Baby, we got a bubble!?

[Eug]

Well, I can see where you're coming from, but personally I don't see it as that big of a deal. It's also harder to justify in this situation because these house prices are ballparked by time and comps, not original build costs and what not.

BTW, there is a 18000 square foot (and gaudy) mansion on sale in Mississauga for $1.

As for selling a business, the scenario you outlined does in fact happen from time to time.

And for the car price and couch price, they're arguably usually priced too high. If you pay sticker price, in most cases you are paying too much. Unless you're talking Ikea stuff, I don't think I've ever paid regular retail price on a couch. I have on a car, but that was a for a hybrid when they first came out. High demand for very low stock.

Tangent: It turns out in that car situation it was because the dealers weren't making much profit off them anyway. I remember calling a Toyota dealership back then and telling them I wanted to order a Prius from them at full price. One dealer actually said to me he'd be happy to do it, but to be honest he would actually be just as happy if I ordered from another dealer, because they make so little on them it's not really worth the hassle to them. Toyota raised the profit margin significantly later on.

 

[Condo George]

Lets see how this one sells.

 

[interested]

Lets see how this one sells.

View attachment 25539

I would like clarification of the size of the units but it sounds like it might well be starting at the $630/sq.ft. level assuming a 1 bedroom is 450 sq. ft. I am guessing the 1 bedroom /den is 550 sq.ft. the pricing sounds right....add the subway and I am betting investors will buy them.

Do you have sizing as well?

 

[Condo George]

Here you go. I have select floors from the 13th to the 58th. The tower's top floor is 60th.

www.georgekozaris.com/11wellesleycondos for those who are interested and thanks everyone here for that.

 

[interested]

About $660/sq.ft.+ for floor 13 and will go up from there.
Given the subway, I think it will sell. I think it is priced well or a bit high but given prices of YC and others it is in the range for being on the subway line.
I just don't see how investors will make money at these prices however if they plan to rent them frankly.

E.G. Stanley at 489 sq.ft. say gets $1650/month. Condo fees are about $300/month, taxes about $250/month, insurance $10/month and realtor 1 month +HSt or $155/month. Assuming no vacancy down time at all (add $1650 or $138/month if you assume 1 month/year vacancy) we are talking about $715 to $853/month expenses for a net of $935 or$797 if assume vacant one month/year.
Down payment 20% is $64200 + the LTT + legals and other expenses so let's say $75000.
Residual mortgage $256K @ 3% is $768 of interest alone on the principal. ( I am not counting principal repayment which is virtually zero in the first few years So if no vacancy you make $150/month or $1800 or 2.5 % on your downtown payment and if there is one month vacancy virtually nothing.
To actually sell as a flip, add in realtor fees and legals etc. (let's say a total of 8%, the price has to go up from $343K paid(assumes about $11K of LTT/legals and other expenses) and adding 8% brings 343K to $370K.
$370K means one has to get based on 489 sq.ft. or $757/sq.ft. when ready to break even.

I guess the question is: will investors still buy given this rough economic calculation at this site assuming there is profit to be made. This calculation is based on the lowest floor (13) and I am assuming will go up $1000/floor or $2/sq.ft./floor.

Perhaps some of the investors/flippers would care to comment on their thoughts of 11 Wellesly, both as to how it will sell and whether they as investors or "flippers" would act.

Personally, I would not be a buyer....to do so would be to hope that in 5 years prices will be over $757/sq.ft. by my calculations.

 

[Condo George]

The Britt on the corner of Bay and Wellesley was giving investor for a one bedroom a 2 yr rental guarantee of $1900 a month, not saying that is going to happen at Wellesley but I think $1650 is very low for new product in this area.

Another point is look at resales at Burano these small one beds are in the $800 psf range today. So I am in at $660 a ft. But that's me, I am sitting on cash at 1% waiting for this tower to launch.

Also Britt day 1 launched at $800 psf on the ground.

 

[interested]

The Britt on the corner of Bay and Wellesley was giving investor for a one bedroom a 2 yr rental guarantee of $1900 a month, not saying that is going to happen at Wellesley but I think $1650 is very low for new product in this area.

Another point is look at resales at Burano these small one beds are in the $800 psf range today. So I am in at $660 a ft. But that's me, I am sitting on cash at 1% waiting for this tower to launch.

Also Britt day 1 launched at $800 psf on the ground.

Interesting George. Thank you.
However, I think we would both agree that the Britt launched in a different market than today. However, $660 to $800 is a sizable difference.

 

[rbt]

The Britt on the corner of Bay and Wellesley was giving investor for a one bedroom a 2 yr rental guarantee of $1900 a month,

Erm, does that even matter?

If actual rent was $1700 and they cover the difference then they're on the hook for a $4800 refund for the few people who bother to apply for it. If they got a 1% average sale price bump it would probably still be profitable to offer that guarantee even if they didn't think was achievable and fully expected to issue refunds.

I do agree that $1650 is a low estimate, but that guarantee has nearly zero actual value outside of marketing.

 

[interested]

I am surprised by you guys suggesting $1650 is low. How much do you think one can get for 489 sq.ft. 1 bedroom. This is $3.38/sq.ft.
What are comparable new products under 500 sq.ft. getting these days (with no parking or locker) but on the subway line...
$1700? I don't believe the $1900 is attainable on the market and therefore the "guarantee for 2 years. I agree with rbt....a marketing ploy in my view.

 

[rbt]

I am surprised by you guys suggesting $1650 is low. How much do you think one can get for 489 sq.ft. 1 bedroom. This is $3.38/sq.ft.

550sqft 1 bedrooms at X-Condos seem to go for $1700/month + ~$150/month for parking now. Yonge and Wellesley on the surface seems to be a better location than Charles and Jarvis. X-Condos is the only building I follow rents in but I suspect they're not abnormally high for downtown.

I assume rents will appreciate somewhat between now and 2018; perhaps 10% or more given that there will be few transportation improvements between now and then to the core (congestion will get worse, not better over that time period).

I think you could get $1650 for it today, so $1800 in 2018 might be a reasonable starting point. I don't think I would pay that but I also wouldn't buy my current home at its current market price.

 

[TheKingEast]

I am surprised by you guys suggesting $1650 is low. How much do you think one can get for 489 sq.ft. 1 bedroom. This is $3.38/sq.ft.
What are comparable new products under 500 sq.ft. getting these days (with no parking or locker) but on the subway line...
$1700? I don't believe the $1900 is attainable on the market and therefore the "guarantee for 2 years. I agree with rbt....a marketing ploy in my view.

500 sqft in Murano, Burano, Lumiere, etc go for 15-$1600

 

[interested]

I was thinking in todays dollar terms.
I don't know that rents will increase much. They increased about 4% I believe year on year but recently I have heard price pressure.
I think maybe the $1800 is reasonable by 2018 but I just based my numbers on current rents assuming they would stay about the same. Also, it is distinctly possible/probable that the taxes will increase and the condo fees come in higher than anticipated after the first year after registration.

 

[rbt]

I was thinking in todays dollar terms.

Yeah. I suppose I got distracted by the price guarantee which is the future rate.

 

[CITY_LOVER]

Another point is look at resales at Burano these small one beds are in the $800 psf range today.

Wow, $800 psf for resales? That's darn good. So, a 600 sq. ft. condo would go for $480K? Does that include parking and locker? How about Lumiere, from your perspective? Thanks!

 

[cruzin4u]

550sqft 1 bedrooms at X-Condos seem to go for $1700/month + ~$150/month for parking now.

About 3 years ago, rent for a 1 bedroom + den and 1 bath at X was going for $1750 per month. Once I moved out, after 2 years that same unit was on the market for $2000 a month. So definitely the pricing has gone up in the last few years.