Any chance of developers raising prices?

[UrbanVigor]

I'm not in the doom and gloom camp. I believe prices will stablize in the summer and fall a small percentage as in recent months the industry experienced pent up demand, sales have accelerated due to the rush to beat the HST and the inevitable increase in interest rates, and the fact that summer is a cool down period in general. Supply is there and demand will cool, but there are no signs pointing to a bust.

The only question that I do have is - and CNTower and myfive have made some excellent observations - what will happen when all this foreign investment in Canadian real estate is moved out as the world economy picks up pace? A lot of foreign investors have purchased units not to rent out but just sit there as investments in real estate. When it comes time for them to sell, will the demand be there? If the economy continues to grow thereby creating jobs and increasing salaries and ability to purchase a home then that demand will be there. But I'm curious to know if that future demand matches the future supply. In other words, will all these investments in real estate actually become homes? Or will there be an excess in supply even as demand increases?

 

[interested]

I'm not in the doom and gloom camp. I believe prices will stablize in the summer and fall a small percentage as in recent months the industry experienced pent up demand, sales have accelerated due to the rush to beat the HST and the inevitable increase in interest rates, and the fact that summer is a cool down period in general. Supply is there and demand will cool, but there are no signs pointing to a bust.

The only question that I do have is - and CNTower and myfive have made some excellent observations - what will happen when all this foreign investment in Canadian real estate is moved out as the world economy picks up pace? A lot of foreign investors have purchased units not to rent out but just sit there as investments in real estate. When it comes time for them to sell, will the demand be there? If the economy continues to grow thereby creating jobs and increasing salaries and ability to purchase a home then that demand will be there. But I'm curious to know if that future demand matches the future supply. In other words, will all these investments in real estate actually become homes? Or will there be an excess in supply even as demand increases?

Just a gut feel in response to your question but I think there will be an excess of supply even as demand increases. In the past, developers tend to get overzealous and construct too much and I believe that will happen here. the question I think is how much of an excess will it be as that will dictate how much price adjustment is likely to occur.

 

[onfence]

All good points, but realistically will developers feel any pressure to *reduce* prices in the 2nd half of 2010? Or will they be sticking to their guns, especially if their development is near completion/occupancy?

For buildings that are near completion/occupancy, will potential buyers be faced will price *increases*? Thx.

 

[interested]

All good points, but realistically will developers feel any pressure to *reduce* prices in the 2nd half of 2010? Or will they be sticking to their guns, especially if their development is near completion/occupancy?

For buildings that are near completion/occupancy, will potential buyers be faced will price *increases*? Thx.

For buildings near completion more so than occupancy, the builder will try and sell at top dollar unless the builder has very few units left and just wants out. This is where they usually make the most profit, it is all gravy at this point since the costs of construction have long since been recouperated. If the builder has alot of units left, then yes, I think you may be able to negotiate a price decrease. Whatever the price is when the building is nearly complete will likely stay and not be increased but also not likely decreased (or at least in any significant fashion).

 

[JayBee]

I'm just a little worried at the number of projects on the go and the amount of new projects starting up. I just can't fathom all of these units being occupied. I'm not seeing that many office buildings being built here or companies relocating to the downtown core so why would there be such a mass exodus to downtown Toronto?

 

[t.o]

For buildings near completion more so than occupancy, the builder will try and sell at top dollar unless the builder has very few units left and just wants out. This is where they usually make the most profit, it is all gravy at this point since the costs of construction have long since been recouperated. If the builder has alot of units left, then yes, I think you may be able to negotiate a price decrease. Whatever the price is when the building is nearly complete will likely stay and not be increased but also not likely decreased (or at least in any significant fashion).

Looks like right now prices for pre construction and re-sale are at a peak high. I have been looking around at various new pre construction projects and most now are $600 psf and up. I mean is this normal? Even re sale is now 500 psf and up.

Do you think the the market in downtown Toronto will "cool" later this summer? Would it be better for me to wait till after the summer to buy (re sale or pre construction). Will prices be cheaper?

 

[interested]

Looks like right now prices for pre construction and re-sale are at a peak high. I have been looking around at various new pre construction projects and most now are $600 psf and up. I mean is this normal? Even re sale is now 500 psf and up.

Do you think the the market in downtown Toronto will "cool" later this summer? Would it be better for me to wait till after the summer to buy (re sale or pre construction). Will prices be cheaper?

Yes, I think it will be better to buy later but I am not sure that it will be down signifcantly until at least the end of this year or next year.
I would not buy new personally at these prices as I don't believe there is much appreciation likelihood and more downside potential (though not a crash).
If I could suggest, look for a resale or an assignment in the buildings you want and seek out someone whose situation may have changed (or just want out of their current assignment, maybe with minimal profit) and you may be able to get a better price than $600/sq. ft. You should be able to get in in any event below the builder's prices for a completed building if new if it is just on the market as the assigner will like have to price it to be more attractive than the comparable from builder and if an earlier unit bought, may be better than the stuff left over near the end once the units have been picked over.

 

[onfence]

Yes, I think it will be better to buy later but I am not sure that it will be down signifcantly until at least the end of this year or next year.
I would not buy new personally at these prices as I don't believe there is much appreciation likelihood and more downside potential (though not a crash).
If I could suggest, look for a resale or an assignment in the buildings you want and seek out someone whose situation may have changed (or just want out of their current assignment, maybe with minimal profit) and you may be able to get a better price than $600/sq. ft. You should be able to get in in any event below the builder's prices for a completed building if new if it is just on the market as the assigner will like have to price it to be more attractive than the comparable from builder and if an earlier unit bought, may be better than the stuff left over near the end once the units have been picked over.

Silly ques: where can I find these listings? Also, I thought that assignments need developer's permission to sell so how does that work? Thx.

 

[interested]

Silly ques: where can I find these listings? Also, I thought that assignments need developer's permission to sell so how does that work? Thx.

there are no silly questions, only silly anwsers. I don't know for certain but if you have a realtor, they would have access to at least those which are on MLS. Often knowing the sales people in the condos you are interested in may be of help because they may know of people or people may have approached them to try and get their assignment picked up.
A number of agents post their assignment listings on their web site.

as relates to the developer, it depends on the wording of the contract. In some, it states the developer must give his approval and often there is a fee payable by the assigner(which they will want you to pay in your price probably) to assign the contract. In others, there is approval pregiven allowing the reassignment. You would have to check on the details.

I know this doesn't eactly answer where to find the listings and perhaps others on the forum could help in this regard.

Good luck.

 

[Ric]

Yes, I think it will be better to buy later but I am not sure that it will be down signifcantly until at least the end of this year or next year.
I would not buy new personally at these prices as I don't believe there is much appreciation likelihood and more downside potential (though not a crash).
If I could suggest, look for a resale or an assignment in the buildings you want and seek out someone whose situation may have changed (or just want out of their current assignment, maybe with minimal profit) and you may be able to get a better price than $600/sq. ft. You should be able to get in in any event below the builder's prices for a completed building if new if it is just on the market as the assigner will like have to price it to be more attractive than the comparable from builder and if an earlier unit bought, may be better than the stuff left over near the end once the units have been picked over.

Gr8 advice.

 

[onfence]

Often knowing the sales people in the condos you are interested in may be of help because they may know of people or people may have approached them to try and get their assignment picked up.

Thx for the advice. I'm curious though why would the sales in the condos refer me to these assignments, as it would cannibalize their sales of new condo units? *confused*

 

[interested]

Thx for the advice. I'm curious though why would the sales in the condos refer me to these assignments, as it would cannibalize their sales of new condo units? *confused*

A good point. Often however, if you are specifically looking for a particular floor plan and that is not available as sold out (as is often the case in developments as people choose the more desirable floorplans early) or you are approaching the agent stating this is what I want and you don't have any from builder left and I am not buying unless I get one this particular unit/units at a great price, the agent loses nothing. Remember, some builders hire in house agent teams but others use external agents. As well, builders pay very low commission rates to their in house people and therefore if they can make 1 or 2% on a resale putting together a vendor who wants to sell and a buyer wanting to buy, they will co operate as they actually make more money and are not cannibalizing their sale of new condo units.
And for the record, I am not a real estate agent and have no vested interest in suggesting this.

 

[onfence]

I don't know for certain but if you have a realtor, they would have access to at least those which are on MLS.

Oh, so only agents can access MLS listings? Thx.

 

[interested]

Oh, so only agents can access MLS listings? Thx.

No, you can access the MLS. Just type in mls.ca, then go to residential, advanced search, and type in the street/ address and you will see the listings. It is just that a number of developers state that the listing on MLS cannot be placed until they say so there may be listings that do not appear that realtors/staff at sales offices of condos know about but are not listed.