Downtown Condos (Parallax) - Real Estate -

[cdr108]

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it looks like the last 2 listings are for the same unit and extremely overpriced ($285K for 475 SF on 2nd floor) considering what the others are offering.

 

[interested]

^ ^ ^

it looks like the last 2 listings are for the same unit and extremely overpriced ($285K for 475 SF on 2nd floor) considering what the others are offering.

I agree with you cdr. But you know the saying: You can ask what you want. Doesn't mean you are going to get it.
I unfortunately agree with some of the other comments that these units being offered are not very desirable. Especially the one looking at the wall.

Investors often go for the cheapest units and that works great in a frenzied market because everything sells but when the market slows and people have choice, then those less desirable units will either languish or be severely discounted to make a sale.

 

[carturo15]

some investors are so greedy, the guy who purchased that unit facing the wall did not pay more than $190k 3 or 4 years ago and now he wants $315k, come on, that unit will never sell at that price. he could price it at $269k and will sell it in less than a week and still making a good profit.

 

[interested]

some investors are so greedy, the guy who purchased that unit facing the wall did not pay more than $190k 3 or 4 years ago and now he wants $315k, come on, that unit will never sell at that price. he could price it at $269k and will sell it in less than a week and still making a good profit.

carturo15
You can't fault the investor for trying to make the most that he can and if someone is willing to give him that much, so be it. However, I think he overpriced and it will sit. I concur that I would accept a lower amount (at least price at $299,900 to get that market looking under $300K. Anyhow, not my problem.
If the market does start a correction and suddenly there is alot of product, it might get interesting to see how fast greed turns into fear.

 

[JayBee]

some investors are so greedy, the guy who purchased that unit facing the wall did not pay more than $190k 3 or 4 years ago and now he wants $315k, come on, that unit will never sell at that price. he could price it at $269k and will sell it in less than a week and still making a good profit.

Well, when your agent tells you $315K is a good price, you're going to list it for that. At least it's built.

Look at what pre construction units are going for now. Berkzy's selling bowling alleys for upwards to $400K

 

[JayBee]

carturo15
You can't fault the investor for trying to make the most that he can and if someone is willing to give him that much, so be it. However, I think he overpriced and it will sit. I concur that I would accept a lower amount (at least price at $299,900 to get that market looking under $300K. Anyhow, not my problem.
If the market does start a correction and suddenly there is alot of product, it might get interesting to see how fast greed turns into fear.

Not a big fan of the Thompson...but if units at 75 Portland or 10 Morrison drop 20-30% I will be very interested.

 

[interested]

Not a big fan of the Thompson...but if units at 75 Portland or 10 Morrison drop 20-30% I will be very interested.

For what purpose: investment or living. I ask because assuming you would not buy condo units looking at a wall would you buy based on $600/sq. ft with a 20 or 30% discount at $420 or $480/sq.ft.?

My suspicion is alot of people actually seeing 20% discount will wait for it to go to 30% and then still won't have the courage to invest for fear of "where is the floor". I think one has to make a decision beforehand and decide that at a given price: eg. $450 I will buy and hold longer term if one believes that one is near or at bottom.

 

[CN Tower]

some investors are so greedy, the guy who purchased that unit facing the wall did not pay more than $190k 3 or 4 years ago and now he wants $315k, come on, that unit will never sell at that price. he could price it at $269k and will sell it in less than a week and still making a good profit.

Flawed logic. I own property acquired in the 1980's with very high leverage. Suffice it to say my ROE is well in excess of 1000%. Were I to sell (not likely) should I give it away for less than market value?

 

[JayBee]

For what purpose: investment or living. I ask because assuming you would not buy condo units looking at a wall would you buy based on $600/sq. ft with a 20 or 30% discount at $420 or $480/sq.ft.?

My suspicion is alot of people actually seeing 20% discount will wait for it to go to 30% and then still won't have the courage to invest for fear of "where is the floor". I think one has to make a decision beforehand and decide that at a given price: eg. $450 I will buy and hold longer term if one believes that one is near or at bottom.

I'm talking in general, not the crappy ones. I also find views to be overrated. Of course, I don't want to stare at a wall, but I don't need an amazing view to be happy. I've lived in an aparment that looked onto a back alley. I didn't mind.

The people waiting for prices to drop 50% will continue to wait because that will not happen. I'd purchase to live. The days of buying condos for investment purposes are pretty much over IMO.

 

[interested]

Flawed logic. I own property acquired in the 1980's with very high leverage. Suffice it to say my ROE is well in excess of 1000%. Were I to sell (not likely) should I give it away for less than market value?

I agree with your decision not to sell. However, I can't agree that "past performance is any indication of future performance". The last 30 years even with the bumps along the way were the "golden age " for real estate.

I say this with respect but in the 1980's interest rates were falling. Much like a hedge fund, you received the benefit of financing a long term asset with decreased financing costs each time you went to renegotiate your mortgage. Leverage is a 2 way street. Interest rates are near zero so unless you can show me that you expect interest rates to fall significantly further, applying this logic in 2010 will lead I believe to different results than they did in 1980.

One additional point. You are absolutely correct when you say you should not give it away for less than market value. On the other hand, I think carturo was trying to point out that the amount being asked is above market value, at least in his estimation

 

[interested]

I'm talking in general, not the crappy ones. I also find views to be overrated. Of course, I don't want to stare at a wall, but I don't need an amazing view to be happy. I've lived in an aparment that looked onto a back alley. I didn't mind.

The people waiting for prices to drop 50% will continue to wait because that will not happen. I'd purchase to live. The days of buying condos for investment purposes are pretty much over IMO.

I agree for at least the next few years. I too do not believe there will be a 50% drop. Of course, that is the nature of bubbles. No one sees them, then it is obvious to everyone. The correction almost always overshoots in the wrong direction, hence the degree of destruction is worse than fundamentals would dictate. However, everyone is so shell shocked and paranoid (or financially devistated) that they fail to act on the overly low prices even though they represent "value" once again.

 

[CN Tower]

However, I can't agree that "past performance is any indication of future performance". The last 30 years even with the bumps along the way were the "golden age " for real estate.

I say this with respect but in the 1980's interest rates were falling. Much like a hedge fund, you received the benefit of financing a long term asset with decreased financing costs each time you went to renegotiate your mortgage. Leverage is a 2 way street. Interest rates are near zero so unless you can show me that you expect interest rates to fall significantly further, applying this logic in 2010 will lead I believe to different results than they did in 1980.

Interested, we are totally simpatico my friend. Adjusted for inflation, I anticipate falling prices for GTA real estate, mine included, going forward. Notwithstanding, I don't think I've ever bought property with negative leverage. Not in the 1980's and not today. Those who do are appear to be doing it for reasons that I cannot comprehend as a businessman looking for a fair ROE given the risks involved.

 

[interested]

Interested, we are totally simpatico my friend. Adjusted for inflation, I anticipate falling prices for GTA real estate, mine included, going forward. Notwithstanding, I don't think I've ever bought property with negative leverage. Not in the 1980's and not today. Those who do are appear to be doing it for reasons that I cannot comprehend as a businessman looking for a fair ROE given the risks involved.

We agree.

As well, I too have investment real estate that I have held in some cases for 25 years. It has gone up (though no where near as much as you have since I was not highly leveraged).
That said, I have to say that when selling investment real estate, there is a whole other set of issues. There are the costs to sell, the recaptured depreciation which shows up as income, and the capital gain. This significantly takes away from the net one is left with and therefore there are good reasons to hold on even if one is getting less of a return since likely one will have 75% or there abouts of the present value of the sold property (depending on tax rates and other factors) after all expenses and taxes.
Furthermore, the return on the old asset is likely more than one could get on the new asset worth 75% of the value of the old one.
Buyin with negative leverage is a very risky strategy if you mean that you have more than 100% of the property levered. This is exactly what happened with the subprime mortgage market in the US and survival depends on either having alot of other sources of cash flow to make up the negative equity if prices drop or relying on prices continuing to escalate.
A bit like shorting a stock and hoping you guessed the right direction. You make an incredible amount of money or you lose your shirt (or house in this case).
Clearly you have identified the issue. As a "businessman" you have made the calculations, looked at various scenarios, and mae a "business decision". That is all any reasonable investor should be doing.
The concern I have is there are alot of investors/first time buyers, flippers, who are not doing their due diligence or are relying on the advice from people with vested interests and jumping into the foray without fully appreciating the risks they are taking.

 

[marlws]

I must say as the person who started this post to get all these comments and opinions is fantastic. A plethora (two points for that word) of opinions. I nullified the contract (within my 10 days) and
will pay heed to the advice from everyone. I will keep looking, and monitoring the market as best anyone can. I'm not desperate, so at least i have the advantage of being picky - and trying to get what I want, so thanks everyone. If i had the money I'd buy everyone a few rounds, but then again, I could use that money to save toward a down payment. Thanks everyone!

 

[neuhaus]

which building/development is 508 Wellington?
sounds like an awesome area (especailly being so close to the 500 Wellington building).