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So, um, when are condo prices supposed to drop again?

simuls said:
I absolutely think you will see some firesales on properties but this won't happen until 2010/11.
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I think you'll find heightened pre-construction buying in central Toronto ahead of the increased HST (extra 8%) in July 2010. We saw the same thing in the months leading up to Miller's land transfer tax Feb 2008.

In my opinion, projects which have pre-sold 75% are least likely to drop asking prices ahead of July 2010.
 
Future Pricing and demand

Johnzz said:
I think you'll find heightened pre-construction buying in central Toronto ahead of the increased HST (extra 8%) in July 2010. We saw the same thing in the months leading up to Miller's land transfer tax Feb 2008.
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I think that John is making a valid point.

Many consumers [buyers] are completely unaware of the change in HST and introduction into law. This will add substancially to the price of a new home, both condo and detached.
 
Johnzz said:
I think you'll find heightened pre-construction buying in central Toronto ahead of the increased HST (extra 8%) in July 2010. We saw the same thing in the months leading up to Miller's land transfer tax Feb 2008.

In my opinion, projects which have pre-sold 75% are least likely to drop asking prices ahead of July 2010.
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I don't think consumers will be hit directly since the price of a unit usually includes the GST hidden in the price. IMO the same will be done with HST for anything that's already on the market pre-July 2010 but purchased after.

The developers are crying foul because it will cut into their profits for future construction since it comes off the bottom line.
 
^ Developers are crying foul because it's a massive tax increase (which will impact both consumers and the developers), it will reduce total sales volumes, skew the market towards cheaper units, hurt intensification efforts in many jurisdictions with high land prices, severely impact project feasibility for condo developments (units under $400k will be impacted when portions of large projects with a range of unit sizes and prices have significant tax increases), it will also widen the competitive gap between new and resale which has other public policy implications in areas such as energy efficiency, construction labour/employment etc.

There will be negative impacts for consumers, developers and those employed in the construction/development industry.

As far as the subject of this thread, there will be significant taxation implications for new units (after July 1, 2010) priced over the $400,000 & $500,000 thresholds and there will be indirect implications on units under the $400k threshold - especially in larger projects with a range of units.
 
That calculator does not allow for a negative home value price change.

As it happens, this is one of the big contributing factors to the poor modelling of the various securitized mortgages in the US. Their models simply did not allow for the possibility of house price decreases.
 
urbandreamer said:
Could it lead to more rental housing being built? (I hope so.:))
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Unlikely - All new rental housing, whether market housing or social housing will pay the full eight percent tax. The federal government has a GST rental rebate program; currently the province hasn't made any indications as to whether there will be an HST rebate.

The current supply of rental housing being built in Toronto is generally investor driven in newly purpose built condos. The HST exemptions under the $400k threshold only applies to 'primary' residences. Unless the province alters this language a $250,000 condo purchased by an investor with the intent of renting the unit will be subject to $15,000 in new taxes (6% in new taxes - approx 2% or $5000 in provincial sales taxes is currently embedded into prices).

So there will be a hit on the rental market for both purpose built rental, social housing and the investor market that supplies the lions share of new rental accomodation in the city.
 
There really is nothing on MLS for under $300K right now. I wonder what April's numbers will look like in terms of # of units on the market. I'm sure the numbers are way down.
 
I see quite a selection of condos under $200k, for example, that ugly thing north of Bloor on Christie is asking $199,900 (MLS# C1592145), meaning its realistic selling price is at least $10k less.

However, considering how close it is located to all things cool (Ossington, Dundas, College, Queen, the Annex, and subway stn) and that it could be rented to students, it may be a bargain!

Here's a photo I took last week:

dsc01357.jpg


(Personally I think this tiny 436 SF unit is over-priced, and should be going for under $150,000 within 2 years.:))

Then there's an older building at 914 Yonge St (near Yorkville) with a larger unit going for $182,000 (probably could get it for $175,000): #C1582289

Finally, if you work on Bay St, and want to skip the metropass and literally walk to work, there's an astonishing bargain (#C1564912) in the Graphic Arts building at 73 Richmond St West, for only $147,500 (real price: $139,000.) With Trump and Shangri La around the corner, surely this may just be the bargain of the century?
 
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Similar to the equity market, specific homes/areas can appreciate in value during a bear market. Rarely does "everything" fall at the same time.

Some of those properties urbandreamer listed could quite plausibly appreciate 25% over the next few years.
 
urbandreamer said:
Finally, if you work on Bay St, and want to skip the metropass and literally walk to work, there's an astonishing bargain (#C1564912) in the Graphic Arts building at 73 Richmond St West, for only $147,500 (real price: $139,000.) With Trump and Shangri La around the corner, surely this may just be the bargain of the century?
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The 73 Richmond St West unit has no windows. :eek:

Maybe a good unit for a shift worker who wants to avoid sunlight? Or a vampire?
 
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