CN Tower
Banned
I suspect the rainbow boy's comments were made in jest.
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Baby, we got a bubble!?
- Thread starter simuls
- Start date
I suspect the rainbow boy's comments were made in jest.
Roy G Biv
Senior Member
Sure.
The unit was vacant 2 months.
It took 2 weeks to sell (privately). I only marketed within the existing building, at minimal cost (a flyer).
The old rent I had locked in for 4 years netted me about +$400/month.
I was dangling it at a rent that would only net me $200/month, and nothing even close to a bite after 4 weeks. However, I knew there was sale interest, so I decided to sell it and maybe dive back in when some bargains start appearing over the next few years. It pains me, because it was a great unit.
Radio City - 27th floor
Amazing South view of downtown
1083 sq/ft
2 bed + 2 bath + den
Fully upgraded with gas: stove, fireplace rough-in and bbq.
1 parking + 1 locker
$575,000
The unit appreciated at about 4%/year, but I made some nice dough off rent. I probably could have made 5-10k more if I waited another week or two for more interest, but this was a nice clean transaction.
CN Tower said:
Yes, and now this post completes my elaborate episode of trolling...
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CN Tower
Banned
My error. Why the sarcasm?
What was this unit renting for out of curiosity?
This phenomenon will be multiplied across the spectrum into the foreseeable future and will no doubt have a significantly negative impact on downtown condo pricing going forward.
What was this unit renting for out of curiosity?
This phenomenon will be multiplied across the spectrum into the foreseeable future and will no doubt have a significantly negative impact on downtown condo pricing going forward.
KA1
Senior Member
cdr108, please go to The Globe and Mail website. In the search box, type rosenberg and you will be taken to various articles by Rosenberg.
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cdr108
Senior Member
???
what am I looking for?
========
KA1, never mind ... i think i know why you gave me the info ...
there was a misunderstanding/miscommunication with my earlier comment ...
i meant to say i can't find the article that i read, which indicated the # of mortgages teetering on default, etc
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Condo George
Active Member
Activity is picking up folks this past week in the resale market and long line ups at the new launch of Ocean Club condos on the west waterfront, which I dont sell Etobicoke to investors but some find value there.
Gold spot $1315 approx, for those here following my posts, I shared that the only stock I own is High River Gold mines, take a peek at the chart on this one HRG
I am doing an open house today and tomorrow at 712 Shaw st. Semi detached home listed at $639,900 pls come by and say hello and chat about the market
Gold spot $1315 approx, for those here following my posts, I shared that the only stock I own is High River Gold mines, take a peek at the chart on this one HRG
I am doing an open house today and tomorrow at 712 Shaw st. Semi detached home listed at $639,900 pls come by and say hello and chat about the market
simuls
Senior Member
I heard that activity is picking up and then also caught that retarded HOT PROPERTY show, but a little too late to really get the numbers. He did say something like a 14% increase in home prices vs a year ago though. Is that correct or am I high, cause mid month, we were down .2% from August and a 14% rise seems like a large number unless numerous, very expensive properties sold and skewed the average.
interested
Senior Member
Hi guys,
I have been away for 3 weeks and just spent a bit of time glossing over the past comments since about mid September.
It is interesting not to have read anything for 3 weeks and see there is not much changed. A bit like a soap opera of past which when you looked at it a year later you felt like everything had stayed the same. ( Same characters, story line, plot )
I have a few comments. I hope Ka1 will have shed a tear that I was not writing the past 3 weeks or else I shall be jealous of Condo George.
I would like to echo the fact that the world is awash in money now produced by the central banks and that this stimulus will ultimately have to be withdrawn. If this does not occur, we will either get inflation/hyperinflation or we will get significant currency devaluation in those countries that do not take corrective action. Now, this may make the country with devalued currency's real estate "cheap" to buy as a foreigner but who wants to buy an asset increasing in value on one hand with that increase being wiped out by a devaluing currency.
If the central banks do start removing the massive stimulus, then with less money available surely with the same or larger quantity of real estate available, it along with other assets will decrease in value, not increase further.
CG, it is not a question in my mind that a correction in R/E prices has to occur. R/E prices must based on Fundamentals as so eloquently pointed out by Simuls, CN Tower and others on this forum. Just because there has been irrationality to present, does not mean that it will correct immediately or that it makes sense that it continue. Unfortunately, the nature of irrationality and bubbles are that when they occur, everyone seems shocked and then explain it away in hindsight. The chorus is growing that things are not sustainable. Does this mean the market will follow logic? Eventually it has to but we may have another year of more for the correction or we may not.
Traditionally, developers do make mistakes as well and have been late to adjust to the trends. Remember, a condo is a 3-5 year advanced decision. Witness: Reichmann's arguably the greatest investors in Real estate of all time ultimately going under due to Canary Wharf. I recall reading that when asked at the launch, one of the Reichmann's stated that they expected a recession, the question was whether there would be more than one over the lifetime of the project. Despite this insight, the end result was beyond anything anyone anticipated and it shows that cycles eventually occur and those that ignore them do so at their peril.
Rationally and fundamentally real estate is overpriced at present. This does not mean we will have an imminent correction or a "popping of the bubble." However, it does imply that there should and eventually must be a correction of pricing to once again take fundamentals and affordibilty back into the equation.
On a personal note: I predicted the real estate "correction of 1989" in April of 1988. I did not realize how far the down turn would be and for how long however. That, I got very wrong believing it would take about 2 years instead of the 7 years for prices to stabilize/start to rise again. Then too people were lining up to buy property soley on the basis of "flipping" before completion with no thought of how to carry if rents decreased from present levels. Unless you are prepared to sit on the investment now for 5 years, I believe the easy money days of the past are now gone just as routine expectations of double digit returns annually from other investments is over. I realize other brighter individuals than myself know how to get this, I just am risk averse.
By way of another example, I sold a property in Florida in 2003 when prices "doubled" in 2 years. I was wrong as it continued to increase until 2006 and I was left scratching my head and frankly upset at how wrong I had been. Today, that property is worth less than what I sold for in 2003. I point this out not to say that I was brilliant. In fact, for 3-4 years, I began to question if there was a "new normal", that argument always put forth for explaining away non logical facts. The experience humbled me as I watched what turns out in hindsite to have been irrationality continue until 2006-2007.
My point with these 2 examples is simply this: Eventually fundamentals must take over and there are simply too many headwinds going forward to allow for price increases to continue. So, unless prepared to be a landlord and accept present, possibly decreased rents, one should not be buying at all in this market unless for personal use/need in my view. Personal use property, as stated by others and I concur with, is a decision about more than just "investment potential" but also should be analyzed from a rational point of view.
Once again, glad to be back and hope to participate usefully in the discussion going forward.
I have been away for 3 weeks and just spent a bit of time glossing over the past comments since about mid September.
It is interesting not to have read anything for 3 weeks and see there is not much changed. A bit like a soap opera of past which when you looked at it a year later you felt like everything had stayed the same. ( Same characters, story line, plot )
I have a few comments. I hope Ka1 will have shed a tear that I was not writing the past 3 weeks or else I shall be jealous of Condo George.
I would like to echo the fact that the world is awash in money now produced by the central banks and that this stimulus will ultimately have to be withdrawn. If this does not occur, we will either get inflation/hyperinflation or we will get significant currency devaluation in those countries that do not take corrective action. Now, this may make the country with devalued currency's real estate "cheap" to buy as a foreigner but who wants to buy an asset increasing in value on one hand with that increase being wiped out by a devaluing currency.
If the central banks do start removing the massive stimulus, then with less money available surely with the same or larger quantity of real estate available, it along with other assets will decrease in value, not increase further.
CG, it is not a question in my mind that a correction in R/E prices has to occur. R/E prices must based on Fundamentals as so eloquently pointed out by Simuls, CN Tower and others on this forum. Just because there has been irrationality to present, does not mean that it will correct immediately or that it makes sense that it continue. Unfortunately, the nature of irrationality and bubbles are that when they occur, everyone seems shocked and then explain it away in hindsight. The chorus is growing that things are not sustainable. Does this mean the market will follow logic? Eventually it has to but we may have another year of more for the correction or we may not.
Traditionally, developers do make mistakes as well and have been late to adjust to the trends. Remember, a condo is a 3-5 year advanced decision. Witness: Reichmann's arguably the greatest investors in Real estate of all time ultimately going under due to Canary Wharf. I recall reading that when asked at the launch, one of the Reichmann's stated that they expected a recession, the question was whether there would be more than one over the lifetime of the project. Despite this insight, the end result was beyond anything anyone anticipated and it shows that cycles eventually occur and those that ignore them do so at their peril.
Rationally and fundamentally real estate is overpriced at present. This does not mean we will have an imminent correction or a "popping of the bubble." However, it does imply that there should and eventually must be a correction of pricing to once again take fundamentals and affordibilty back into the equation.
On a personal note: I predicted the real estate "correction of 1989" in April of 1988. I did not realize how far the down turn would be and for how long however. That, I got very wrong believing it would take about 2 years instead of the 7 years for prices to stabilize/start to rise again. Then too people were lining up to buy property soley on the basis of "flipping" before completion with no thought of how to carry if rents decreased from present levels. Unless you are prepared to sit on the investment now for 5 years, I believe the easy money days of the past are now gone just as routine expectations of double digit returns annually from other investments is over. I realize other brighter individuals than myself know how to get this, I just am risk averse.
By way of another example, I sold a property in Florida in 2003 when prices "doubled" in 2 years. I was wrong as it continued to increase until 2006 and I was left scratching my head and frankly upset at how wrong I had been. Today, that property is worth less than what I sold for in 2003. I point this out not to say that I was brilliant. In fact, for 3-4 years, I began to question if there was a "new normal", that argument always put forth for explaining away non logical facts. The experience humbled me as I watched what turns out in hindsite to have been irrationality continue until 2006-2007.
My point with these 2 examples is simply this: Eventually fundamentals must take over and there are simply too many headwinds going forward to allow for price increases to continue. So, unless prepared to be a landlord and accept present, possibly decreased rents, one should not be buying at all in this market unless for personal use/need in my view. Personal use property, as stated by others and I concur with, is a decision about more than just "investment potential" but also should be analyzed from a rational point of view.
Once again, glad to be back and hope to participate usefully in the discussion going forward.
KA1
Senior Member
Hey Interested,
I am glad, and I am sure others are glad as well, that you are back to the forum.
No. I did not shed tears for you simply because you had not informed us about your intended departure. I had assumed that having said all that you had to say about the current state of economy and its impact on R/E prices in the future, you had decided to take a back seat and let others say whatever they have to say. Now that you are back, I did shead a tear or two -- all that were left after crying for Condo George. However, these tears were from the joy of knowing that you are back and that we will benefit from your words of wisdom in the future.
Now that you have expressed your thoughts about R/E prices in the future, that is downward, tells us, do you still intend to go ahead and complete your purchase of a unit in Shangri-la or just, simpoly, walk awayfrom the deposit?
I am glad, and I am sure others are glad as well, that you are back to the forum.
No. I did not shed tears for you simply because you had not informed us about your intended departure. I had assumed that having said all that you had to say about the current state of economy and its impact on R/E prices in the future, you had decided to take a back seat and let others say whatever they have to say. Now that you are back, I did shead a tear or two -- all that were left after crying for Condo George. However, these tears were from the joy of knowing that you are back and that we will benefit from your words of wisdom in the future.
Now that you have expressed your thoughts about R/E prices in the future, that is downward, tells us, do you still intend to go ahead and complete your purchase of a unit in Shangri-la or just, simpoly, walk awayfrom the deposit?
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interested
Senior Member
I will definately keep my Shangrila purchase. I expressed before that I think it may well be around the 2008 price or possibly back to what I paid for the unit when ready (May 2007 price) and that will not in any way affect my decision.
Obviously, I hope I am wrong and prices do not adjust that much and that through a combination of some price adjustment and time, prices will recover without too much of a drop. However, as I expressed, I think price increases are a thing of the past for the next few years at least.
Besides, in Canada, one cannot walk away from the deposit as the builder can come after you if prices are lower and he sells below what he had from you as a deposit. It is afterall a contract in which both parties agreed to terms and he would be in a position to apply to the courts to make himself whole. Whether he would chose to do so or not would be up to him.
Besides, real estate again as we discussed is a long term investment, not to be confused with a short term quick kill to get out with profit. This existed the last 10-15 years and now we will give back some of that gain, I anticipate.
Now, if Shangrila got to $350/sq. ft like some have speculated, I'd have to reconsider. However, from its present approximately $1150/sq. ft to $350/sq. ft would result in pain for almost every home owner in the country as virtually every mortgage with this type of drop would be under water. If it went to $600/sq. ft., I wouldn't be happy but I don't think I would lose sleep( and that is close to a 50% drop, or comparable to the drops in markets in the US where prices were up 200% in the years from 2000 to 2006 or more than double our increases over the same time).
Being realistic, I don't expect that to happen. But $850/sq. ft that I paid, sure could well happen.
One further point: those buying with solely flipping intent and no ability to close will have to sell. That will drive down prices if alot of them are present in Shangrila or any other development. My guess is that given that Shangrila's bylaws do not allow for condo rentals under 6 months minimum, most who bought did so knowing they would not be able to rent nightly/monthly as in Trump. I suspect therefore those individuals in Shangrila would be on a little more solid a footing than perhaps someone who bought Trump with the reliance on say 50 to70% occupancy of their suites on a daily/monthly basis. The true investor will not walk if his investment is 5 to 10% underwater (so say above $765/sq. ft for my unit especially if he can rent out and cover his costs unless he believes the trend will be further downwards. Please realize from $1150 to $765 we are talking about a 33.5% decline from the present price being asked. That would already be a very significant correction (beyond most of the US correction with the exception of places that had the mammoth increases).
What about you Ka1. I doubt based on your previous posts/comments that you will be getting rid of that view at Aura any time soon.
Obviously, I hope I am wrong and prices do not adjust that much and that through a combination of some price adjustment and time, prices will recover without too much of a drop. However, as I expressed, I think price increases are a thing of the past for the next few years at least.
Besides, in Canada, one cannot walk away from the deposit as the builder can come after you if prices are lower and he sells below what he had from you as a deposit. It is afterall a contract in which both parties agreed to terms and he would be in a position to apply to the courts to make himself whole. Whether he would chose to do so or not would be up to him.
Besides, real estate again as we discussed is a long term investment, not to be confused with a short term quick kill to get out with profit. This existed the last 10-15 years and now we will give back some of that gain, I anticipate.
Now, if Shangrila got to $350/sq. ft like some have speculated, I'd have to reconsider. However, from its present approximately $1150/sq. ft to $350/sq. ft would result in pain for almost every home owner in the country as virtually every mortgage with this type of drop would be under water. If it went to $600/sq. ft., I wouldn't be happy but I don't think I would lose sleep( and that is close to a 50% drop, or comparable to the drops in markets in the US where prices were up 200% in the years from 2000 to 2006 or more than double our increases over the same time).
Being realistic, I don't expect that to happen. But $850/sq. ft that I paid, sure could well happen.
One further point: those buying with solely flipping intent and no ability to close will have to sell. That will drive down prices if alot of them are present in Shangrila or any other development. My guess is that given that Shangrila's bylaws do not allow for condo rentals under 6 months minimum, most who bought did so knowing they would not be able to rent nightly/monthly as in Trump. I suspect therefore those individuals in Shangrila would be on a little more solid a footing than perhaps someone who bought Trump with the reliance on say 50 to70% occupancy of their suites on a daily/monthly basis. The true investor will not walk if his investment is 5 to 10% underwater (so say above $765/sq. ft for my unit especially if he can rent out and cover his costs unless he believes the trend will be further downwards. Please realize from $1150 to $765 we are talking about a 33.5% decline from the present price being asked. That would already be a very significant correction (beyond most of the US correction with the exception of places that had the mammoth increases).
What about you Ka1. I doubt based on your previous posts/comments that you will be getting rid of that view at Aura any time soon.
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CN Tower
Banned
Best post of the year Interested. Objective, poignant and honest. Thank you for sharing your thoughts.
You and KA1 should be aware (if you are not already) that there are about 1/2 dozen Shangrila units listed for sale on MLS. While the early flippers is a troubling sign on one hand, the outrageous asking prices, >$1500psf should be comforting to you on the other.
In my opinion the downside risk to pricing in ultra-luxe buildings such as this equate to the approximate value per square of the construction loan, likely 70%-75% of the project cost and probably more like 60% of your purchase price. Stated otherwise, if you purchased for $850psf then the developer's cost is probably in the $750psf range and the construction lender is probably exposed to 75% of that amount. So your floor price is somewhere around $560-$600psf in the event that the market comes unwound with a full blown correction.
My prediction is more stagnation than sudden hit. I believe that new projects will stall and start to shut and that existing and resale product will become extremely difficult to unload and sales prices will slowly come down over course of the next several years.
interested
Senior Member
I am intrigued that some have come on the market already since the agreement states the developer must agree to units for sale. I would think unless they were agents early with this clause that they could MLS list that they are doing so and at risk of voiding their agreement. For interest, some of the prices were around $700/sq. ft but also others ranged to well over $1000/sq. ft when I bought. My unit being one of the smaller + having a 200 sq. ft. west face balcony/terrace(the largest balcony until one gets to floors 50 and above) I believe resulted in higher price for my unit. The $1500/sq. ft price refers to present prices on the Estates which are large and on floors 51 and above I would believe.
Can you post the links to the MLS listings as I would be most intrigued to see what is actually being offered. I have noted a couple of units on Craig's list but no price listed.
As you and I both know, one can ask whatever one wishes. What they buyer will pay is what is relevant.
I always felt that I was relatively safe with my purchase point for the longer term since the 50th floor and above units are well over $2 million. With the exception of the 800 sq. ft units (which I think may be investors), I doubt alot of people bought the 1100 sq. ft and over to speculate. However some may and I guess we will see what ultimately happens. I am in early enough and at a price below $1 million in a building where the average of most units( as they are larger) is around $1.2 to $1.5 million on lower floors (20 to 50) and from $2 to $6million on upper floors(excluding the $16 million dollar penthouses.).
I thank you for the comment about my post and appreciate the sound math which I can understand in your calculations about a price floor. While I would not like a $300000 loss, I could handle this. That said, from current pricing that would be a 50% decline and for this to occur, the rest of the current market would have to decline at least 35-40% which would hit alot of owners of all properties.
I agree with the stagnation but I do expect price declines to 2008 levels again (prior to the meltdown).
One additional point. In Florida in Hollywood, Trump Towers with agreement of their lenders lowered prices from $700 to about $550/sq. ft. I believe they were as high as $850-1000 / sq. ft. initially.
Can you post the links to the MLS listings as I would be most intrigued to see what is actually being offered. I have noted a couple of units on Craig's list but no price listed.
As you and I both know, one can ask whatever one wishes. What they buyer will pay is what is relevant.
I always felt that I was relatively safe with my purchase point for the longer term since the 50th floor and above units are well over $2 million. With the exception of the 800 sq. ft units (which I think may be investors), I doubt alot of people bought the 1100 sq. ft and over to speculate. However some may and I guess we will see what ultimately happens. I am in early enough and at a price below $1 million in a building where the average of most units( as they are larger) is around $1.2 to $1.5 million on lower floors (20 to 50) and from $2 to $6million on upper floors(excluding the $16 million dollar penthouses.).
I thank you for the comment about my post and appreciate the sound math which I can understand in your calculations about a price floor. While I would not like a $300000 loss, I could handle this. That said, from current pricing that would be a 50% decline and for this to occur, the rest of the current market would have to decline at least 35-40% which would hit alot of owners of all properties.
I agree with the stagnation but I do expect price declines to 2008 levels again (prior to the meltdown).
One additional point. In Florida in Hollywood, Trump Towers with agreement of their lenders lowered prices from $700 to about $550/sq. ft. I believe they were as high as $850-1000 / sq. ft. initially.
interested
Senior Member
CN Tower, I found the listings on University avenue on the MLS. I am quite sure that the 5 listings all with 1 agent including one of the penthouses is being done to attract buyers with Shangrila's approval or to attract buyers that she can go in as a buyers agent. These prices look like current prices to me. I know that as of 1 month ago, neither penthouse had been sold so I do not believe that one has been bought and relisted immediately. The $16,880,000 price I believe is the asking price from Shangrila or may have a couple of hundred thousand to cover her commission/expenses for listing.
Ka1 will be more interested in Aura since he is in the sky with the birds (floor 59) far above me and I suspect alot of us.
Ka1 will be more interested in Aura since he is in the sky with the birds (floor 59) far above me and I suspect alot of us.
klb86
Active Member
I've been browsing the UT forums for 4-5 months now but never bothered signing up until now. I just wanted to say excellent post, best reply I've read on here.
I'm sure some of you have seen the CBC documentary Meltdown? the last episode just aired last thursday. If not, it's a 4 part (45 mins each) doc about the 2008 crash, how it affected different countries, job losses, banks, housing market etc.. It was really intesting.
You can watch it online if you missed it.
http://www.cbc.ca/video/#/Shows/Doc_Zone/Meltdown/ID=1588435215
KA1
Senior Member
As I have said before, I did not buy a unit in AURA to flip it over -- unless, of course, someone offers me a price that is too good to turn down. My cost is $700.00 SQ.FT. I bought this unit to live in. And, unless my personal financial situation deteriorates unexpectedly-- it is now comfortable-- I will not sell the unit to become a refugee in my own town.
All my life, I have been, among other things, kicked around, insulted and ridiculed. This will be my last, and only, oportunity to sit near the window of my unit on 59th floor ( there is no balacony at that level) and look down upon others during the last few years of my life. I have no intention whatsoever to miss that opportunity (grin).