agreed. many of the weaker developments will never break ground. bad news for the people who'll have their money all tied up for years.MG,
It will have a significant impact on development projects in the city, even without considering if buyers believe real estate, and particularly condo's, are a better investment over the next couple of years than say stocks.
The main issue here is project financing. More than a year ago, before the credit crisis began, you could probably obtain financing for a development project from 1 bank, with 55%-65% of pre-construction sales and a small amount of equity. Today, its very different to obtain financing. First, banks are limiting their exposure to any one project to a certain cap. That means developers must go to 3, 4, or 5 different banks to obtain the amount they require. Second, they are requiring up to 75% of pre-construction sales, totalling 80% of revenue (you can't just sell all the one bedroom's). Three, you have to have a significant amount of equity involved. And finally, none of the above matters unless you can establish a proven track record.
I would predict that many of the new high rise developers who were trying to enter the market and have opened to the public will never build, because they can't obtain financing. Some of the better capitalized and well known developers may pounce and buy out some of the projects, or they may just use their cash to help develop their own. Either way, it equals not as much development.
But, I would think that the established builders - Tridel, Daniels, Menkes, Minto etc will go ahead, although much slower. Especially if they can build with their own money.
Define 'weaker developments'? I have an unit at 101 Sherbourne, The Modern, that's scheduled to break ground some time soon after reading what HDltd said I don't know...agreed. many of the weaker developments will never break ground. bad news for the people who'll have their money all tied up for years.
there's some good buying opportunities out there. value investors having a field day.
UD, you been around I am sure so you must know when there is blood in the streets, that's the time to buy. Not bragging, but nibbled at some financials (not banks) and oil yesterday and got some healthy returns today. But that's just one day, I know.Yep, I already yanked all my cash out...sitting in gold and socks. I predict at least one Canadian bank will fail within the next 300 days.
Thankfully, I was away from my trading desk when the market tanked today. Good buying op's coming....
RIM, $60 support held today...if markets continue to tank, here comes $40.