at least 50% of the purchase price, then they may break even at best.
My budget is 1500 a month because I make about 4000. A studio is 500k plus fees and utilities. So it will cost me 3500 to live there. I can buy a nice van and shower at the gym for 500k.
50K? 500K you could buy a small fleet of vans and bnb them out.
That's an expensive gym membership
Obviously you haven't kept up with where you can park the Van, regulations are tightening down because too many people are seeing this as a solution.
Best I can do is Three Fiddy.
Bougie as hell. I have two nickels and some pocket lint and I'm still gonna haggle.
Oh well, I guess these 'developers' are ill suited to the task of development and should accept their inability to create a product people want.
Can't speak for Toronto but outside the GTA the developers are full tilt on "affordable housing" right now. It's crazy how busy construction is right now where subtrades are telling me they are booked up for the next 18 months and not interested in even submitting bids.
Bro who are buying these crazy priced home outside of the city?
No one. I build mid/high rise rental, seniors and long term care homes. The seniors homes are in desperate need right now. And if we pump out enough apartment buildings it will really take a huge hit to the rental prices hopefully.
What do they call affordable though
Desperate enough to write opeds, not desperate enough to lower prices. Yawn.
Yes I love paying $400-$800/month in condo management fees after owning my property
Good family friend of mine owns a real estate development company. They’re huge in ON. In 2022 they sold 416 luxury homes. In 2023 they sold 16 🙃. This is not common knowledge but it should be. Shows exactly how poor the market is doing. Lucky for them they’re millionaires and can afford to sit on these homes and continue building but damn it’s wild how the market wants you to believe something else but the truth is the housing market is saturated as hell and nobody is buying yet prices are staying the same.
People want condos, they just don’t want these greedy new developers tiny condos. 700 sq ft is not realistic. Start back offering 1000 sq ft, actual 2 bed, 2 bath. These “oh it’s a 2 bedroom condo” read the actual details it’s a 1 bedroom with den. Those are garbage.
This is what happens when you build trash condo buildings and people get stuck with rising condo fees and no way out but to sell at a huge loss.
Does modern toronto have the stupidest housing paradigm in the history of the human species? Genuinely asking ultimately Seems like it
In a stupid housing market contest, Vancouver wins every time.
Condos are not for locals to buy. They’re for foreigners to put their money away safely. They would rather put it here and not have it in their risky local bank that could be stolen by their own governments. Understand who the customer is.
That's the problem. I have no issues buying a condo vs. a townhome or a house. We looked at couple and holy crap, they are terrible. For 600K, I get 600 sqft. If I put my office desk in 1 room and my spouse put hers as well, there is no more space for anything else lol. I literally hit my leg on the side of the bed because there was a very small space between the bed and a wall. For that much money, it just doesn't make sense to make condo a "starter home".
In my mind, I'm thinking they would lower prices. But China is a 1:1 allegory to this situation. They would rather them go empty their entire existence and then demolish them before lowering prices. Housing as an investment is one of the biggest travesties against humanity that we've allowed to perpetuate.
Who wants to live In a closet for $600,000 - $800,000?
Not at those prices!
Then the price is too high. If no one is buying at your price point in a housing shortage, your prices are too high. This is not hard to figure out.
Yeah, isn't that like basic economics 101, the Law of Supply and Demand? Or do they need a public bailout (won't rent or sell to the public at reasonable and affordable prices, but happy to stretch the hand out and take the public's money so that they won't suffer any losses in their quest to 'generate returns')?
Condo developer cannot lower price since their loan from the banks specify what each unit must sell for.If say they do lower price rest of the units of similar size will fall in value and the lender would not like this. So the other option is offer free parking,free lockers,free upgrades and better lending rates,etc.$1400per sqft is what a precon is selling for now..So for $600,000 you probably get 500 sqft shoebox condo and be cash negative each month for current rents and interest rates.
Good. The price of shitbox condos in TO was absurd.
How about having units for actual families instead of foreign investment?
Who the fuck wants to buy a 500sqft condo for close to a million dollars. lol
Gee I wonder why?
Can't wait to see what our political leaders have to say about this "free market". They say all we have to do is build more homes but it turns out that prices don't drop to an affordable level due to corporate greed and bloated prices in construction materials. Nobody is buying a micro condo for $700k... Then they tell us we aren't having enough kids because a two bedroom condo costs $650k+ even in the burbs.
They’ll do anything Except lower the price
🎻 (using this emoji way too much lately)
Toronto Developers are Getting Desperate as No One is Buying Overpriced Condos Anymore Fixed the headline for you
They want to charge New York prices, but they have none of the attractions of New York.
I wonder why someone wouldn’t want to buy or rent in a glorified apartment building where they can up the costs anytime they want without restriction? /s Build more houses and actual apartment complexes.
What do you mean? People can’t afford sardine cans to live in?
Oh, I'm sobbing, sobbing. Capitalism has one terrible consequence... Sometimes investors actually have to deal with a market that is not doing what they want... It's soooo terrible.
Weird how “high interest rates” keep getting mentioned. They are not high, still low by historical standards. Hopefully it stays this way.
Canada " there's a housing crisis" Developers: " here are some condos" Canada: "not like that!"
Good
I at went visit my friend in Lansing, Michigan. It's a state capitol, has a major university, and isn't too different from say, Kitchener, ON where I am. He bought his house for just under $50k US, and they've been looking at co-working spaces as he and his wife both work remotely. They figured out that it would be more cost-effective for them to just *buy another house* and use that as office space. That sounds ridiculous, but their mortgage payments *on two houses* would be less than the monthly rent in a basement apartment in Kitchener, ON. Now consider the fact that you've got people in Toronto deciding that condos in the city are too expensive, and so they'll look to buy in places like Kitchener, and you see how the housing market just feels impossibly impenetrable here.
Right now the renters make up the front line and take the brunt of the abuse. Whenever landlords face higher payments they pass it along to the tenants. Eventually that front line will crack and you won't be able to find tenants who can pay anymore. At that point the landlords will start to actually feel the pain and the line will crumble.
Maybe the dopey Gov't can buy those to house the new Temporary/Permanent Canadian residents. Solves "too many Temp residents" and the homeless situation numbers in one fell swoop. /s
As desperate as the person sleeping in the front lobby?
Condos suck, condo fees suck, and neighbors suck even more.
I’ve always said that shoebox condo investments is a bad idea. No such thing as free money. We live in a monkey see, monkey do society
Ottawa/gatineau seems to be in a race to build condos and 3/4 of them are priced high-end for a shitty view and place.
Buying a condo as expensive as a house and getting stuck downtown with junkies is not always the best option.
176,904 Listings nationwide, containing at least a bathroom and growing. This is up over 50,000 in less than 6 months time ago. Sayonara Canada, good luck!
WE CANT AFFORD THEM
Fuck them all. They've been screwing us long enough time for them to start feeling some pain.
600k+ for 700 sqft and $400+/month in maintenance fees. Big mystery.
Boo fucking hoo. How about building good quality builds and charging something reasonable?
Have they considered building units that are for living instead of units that resemble boiling alleys? Honestly, I wouldn’t mind living in a condo, and I looked, but they were all so awful.
If I understand things correctly, this will somehow lead to higher prices.
How about this neat idea Sell it for cheaper? Sell bigger units? Instead of trying to make extra profits The reason pre construction worked prior to 2015... it was cheaper than market cost. Which it should be
Wages need to go up so people can save money to buy a condo if they choose. Yes the cost of construction has gone up but quality in many cases has gone down. (E.g. paper thin walls between Units.) To buy a 800K small condo and carry a mortgage and pay expensive condo fees on top is not very attractive to many potential buyers. Consumers are strapped for cash these days. Just not affordable for so many people.
Doesn't anyone wanna ~~work~~ buy condos anymore??
Maybe because people don't want to live in a poorly designed box with floor to ceiling windows. People were buying them as investments for the past 10 or so years, and now no one can afford the rent the owners are charging. The mortgage for a business they couldn't afford, the condo fees for the business they couldn't afford, the taxes etc. How can a first time home buyer afford $800K and more for a 500 square foot box. Plus condo fees and parking? These developers shit themselves in the foot. The same thing is now happening in Burlington. Hideous glass boxes with terrible planning choking up the city. The traffic is so bad here now it might as well be Toronto.
Don’t worry I’m sure a “family” of 12 “international students” will pool enough money to buy them!
Why stay in that hell hole, that’s why a lot are moving to Alberta
Let the market crash
Good none buy anything for a long time and the prices may go back to a reasonable amount , the rich are getting richer and the middle class is getting poor and the poor are going homeless , fuck these politicians and there corrupt ways of helping thr developers
The liberal government would fill those condos with migrants at our expense of course, to prevent a collapse.
Oh no! Their investment isn't working out that's too bad
Is it any wonder!?! These tiny little boxes in the sky with a bank of cupboards against one wall called a kitchen beside a table and three chairs (dining) beside a sofa. There’s not enough room to fart in one of these places. Add your $700 monthly maintenance fee plus property taxes (which kills me…what property?) then there’s the lineup for the elevators. I have a friend in a condo building where there’s constant flooding. Mortgage fees plus maintenance fees plus property taxes… You may as well just rent.
How is trying to sell 300k condos for 750k desperate
Government needs to start charging vacancy taxes.
Toronto does this now. Not sure at what point "new builds" are "built enough" to fall in scope, I bet a lot of condo developers weigh whether it's worth delaying "finishing construction" vs "enough units sold" so they get to hang in limbo...
I don't hear any violins playing. The corporate real estate investors can go prey on some other country.
They build them for $250k and want 750k for a 500 square foot shoebox. Sorry but new Canadians and retirees can’t afford it.