Baby, we got a bubble!?

[Eug]

See p.m.

Thanks. Responded.

 

[Ric]

I'm back!!! Did you all miss me?

 

[Eug]

So, interested and I have been having a mini-discussion via pm. One thing I don't necessarily agree with is his statement that single family homes appreciate more than (older) resale condos, although sometimes that may be true.

I'd have to say it really depends on the location and type of condo, vs. the location and specifics of the single family home, etc.

Judging by comps, my SFH in the Scarborough Bluffs has gone up less percentage-wise than sub $400000 condos downtown in the last five years. I'd say my home has realistically appreciated by about 20-25% since summer 2007, and I'm including a reno'd basement in that 25%, as well as new AC. Without the reno, I'd say more like 20% if I'm lucky, or slightly less. However, part of the reason in my case may be because my SFH is one of the higher cost ones in the neighbourhood.

For a cheaper condo downtown, they've gone up maybe 25%, and sometimes more.

BTW, my downtown condo was purchased 1998, and I took possession in 2001. I sold summer 2007. During that period from 1998 to 2007, it went up 85%. That's an annual increase of 6.4%.

 

[PinkLucy]

I'd have to say it really depends on the location and type of condo, vs. the location and specifics of the single family home, etc.

The old real estate mantra: location, location, location.

My downtown Toronto real estate appreciated considerably better in the space of a few years than my Northern Ontario real estate did over 30 years!

 

[Eug]

The old real estate mantra: location, location, location.

My downtown Toronto real estate appreciated considerably better in the space of a few years than my Northern Ontario real estate did over 30 years!

Agreed.

However, even in the same neighbourhood, it would depend as well. Obviously there aren't too many detached homes downtown. However, in areas further north but still in the original city of Toronto, some of the more upscale condos have done very well in terms of price appreciation. Some say too well, in the context of this thread.

I think the problem with condos is the higher priced ones. You can realistically expect a nice $350000 condo in a nice building to appreciate with the market. Not so much though with a $1 million condo even in a nice area and a nice building.

 

[Kenny]

One thing I don't necessarily agree with is his statement that single family homes appreciate more than (older) resale condos, although sometimes that may be true.

I'd have to say it really depends on the location and type of condo, vs. the location and specifics of the single family home, etc.

/just playing devil's advocate

Some condos don't age well (e.g. CityPlace). If you design the condo in a way that it appeals to trends without an eye to functionality, it can get a dated look very quickly. Whereas, "boring, but solid" keeps value over the long term a little better.

Houses keep their value better because they tend to be less trendy looking on the outside. You can also make renos to the interior. A condo will rarely do renos to the lobby, halls, elevators, etc, so even if you put in new floors and a new kitchen in the unit itself, it might still suffer from the overall "old" impression that the areas outside of the unit might make.

Also, with a house, there's always the option to bulldoze and build a new home.

That being said, if the neighbourhood goes to crap, it really doesn't make a difference whether it's a condo or house...

 

[Eug]

Some condos don't age well (e.g. CityPlace).

I've never really liked CityPlace, but how have they been doing in terms of price appreciation?

If you design the condo in a way that it appeals to trends without an eye to functionality, it can get a dated look very quickly. Whereas, "boring, but solid" keeps value over the long term a little better.

Then there was my brownstone condo townhouse downtown (King West). No lobby of course. (There was an associated condo building, but it was just very boring with almost no lobby at all.)

Note that my above calculation has it increasing 85% over a 10 year period. I don't remember my exact contract signing date, but it was summer/fall 1998. Using Teranet's guide, the price appreciation from then until summer 2007 should have only been about 60-65%, so it definitely beat the mean. I lucked out with a bidding war, but even the near identical place that sold several months before mine (which which didn't have hardwood like mine) had an increase of around 75% I'm guessing, so that handily beat the Toronto mean too.

P.S. I was just reading this article: Low-ball bids drive down price of Etobicoke condo. I wonder what they mean by lowball, because the original listing was at $549000 and then it dropped to $539000, and then it sold for $525000. To me a true lowball would have been more like under $495000 (10% off list). Maybe they had some offers like that, or maybe they didn't, I dunno. I looked at the building and there are other 2-bedroom units even lower than that price range, although with less nice interiors. The final selling price was only off 2.6% off the reduced price, or 4.4% off the original list price, but will show up in the TREB data as 97.4% of asking. It would seem the lowballs weren't super impressive in seriously reducing the price.

The last place we bought was 8% off list, but I think the original list was too high, and our final agreed price was decent but not super low compared to what I (with the buyer's bias) thought was fair value.

 

[James]

Location, location, location indeed! From my perspective, detached single family homes in the city have really been and continue to be the big winner in the whole real estate market. As far as volume goes, downtown condos have been garnering most of the attention but in the background, the SFH has been making year-after-year gains at rates beyond any condo that I know. Even with condos in "hot" neighborhoods, I've seen very decent appreciation yet still incomparable to the detached SFHs.

 

[Eug]

Well, after the brief 2008 pullback, the luxury single family home market completely froze, whereas there was still a reasonable amount of activity in the condo market.

And what do you mean by "city"? Does all of the 416 count as "city" in your eyes? It does to me, but I know some of you consider the "inner burbs" like where I live as not being part of the true city.

 

[interested]

So, interested and I have been having a mini-discussion via pm. One thing I don't necessarily agree with is his statement that single family homes appreciate more than (older) resale condos, although sometimes that may be true.

I'd have to say it really depends on the location and type of condo, vs. the location and specifics of the single family home, etc.

Judging by comps, my SFH in the Scarborough Bluffs has gone up less percentage-wise than sub $400000 condos downtown in the last five years. I'd say my home has realistically appreciated by about 20-25% since summer 2007, and I'm including a reno'd basement in that 25%, as well as new AC. Without the reno, I'd say more like 20% if I'm lucky, or slightly less. However, part of the reason in my case may be because my SFH is one of the higher cost ones in the neighbourhood.

For a cheaper condo downtown, they've gone up maybe 25%, and sometimes more.

BTW, my downtown condo was purchased 1998, and I took possession in 2001. I sold summer 2007. During that period from 1998 to 2007, it went up 85%. That's an annual increase of 6.4%.

In good times; and the same comparable neighbourhoods, the lower end may appreciate more in percentage terms as this example shows. However, I think it is difficult to compare downtown TO to Scarboroough.

More relevant would be how has a condo gone up vs. a SFH in the downtown core? I do not know the answer but given the relative paucity of product, I am guessing the SFH has gone up more.

The condo market low end being driven not only by investors but speculators (new condos) is difficult to compare as there is not much new SFH market so each is individual. Perhaps comparing resale condos appreciation to resale SFH would be more appropriate.
I still believe and the figures at least most recently in TO showed that condos went up 2% and SFH 10% if I recall. I believe while this is extreme divergence, it existed before only to a lesser degree.

Perhaps someone (maybe EUG) has the figures for say C01 or Toronto proper and can provide the objective figures. Again they will likely be average figures vs. the Teranet which would be more relevant figures.
I believe however that houses do better in the long run. Also, tough to compare a 2005 condo which is 3 years old to a 40 year old house; less so with a 3 year old house...how many of the latter are there.

Sorry I realize I posted after reading Eug's comment way back and had not read everyone else's contribution.

 

[CN Tower]

I find that SFH owners tend to conveniently overlook major repair/replacements costs of owning a home and instead point to the low cost minimum expenses as their only operating costs. So when you honestly factor in everything home appreciation, while clearly high in most 416 areas, is never as astronomical as reported.

 

[interested]

I find that SFH owners tend to conveniently overlook major repair/replacements costs of owning a home and instead point to the low cost minimum expenses as their only operating costs. So when you honestly factor in everything home appreciation, while clearly high in most 416 areas, is never as astronomical as reported.

Very true CN Tower.
That said, condos also got hit with HST on their reserve funds and have had big hits to their condo fees the past few years as well. Maybe new condos less so though preliminary PRECON budgets I do not believe plan enough or at all for the Reserve fund so that it escalates quickly. Condo fees tend to be higher so maybe this all balances out in the end?

 

[Eug]

I find that SFH owners tend to conveniently overlook major repair/replacements costs of owning a home and instead point to the low cost minimum expenses as their only operating costs. So when you honestly factor in everything home appreciation, while clearly high in most 416 areas, is never as astronomical as reported.

This is important, but then again condo fees are often sky high. When I went looking for a condo in the 90s some of the criteria were that it did NOT have a pool or squash courts or shuttle buses, etc. so that I could save on condo fees. My ongoing home maintenance costs aren't cheap, but I'd guess they're actually comparable to a luxury condo half the size or perhaps even less.

Think of it this way... Say you lived in a house that was 2600 square feet. A luxury condo half the size is 1300 square feet. At say 65¢ per square foot, that's $845 per month, not including the extra fees for parking. So, that works out $10000 per year just in condo fees + extra for parking.

 

[interested]

Well, after the brief 2008 pullback, the luxury single family home market completely froze, whereas there was still a reasonable amount of activity in the condo market.

And what do you mean by "city"? Does all of the 416 count as "city" in your eyes? It does to me, but I know some of you consider the "inner burbs" like where I live as not being part of the true city.

Almost universally the high end reacts first followed by a progression the way down. Perhaps because high end is usually owned by people with higher than average incomes, jobs perhaps in the financial field, perhaps better read, or simply work in areas where they see the slow down first. Perhaps see the economy slowing by less demand for their services/products.

By the time it hits the "lower" end it is usually obvious to everyone and months if not a year or 2 later.

 

[ISYM]

This is normal in every real estate market because the higher the price the fewer the buyers. One of the gauges I use to assist with market direction is to track the number of high end properties starting with non-condos or what is being referred to as SFH. Once they start to taper off in price and or linger longer on the market it is a sure signal that buying power is receding and the trend starts downward.

It is not a good idea to measure condominium prices against houses as they are two different animals entirely but the question about comparative appreciation intriques me and if anyone is interested, I'll undertake a little study to see how the two rate against each other. It can only have a reasonable expectation of comparative analysis if specific neighbourhoods and streets offer both such as the 4 blocks east , west and south of Yonge or the Hazelton Lanes west corridor or Yonge & Davisville.

Well, after the brief 2008 pullback, the luxury single family home market completely froze, whereas there was still a reasonable amount of activity in the condo market.