The Condo Game [CBC Documentary]

[NorthYorkEd]

We rent in a building that is approx 15 years old. When it gets really cold, you can feel it at least a foot away from the windows. That's fine, and probably normal during extreme cold. But then ice will crystallize on the panes that are fronted by screens, and when the sun comes out, the ice melts and water trickles down onto the ledge and onto the floor. Several times we have had to pack towels along the ledges to try and prevent these puddles.

Everything else about this building seems rock solid. They are on top of cleaning, maintenance, and addressing any concerns we have had. But the windows, IMO, are complete garbage. Even when shut tight it sometimes sounds like a window is open. It is a bonus that we front a relatively quiet street, otherwise the noise would likely be an issue. So I don't think it is just new buildings that go cheap when it comes to building components. My biggest complaint about new buildings, at last the ones we looked at, were complete apathy when it came to livable design plans. Living rooms you can't place furniture in, bedrooms you can hardly fit a bed in, balconies you can't really use, and bathrooms sitting right off the kitchen area.

At least the older buildings were intended as homes for people to live in, not just slapped-up flippers for speculators to flip. I'm sure others are having window issues as well, but there's been nothing about replacement in the newsletters. Of course, we are tenants, so we are probably not privy to those discussions anyway.

 

[Hanlansboy]

Toronto condo boom a long term bust?

I was surfing the web on info pertaining to our unprecedented condo boom, and came accross this CBC clip...

http://www.cbc.ca/doczone/episodes/the-condo-game

Being the least knowledgable here, I'd really appreciate your input, is this really the case? If so, what do you believe the future consequences will entail?

 

[BobBob]

There is already a long thread about this show here:
http://urbantoronto.ca/forum/showthread.php/20186-The-Condo-Game-CBC-Documentary

 

[TheKingEast]

This boom is going to create a lot of headaches in the next 10-15 years IMO.

 

[Bass gtr]

We rent in a building that is approx 15 years old. When it gets really cold, you can feel it at least a foot away from the windows. That's fine, and probably normal during extreme cold. But then ice will crystallize on the panes that are fronted by screens, and when the sun comes out, the ice melts and water trickles down onto the ledge and onto the floor. Several times we have had to pack towels along the ledges to try and prevent these puddles.

Everything else about this building seems rock solid. They are on top of cleaning, maintenance, and addressing any concerns we have had. But the windows, IMO, are complete garbage. Even when shut tight it sometimes sounds like a window is open. It is a bonus that we front a relatively quiet street, otherwise the noise would likely be an issue. So I don't think it is just new buildings that go cheap when it comes to building components. My biggest complaint about new buildings, at last the ones we looked at, were complete apathy when it came to livable design plans. Living rooms you can't place furniture in, bedrooms you can hardly fit a bed in, balconies you can't really use, and bathrooms sitting right off the kitchen area.

At least the older buildings were intended as homes for people to live in, not just slapped-up flippers for speculators to flip. I'm sure others are having window issues as well, but there's been nothing about replacement in the newsletters. Of course, we are tenants, so we are probably not privy to those discussions anyway.

Same problem we had in our condo, but otherwise was a solid building.

 

[Condo Madness]

It is expensive to replace windows, up to $3 million on a large tower so they are often the last thing to get replaced. Some condos built in the 1970's still have the original single-pane windows.

The money, if they have any, gets spent on fixing the underground garages, up to $9 million, copper water pipes (risers) that get pinholes, roof and water penetration problems through the exterior walls. At times the mortar is so weak bricks will fall off the buildings.

Then there is balconies that need crumbling concrete and the steel railings repaired. Very expensive and very noisy.

Of course, we get the boards that ignore all of that boring stuff and will spend whatever money they got on lobby renovations, landscaping and new hallway carpets so the place, that is falling apart, has curb appeal.

 

[Condo Madness]

I was surfing the web on info pertaining to our unprecedented condo boom, and came accross this CBC clip...

http://www.cbc.ca/doczone/episodes/the-condo-game

Being the least knowledgable here, I'd really appreciate your input, is this really the case? If so, what do you believe the future consequences will entail?

Yes, it is real. Some new condos are known to have very serious problems while others hide their problems very well so they remain largely undetected.

Think of the cheaper lines of Ikea furniture.

It has style, is good looking and it is cheap. Life expectancy? A few years at most. Yet buyers don't care because they will tire of it long before it wears out.

It is the same with some of these bachelor and one bedroom downtown condos. A large number of tenants and owners plan to live there, or own them, for about three years. Then they will be gone. The building will be someone else's problem. (Something like leasing a car.)

Everyone who hears about the horror stories in the 30-40 year old condos in the suburbs think that those disasters will not happen to these new towers. They are wrong, wrong, wrong.

My advice? Never buy a condo in a building that is less than six years old. It takes that much time for the builder's defects to show up and to get an idea who will be living there. You want to know if you will be living in a rental building that has 250 amateur landlords, a student frat house or a decent building.

 

[TheKingEast]

I like the IKEA analogy. One thing though is IKEA furniture is inexpensive. People know what they are getting when they buy from there. I'd say its akin to buying from a place like eq3. Nice design but crap quality for a big price.

 

[Johnny Au]

The IKEA at Sheppard and Leslie is doing extremely well. IKEA condos next to an actual IKEA is good for IKEA, along with Darwin the IKEA Monkey.

 

[James]

The IKEA at Sheppard and Leslie is doing extremely well. IKEA condos next to an actual IKEA is good for IKEA, along with Darwin the IKEA Monkey.

LOL!

Well, you do have to recognize that more and more we're living in a disposable society. Everything is disposable and easily upgradable, most certainly furniture. Once design cues and fads go out of style, people want to be able to replace it with the next cool thing. Combine that with a relatively low purchase price and it's no wonder IKEA is doing so well.

The big concern is that the condo building itself or that rebuilt detached house or that beautiful gut/reno job...these are crucial items that most definitely should not be designed with a short life cycle in mind which unfortunately it appears is happening now more than ever.

 

[diminutive]

I finally watched this documentary and it left me with mixed feelings.

On one hand, I'd agree that the condo industry seems to be more a product of investment markets and regulatory issues than supply and demand for housing. Beyond tax and financing preferences given to condos over rental buildings, it makes little sense to me that the construction market has so overwhelmingly skewed towards condos. If well over half of residents in these buildings are tenants, why not simply have the building owned and operated by a professional rental company? From my experience, investor-landlords don't really care about building maintenance. Ideally, the developer would be responsible for lifetime upkeep of the building. Either that or condo corps should be forced by law to prioritize certain maintenance projects over others.

In other ways though the movie seemed alarmist, or at the very least to conflate issues. Lack of family units in the core hardly seems related to anything the condo industry does. At 700$/sf, or even half that, you won't see huge families flocking downtown. Keesmat repeatedly made up terms like "family friendly midrise housing." By most estimates, mid rises are even more expensive than high-rise projects and, by that metric, less family friendly. I've got no idea what kind of analytical utility we can get from just mashing together terms like that.

Likewise, the documentary repeatedly praised Vancouver's 'model,' which didn't have much description beyond apparently giving the planning department lots of power, yet we finally get to the point where Cole Harbour and Vancouver have even worse problems than Toronto in terms of family affordability and investor dominance. Coupled with some baseless attacks on the OMB, parts of the movie just seems to try to cast Adam Vaughan and Keesmat as in some kind of David v Goliath fight against "profit-driven" developers.

As I would summarize, the doc raises some valuable questions and concerns, but tends to muddle everything together and make unhelpful generalizations (i.e. developments in Toronto are too centred on profit...)

1.) Is the institution of condo development economically rational or the product of regulatory and tax laws? Investing billions of dollars into this relatively novel vehicle may not reflect underlying housing demand, and lead to sub-optimal arrangements.

1.b.) As a related issue, are building codes strict enough to ensure decent longevity out of these buildings? Is there a legitimate concern about build quality, or do observed quality issues simply reflect the nature of any construction project?

1.c.) What's the role of international buyers in this? For something so under quantified, lots of people make very bold claims about the significance of international buyers.

2.) How do we promote affordable housing in Toronto for all income and house types? Is it a matter of legislating quotas or do we have to address underlying supply constraints? For instance, increasing the amount of land available for redevelopment throughout the City, allowing more affordable forms of construction (e.g. woodframed midrises..) and so forth.

3.) What makes a city livable? Lot's of people criticize areas like CityPlace for being soulless or whatnot, but is this even fair? There's a certain Annex-normative expectation of what "city-life" should look like in many criticisms of CityPlace. At least in terms of affordability, CityPlace seems to do a much better job than anywhere else in the City.

 

[waltthizzney]

I agree there is A LOT of uncertainty moving forward but here are some things to remember.

Culture is changing rapidly. Obviously it is much more expensive to live these days, jobs are harder to come by, and you need to be more educated. This has lead younger people to not get married and especially not have kids at the rates before. I am 25 with a fairly large social circle and I only know one person who has had a kid, and only a handful of people that are engaged or married within 5 years of me. Yes I know I am still young but people simply are not living like they use to. This along with the fact that the migration to city is in full effect culturally, and Toronto's pathetic transit system will only boost city living. Ad in migration and I doubt anything is going to crash. Cityplace will look like shit in two decades though no getting around that!

 

[NorthYorkEd]

Same problem we had in our condo, but otherwise was a solid building.

Just a quick update - we discovered that the panes for sealing off the screens from the inside panels were tucked behind some other panels. So neatly they were easy not to notice. They were also stuck, but a little elbow grease and they slid back into perfect position. So no more condensation and leakage issues. It was truly a "duh" moment...

Culture is changing rapidly. Obviously it is much more expensive to live these days, jobs are harder to come by, and you need to be more educated. This has lead younger people to not get married and especially not have kids at the rates before. I am 25 with a fairly large social circle and I only know one person who has had a kid, and only a handful of people that are engaged or married within 5 years of me. Yes I know I am still young but people simply are not living like they use to. This along with the fact that the migration to city is in full effect culturally, and Toronto's pathetic transit system will only boost city living. Ad in migration and I doubt anything is going to crash. Cityplace will look like shit in two decades though no getting around that!

Lifestyles have changed considerably compared to previous generations. No longer is it the expectation that you will buy a house and live there for decades, while also raising your family and working at the same job until you retire. These days, jobs are much more transient, people transition careers and houses several times, and relationships fracture and families split all the time. Freedom, mobility, and efficient living are becoming more desirable, even to my generation (early 40's), that was taught you had to get a car and you had to buy a home, preferably a large one tucked within the safe bosom of the suburbs. We were conditioned by TV to think the suburbs were safe and desirable places for families to live while cities were portrayed as full of crime and danger and as bastions of moral decay.

Where my boomer-era father worked all week, then worked around the house doing chores and maintenance all weekend, all I want to do with my spare leisure time is go to restaurants, see shows, hang out, drink coffee, walk the neighborhood, etc. I have no interest in accumulating a bunch of "stuff". I only want what I need, whether possessions or space. I have no desire or interest in a "mega-mansion" or having a huge property to maintain and fill up with useless clutter. I've owned a house, and now I rent a condo. And I much prefer the ease of condo living. I have friends that bought large homes and now curse all the work they have to do, none of which interests them, but they never once considered more reasonable modes of living; they just did what they felt they had to do.

There is this mindset that you have to have a house if you are raising a family, and that you must be an owner, otherwise you will come out on the losing side of life. But I think that might also be starting to change, as debt levels rise and many wake up to the financial realities that things aren't the way they used to be. People have traded wealth for debt, but are failing to see the difference. Some of the no-brainers aren't so non-brainy anymore. I can rent, save money, and still be a respectable member of society.

 

[Pickles]

Then why not rent, instead, NorthYorkEd? Study after study shows that renting is cheaper than buying a house or a condo. If you like condo living, it is dead easy to find a unit to rent in virtually every building. I know three people who had units in older luxury condo buildings (lakeshore, yorkville) who sold and then rented another unit in the same building. They all saw that they could make more money in investments than they could sinking it into an aging box in the air. They can have their cake and eat it too.

In my case, although I was single at the time, I craved for a place without shared walls that had a yard where I could have a dog and BBQ, extra space for visitors and my "stuff", etc. So I bought a house. Your Dad's experience rings true for me. I couldn't afford a vacation away for the first 3 years and I quickly found that the purchase price is just the beginning of what you pay to have a house. Nonetheless, it was the right lifestyle choice for me 20+ years ago.

Now, the idea of someone else doing the maintenance and being able to lock the door and take a trip sounds good. The problem is, I don't see any well-built condo buildings in my price range, especially when you add on the exhorbitant condo fees. And taking a close look at what those fees are spent on invariably shows the money is not being directed where it should be. As a homeowner, I can ensure the building envelope -- basement, roof, windows, doors -- is maintained and updated as required. I can schedule plumbing and electrical work and upgrades if I want and when I can afford it. I don't need to pay for the upkeep of a parking garage, party room, gym, marquee, etc. that I don't require. By doing my own upkeep and minor repairs, I not only save on labour costs but reduce the effect of inflation, whereas condo staff salaries have risen substantially in the last 20 years.

The gamble of renting, of course, is the risk that a landlord will impose inflationary rent increases, but most of my work experience was with landlords and tenants and indicates that a small landlord who has good tenants clings onto them like grim death. So I am not too concerned about unfair rent increases.

The main advantages of renting in a condo are: 1. if your due diligence wasn't enough and you made a mistake, you can leave when your lease is up; 2. If the character of the building later changes and becomes less desirable, you can move anytime after the first year with only 60 days notice; 3. If owners are assessed $thousands for necessary catch up repairs, your landlord must give you 90 days notice of any rent increase sought to defray his expense and you may choose to move to avoid paying a steep increase and living in a construction zone for an indeterminate length of time.

Eventually, bad construction and mangement will bite condo owners in the pocketbook. One can try to time the market and sell out before the crash or an influx of short-term renters change the atmosphere of your building or you get an assessment for $30,000 if repairs but if you time it wrong, you can lose much of the equity you thought you were building up. I'd take rental over this risk any day.

 

[NorthYorkEd]

Then why not rent, instead, NorthYorkEd? Study after study shows that renting is cheaper than buying a house or a condo. If you like condo living, it is dead easy to find a unit to rent in virtually every building.

Indeed, we do rent. We moved here from another city and did not feel that buying blind was a smart move. It seemed wiser to rent until we figured out exactly where we wanted to be and what our lifestyle was going to be like. After seeing the crazy prices and the deplorable condition of some of these "hot" properties, I'm more convinced than ever that people (i.e. the unwashed masses who don't generally read economic reports or understand the bigger picture) are being agitated and manipulated into taking on too much debt. And the bottom will fall out eventually.

Nonetheless, it was the right lifestyle choice for me 20+ years ago.

As it was for us when we bought our first home. We bought at a good time and sold at a good time. It definitely served its purpose.

Now, the idea of someone else doing the maintenance and being able to lock the door and take a trip sounds good. The problem is, I don't see any well-built condo buildings in my price range, especially when you add on the exhorbitant condo fees...

This is a huge part of why we are in no hurry to buy. I don't understand why condo fees are so high in the GTA as compared to other regions, like Vancouver. We also happened to be in BC when the "leaky condo" scandals were going on and remember people on the news weeping with the financial devastation. Of course, developers skated away free as birds, as they will here once the quality issues with some of these newer builds become more apparent over the coming decades.

The main advantages of renting in a condo are: 1. if your due diligence wasn't enough and you made a mistake, you can leave when your lease is up; 2. If the character of the building later changes and becomes less desirable, you can move anytime after the first year with only 60 days notice; 3. If owners are assessed $thousands for necessary catch up repairs, your landlord must give you 90 days notice of any rent increase sought to defray his expense and you may choose to move to avoid paying a steep increase and living in a construction zone for an indeterminate length of time.

This is why I think renting actually provides more freedom than owning. There is a perspective in what constitutes "freedom". For an owner, being able to paint, knock down walls, and plant a garden are considered as having more freedom. For us, it is about being able to pack up and go somewhere else with little hassle. New job, new city, new building, new neighborhood, all within easy grasp. We consider this to be much more valuable. Once we were able to separate the emotional component of ownership from the financial reality, our decision to rent became much easier to accept.

Eventually, bad construction and mangement will bite condo owners in the pocketbook. One can try to time the market and sell out before the crash or an influx of short-term renters change the atmosphere of your building or you get an assessment for $30,000 if repairs but if you time it wrong, you can lose much of the equity you thought you were building up. I'd take rental over this risk any day.

For us, the bottom line is we rent this place for much less than it would cost to buy. Our rent carries what this place would cost if it was priced at least $100K less. We pay our monthly, then tuck away a substantial amount of savings into our investments. Our unit was previously owner-occupied, so was kept in great shape. And as (previous) homeowners who take pride in their living space, and prefer a friendly, mutually-beneficial relationship with the owners, we treat this place as our own. Everybody wins.