Costly Condos
In respect of the cost of condos there are 2 things at work here.
First is location.
Typically condos are being built downtown and secondarily in areas like NYCC.
In such areas land values are generally at their peak, and often developers overpay for properties based on the assumption they will get vastly inflated height/density (which they often do).
Obviously this has the effect of forcing up prices, and any fair comparison of condos in downtown Toronto is made to the cost of a single-family home in the same location.
Of course, for the most part, there is no such home with which to compare it.
But were there, you can be sure the price would be 700k+++
When comparing a suburban home price, you must compare to a theoretical condo in the same location.
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That said, there are other price factors at work, which are resolvable.
Parking is a classic, even today, in downtown Toronto, minimum parking requirements typically work out to just under 1 space per unit.
Assuming parking entirely underground, this has a cost-impact of between $15,000 - $30,000 per unit. Sometimes these are price out separately from the units, but not always, and their is definitely a subsidy from the non-parker to the parker in this context.
I'm not suggesting a prohibition on parking, but rather eliminating the minimum and allow developers to determine what they need to make the market work.
Doing the same for apartments, using a 20 year amortization, could mean reducing rents in new rental construction by $125.00 per month.
We also generally impose a raft of other costs on developers. Nowadays, we must have a party room and 'x' square footage of indoor amenity space and outdoor amenity space. This never used to be the case and people didn't suffer.
Let upmarket developers include all the bells and whistles they want, but let others build with virtually none. The impact of being able to shave out the swimming pool and the spa, and party room and the guest suite would allow for a further reduction in unit cost of $10,000 or more on most developments.
Then we tack on all the development charges. Don't get me wrong development charges make sense for greenfield developments where the new subdivision imposes the need for a whole new school and a whole new park and fire hall and so on....
But when building in an established area, most of which are rich in parkland and public services and have plenty of room to spare in their local schools, these charges should be kept to a minimum.
Wave them would save a typical large development more than $3,000,000 and possibly more than that.
And of course developers use the same market pricing as most other businesss. Sale price is a factor of raw cost + a standard mark-up.
The higher the wholesale cost, the larger the profit markup is too!
IF we could trim all the detritus out of the price of condos (or new rental) we could easily trim total prices by $50,000 or more on new units and rents by $200.00 a month.
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As a further note, renters in this City continue to face an inordinate property tax burden as well. Were the rate on multi-res housing reduced to the same rates as single family residential (which would invariable have to come up) you would see a saving on rent (or condo fees) equivalent to no less than $50.00 a month, and possibly double that.
These are the fixes we need to promote density and to make housing more affordable.