Baby, we got a bubble!?

[Admiral Beez]

2-3 bedroom units would be 800-1000 sqft. To hit $500k that means a cost psf of $500-$600. When preconstruction units are going for 2.5 to 3x that amount.

But are they going for that amount now, or sitting “ungone”, unsold? Developers can address the demand side of the volume collapse by offering the market what it wants and can afford. If the market wants and can afford $500 psf then if you want to remain in the mass condo market that’s what you need to make. Perhaps we’ll see developers decide they cannot and leave the market?

 

[afransen]

Seeing as developers don't have 60% margins, I don't think they could profitably offer $500 psf developments. So they won't.

 

[Admiral Beez]

Seeing as developers don't have 60% margins, I don't think they could profitably offer $500 psf developments. So they won't.

Well, developers and their customers losing their shirts maybe costs and fees faced by developers will need to come down.

 

[TheKingEast]

At 500 PSF, you need to have the government build housing. Developers are private businesses who are in the business to make a profit. The math doesn't math.

 

[evandyk]

Does $500/psf even cover construction costs now, never mind the cost of land or financing?

 

[Admiral Beez]

Does $500/psf even cover construction costs now, never mind the cost of land or financing?

The province, city, financiers, and developers need to sort it out. Perhaps govt fees or regs are driving up the cost.

If developers don’t or can’t make what the markets wants AND can afford then there is no market.

 

[toaster29]

I wonder why we aren't seeing a scaling back of things like the elaborate condo amenities, huge pools, saunas, gyms, rooms for massage, sports, these massive staircases and chandeliers, all these things add up, and appear in most new builds. People also don't want 1k in condo fees or special assessments to fix pools, or pay for these concierges. Just build regular buildings, and we could likely get the psf lower. Why aren't builders doing this? Is there no margin on non-luxury new builds?

 

[evandyk]

People do want the concierges, but those other things are often used by a small subset of residents.

 

[yrt+viva=1system]

My only guess here is that it's game of chicken to see who will relent first. The developers thinks the can wait it out until the government steps in give funding since the developers have locked up all the land and are just waiting it out. The government thinks that developers will relent as the market forces kick in thus not needing to provide as much funding to get construction going.

 

[Admiral Beez]

I wonder why we aren't seeing a scaling back of things like the elaborate condo amenities, huge pools, saunas, gyms, rooms for massage, sports, these massive staircases and chandeliers, all these things add up, and appear in most new builds. People also don't want 1k in condo fees or special assessments to fix pools, or pay for these concierges. Just build regular buildings, and we could likely get the psf lower. Why aren't builders doing this? Is there no margin on non-luxury new builds?

I assume the developers throw in a lot of garbage quality, but initially-appealing amenities in order to attract a higher end buyer. But the quality is crap, and the special assessments will come on hard within the first decade.

The best condos I've seen are loft/factory conversion with nearly zero amenities, easily replaced punch out windows and keep it simple construction. Like the Tannery Lofts near me, https://www.realtor.ca/real-estate/26916037/501-736-dundas-street-e-toronto-c08-regent-park. $621 a month for maintenance fees is still high, especially as heat is seemingly not included.

One of my best friends lives in this place in Scarborough https://www.realtor.ca/real-estate/27205535/1213-5-greystone-walk-drive-toronto-e04-kennedy-park but has a 1 bed room plus a true glazed in den with window, and pays about $500 a month.

 

[afransen]

My only guess here is that it's game of chicken to see who will relent first. The developers thinks the can wait it out until the government steps in give funding since the developers have locked up all the land and are just waiting it out. The government thinks that developers will relent as the market forces kick in thus not needing to provide as much funding to get construction going.

What funding would government give developers?

 

[Admiral Beez]

What funding would government give developers?

Tax incentives and other deductions?