Baby, we got a bubble!?

[simuls]

Normally, builders do not reduce the price of existing stock directly. They offer free upgrades up to a certain amount and/or low rate mortgage for a number of years.

This is incorrect, although it is a last resort. During the phenomenally slow period of Jan-April of last year, X condo dropped as much as $100 000 off their suites (they were promptly raised again by June), and many other builders did the same. It is, however, much more advantageous to offer even $50 000 worth of free upgrades as most upgrades have a markup of 500-1000% percent, so $50000 in free upgrades is equivalent to about $5000-$10000 off purchase price. I expect to see this happening again within 12 months. (Streetcar is now holding "info sessions" on why buying preconstruction condo's is a good idea - this is a leading indicator of a market quickly drying up).

While it's true there is some doubt in the market, the drop of the Cdn dollar has given the government a lot more room than it had even a month ago when fears of pushing it up would slow exports. I'd say .25% is pretty much guaranteed, and even a .5% is a 5-1 possibility. Urbandreamer is clearly dreaming the .75% and knows better - he's just hyperbolizing (I don't think that's word but I'm using it anyway!).

As for larger suites not selling - I'd disagree with the logic being used to discredit the theory that a dropping market will cool those sales. It is almost always advantageous to move up in a down market and considering the dearth of 1000 sq ft suites available vs the massive overstock of <600 ft ones, I'd expect the ReMax report to be correct. All of the people who bought these small suites need to move up or out and into a house and real estate purchasing while affected by market forces, isn't 100%. Considering how many people are in tiny units but love condos I'd expect this larger unit sector to vastly outperform the smaller units. Small units might even take a 25-30% hit, while the larger ones might only lose 10%. I understand I'm kind of contradicting my up/down market comment above, but when you get married, have kids, you need to move - regardless of the price/market.

 

[simuls]

Here's a link to John Pasalis's blog today titled "Is Toronto's Housing Market a Bubble?"

http://www.movesmartly.com/2010/05/making-sense-of-torontos-real-estate-market.html#more

I like John Pasalis as he's very fact oriented. I would add to his discussion a couple of things however. You also need to look not only at more regional numbers, but what segment of the market. Condos vs houses for eg. I don't think houses are particularly overpriced, but condos are, so any correction would be in this segment. Housing stock in the Toronto core is relatively fixed - there's not a lot of land (besides laneways) to build more houses, but there's tons of room for more condos to be built. I'd also add that the idea that a RE market can appreciate unchecked at 4% a year is insane and would lead to completely unaffordable housing very quickly. If, in 2008 we were at a peak and in 2010 we're at a higher peak, regardless of the fact it's only a 7% increase (on average not median), it's still too much after 15 years of appreciation.

 

[CN Tower]

I track the upper end of the Toronto housing market. In the past week alone I have noted an 11% spike in listings and far more off market deal chatter from my various sources. There are way more off market deals out there than you would think. I believe this is relevant data but the number is rather small so spikes can be somewhat misleading I suppose. Anecdotally, I also continue to see upper end properties (houses and condos) remaining unsold on MLS for extended periods which leads me to believe that the high end market has totally stalled. Granted there are some that have sold but I recognize many listing as permanent fixture on the MLS for what appears to have been many months. It is quite humorous to see some of the tricks that agents play to get their listing noticed. They re-list at a nominally different price so that the listing doesn't appear stale and they change photos periodically to give the appearance of a new listings. Tricks of the trade.

Time will tell...

An update:

Since I began tracking on April 8 the number of listings in the broad area that I track has increased 32.5%.

FWIW

 

[Kenny]

An update:

Since I began tracking on April 8 the number of listings in the broad area that I track has increased 32.5%.

FWIW

Thanks! Please keep us upated. Next month's TREB report will be interesting to see. I doubt that prices will fall, yet, since people are still buying. The "Days on Market" should shoot up a bit, though.

 

[Naveen]

Bubble my ass. The way Liberty Development built my condo, there's no way prices could ever go down

 

[KA1]

Bubble my ass. The way Liberty Development built my condo, there's no way prices could ever go down

I wish that you were to use a bit more appropriate language in your postings and not to burden us with your personal problems.

 

[Naveen]

This is not a personal problem and I'm sorry if you think that way. There were over 400 units Liberty Development made in my complex, EKO Markham. They also have other developments in the GTA and similar problems exist not only in my unit. If the unit and building construction is so poor than it's the entire community that loses and the actual unit owners are the bigger losers. The owners wear the financial and investment loss. In my opinion if people were more educated and knew the outcome, they probably wouldn't have purchased from this builder and would have rather invested their hard earn money in another project with a more reputable builder. Don't hate because I have the guts to stand up for what I believe in. Maybe and just maybe by sharing my experiences and taking the time to show others what I have been through and how Liberty Development treats their customers, people may think twice before purchasing from them.

What would you do if you owned this condo and received a response like that from the builder?

 

[PinkLucy]

I'd be working with a lawyer, not posting the same thing in multiple threads on a forum.

 

[interested]

I'd be working with a lawyer, not posting the same thing in multiple threads on a forum.

I agree Pink Lucy.

Naveen, clearly you believe you genuinely have a case. That said, unfortunately it is expensive and the only ones who win in the end are the lawyers.

Sometimes, a registered letter suggesting you will persue the matter, and then if necessary, followed by a lawyer's letter requesting satisfaction may be all it takes. However, clarify in your own mind how far you want to go as there are no guarantees you willl get satisfaction, and there is the risk you will end up taking on a hefty legal bill. Sometimes it is better to absorb one's losses, have them fix it and if still unsatisfactory, see what it would cost to have your own trades. However beware if you do it yourself you may void your Tarion warranty so you may be best just to keep on top of the builder and ensure a mutually acceptable result. I don't think you will be happy at the end, perhaps understandably but sometimes it is just best to move forward.

The educational value, lesson learned, is that you have to go with a reputable builder. I can't comment on your particular situation but the pictures do seem poor. However, I would reserve judgement until I saw the remedy they effected. It is

I would also if I were you call Tarion myself. Just because they say to the builder this is acceptable, remember the builder presents a set of facts. You should present your side as well to Tarion if you have not already done so. Whether it will do any good, who knows, but at least that only costs you your time.

Your frustration is coming through by posting on all the various threads. I can only assume you are hoping by doing this that the builder will catch wind of this and remedy the situation with you to drown out the bad publicity but I would be a bit worried you find he comes after you for damages stating you are defaming him.

All the above said, it is sad that your first home experience should have had the obvious result it has had on you.

Good luck going forward.

I would suggest you have made your point with all the posts and perhaps post if/when you get some satisfaction going forward.

Hope the above suggestions are of some help.

 

[KA1]

http://www.libertydevelopment.ca/news/pressreleases/index.html

I have pasted a link to Liberty Development's EKO project in Markham for whatever it is worth.

 

[ome]

I agree Pink Lucy.

Naveen, clearly you believe you genuinely have a case. That said, unfortunately it is expensive and the only ones who win in the end are the lawyers.

Sometimes, a registered letter suggesting you will persue the matter, and then if necessary, followed by a lawyer's letter requesting satisfaction may be all it takes. However, clarify in your own mind how far you want to go as there are no guarantees you willl get satisfaction, and there is the risk you will end up taking on a hefty legal bill. Sometimes it is better to absorb one's losses, have them fix it and if still unsatisfactory, see what it would cost to have your own trades. However beware if you do it yourself you may void your Tarion warranty so you may be best just to keep on top of the builder and ensure a mutually acceptable result. I don't think you will be happy at the end, perhaps understandably but sometimes it is just best to move forward.

The educational value, lesson learned, is that you have to go with a reputable builder. I can't comment on your particular situation but the pictures do seem poor. However, I would reserve judgement until I saw the remedy they effected. It is

I would also if I were you call Tarion myself. Just because they say to the builder this is acceptable, remember the builder presents a set of facts. You should present your side as well to Tarion if you have not already done so. Whether it will do any good, who knows, but at least that only costs you your time.

Your frustration is coming through by posting on all the various threads. I can only assume you are hoping by doing this that the builder will catch wind of this and remedy the situation with you to drown out the bad publicity but I would be a bit worried you find he comes after you for damages stating you are defaming him.

All the above said, it is sad that your first home experience should have had the obvious result it has had on you.

Good luck going forward.

I would suggest you have made your point with all the posts and perhaps post if/when you get some satisfaction going forward.

Hope the above suggestions are of some help.

Interested,

Very nicely written and you have some very good points. Sometimes the lawyer route is difficult because not only is it expensive but there is not guarantee and I also imagine the builders pockets are much better lined than the purchasers. I hope you can agree that the remedy offered by the builder in their own letter is pretty ridiculous. To cover the damages with skins instead of replacing the cabinets sounds idiotic and unreasonable keeping in mind this sounds like a a new condo. Why were second hand materials used in the first place? Who oversaw the construction of the unit and is it fair to assume they are unprofessional and unskilled? This sounds similar to the case of "United breaks Guitars". Read about it on Youtube. hahaha. But please Naveen, I agree with the others that posting in multiple threads irritates people and I suggest sticking to one tread. Good luck with this.

 

[interested]

Interested,

Very nicely written and you have some very good points. Sometimes the lawyer route is difficult because not only is it expensive but there is not guarantee and I also imagine the builders pockets are much better lined than the purchasers. I hope you can agree that the remedy offered by the builder in their own letter is pretty ridiculous. To cover the damages with skins instead of replacing the cabinets sounds idiotic and unreasonable keeping in mind this sounds like a a new condo. Why were second hand materials used in the first place? Who oversaw the construction of the unit and is it fair to assume they are unprofessional and unskilled? This sounds similar to the case of "United breaks Guitars". Read about it on Youtube. hahaha. But please Naveen, I agree with the others that posting in multiple threads irritates people and I suggest sticking to one tread. Good luck with this.

OME,
Your points are well taken. However, sometimes a cover with skins may look exactly like new. I realize this isn't a perfect solution and of course one should expect a new cabinet. that said, one must be practical. If Naveen can't get new from the builder, he should perhaps cut his losses by having the skins put on and seeing if the result is acceptable. It is very possible that only Naveen will know there ever was a problem, not because he can see it after the fix, but because it may be so good that one not knowing of the issues would not be able to tell there even is/was a problem.
The above said, I agree it is sad that he finds himself in this unfortunate predicament. the practical question, once one has vented, is how does one go forward from here

 

[onfence]

I'm curious: why is Naveen's developer offering to do repairs in November(!) when I assume that these prbs are happening now? Do they take that long to repair defects?

 

[PinkLucy]

I think it's November of last year, since Nov. 2 is not a Friday this year. And if all this went on that long ago, I wonder why Naveen is posting about it here and now. I assume frustration has a lot to do with it, but it has certainly caused this thread to go off topic

 

[KA1]

OME,

the practical question, once one has vented, is how does one go forward from here

despite utter frustrations with the builder, never use inapproriate langugage in the posts, not to risk a defamation law suit by the developer and go to the link in my post # 836 above. With all due respect, we know only one side of the story and even then, only the story that we have been told and it might not be the entire story.

And don't forget, this thread is about prices going up and down and not about shoddy construction.

For Heaven's sake, go somewhere else.