Baby, we got a bubble!?

[AKS]

Agreed that purchase in RoCP with 100-200k downpayment not really a stable bullet proof segment. However, the purchaser will not walk away easily if mortgage rates inch up a bit.

To muddy the waters a bit more, the unit was listed and sold by an individual with Chinese/vietnamese sounding name. Could be that some one from Vancouver or mainland China bought the unit with full payment and no mortgage.

I don't understand your logic. The units bought in Aura are purchasers with asian names hence they must be rich and pay with full payment. But the units bought at CP with many Asian names are poor Asians who put low down payment and mortgaged over their heads. What logic is that?

Are the Asians who bought at Aura also people who intend to live there while all the Asians who bought in CP going to rent it out?

 

[KA1]

I don't understand your logic. The units bought in Aura are purchasers with asian names hence they must be rich and pay with full payment. But the units bought at CP with many Asian names are poor Asians who put low down payment and mortgaged over their heads. What logic is that?

Are the Asians who bought at Aura also people who intend to live there while all the Asians who bought in CP going to rent it out?

To start with, my apologies for ruffling feathers. I should have not have made reference to a particular ethnic community.

As has been said on this thread in earlier posts by R/E agents that most of the buyers from overseas, wealthy individuals with savings, buy a unit with substantial down payment and, at times, with payment in full. Any increase in interest rates or slow down in economy will not make them dispose of the property. On the other hand, most of the units in places like CP and other such developments have been purchased by investors/flippers with low down payment, who rent the units to help with cash flow. As such, they are more likely to sell the unit if interest rates go up causing, as said in post 3011 above, a bubble in that end of the market.

 

[AKS]

To start with, my apologies for ruffling feathers. I should have not have made reference to a particular ethnic community.

As has been said on this thread in earlier posts by R/E agents that most of the buyers from overseas, wealthy individuals with savings, buy a unit with substantial down payment and, at times, with payment in full. Any increase in interest rates or slow down in economy will not make them dispose of the property. On the other hand, most of the units in places like CP and other such developments have been purchased by investors/flippers with low down payment, who rent the units to help with cash flow. As such, they are more likely to sell the unit if interest rates go up causing, as said in post 3011 above, a bubble in that end of the market.

Sorry to burst you bubbles. Nowhere is safe from investors. There are rentals at ROCP too I believe. As other buildings downtown. The old buildings are probably the safest bet because the investors have probably sold and left. Newer buildings are mostly investor driven IMO. The idea of actually purchasing a condo by locals for pre-construction to live hasn't really set in until recently. Most buy built ones if they buy. And at these prices, I don't think many locals will buy them unless they have a lot of cash or mortgage themselves over the head.

As for Asian investors, they've been here for a long time. Not just recently. And not just Chinese either. I've seen South East Asians around the presentation centres as well. Like when I walked out of Aura with info package, and when I walked past Infinity. They weren't Chinese. I wouldn't try to mix two topics into one and make assumptions that all Chinese have money and pay in full. Neither would I make assumptions that only Chinese with deep pockets buy in Aura/ROCP area and poor investors buy in CP and surround area to rent. For example, while I was at ICE condos, there was an old Taiwan lady who bought 7 units there without blinking an eye. I think her family must be really rich and could probably buy in cash.

As for investors, not all are investors at CP. I've talked to people who own units there or will own units. Some intend to occupy them. And I wouldn't look down on all people who live at CP as not having enough money to pay most or all of their purchase.

 

[KA1]

As for investors, not all are investors at CP. I've talked to people who own units there or will own units. Some intend to occupy them. And I wouldn't look down on all people who live at CP as not having enough money to pay most or all of their purchase.

To start with, this is a general discussions thread. No question of looking down upon anybody.

There is a separate thread on this Board -- City Place.... Not too long ago, someone had made a post there stating that he/she rents a unit in CP and most of the individuals living there that he/she knows are renters and that whenever he/she decides to buy a unit, it will not be in CP.

 

[cdr108]

To start with, this is a general discussions thread. No question of looking down upon anybody.

There is a separate thread on this Board -- City Place.... Not too long ago, someone had made a post there stating that he/she rents a unit in CP and most of the individuals living there that he/she knows are renters and that whenever he/she decides to buy a unit, it will not be in CP.

there has been much posted in news paper articles citing R/E agents that at least 50% pre-con is bought by investors, with some even going up as high as 70% !

IMO your assumption that Asian/Chinese ROCP buyers are rich end users and pay in full vs. Asian/chinese CP buyers are flippers/investors with low down payments is clouded by the fact that you purchased at Aura.

 

[redfirm]

Question: what's the rent on this $500K 2 brdrm RoCP condo ? What are monthly fees? Property tax? "Other" expenses?

Please now do the math.

Whether I'm a "poor" local or wealthy foreigner - does this make sense to buy and rent out in the long run?

 

[KA1]

IMO your assumption that Asian/Chinese ROCP buyers are rich end users and pay in full vs. Asian/chinese CP buyers are flippers/investors with low down payments is clouded by the fact that you purchased at Aura.

CDR, It seems that I have hit a 'raw' nerve somewhere for you to bring up my purchase of a unit in AURA.

I would like to point out that I did not, or at least did not have any intention, to single out any particular community. The point I was trying to make was that individuals with money -- and here, using various posts by R/E agents, I did point to overseas Chinese investors -- buying a unit with substantial money down or even with full payment. For those individuals, an upward increase in interest rates or shortening of amortization term will not make difference. They will not panick and try to cash out. There will be no bubble in that end of the market. It is the individuals who have bought units with low down payment, variable mortgage and 35 year amortization and who are basically relying on rental income to carry the unit -- CP is one of the developments -- who will feel the heat of rising interest rates and try to unload their units causing bubble in that end of the market.

Without taking the bait and reveal too much of my personal life, I would like to address this issue of my purchase of a unit in AURA.

I signed for a unit in RoCP 1, where I live, in November 2001 at $ 310 per sq/ft. R/E market at that time was ' down in the dumps'. I was told by seasoned R/E agents to not to rush into buying under the economic conditions then prevalent. I chose to ignore the advice. And I am glad that I did. In 2006 I got the possession and in 2007 I got the ownership. At that time, again, contrary to rhe asdvice of smart 'Financial Planners' I cleaned out my RRSP, paid my dues to the 'Ceaser' and paid for the unit in full. At that point, it did not matter as to what happened to the economy and the interest rates. In March 2008, units in AURA ignoring the Executive and sub-penthouse floors, were sold ast $ 500 sq/ft at VIP agents event and $ 550 sq/ft to invitied souls. Prices of the resale units in RoCP are now at around $ 650 sq.ft. When I move into AURA, I wil be trading my unit in RoCP for a unit in AURA. And if the prices keep going up -- even at 1/2% -- I will have a small change left for round of draft. In effect, I will be moving into AURA at $ 310 sq/ft

Redfirm, considering your back ground -- that is, a tax accountant -- I am a bit surprised at your posts about not justifying purchasing a unit at 500k, even with 100k down, considering low rents. In real easte, you do make money not by renting -- although it helps with the cash flow to get as much rent as possible --but by from increase, on long term basis, in the value of real estate. You have to have staying power. If someone had purchased a unit anywhere, except in 'cookie cutter' developments,- and to not to inflame the passions, I will not mention any particular development -- and had kept it empty, that individual will be well ahead, financially. Then, there are intangibles on which you can not put any price. In the Summer, I walk to Dundas Square, watch open-air movies and re-live my long gone youth -- minus, of course, the girlfriend at that time.

There is a separate thread on CP. One can go there and read various posts.

CDR, you seem to be wringing your hands at having missed the opportunity of buying a unit in AURA. Rrelax. As soon as construction reaches level 1 of the residential units -- and it is expected to be in the Fall -- Canderel will allow 'assignments'.

Cheers.

 

[redfirm]

QUOTE: Redfirm, considering your back ground -- that is, a tax accountant -- I am a bit surprised at your posts about not justifying purchasing a unit at 500k, even with 100k down, considering low rents. In real easte, you do make money not by renting -- although it helps with the cash flow to get as much rent as possible --but by from increase, on long term basis, in the value of real estate. You have to have staying power. If someone had purchased a unit anywhere, except in 'cookie cutter' developments,- and to not to inflame the passions, I will not mention any particular development -- and had kept it empty, that individual will be well ahead, financially. Then, there are intangibles on which you can not put any price. In the Summer, I walk to Dundas Square, watch open-air movies and re-live my long gone youth -- minus, of course, the girlfriend at that time.

Sorry, I totally disagree with your statement. Are you talking about rental r/e or principal residence? I think you are mixing both since you're mentioning "intangibles of walking to Dundas Square".

I'm talking strictly about investment / rental. Numbers just don't make any sense right now to me.

Rental has to produce net profit that beats, or at least equals, the best other option you can create with your money.

Long term increase in r/e is also an interesting concept. What is long term? 100 years? Or more likely 10-15 years so you can actually enjoy and realize the benefits of your investment since people do not normally live 150 years.
10-15 years: prices can go up, go down, or stagnate - the last two scenarios you are defitely losing money, and you can still lose with the first one. Just ask people in US, Ireland and Spain.

 

[redfirm]

^
In addition to what I wrote above - your rich Asian investors will not buy and hold for 30,40 or 100 years. They like it now,
but God forbid their yield from these condos does not produce annual increase that they expect based on the recent history ...
Buying and not counting on rent, just pure increase in r/e value, is highly speculative business. Coupled with leverage .... hmmm

 

[cdr108]

CDR, It seems that I have hit a 'raw' nerve somewhere for you to bring up my purchase of a unit in AURA.

....

CDR, you seem to be wringing your hands at having missed the opportunity of buying a unit in AURA. Rrelax. As soon as construction reaches level 1 of the residential units -- and it is expected to be in the Fall -- Canderel will allow 'assignments'.

Cheers.

sorry to burst your bubble, but i'm not interested in any of the RoCP projects.
the awkward floorplan layouts and design weren't to my liking, nor was the negative cashflow for investment purposes ... to each their own.

congratulations on your purchase and low entry price.
as an upgrade on your principal residence it makes financial sense as long as you will be selling the unit in RoCP.

 

[KA1]

^
In addition to what I wrote above - your rich Asian investors will not buy and hold for 30,40 or 100 years. They like it now,
but God forbid their yield from these condos does not produce annual increase that they expect based on the recent history ...
Buying and not counting on rent, just pure increase in r/e value, is highly speculative business. Coupled with leverage .... hmmm

Redfirm, as long as you don't take it personally, I would still repeat what I said in an earlier post -- coming from a tax accountant , your posts surprise me. You seems to be a ' spring chicken' determined to take the world on your own terms. Take it from this old hog: cookie does not always crumble the way you want it to crumble.

CDR, who cares about negative cash flow and unacceptable flloor plans? What is important is the total return on the investment.

On a deposit of $ 52,000 in November 2001-- given over the next 12 months -- there was an increase in the price of the unit of $ 30,000 on the date of possession in July 2006. Since the date of possession, till January 2011, prices have gone up by appx $ 225,000. Go figure out return on the equity --- regardless of the negative cash flow and undesirable floor plans. Take into consideration tax on capital gains as well. Even if someone had kept the unit empty, return on equity would still be fantastic -- as long as it is the right location.

 

[KA1]

http://www.nationalpost.com/news/Kelvin+Browne+Understanding+downtown+condo+boom/4543564/story.html

 

[klb86]

Has anyone else been taking a look at some of the real estate statistics from other "major" canadian cities?

I just took a quick look. Calgary, (March) year over year prices are down. Edmonton, (February) YOY prices are down. Vancouver, (February) YOY prices are up. Victoria, (March) YOY prices are down. Ottawa, (February) YOY prices are up. Monteal, (February) YOY prices are up.
Sales YOY are down pretty much everywhere though. Alberta seems to be taking the biggest hit so far.

 

[redfirm]

Redfirm, as long as you don't take it personally, I would still repeat what I said in an earlier post -- coming from a tax accountant , your posts surprise me. You seems to be a ' spring chicken' determined to take the world on your own terms. Take it from this old hog: cookie does not always crumble the way you want it to crumble.

CDR, who cares about negative cash flow and unacceptable flloor plans? What is important is the total return on the investment.

On a deposit of $ 52,000 in November 2001-- given over the next 12 months -- there was an increase in the price of the unit of $ 30,000 on the date of possession in July 2006. Since the date of possession, till January 2011, prices have gone up by appx $ 225,000. Go figure out return on the equity --- regardless of the negative cash flow and undesirable floor plans. Take into consideration tax on capital gains as well. Even if someone had kept the unit empty, return on equity would still be fantastic -- as long as it is the right location.

Yes. You did this in 2001. If you read my comments again you'll see that I keep saying RIGHT NOW. There is a huge difference between 2001 and 2011. I've been following this thread since it started. But please note that I joined the conversation just recently. Why? Because I didn't think that we've reached the top 3 years ago. Right now we are there imho. So why would anybody pay $500K to have a negative cash flow and not have a chance to see the same appreciation in
value like you did from 2001 to 2011 is my question to you?

As far as spring chicken.... well, I wish.

 

[KA1]

Another, and perhaps the last post on this point.

In March 2008, AURA units , ignoring Executive and sub-penthouse flloors, were sold to VIP agents at $ 500/sq.ft and, a few days later, to the 'blessed' invitees at $ 550/sq/ft. Resale units in RoCP are now selling at $ 650/sq/ft. Individuals who bought units in AURA have already made their money. If you were to look at various posts in this thread around Nov/Dec 2010, you will notice individuals forecasting 'blood-bath' in the market around this time. This has not yet happened. 3 years from now, individuals who buy now-- at the right location and not in C...- will have made their money, although not at the rates in the past.

Time to move on to another topic.