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Good Market to buy now? Will it cool off?

t.o

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Hi, I am currently looking at re sale properties in the downtown area. They seem to be floating around $500 psf and up. Some even close to $600. I keep hearing people talking about the market cooling off. From what I am hearing, this is suppose to happen in a few months or in the fall 2010.

What do you guys think? Will the market cool off allowing to buy at a better price after the summer?

Pre Construction - There seems to be a handful of projects in the downtown area. I am finding prices of $550-570 psf for 1 project up to 800 psf for others. Will the developers drop there prices after the summer? Will the market cool off in the next 6 months?

All opinions welcome.
 

T.O.Condo

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I think there will be a small dip but nothing major. As for pre-construction condos, I don't think they will lower the price if builder makes 65% of the sale, if not they may give incentive upgrades. Once 65% is reached they can get loan from bank to start the construction. Builders have 2-3 years for price to adjust therefore they will not decrease the price but definitely won't increase it :). I do see more condos popping up in downtown but the core downtown condos will be the more stable during the down times.
 

t.o

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Thanks for the reply. I think your right. The re sale market may dip a little but I don't see some outrageous drop.

I am finding that pre construction is priced fairly high now. Can't find anything under $500 psf.
 

Kenny

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What do you guys think? Will the market cool off allowing to buy at a better price after the summer?

If you're gonna buy, buy now. The market's gonna cool off, but by "cool off" it means it's gonna stay level. You won't save much money by waiting. And it's going to be level for at least five years.

Buy now and lock into a nice and cheap mortgage while you can. Or wait five years.
 

interested

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I think there will be a small dip but nothing major. As for pre-construction condos, I don't think they will lower the price if builder makes 65% of the sale, if not they may give incentive upgrades. Once 65% is reached they can get loan from bank to start the construction. Builders have 2-3 years for price to adjust therefore they will not decrease the price but definitely won't increase it :). I do see more condos popping up in downtown but the core downtown condos will be the more stable during the down times.

I agree completely with this assessment. If there are increases, they will be minimal and similarly decreases will likely be limited despite all the doom and gloom. I would seriously wait and see if you can't pick up an assignment as by next year I would believe there will be people just wanting to get out rather than close. (No more money to spec on price increases and alot of people will start asking themselves if they really want to be landlords). You may be able I believe to pick up assignments at the 2007 tp 2008 prices when they were signed which will be lower than todays new condo prices
 

daveto

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For downtown Toronto condos? Net of inflation, down 15% by the end of 2011, and down 30% by the end of 2015.
 

KA1

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For downtown Toronto condos? Net of inflation, down 15% by the end of 2011, and down 30% by the end of 2015.

http://www.remaxcondosplus.com/property.php?propid=EXC4846&agent1=khan

I have pasted a link to listing of a 3 bedroom plus den apartment, including parking and locker, at Burano for $ 779,000. This is an assignment. According to the listing agent, developer's price for the same condo, without parking and locker, is $ 852,000 -- a difference of $ 73,000.

Another 3 bedroom plus den apartment in Burano, it seems without parking and locker, is an assignment sale at $ 695,000.

http://www.remaxcondosplus.com/property.php?propid=EXC4630&agent1=allinson

Is it a sign on things to come or there is something wrong somewhere?
 
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interested

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http://www.remaxcondosplus.com/property.php?propid=EXC4846&agent1=khan

I have pasted a link to listing of a 3 bedroom plus den apartment, including parking and locker, at Burano for $ 779,000. This is an assignment. According to the listing agent, developer's price for the same condo, without parking and locker, is
$ 852,000 -- a difference of $ 73,000.

Is it a sign on things to come or there is something wrong somewhere?

Ka, if you were trying to sell, you have to make it more attractive than what the developer is asking. Remember, this project probably was sold initially at least 3-4 years ago if not longer. My guess is there is 30%+ appreciation from original price. If the unit was say $650 to $700K, there is still a profit to me made. Possibly the person's situation changed and he is looking to get out breaking even after expenses. Maybe he is having trouble qualifying for a mortgage. Perhaps he was an investor (though less likely on a unit of this size). Maybe he just needs money quickly (divorce/ loss of job). the point being it does not mean something is wrong for the market in general.

That said, it does not mean things are right either as if we were in a market of just 6 months ago, he would likely ask $830+ to be much closer to the developers price but not with this amount of discount.

At this point we are all just guessing. You know my feelings from previous posts. I believe we may have some price correction but not to the extent of Daveto's predictions. Daveto's feeling is markedly more bearish than mine. That said, I think the people who will be in real trouble are those who bought at the end of 2009. I believe we may retest 2007-2008 prices so the 15% figure by end of 2011 may be possibly close though my guess is that this is the extreme of the range.

This listing just proves that one either has to entice end buyers to buy now (rapidly changing to a buyer's market) and that at these prices as posted elsewhere investment for rental does not make sense.
 

interested

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http://www.theglobeandmail.com/repo...w-and-resale-homes-is-cooling/article1596358/

Link to an article in Today's Globe and Mail -- Report on Business section

the article is not suprising and not alot of new information.

Talking about the 1264 sq. ft 3 bedroom +1 at Burano. the cheapest is $550/sq. ft. with no locker or parking. The next is over $600 with parking/locker. the builder is in the upper/mid $600's without locker/parking (therefore $700+ with these). So, it shows I think that there is resistance to these prices and that $550 to $600 is likely the market for now. If it falls 7% as in the article: $500 to $550/ sq. ft. range. Not a disaster.

Let's remember that alot of factors come into play which "economists" as wise as they are cannot account for. For eg. Geopolitical events, stock market rapid decline and a negative outlook will influence, sudden inflation/deflation unanticipated. Most importantly, events that just occur that no one is anticipating (eg. the Greek fiasco which is now a Hungarian fiasco). It is obvious in hind site but who even talked about these 2 countries in the past 2 years (ecept that hungary got an IMF loand over a year ago).
 

js97

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Can I just point out how many families can afford a 800k 'Condo' with probably a 700 dollar maintenance fee and another 400 dollar tax?

What market are they tapping too? the 40's executive with an annual income of 400k? How many of those do we have in Toronto?
 

lead82

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I have been wondering the same question.

How are people affording such insane prices. I am shocked at the amount of debt people are taking on and the prices that are being paid.
 

interested

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I have been wondering the same question.

How are people affording such insane prices. I am shocked at the amount of debt people are taking on and the prices that are being paid.

I agree that people are taking on alot of debt. When I travel to Europe and speak to people there, there are those who rent their whole lives. They choose to use their wages to enjoy life and prices in general are much higher. They never aspire to actual ownership of homes.

I believe that the prolonged low interest rate environment has encouraged people to buy based on what they could afford to carry rather than on what they could afford based on historical mortgage rates and in doing so (due to marketing by the r/e industry, mortgage brokers, banks, government) have lost site of the true cost of home ownership.

In North America, owning a home seems to be a right of passage and people just assume they will rent a few years and then buy and though I can't speak for others, I think one is almost viewed as "unaccomplished" if one doesn't own a home of some sort by age 35 or possibly even younger. Just my gut feeling but that is how it appears to me.
 

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