News   Jul 24, 2024
Infill Towers Proposed on Markham Road South of Ellesmere
 512     1 
News   Jul 24, 2024
Hullmark, First Capital, and Woodbourne Break Ground on 1071 King West
 1K     1 
News   Jul 24, 2024
News Roundup for July 24, 2024
 627     0 

Baby, we got a bubble!?

Oh, I'm aware of the problems, but those units are still being rented out, the landlords are just grumpy that the rents aren't paying both their equity and interest payments on their mortgage at current interest rates. Prices will correct. Sadly, it will cause a bunch of pain in the number of new units coming in the next few years.
 
evandyk said:
Oh, I'm aware of the problems, but those units are still being rented out, the landlords are just grumpy that the rents aren't paying both their equity and interest payments on their mortgage at current interest rates. Prices will correct. Sadly, it will cause a bunch of pain in the number of new units coming in the next few years.
Click to expand...
I would not be surprised if in the next two decades we increasingly see retrofits of these investor-focused buildings where several shoebox units are combined into two or three bedroom units that are more suitable for owner occupancy, especially families.


This fellow from ten years ago, see below is trying to talk people out of the idea.

torontorealtyblog.com

Combining Multiple Condo Units | Toronto Realty Blog

I’ve seen this done countless times, but I have never seen it done effectively. I’m sure there’s an old adage, or a saying, that explains something to the effect of, “It’s best use is for that which it was intended.”...
torontorealtyblog.com torontorealtyblog.com
 
Last edited:
Admiral Beez said:
I would not be surprised if in the next two decades we increasingly see retrofits of these investor-focused buildings where several shoebox units are combined into two or three bedroom units that are more suitable for owner occupancy, especially families.
Click to expand...
While I would love to see this happen so families have better urban housing options, I just can't see a market where this is viable, unless there's a severe downturn. The terrible investor units of today are just priced too high to add construction costs on top.

The other issue is that it's not just the unit layouts that aren't conducive for family living, but many buildings don't have amenities for families or poor elevators ratios, etc. So combining smaller units only solves part of the problem.
 
It’s mostly just not feasible. A lot of these buildings will fall to demolition sooner than later or convert to hotels.
 
What do they become? The current old buildings at least have architectural charm, and are quite large. In 50, or even 20 years from now, a lot of these buildings will become "slums".. some would say places like ICE condos are already there.
 
toaster29 said:
What do they become? The current old buildings at least have architectural charm, and are quite large. In 50, or even 20 years from now, a lot of these buildings will become "slums".. some would say places like ICE condos are already there.
Click to expand...
The big issue will be with the floor to ceiling window condos. The half life of the argon filled seals is only about 15 years, after that the seals fail, the insulation values plummet and then every unit owner is hit with a special assessment to replace all the windows, which can cost millions $ per building. This was a known problem over a decade ago, but we kept building them.


 
Admiral Beez said:
I don’t think any high rise condo tower has ever been demolished in Toronto. I expect the current inventory will be here for 100 years.
Click to expand...
Not yet but we may see poorly built condos fail and of the owners can’t pay the special assessments they will sell and the building may fall into disrepair. The older buildings built ~ pre-2010 are much better quality.
 
lead82 said:
Not yet but we may see poorly built condos fail and of the owners can’t pay the special assessments they will sell and the building may fall into disrepair. The older buildings built ~ pre-2010 are much better quality.
Click to expand...
I don't think I've ever seen footage of a glass clad condo being demolished. I would assume all the exterior of the condo would need to be stripped.
 
It’s too early. We may see mass glass facade replacements or other major exterior repairs. Demolition will be a last resort if the owners can’t cough up the funds to repair.
 
I have a question: will the likely rate cut next week have a noticeable effect on the real estate market? Is it enough or are more needed?
 
www.thestar.com

Toronto’s new condo sales plunge 57%, hit 27-year low in ‘catastrophic’ drop

The 3,159 new units sold in the GTHA in the first half of 2024 represent a 72 per cent decline compared to the 10-year average, according to a report.
www.thestar.com www.thestar.com
Paywall free: https://archive.is/uEa3v

I'll say it again. Make a product your customer base both wants and can afford. Instead developers are making condos for a market of micro-investor units and million $ luxury multi-bedroom units that largely no longer exists. This is nuts, when what the market wants and can afford is 2-3 bedroom units for either rent or purchase below $500k for middle income families in well-planned communities integrated with parks, transit and walkable schools (that are open to new enrollment). And stop referring to dens/nooks as "bedrooms" in your listings - if it doesn't have a door and a window to the outside, it's not a bedroom. And keep the monthly condo maintenance fees to a minimum by limiting or omitting the pool, gym, hobby rooms, sports courts, in-house theatre and other unnecessary amenities.

Make $500k (or less) condos with 2-3 bedroom units to house the hundreds of thousands of new families emigrating to Toronto each year. That's what the market wants and can afford. With a $50k down payment, according to the government mortgage calculator, a $450k 25-year mortgage at the current 6.6% would have a monthly payment of about $3k. Of course rates will go up and down over the term, but we must not assume a return to the free money of the condo boom.

Meanwhile, on realtor.ca there are only fifty units with 3 bedrooms below $500k. So, how can developers make a profit making 2-3 bedroom units people can both want and afford to buy or rent?
 
Last edited:
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. What happens when the demand side and supply side are too far apart? Volume collapses, which is what we are seeing.
 
You must log in or register to post here.

Back
Top