Baby, we got a bubble!?

[interested]

Wow, I just came across this at the Ritz:
If one goes to the MLS; Realtor.ca site:
MLS®: C2319857
2303 sq.ft. price: $1585000 with South views: $688/sq.ft.!!!
Granted this is luxury and very large and expensive with condo fees of $2222/month and I am sure taxes of another $1000+/month but still.
FLoor 35. Views of the lake.

I have to think this is an early buyer who will lose money on his purchase!!!
This is a great buy for an end user who is willing to pay the upkeep. This is elegance at below mid range pricing.

 

[cdr108]

Wow, I just came across this at the Ritz:
If one goes to the MLS; Realtor.ca site:
MLS®: C2319857
2303 sq.ft. price: $1585000 with South views: $688/sq.ft.!!!
Granted this is luxury and very large and expensive with condo fees of $2222/month and I am sure taxes of another $1000+/month but still.
FLoor 35. Views of the lake.

I have to think this is an early buyer who will lose money on his purchase!!!
This is a great buy for an end user who is willing to pay the upkeep. This is elegance at below mid range pricing.

damn, if only one could divide the space into 2 or 3 units.

 

[cdr108]

From Jamie Johnson at REmax condos plus.
I think this is a great post and actually makes a lot of sense to me. While the resale may correct down, and I realize he has a "vested" interest to talk down PRECON; I believe the blog is well written and would be interested in comments from some of the others including Ka1 in view of his comments and my last post.

UNDERSTANDING THE COMING CHANGES TO THE TORONTO CONDO MARKET
Posted on March 26, 2012 by admin

Remember that most sales in the resale condo market take place because of lifestyle changes and not economic changes. People buy condos for the space they need today – not for five years from now. And when Grandma dies, I have never heard an Executor ask me about the condo market and whether they should rent the property out for a year. It is always sell! Worried about those buyers with 5% down, not being able to afford their condo if interest rates rise? Worry not. All these buyers have five year locked in mortgages. Why? They qualified at their own mortgage rate (3%) versus the posted rate of over 5%. With a 25 year amortization, after 5 years, these buyers will have repaid 15% of the principal and will have 20% equity in the property even if it does not go up by one cent in five years! Think these people will walk from their property? Not likely.

There you have it. The resale condo market will continue to grow in size going forward. Lifestyle and continuing migration to Toronto will ensure that more and more people will want to live downtown. Prices will not increase like the past, but they surely won’t go down either!!
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i agree with most of what he said regarding pre-con prices, and who's buying, etc.
but i do have more concerns than he does regarding future prices.

how common is/was 3% for 5-yr fixed these past several years?

i know that not everyone pays the posted rate; however, i don't think ppl are/were getting such deep discounts, maybe 1% off the posted rate so 4+%. having a mortgage rate of either 3% or 5+ % makes a big difference in the amount of principal repaid over the 5-year term from 15% to only 11%.

granted, these individuals won't "walk" from their property if prices remain static; however, what happens if prices drop just a modest 10-15% in that time? all equity is wiped out. they may not have much options if they are underwater.

 

[macookie]

You really have shown great moral courage and strength by admitting that you have been wrong. Kudos to you

First it was interested. Now it is you. Let's see as to who follows next.

Without in any way trying to rub salt in the wounds, by staying on the sidelines, doom and gloomers have missed the boat. Perhaps, next time.

I want you to know that, as far as I am concerned, time was well spent arguing our respective positions.

It gave me the ideal diversion from my, at times boring, bean counting activities. By sticking to the computer and answering various posts almost immediately, Interested -- a retired individual -- was able to stay away from the path of his wife and thus avoid possible breakouts and, perhaps, even a breakup. I am sure others must have benefited from making various and regular posts for and against a possible 'bubble bust'.

Now that a possible bubble bust is out of the way, we need some other activity to engage in. Any idea what that could be?

I promise not to rub salt in your face... but five or six years down the line would really suck if the interest rates are much much higher... and most if not all of your equity is gone.

 

[KA1]

I promise not to rub salt in your face... but five or six years down the line would really suck if the interest rates are much much higher... and most if not all of your equity is gone.

The higher the interest rates go, the better is for me, personally. That's about all I would reveal my personal financial situation to you.

Think of a better missile to throw at me

 

[CN Tower]

The higher the interest rates go, the better is for me, personally. That's about all I would reveal my personal financial situation to you.

Think of a better missile to throw at me

Better yet think of other ways to self-improvement and personal achievement that do necessarily involve righteous indignation towards an anonymous Internet forum avatar. I find the 'personal' attacks ridiculous as they do nothing to advance ones own success. The G&M comments section is just loaded with vitriolic hatred towards achievers. It's like forums have become dens of disdain instead of venues for enlightened discourse.

Interested, Ritz units sub $700/sq. ft. is a troubling sign. I don't know what to make of it exactly but there's no doubt that it's a negative sign. The mitigating factors might be that the unit in question is poorly laid out, has no view, is cheaply finished, etc. Regardless, I just don't comprehend why anyone would buy at Lamb's skinny project on King next to the Alex with brand new super luxury units available here beginning for buyers. If I were Lamb I'd be very concerned.

 

[interested]

Better yet think of other ways to self-improvement and personal achievement that do necessarily involve righteous indignation towards an anonymous Internet forum avatar. I find the 'personal' attacks ridiculous as they do nothing to advance ones own success. The G&M comments section is just loaded with vitriolic hatred towards achievers. It's like forums have become dens of disdain instead of venues for enlightened discourse.

Interested, Ritz units sub $700/sq. ft. is a troubling sign. I don't know what to make of it exactly but there's no doubt that it's a negative sign. The mitigating factors might be that the unit in question is poorly laid out, has no view, is cheaply finished, etc. Regardless, I just don't comprehend why anyone would buy at Lamb's skinny project on King next to the Alex with brand new super luxury units available here beginning for buyers. If I were Lamb I'd be very concerned.

CNTower, if you go the realtor.com site and type in the MLS number C2319857 you will see pictures. Now pictures can be shot in a way to make a property look better or worse but it is a high floor; South view from which you see the lake. The finishes are not bad but in my view not much different than most upscale(mid to luxury market) finishes.

I think the issue is size: At about 2300 sq.ft.; it gets expensive. Also; condo fees of $2200 + taxes will mean about $3500/month with no mortgage. This is by far the lowest I have seen but you are right CNTower; if I was in the market for a large unit; high floor (35) with South lake views; this is definitely a buy in my view; even allowing for all the reservations I have about the Ritz as a project...no opening windows; 2 elevators to get to your suite; no private balcony space, less than ideal location on Wellington(I just don't like the street and what is around there though it is close to King Street which I view as much better than Wellington. Still.

I believe this is the only unit that cheap.

I read that over the past 60 days there have been only 2 sales. There is therefore about 30 months of inventory at The Ritz. I refer to truecondos,com site and Andy Lafleur's blog. He has noted there is also 28 months at the Lightbox condos on King based on sales absorption over the past 60 days. A very interesting piece.

He also talks of average rental rates at the Ritz of $3.84/sq.ft. I suspect a couple of very expensive rentals are pulling up the average. Again, units at the Ritz are large (1500 sq.ft. for 1 bedrooms) and 2 bedrooms closer to 2000+sq.ft. making them expensive proposals.

Perhaps it is that TO is not ready to spend $2million for large condos and will rather buy Single Family Homes or luxury townhomes?

Also, with further developer units priced at over $1000; with Trump having quite a bit of inventory( and hotel units in particular which I think will turn out to be a terrible investment in the long run) as well as SL coming to market(though at least in my case I have a smaller unit (1100 sq.ft.) making it relatively less expensive but still costly++; I don't think we will be seeing any profit any time soon; despite the developer asking well over $1200/sq.ft. now for the residual units. Incidently; at SL some of the Estate larger units of approximately2000 sq.ft. have been broken down to 1115 and 860 sq.ft. to sell. The problem is the Estate condo fees are estimated at 75 cents. I suspect that will be closer to 90 cents once done. At least the lower floors Residences are estimated at 54 cents which I think will be 65 to 70 cents. While more/sq.ft. than most of Toronto; I think 10-15 cents/sq.ft.(20-30%) for the luxury building is feasible whereas 30-35 cents is adding60-70% to the median new condo price and that is a lot.

SL's experience at the Estates level with the breakdown of some of the larger units suggests to me TO is not ready to spend $1000+/sq.ft. "en masse" for larger units costing $2 and $3 million.

Lafleur in his blog says anything over $800 / sq.ft. will be possibly in trouble in the downtown and $1000/sq.ft. in Yorkville is the only spot that will command over $1000K. Well; the 4S is well over $1500/sq.ft. so unless Yorkville ultra luxury will get $1500+; I think the discount in Yorkville will be similar to the discount in the Downtown core on a percentage basis. Personally I believe that we will have to wait out and see if the condohotel concept ends up being desirable once it is completed and lived in a couple of years or a failed experiment.

 

[interested]

^^^
In response to Ka1's post about interrest rates: I believe Ka1 is referring to the dilemma faced by most retirees/near retirees. The inability to invest our money and get any descent rate of return. Most of us "oldies" on fixed incomes (who do not have pension plans) prefer interest rates to go up (and consequently mortgage rates which would hurt real estate). But most retirees already have homes/condos with significant equity and would prefer I believe to have the interest revenue to live rather than see the equity in our homes increase since this is "dead money" and tied up. While it is great in the long run for our "equity" it does not help in the day to day living expense department.

 

[interested]

If I were Lamb I'd be very concerned.[/B]

I think CNTower the units Lamb will produce will not be 2300 sq.ft. I notice the cheapest 1 bedroom (and it is around 1200 sq.ft. is over 1 million dollars asking(we shall see what it sells for) but this is over $800/sq.ft. So smaller units just because of price point sell for more/sq.ft. I suspect Lamb's project will do very well. It is $700/sq.ft. range and I believe originally was closer to $600/sq.ft. Also, units are smaller and the location there on King street is much better. When completed; we will have to see what prices are. I think by the way the King Street Lamb project next to the Royal Alex will compare favourably with INDX and the other new one( the name escapes me) just recently released. (One is on Yonge street and the other is on Temperance). Perhaps someone could help me out.

 

[KA1]

CNTower, if you go the realtor.com site and type in the MLS number C2319857 you will see pictures. Now pictures can be shot in a way to make a property look better or worse but it is a high floor; South view from which you see the lake. The finishes are not bad but in my view not much different than most upscale(mid to luxury market) finishes.

I think the issue is size: At about 2300 sq.ft.; it gets expensive. Also; condo fees of $2200 + taxes will mean about $3500/month with no mortgage. This is by far the lowest I have seen but you are right CNTower; if I was in the market for a large unit; high floor (35) with South lake views; this is definitely a buy in my view; even allowing for all the reservations I have about the Ritz as a project...no opening windows; 2 elevators to get to your suite; no private balcony space, less than ideal location on Wellington(I just don't like the street and what is around there though it is close to King Street which I view as much better than Wellington. Still.

I believe this is the only unit that cheap.

I read that over the past 60 days there have been only 2 sales. There is therefore about 30 months of inventory at The Ritz. I refer to truecondos,com site and Andy Lafleur's blog. He has noted there is also 28 months at the Lightbox condos on King based on sales absorption over the past 60 days. A very interesting piece.

He also talks of average rental rates at the Ritz of $3.84/sq.ft. I suspect a couple of very expensive rentals are pulling up the average. Again, units at the Ritz are large (1500 sq.ft. for 1 bedrooms) and 2 bedrooms closer to 2000+sq.ft. making them expensive proposals.

Perhaps it is that TO is not ready to spend $2million for large condos and will rather buy Single Family Homes or luxury townhomes?

Also, with further developer units priced at over $1000; with Trump having quite a bit of inventory( and hotel units in particular which I think will turn out to be a terrible investment in the long run) as well as SL coming to market(though at least in my case I have a smaller unit (1100 sq.ft.) making it relatively less expensive but still costly++; I don't think we will be seeing any profit any time soon; despite the developer asking well over $1200/sq.ft. now for the residual units. Incidently; at SL some of the Estate larger units of approximately2000 sq.ft. have been broken down to 1115 and 860 sq.ft. to sell. The problem is the Estate condo fees are estimated at 75 cents. I suspect that will be closer to 90 cents once done. At least the lower floors Residences are estimated at 54 cents which I think will be 65 to 70 cents. While more/sq.ft. than most of Toronto; I think 10-15 cents/sq.ft.(20-30%) for the luxury building is feasible whereas 30-35 cents is adding60-70% to the median new condo price and that is a lot.

SL's experience at the Estates level with the breakdown of some of the larger units suggests to me TO is not ready to spend $1000+/sq.ft. "en masse" for larger units costing $2 and $3 million.

Lafleur in his blog says anything over $800 / sq.ft. will be possibly in trouble in the downtown and $1000/sq.ft. in Yorkville is the only spot that will command over $1000K. Well; the 4S is well over $1500/sq.ft. so unless Yorkville ultra luxury will get $1500+; I think the discount in Yorkville will be similar to the discount in the Downtown core on a percentage basis. Personally I believe that we will have to wait out and see if the condohotel concept ends up being desirable once it is completed and lived in a couple of years or a failed experiment.

Interested, as I said once before in reply to one of your earlier posts and I will say it again, could you, please, re-write your post in simple English and in not more than 3 sentences?

No insult intended here.

On a lighter side, condos at Ritz have no windows, difficult to get in and, more important, get out and they are going cheap. Wouln't it be cheaper for the Federal government to buy all available units and turn them into a prison rather than building new ones?

 

[interested]

Interested, as I said once before in reply to one of your earlier posts and I will say it again, could you, please, re-write your post in simple English and in not more than 3 sentences?

No insult intended here.

On a lighter side, condos at Ritz have no windows, difficult to get in and, more important, get out and they are going cheap. Wouln't it be cheaper for the Federal government to buy all available units and turn them into a prison rather than building new ones?

Hi Ka1: No insult taken.
Once again, I apologize for my "English".

That said, sometimes it is difficult to get a more complicated concept out "in not more than 3 sentences".

I believe most on the forum, yourself included, can comprehend more than a 3 sentence thesis. (Please appreciate this is meant to be light hearted sarcasm and not an insult).

 

[interested]

damn, if only one could divide the space into 2 or 3 units.

CDR:
I tried to address this indirectly my "verbal diarrhea"
post number 5332 with the additional thought. At SL; they are doing just that with some of the Residence floors.
Breaking down what was 5 units/floor and making it into 8/floor.
Personally I would be probably a bit miffed if I was on a floor with 2000sq.ft. expecting 4 neighbours with similar sized units to have an additional 3 neighbours and units at 800 to 1000 sq.ft.
I am not saying this as a snob by the way. I am saying it as an investor looking at my investment; exclusivity, and concluding the 800 sq.ft. unit is pulled up by me if I owned 2000 sq.ft. and I am pulled down by the smaller unit and the fact that I have increased by 60% the number of neighbours.

 

[KA1]

A thought for you, Interested.

The other day, someone had posted a picture of SL engulfed in the fog.

During the summer months, there are frequent cautionary warnings by the City on smog, air pollution and advise for seniors -- and you have posted yourself as a senior on this thread -- to stay indoors, balcony will be of use only for Winter camping. Wouldn't it follow that they prices of SL, probably, will go to the level of Ritz?

 

[interested]

A thought for you, Interested.

The other day, someone had posted a picture of SL engulfed in the fog.

During the summer months, there are frequent cautionary warnings by the City on smog, air pollution and advise for seniors -- and you have posted yourself as a senior on this thread -- to stay indoors, balcony will be of use only for Winter camping. Wouldn't it follow that they prices of SL, probably, will go to the level of Ritz?

I had not thought of that Ka1. I guess I won't be outside on those days. That said, it was the upper floors that where engulfed in the fog (by the way, they were fascinating pictures, weren't they?).

So, on those same days; won't your 62nd floor view be a non view? Also, won't you worry about small planes flying into you?
Just joking

 

[CN Tower]

I think CNTower the units Lamb will produce will not be 2300 sq.ft. I notice the cheapest 1 bedroom (and it is around 1200 sq.ft. is over 1 million dollars asking(we shall see what it sells for) but this is over $800/sq.ft. So smaller units just because of price point sell for more/sq.ft. I suspect Lamb's project will do very well. It is $700/sq.ft. range and I believe originally was closer to $600/sq.ft. Also, units are smaller and the location there on King street is much better. When completed; we will have to see what prices are. I think by the way the King Street Lamb project next to the Royal Alex will compare favourably with INDX and the other new one( the name escapes me) just recently released. (One is on Yonge street and the other is on Temperance). Perhaps someone could help me out.

Lamb's investor buyers will hit the panic button at the first sign of trouble.