Where to invest in dt toronto?

[interested]

"TO is in its 17th year of straight gains, it cannot last. How long is long term for you 3,5 7, 10 years? The last downturn took 7 to start to recapture lost value."


That just isn't true. In 2008, after Lehman crashed, there were 2 bedroom bungalows in East York available for 325-330k (on the same street they had sold pre-Lehman for 75-100k more) and now they're close to 600k.

The market ebbs and flows and it is much more complicated than the average person or investor understands. Whether it's up, down, or flat, you should ALWAYS be able to make money.

The market will correct itself, because pricing has gotten insane. But some areas, certain builders, and some condo projects will be hit much harder than others. It's Darwinian, but the weak, stupid, and poorly informed will lose. But other will always win. When the market was super hot a chimp could have made money, anyone could have.

There may be some truth to what you say but the reality is that while you can make educated guesses, and that is what they are, in a highly priced market it is difficult to find good value. Also, even very smart savvy investors can get it wrong or events unexpected can happen. If not, all smart / informed people would be rich and that is just not the case.

I believe the reference to 7 years would have been the 1989 to 1996 recovery.

Canada had a minor correction in 2008, only held afloat by low interest rates, 40 year mortgage terms, and low requirements for down payments. The example of East York is clear in hindsight. The question is, how many knew enough or were gutsy enough to act...and of those, how many will honestly admit that most of their return was dumb luck. I say this because I don't think in 2008 one could reasonably have expected to have a 4 year almost 100% price increase. But then, maybe I am just not that smart.

 

[ISYM]

It is indeed true futurebuilder. I trust you only use the Lehman crash relevant to the global mortgage crisis as a point in time reference because it has none otherwise to the GTA's market which surged after a short 5 months in the doldrums. GTA's housing market has ended every calendar year for the past 16 higher than the year before.

Interested's point is correct, the 7 years referred to the crash of 1989.

"TO is in its 17th year of straight gains, it cannot last. How long is long term for you 3,5 7, 10 years? The last downturn took 7 to start to recapture lost value."


That just isn't true. In 2008, after Lehman crashed, there were 2 bedroom bungalows in East York available for 325-330k (on the same street they had sold pre-Lehman for 75-100k more) and now they're close to 600k.

The market ebbs and flows and it is much more complicated than the average person or investor understands. Whether it's up, down, or flat, you should ALWAYS be able to make money.

The market will correct itself, because pricing has gotten insane. But some areas, certain builders, and some condo projects will be hit much harder than others. It's Darwinian, but the weak, stupid, and poorly informed will lose. But other will always win. When the market was super hot a chimp could have made money, anyone could have.

 

[taal]

I'd hate to live there but I think the 905 (less MCC) may be more stable in the long term. That is new condos along Hi-way 7, again not MCC as it seems to react very similarly to NYCC (i.e. little new office growth). Downtown Markham potentially ? The prices aren't exactly low there though, but with all the job growth and new arena / retail and the like ...

Along the same lines in Toronto would be the waterfront, East Bayfront / West Donlands. Personally I think there's more potential growth here then the Downtown Markham but downtown Markham will be more stable while the waterfront may lose a lot in the near future (or gain) ... who knows ...

 

[W. K. Lis]

One could invest their money in a real estate company or manager, like Cadillac Fairview, and have their professionals do the work for you.

 

[ponyboy]

seems like most of the condo developers are privately held. i would love to be able to short some of these companies in the long run, but who knows how long it will take for a correction to unfold. David Rosenberg is now saying that borrowing will be ultra cheap until at least 2018.

why are so many developers privately held? How does an average investor get a piece of the action, or bet against these builders?

 

[UserNameToronto]

why are so many developers privately held?

My guesses:
- Many developers are backed by private equity and/or family wealth. These sources of funding are better able to "ride out" market gyrations, which is important because real estate is inherently cyclical. Wealthy families or closed end funds can, and do, delay plans for years in order to wait for a market bounceback.
- A public developer's management would be pressured by shareholders to deliver stable returns every quarter, which isn't possible or desirable given the "lumpy" nature of bringing projects to market. Developers of course face long periods of high costs and low revenue, followed by short bursts of massive sales.
- A public developer would have to disclose all sorts of information in their financial reporting. This would include land holdings, values, future plans, margins, and compensation to management. These disclosures might handicap a public developer vs. a private developer who can work in secret.

I'm not sure how you can play the Toronto Condo developer market directly, long or short. You can buy US property developers (this has been written about in the G&M a few times) or play related businesses ( such as Home Depot and other building centres ).

 

[ybountiful]

How about CityPlace? Does anybody have an thoughts?
I'd love to talk to somebody who has invested - or lived (or lives) there.

 

[neuhaus]

How about CityPlace? Does anybody have an thoughts?
I'd love to talk to somebody who has invested - or lived (or lives) there.

I have lived at Cityplace, helped my landlord find new tenants, and know of people who have invested there.
I generally don't think it's a great place to invest, but there are some pluses and negatives.

Pluses:
- Excellent central location, steps to everything.
- Could be purchased at a good deal.
- It is rich in amenities which appeals to young professionals and makes it easier to rent out.
- Often a go-to area for people looking to rent. Very easy and quick to find new tenants.
- Parking and lockers always in demand, so it is easy to rent them out to other residents if your tenants don't require them.

Negatives:
- Area tends to attract younger tenants which are not the most caring or responsible types, or don't fully understand the concept of living in a condo/communal environment.
- Poorer resale values ($/sq.ft.) due to huge amount of inventory and the cookie-cutter nature of the units.
- High resident turnover and high ratio of renters which means greater wear and tear of building, and increases in maintenance fees. Very little pride of ownership here.
- Poorer quality of Condo Board due to relative lack of resident owners.
- A number of buildings have experienced lawsuits by homeowners. Do your research on the history and performance of its property management.
- Questionable construction quality, especially with older buildings.

 

[ybountiful]

Thank you!

Thanks so much for this it's very helpful.
I would like to connect with a CityPlace resident willing to chat further about pros and cons of the development.
I'm working on a documentary about condo living.
Please contact me at:

Yvette@bountiful.ca

 

[Ryan_T]

I have lived at Cityplace, helped my landlord find new tenants, and know of people who have invested there.
I generally don't think it's a great place to invest, but there are some pluses and negatives.

Pluses:
- Excellent central location, steps to everything.
- Could be purchased at a good deal.
- It is rich in amenities which appeals to young professionals and makes it easier to rent out.
- Often a go-to area for people looking to rent. Very easy and quick to find new tenants.
- Parking and lockers always in demand, so it is easy to rent them out to other residents if your tenants don't require them.

Negatives:
- Area tends to attract younger tenants which are not the most caring or responsible types, or don't fully understand the concept of living in a condo/communal environment.
- Poorer resale values ($/sq.ft.) due to huge amount of inventory and the cookie-cutter nature of the units.
- High resident turnover and high ratio of renters which means greater wear and tear of building, and increases in maintenance fees. Very little pride of ownership here.
- Poorer quality of Condo Board due to relative lack of resident owners.
- A number of buildings have experienced lawsuits by homeowners. Do your research on the history and performance of its property management.
- Questionable construction quality, especially with older buildings.

Young people can make for a great community, stop focusing on the negatives.

Some of the negatives here can be fixed by select tenants taking leadership and communally rallying support for a better condo board. Realistically, only a few owners/tenants are on the board anyway. If we can get those few that do care to take charge and drive sustainable living practices for the rest, I think the area/building can really thrive.

Regarding lawsuits, as long as people are talking, and there's a goal in mind, some agreement might be reached.

 

[neuhaus]

Young people can make for a great community, stop focusing on the negatives.

Some of the negatives here can be fixed by select tenants taking leadership and communally rallying support for a better condo board. Realistically, only a few owners/tenants are on the board anyway. If we can get those few that do care to take charge and drive sustainable living practices for the rest, I think the area/building can really thrive.

I'm young myself (under 40), I'm not simply saying just because they are young they make for bad residents. Generally speaking they do not have as much experience living on their own, they may not own property or own property long enough to feel the pride of ownership. Some of the them are accustomed to being looked after or just spoiled and lazy and think that a condo is run like a hotel.
I currently sit and have sat on a number of condo boards and typically a good portion of these boards are made up of younger people who are very active and motivated and contribute postitively to the building. My point is being the importance and advantages of a building that has a high percentage of resident-owners. Only owners could serve on the condo board and vote on board issues.

When there is a large percentage of renters in a building, who may live there for a relatively short period of time, there is little support of residents as the community is rather transient with very little ownership, so there is little regard of preserving of improving home values as it doesn't concern tenants.

Cityplace has long been an easy target for being called a future ghetto, but after living here I found these thoughts unfounded and these points could even be said with many other large condo developments. It is certainly not a bad place to live, but it is definitely not for everyone and with any condo there are good points and bad points.

 

[blahblahblah]

Personally I think I would stretch to buy a freehold duplex somewhere. They come up I think. Condo rents have dragged prices up in older duplexes. I am thinking Beaches, Riverdale, such areas. Or rent the whole house. Was a time one needed to duplex to make sense of the model but I think there is demand for entire houses. But back to the duplex. They increase commensurate with house prices. They don't have condo fees. They are cheaper to run if one does as much on his own. And as I say, rents are being dragged up by condos. You need to provide a good modern product though.

 

[metroTO]

It seems like the best selling developments are along the Yonge Street subway line, which is somewhat understandable but I think it is overrated.
The selling prices are in the upper $600 to mid-$700 per sq.ft. which I think is over priced, but to the investor with these long completion dates and small units is ideal to park their money into. There are developments in great neighbourhoods which are amenity- and character-packed selling in the $600- and even $500-sq.ft. range, unfortunately many of these investors are not so familiar with the city and lured by developer's slick marketing campaign to buy into the newest condo development.

I really think to the end user and smarter first-time or low volume investor that it is wise to invest in more established and desirable neighbourhoods like the west end such as King West and around the Annex areas not so populated by generic mega high-rise developments.