The Condo Observer
Active Member
Downtown Condo Boom Over?
Yes, there are signs of life in economy. We are about to land at the bottom, or perhaps have already arrived. The pent up demand from a dreary winter, coupled with historically low interest rates have caused an unexpected blip in real estate resales.
But my gut feeling is that the grand era of new condo construction downtown is pretty much over. Projects that were shelved for repackaging might come to market, but it will be years before they are built. The rules of financing new projects have changed, indeed they are now re-writing that book for both development financing, as well as consumer financing. So its not like we are going to pick up where we left off pre fall 2008.
Resale prices are so much more attractive than new construction. And investors planning to flip now have to rent or sell and bail, probably breaking even. Entry level condos in the core are 300K for 500 sq ft in non-premium locations. Not attractive to investors even at these interest rates. An investor needs to put out 100K cash at a minimum, to bring the mortgage down to break even levels. So the investor-driven segment of the market might shift to resale units or other peripheral markets outside of the core. North York, Lakeshore and Mississauga are all looking better in terms of the numbers.
The stock of new downtown condos is therefore precious. This is the stock that we are going to be with for a long time.
Yes, there are signs of life in economy. We are about to land at the bottom, or perhaps have already arrived. The pent up demand from a dreary winter, coupled with historically low interest rates have caused an unexpected blip in real estate resales.
But my gut feeling is that the grand era of new condo construction downtown is pretty much over. Projects that were shelved for repackaging might come to market, but it will be years before they are built. The rules of financing new projects have changed, indeed they are now re-writing that book for both development financing, as well as consumer financing. So its not like we are going to pick up where we left off pre fall 2008.
Resale prices are so much more attractive than new construction. And investors planning to flip now have to rent or sell and bail, probably breaking even. Entry level condos in the core are 300K for 500 sq ft in non-premium locations. Not attractive to investors even at these interest rates. An investor needs to put out 100K cash at a minimum, to bring the mortgage down to break even levels. So the investor-driven segment of the market might shift to resale units or other peripheral markets outside of the core. North York, Lakeshore and Mississauga are all looking better in terms of the numbers.
The stock of new downtown condos is therefore precious. This is the stock that we are going to be with for a long time.
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