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Baby, we got a bubble!?

I'm looking to buy newish resale (1-5 years old) in about a year and a bit. Pre-construction will completely depend on the resale market. If the resale market tanks (20% - and we're already down around 5% of it) then the pre-con will have to adjust downward quite substantially and if it does (ala march '09 when places like 'X" knocked up to 25% off certain suites) then I'll jump in. Downtown core is simply not worth more than 560/ft for 10th floor medium building (MLS, Murano, U, etc.) with current population growth. I'm pretty conservative and will only invest if I have positive cash flow of 7-8% + appreciation. Otherwise trading and/or waiting or investing elsewhere in RE makes more sense.
 
Condo George said:
Sim.....Yonge and Front on my radar, 259 units , 200,000 webhits off the name the condo marketing campaign, builder gave $5000 but wow what a potential return. If only .1 % are buyers thats 200 units , I will be there on Platinum Broker day, hard to miss me, look for the hair. Pre const is ready in 3 to 4 yrs if you believe in Toronto core condo investment this maybe a play up to u
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any floorplans and price list for us to see CG




simuls said:
I'm looking to buy newish resale (1-5 years old) in about a year and a bit. Pre-construction will completely depend on the resale market. If the resale market tanks (20% - and we're already down around 5% of it) then the pre-con will have to adjust downward quite substantially and if it does (ala march '09 when places like 'X" knocked up to 25% off certain suites) then I'll jump in. Downtown core is simply not worth more than 560/ft for 10th floor medium building (MLS, Murano, U, etc.) with current population growth. I'm pretty conservative and will only invest if I have positive cash flow of 7-8% + appreciation. Otherwise trading and/or waiting or investing elsewhere in RE makes more sense.
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wow simuls, you're being generous.
i wouldn't pay more than $400 PSF to compensate me for the anticipated 25-30% drop.
low interest rates should benefit the consumer, not pad the developers profits.
 
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Point well taken.......

7 to 8 pts will be hard in residential , may have to go commercial

1 - 5 yrs agreed, value there over pre const

I dont invest for rental returns there are none really maybe 2 pts or just covering, but I love the capital appreciation and the return rates on the deposit in pre const, deposit $50,000 over a yr, maybe $100,000 up this is what I have been good at, building wealth through leveraging and focusing on cap ap, I know can get burned in a down market, but I am taking a calcuated risk imo, this yr Sim, 6 or 7 sites sent me the red carpet with lofty commission , I only promoted 1 site and maybe Yonge and Front if I get a psf around $600, if it comes in high, forget it....maybe I will wait for Bayside

Nice chat
 
No info yet, should see pricelist mid to end of Sept

Just sharing on price per sq ft........ last week I sold a 460 sq ft unit at Neo, a pretty good location , avg finishes etc, Neo is 2 yrs old, for $250,000 or $543 psf now to me this is high for Neo, we asked $244,900, I dont know about $400 to $450 guys, maybe for aged product with very high maintenance fees that will hinder value moving forward, I dont think we will see those levels for new towers.
 
George you and I actually agree.
I think new will go back to $500 and could well hit $450 for new mid product. Even if the market does go down, I think there will be enough " true investors" who look to buy at those prices and will accept2-3% returns on their money while they wait. This will be especially true if the economy if interest rates stay low because the economy continues in the doldrums or if the stock market falls because this money will have to go somewhere and if bond yields are 3-4%(tough to get with AAA mid term money) , stocks falling some will accept the real estate.

I agree also with your comment about 7% being unattainable on condos in the core. Prices would have to go back to 7-10 years to get those cap rates unless there is a significant rent rate increase which I do not think is in the cards. Renters would not be able to afford this. I think that is applying an historic norm which is like expecting double digit returns 10 years ago on stocks. Not in the cards.

I disagree George however with your idea of capital appreciation and banking on this going forward. For reasons that others and I have put forth before, falling bond market rates, hence mortgage money become cheap have fuelled the growth effectively for the past 30 years. Bond yields are now at lows and will only go lower if we have a double dip recession(bad for R/E and the economy) or there is no recovery and demand for money dwindles (which is why you saw 3.59% 5 year fixed mortgages by BMO since they are desperate to get a dwindling supply of the new mortgage/renew mortgage market).

Going forward, the odds are on deleveraging, risk and speculative money going out of the system. Shortly thereafter bond holders (or at the first sign of economic improvement) will demand higher returns and the "capital appreciation" will evaporate and risk being capital "depreciation". The point being that the 30 year drop in interest rates has favoured R/E because it is as you say "highly leveraged". Interest rates go the other way and the opposite has to and will happen going forward since there is nowhere for interest rates to go but up (unless we enter deflation in which case R/E with everything else will devalue).
 
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Condo George said:
Point well taken.......

7 to 8 pts will be hard in residential , may have to go commercial

1 - 5 yrs agreed, value there over pre const

I dont invest for rental returns there are none really maybe 2 pts or just covering, but I love the capital appreciation and the return rates on the deposit in pre const, deposit $50,000 over a yr, maybe $100,000 up this is what I have been good at, building wealth through leveraging and focusing on cap ap, I know can get burned in a down market, but I am taking a calcuated risk imo, this yr Sim, 6 or 7 sites sent me the red carpet with lofty commission , I only promoted 1 site and maybe Yonge and Front if I get a psf around $600, if it comes in high, forget it....maybe I will wait for Bayside

Nice chat
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0% return on rent and relying completely on appreciation is a dangerous game.
at least you know you're getting 0% ROI based on rent, unlike some who buy thinking the rent will cover their costs.
with limited rent increases (rent control), higher costs associated with maintenance fees, property taxes, utilities, insurance, etc it quickly becomes negative cashflow ...
nothing to tie one over during the bad times to wait out the RE market downturn.
 
cdr108 said:
please provide substantiated evidence ...
we hear RE agents always mentioning that but since the industry is so monopolistic, only insiders seem to actually have the data.

anadotally, figures ranging from 30-50% of pre-construction condo purchases in the past decade have been attributed to foreign investors but again, nothing has been provided
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I'm not a Realtor. And I'm not a shill. There are many places I've had people attempt to get me to invest..and I ran away fast. So I can understand your comments.

However, I have significant international investments and am very close with several important communities in the GTA. Particularly the Chinese community.
 
Good article in the condo guide page 64, talks about Toronto and how the lux market stacks up compared to other world cities

Festival, may come to market at $850 psf for big units, $900 psf + for smaller units under 800 sq ft
 
I recd an email today from a mortgage broker I dont deal with, I am pretty sure there is a catch or an error or just plain bait to get me to move business into them but there is what the email said.

5 Year fixed mortgage 3.19 % on principal res only and only for clients of mine.

Any of you guys mortgage brokers, pls share
 
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Condo George said:
Good article in the condo guide page 64, talks about Toronto and how the lux market stacks up compared to other world cities

Festival, may come to market at $850 psf for big units, $900 psf + for smaller units under 800 sq ft
Click to expand...

Condo George, how do I get a copy of this article? Any web link? I am out of town for the next 3/4 weeks.
 
cdr108 said:
please provide substantiated evidence ...
we hear RE agents always mentioning that but since the industry is so monopolistic, only insiders seem to actually have the data.

anadotally, figures ranging from 30-50% of pre-construction condo purchases in the past decade have been attributed to foreign investors but again, nothing has been provided
Click to expand...

Link to an article in Today's Friday's) The Globe and Mail re: foreign investors.

http://www.theglobeandmail.com/real...p-gta-flush-with-rental-units/article1701180/
 
I wonder if the Asians decide to stop buying it will because they"don't appreciate or understand the market" in the next reporting because currently they are knowlegeable and savy while it suits the advertorial content.
The article really says absolutely nothing new other than rehash the same content. Much like I find myself doing of late.LOL.
 
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