What Is the Current Market Value for a Downtown Toronto Condo?
How do you know if you are getting a good deal on a pre-construction condo? Andrew la Fleur shares his famous UP Investing Formula and walks you through one current real time example to show how buying pre-construction today at the right price is an amazing investment opportunity.
What exactly is the current market value of a downtown condo today? Well, find out on today’s episode.
Announcer: Welcome to the true condos podcast with Andrew la Fleur, the place to get the truth on the Toronto condo market and condo investing in Toronto.
Andrew la Fleur: Hi, and welcome back to the show. Thank you for listening and for your support. Really appreciate it. Today’s episode, I want to talk about what is the current market value of condos downtown.
The reason why I’m doing this podcast is because I had a client this week, who was looking at purchasing a pre-construction unit that I had recommended to them in a project downtown. The unit was around just over $700 a square foot. They were wondering, “Is this market value?” “Is this a good deal?” “How do I know if I’m making a good investment on this particular unit?” I wanted to just basically share with you my answer to that question to the client, as much as I can, obviously, without revealing details of the specifics of the situation.
It’s a common question that I get, and that is, basically, “Andrew, how do I know that this is a good deal?” The easy answer is to say, “Trust me,” because this is what I do and I do this every day. Been doing this for 10 years, as an investor and as a real estate agent, helping people to make investments. Every single one my clients in 10 years, knock on wood, has done so and made money, and not lost a dime.
Short of that, of course, I do want to help to educate you the listener, the condo investor, the condo investor in training, so to speak, if you’re just learning about it and getting ready to make your first investment. Of course, that’s what I love to do, and that’s what I want to do in this episode is, again, just to continue the education process for you if you’re thinking about investing in condos, or you’re doing it right now.
The background on this is something that I always go back to, and it’s a formula that I came up with many years ago when I realized a pattern of how certain condos do better than others, certain investments are better than others. What do they have in common?
It’s what I call the UP investing formula. UP investing. If you want to make sure that your investment goes up, you should follow this simple formula. UP stands for two things. The U stands for under current market value, and the P stands for positive cash flow.
If you purchase a pre-construction condo that is under current market values, current resale property market values, and if the condo is going to give you a positive cash flow, with the traditional 20% down and with today’s market interest rates, then that unit is a winner, most likely. That is the type of condos that we like to invest in here, and that I invest in myself.
The positive cash flow part is fairly easy to figure out, it’s a simple formula. The under current market value part is a little bit harder to do if you are not, obviously, someone like me who is looking at sales, and figures, and numbers, and analyzing the market every single day for 60 hours a week, or whatever it might be.
That’s probably not what you’re doing. If you’re a condo investor, you probably have a day job and a life and a family and everything else, so you don’t have the time and the resources, and the access to MLS and everything else, to be studying the market like that. That’s what I do. Again, that’s what I help investors with, if you don’t know, is I help you understand all those figures and numbers side of it to help you make a great investment. Okay, I’m going off on a bit of a tangent here.
Getting back on track, we’re going to talk about this particular unit, give a bit of a case study here, and a breakdown. So the client was saying, “Is this a good buy, Andrew? I’m not sure.” This unit is downtown, it’s in the low 700s per square foot, the idea is maybe this seems a little high.
Part of, again, what’s happening in the market right now, in the other, bigger context of the market, is the market is moving so quickly that it’s hard, even for me, to sometimes realize where prices are in the resale market, what real people are actually paying for real properties on the street, so to speak, in the resale market as opposed to the pre-construction market, which is driven primarily by investors. It’s a little bit detached from the day-to-day realities of people buying and selling, moving, renting, living in actual properties, as opposed to investors buying floor plans and so on.
When you look at what’s actually happening on the street in the market right now, prices are rising very, very rapidly. Something that would be considered expensive three months ago is normal today, or maybe even a bargain today, because things are just moving very, very quickly. Prices are appreciating at approximately 25% on an annualized basis right now, downtown, 25%. So you can imagine, every month, that’s about a 2% gain every single month that goes by.
You really have to keep on top of the market and understand what the market is doing, so that if an opportunity is presented to you, you’re not missing out on a good opportunity because you think it’s expensive, when really it’s not.
So is something in the low $700 per square foot, in a good location downtown, in a good building downtown, a building that has good features and finishes downtown, is that a good buy today? Well, the short answer is absolutely 100% that’s a good buy. Obviously, every case has to be analyzed individually, every floor plan has to be analyzed individually. You can’t just make a blanket statement and say, “If you’re buying at this PSF, then it’s a good buy,” it’s not that simple. But if you follow where I’m going here, you can see that something in the low 700s is a very good buy for a pre-construction investment today.
I just pulled some of the recent resales, just from 2017. We’re recording this here March 1st, so it’s only two months into the year. I only looked at stuff from the last couple of months. Again, stuff from six months ago is kind of irrelevant. Markets are very different from six months ago. Just looking at the past couple of months, what kind of resale transactions are taking place?
Here’s a few examples: 8 The Esplanade, so this is L Tower building, two bedroom, two bath unit, 18th floor, sold for $914 a square foot. $914 per square foot.
I should mention that the examples I’m going to give here today are just from the downtown east side, Downtown East, because this particular opportunity that we were looking at was also in the Downtown East. So not even looking at stuff at Yonge & Bloor, or along the Yonge line, Yorkville, King West, Waterfront, not looking at those areas in this particular case. Just looking at what’s selling in the Downtown East, because this was a Downtown East opportunity.
So there was one, $914 a square foot. Another one, Market Wharf Condos, two bedroom, $855 per square foot. Another one at Market Wharf, a one bedroom, one bathroom unit, $863 per square foot. Pace Condos, Jarvis & Dundas. Yes, Jarvis & Dundas. Definitely, a few years ago you would not want to be hanging out at that intersection late at night, but here we are, 2017, Jarvis & Dundas, $816 a square foot, 13th floor unit, no parking. No parking.
Another unit in the same building, $828 a square foot, even higher. Again, no parking, and this unit was only on the sixth floor, so these are the low floor units, no spectacular views or anything, well over $800 a square foot.
Here’s a couple more examples: 318 King Street East, this is the King East building for those of you who know it, King & Parliament. Again, not beside the subway, quite a ways off of Yonge street. Many people would not think that something at King & Parliament would be considered super prime real estate, but again, if you’re not up-to-date on what’s happening in the market, and the changes that are taking place every single year downtown, the market’s going to fly by you and you’re going to miss out these opportunities. $880 per square foot. $880 per square foot for a one bedroom, one bathroom unit on the 12th floor. This unit did have a terrace and a parking spot, but still, $880 per square foot. Another one in the same building, 318 King Street, sold for $840 per square foot, on the 10th floor. Again, another one bedroom, a den, with one bath, 840.
Here’s one that I found at, that just came through I think last week actually, 400 Adelaide East. This is the Plaza building, Ivory Condos, Adelaide & Sherbourne. A one plus den, large den, good enough to be a second bedroom, two bathrooms, sold for 860 per square foot. Seventh floor. Again, these are not 50th floor, 60th floor, crazy high, unbelievable views to Niagara Falls, something like that. These are just ordinary units, lower floor units, sort of 20th or below.
Just run through those numbers again. I gave one, two, three, four, five, six, seven, eight quick examples, here. 914, 855, 863, 816, 828, 880, 840, 860 per square foot. These are the per square foot sale prices.
Again, good units in good buildings are regularly selling for well over $800 and $900 a square foot. Not even getting into, like I said, the many buildings that have already hit $1,000 per square foot. I mentioned them, I think, in the last episode. INDX Condos, Karma Condos, Yonge and Bloor, Five Condos, Casa, Lumiere, Theatre Park, U Condos, Charlie Condos, 75 Portland, the list goes on. Many buildings have hit $1,000 a square foot now. 800 is sort of pretty standard now, for good product. 800 to 850 is pretty standard for good product in good locations downtown. It’s creeping up on 900, but yeah, so that’s some examples there.
Other examples, comparing it to pre-construction, just maybe I won’t mention the building per se, you can fire off an email to me if you want all the specifics on this. There was a building, also in the Downtown East, that just was launched in the past few months, and they just sold a unit, 28th floor, two bedroom unit, for $914 per square foot. And another unit on the eighth floor, so again low floor, not really any views per se, $834 per square foot.
Another building on the east side, which was also launched in the past couple of months, this is not a Yonge street address, this is a Church Street address, actually Church Street. Units are selling over $1,000 a square foot. I pulled one example of a 27th floor unit, $1,078 per square foot for that particular unit, so over $1,000 per square foot.
Okay, so that, hopefully, paints you a picture if you’re wondering about investing, and if you’re looking at something that is, like this person was or is, is looking at something in the low 700s per square foot. Is that a good investment? Is that below current market value? Absolutely 100%, no question about it, it is.
Again, it’s a great time to invest in the pre-construction market because the resale market is moving so quickly. Builders cannot keep up with the resale market. They don’t raise prices that quickly, and are not that responsive to the changes in a market. There are these opportunities where a builder will put a product out, and will put a price on it and they will sell a few, and then time goes by, one month, two months, three months. Generally, a builder is not raising prices on a daily or weekly basis, or even a monthly basis. They’re looking at things more on a quarterly basis, something like that, in many cases.
So there’s these opportunities that come up, where again, it might have been expensive three months ago, but today it’s cheap. If you can buy something like this, in the low 700s per square foot, absolutely, it is a great, great investment based on the market today.
Okay. I hope you found that useful. Again, if you want more details on that, and the specific units that I’m mentioning here that are selling, if you’re scratching your head and thinking, “What? Andrew, I thought 700 or 750 a square foot was high. I can’t believe that units are actually selling for 800, 900, $1,000 a square foot,” and you want me to send you some of those numbers to see with your own eyes, go ahead and email me, [email protected], and I can fire that off to you.
I should mention, as well, if you are looking to invest, and if you want to get in on something like this investment that I’m talking about, in the low 700s per square foot in the Downtown East, then please, give me a call, send me an email, and we will get you a unit there, as well, and it’s a great investment opportunity right now.
Okay, thank you very much for listening, and until next time, I hope you are having a great day and a great week. We’ll talk to you soon.
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