Cancelled projects?

[Hydrogen]

With average condos costing $400 x 750 square feet or $300,000 how is an average salaried worker able to afford one anymore? Not talking about your personal experience, I'm talking about the whole market. My pals at the other end of my office floor will tell you how crazy things got in the last few years. Big trouble ahead.

I was talking to someone who was considering buying in FashionHouse, but was reconsidering due to the price of $399,000 for about 750 square feet or so. When that project first started selling, the price probably looked good with the cost of condos seeming to always be going up every year. Now it appears as a fixed price at the peak of the market.

 

[TOareaFan]

So are condos pal. That's why we're in a whole whack of trouble!

With average condos costing $400 x 750 square feet or $300,000 how is an average salaried worker able to afford one anymore? Not talking about your personal experience, I'm talking about the whole market. My pals at the other end of my office floor will tell you how crazy things got in the last few years. Big trouble ahead.

Well, assuming a 25% downpayment and a 6% mortgage on a 25 year amortization.....you would need family income of $65k a year to afford a conventional mortgage for that unit. So an average couple each earning a little over $30k per year could "afford" that unit.

 

[Quanttrader]

Well, assuming a 25% downpayment and a 6% mortgage on a 25 year amortization.....you would need family income of $65k a year to afford a conventional mortgage for that unit. So an average couple each earning a little over $30k per year could "afford" that unit.

You're nuts! That's like $2500 per month in housing expenses for a couple netting $4000 per month in income after tax! Two people! For something that rents for $1,800 per month? That's affordable?

This stupidity is what got the world in so much trouble! A couple that only makes $65,000 should not be plunking $75,000 (if they got it) into a condo in today's market! That's the problem! Buy bonds people! For damn sakes!

 

[TOareaFan]

You're nuts! That's like $2500 per month in housing expenses for a couple netting $4000 per month in income after tax! Two people! For something that rents for $1,800 per month? That's affordable?

This stupidity is what got the world in so much trouble! A couple that only makes $65,000 should not be plunking $75,000 (if they got it) into a condo in today's market! That's the problem! Buy bonds people! For damn sakes!

I was just using the CMHC definition of affordibility and that is that housing can take up to 30% of your gross income.....sorry if you don't like their definition but that ratio has served the residential mortgage business pretty well for a long time.

Few homeowners compare the cost of their housing to what they could rent it out for...in my experience...they are buying something with the hope of building equity.

 

[cdr108]

I was just using the CMHC definition of affordibility and that is that housing can take up to 30% of your gross income.....sorry if you don't like their definition but that ratio has served the residential mortgage business pretty well for a long time.


Well, assuming a 25% downpayment and a 6% mortgage on a 25 year amortization.....you would need family income of $65k a year to afford a conventional mortgage for that unit. So an average couple each earning a little over $30k per year could "afford" that unit.

30% of gross income is supposed to cover mortgage, maintenance fees and property taxes.

According to CMHC, for the couple making $65,000 pa their maximum monthly mortgage payment is $1233.

 

[TOareaFan]

30% of gross income is supposed to cover mortgage, maintenance fees and property taxes.

According to CMHC, for the couple making $65,000 pa their maximum monthly mortgage payment is $1233.

50% of maintenance fees......what is the payment on a $225,000 mortgage at 6% on a 25 year amortization.

 

[Quanttrader]

50% of maintenance fees......what is the payment on a $225,000 mortgage at 6% on a 25 year amortization.

Who cares what CMHC tell you? Are you not a grown up? Make decisions yourself! CMHC wants people to own homes. It's their business.

Sorry, but if I made $4000 after tax, on a 2 income family yet, I wouldn't want to have fixed housing costs of $2000-$2200 when I could rent a larger apartment for $1,500-$1800. And if I had $75000 saved up you want me to blow it on a new condo? That's irresponsible. Totally.

What happens in Year 5 when the reset rate is now 7%? 8%? Oh yeah, my salary went up 50% in that time right? And real estate always goes up right?

Thanks for showing us all why the markets crashed around the world. Hopefully we learn now.

 

[TOareaFan]

Who cares what CMHC tell you? Are you not a grown up? Make decisions yourself! CMHC wants people to own homes. It's their business.

Sorry, but if I made $4000 after tax, on a 2 income family yet, I wouldn't want to have fixed housing costs of $2000-$2200 when I could rent a larger apartment for $1,500-$1800. And if I had $75000 saved up you want me to blow it on a new condo? That's irresponsible. Totally.

What happens in Year 5 when the reset rate is now 7%? 8%? Oh yeah, my salary went up 50% in that time right? And real estate always goes up right?

Thanks for showing us all why the markets crashed around the world. Hopefully we learn now.

These are the "normal" ratios that have worked for decades (not just the recent housing boom) 30% of your gross income to housing and 25% downpayments have created the home ownership rates that we have in this country.....of course some would prefer to rent and that is fine......it is not what I want that matters it is just a set of calcs and ratios that has worked just fine for decades and I was just responding to the question of wether a $300k unit is "affordable" and, by long standing definitions/ratios, it is as affordable as the $150k unit was 20 years ago.....that is all I am saying.

 

[cdr108]

50% of maintenance fees......what is the payment on a $225,000 mortgage at 6% on a 25 year amortization.

These are the "normal" ratios that have worked for decades (not just the recent housing boom) 30% of your gross income to housing and 25% downpayments have created the home ownership rates that we have in this country.....of course some would prefer to rent and that is fine......it is not what I want that matters it is just a set of calcs and ratios that has worked just fine for decades and I was just responding to the question of wether a $300k unit is "affordable" and, by long standing definitions/ratios, it is as affordable as the $150k unit was 20 years ago.....that is all I am saying.

Sorry, I wasn't specific enough, just wanted to make people aware that it has to cover other costs besides just the mortgage payment.
$225,000 mortgage @ 6% / 25 year amortization = $1440.

Yes, the normal ratios of 30% gross income to housing and 25% downpayments do work and all should be following it. Unfortunately, not all lending standards are equal, nor do all borrowers tell the truth or follow that formula.

 

[Quanttrader]

These are the "normal" ratios that have worked for decades (not just the recent housing boom) 30% of your gross income to housing and 25% downpayments have created the home ownership rates that we have in this country.

Tell that to the couple with $65,000 in income that gets laid off next month and has a $250,000 mortgage to pay!

 

[Hydrogen]

Quanttrader, I think we are in some trouble, but frankly Toronto seems to be much stronger as a market to date than any US city and stronger than many Canadian cities, in terms of market activity. No one, I think, knows what yet is to come.

I'd say that new proposals will continue to be introduced and, in some parts of town, will continue to sell reasonable well. There are some smart developers who appear to have an idea who their market is, and understand how much new product that market will support.

I wouldn't be surprised if someone like Freed introduced a new building in spite of the economic situation. His projects and his locations appear to be in high demand. But introduce a poorly thought-out project in the same area, and it just might die a slow death.

My rumour-mongering side still says Parc will be cancelled. Most of the banners in King West have already vanished.

 

[TOareaFan]

Tell that to the couple with $65,000 in income that gets laid off next month and has a $250,000 mortgage to pay!

Again, that has historically been a situation that people and banks have had to deal with....it is not pleasant (for either side of the conversation) but people who "stretch" themselves and then find their reality has changed have found this problem for a long time ......it is nothing new in today's environment.

Anyway, I think we have inadvertantly hijacked this thread away from Cancelled Projects to "Residential Mortage Underwriting 101"....probably we should just agree to disagree and let people get back to discussing cancelled projects.

 

[torontofcfan]

Anyway, I think we have inadvertantly hijacked this thread away from Cancelled Projects to "Residential Mortage Underwriting 101"....probably we should just agree to disagree and let people get back to discussing cancelled projects.

I agree with you TOareaFan, ultimately we will all know how accurate our predictions are over the coming year.

Assuming your background I wouldn't be surpised if I've sat across the table from you. I know a few a developers who have slowed down their projects, and do not want to use the dreaded word "cancel" at least not yet.

Saturday's game was a great finale...cant wait 'till next season.

 

[TOareaFan]

I agree with you TOareaFan, ultimately we will all know how accurate our predictions are over the coming year.

Assuming your background I wouldn't be surpised if I've sat across the table from you. I know a few a developers who have slowed down their projects, and do not want to use the dreaded word "cancel" at least not yet.

Saturday's game was a great finale...cant wait 'till next season.

A developer who is a TFC supporter.....if we haven't met, we should!

 

[Riverdale Rink Rat]

Leslieville Lofts dead

http://network.nationalpost.com/np/...ille-lofts-dead-brad-lamb-goes-to-plan-b.aspx

Bringing this back to the original purpose of the thread: Brad Lamb has put a stake in LL after (gasp!) an OMB ruling that went against a developer!

He seems rather bitter (sorry, 'puzzled'). Frankly, the current hodge-podge of crappy auto shops on that block should be razed. Looks like a much scaled down project will be proposed.