Comments on: Price of New Condos Holding Strong Despite Plummeting Sales http://truecondos.com/new-condo-market-sales-statistics-december-2008 New Condo Development Specialist Mon, 06 Feb 2012 15:13:11 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: Andrew la Fleur http://truecondos.com/new-condo-market-sales-statistics-december-2008/comment-page-1#comment-2695 Andrew la Fleur Tue, 03 Feb 2009 19:08:15 +0000 http://andrewlafleur.com/?p=497#comment-2695 Crap Cutter, Good to hear from you my old friend. Crap Cutter,

Good to hear from you my old friend.

]]> By: Cut The Crap http://truecondos.com/new-condo-market-sales-statistics-december-2008/comment-page-1#comment-2685 Cut The Crap Tue, 03 Feb 2009 13:46:49 +0000 http://andrewlafleur.com/?p=497#comment-2685 Hi Andrew, Prices in Condos strong? I know realtors are notorious for spin but...WOW! This is coming from the guy that said a recession was good for Canadian Real Estate? http://www.blogto.com/city/2008/01/us_recession_and_the_toronto_real_estate_market/ Hi Andrew,

Prices in Condos strong? I know realtors are notorious for spin but…WOW!

This is coming from the guy that said a recession was good for Canadian Real Estate?

http://www.blogto.com/city/2008/01/us_recession_and_the_toronto_real_estate_market/

]]> By: Toronto Bear http://truecondos.com/new-condo-market-sales-statistics-december-2008/comment-page-1#comment-2595 Toronto Bear Sat, 31 Jan 2009 00:07:24 +0000 http://andrewlafleur.com/?p=497#comment-2595 Fair points guy, and no-doubt they also come into play. What may also come into play: 1. Rising unemployment 2. Lower wages 3. Reduced access to bank loans due to tight credit market 4. Global "panic" and "gloom and doom" 5. Return to historical lending standards 6. Return to historical price/income ratio (approx 3 x income) 7. Return to historical price/rent ratio (currently at or near all time high, probably excluding 1989). While the supply may be manipulated by the developers, the demand will be vastly reduced. (In this case I define demand not as "desire" to get a mortgage but rather, the ability). I guess only time will tell, but I know where I'd put my bet. Not only that, as previously owned (but still very new) condos prices drop, they still do act as "comps". People looking to buy new are not going to pay insane premiums over a comparable property that is only one or two years old. Cheers and thanks for your opinions and your time putting together this great resource for your readers! Toronto Bear Fair points guy, and no-doubt they also come into play.

What may also come into play:

1. Rising unemployment
2. Lower wages
3. Reduced access to bank loans due to tight credit market
4. Global “panic” and “gloom and doom”
5. Return to historical lending standards
6. Return to historical price/income ratio (approx 3 x income)
7. Return to historical price/rent ratio (currently at or near all time high, probably excluding 1989).

While the supply may be manipulated by the developers, the demand will be vastly reduced. (In this case I define demand not as “desire” to get a mortgage but rather, the ability).

I guess only time will tell, but I know where I’d put my bet.

Not only that, as previously owned (but still very new) condos prices drop, they still do act as “comps”. People looking to buy new are not going to pay insane premiums over a comparable property that is only one or two years old.

Cheers and thanks for your opinions and your time putting together this great resource for your readers!

Toronto Bear

]]> By: Andrew la Fleur http://truecondos.com/new-condo-market-sales-statistics-december-2008/comment-page-1#comment-2585 Andrew la Fleur Fri, 30 Jan 2009 17:16:18 +0000 http://andrewlafleur.com/?p=497#comment-2585 I don't think anyone is saying that prices will not go down on new condos. But I think that the reason why prices are still rising (or at least not falling), are because the pipeline has essentially been cut off completely, and developers are stubborn/hopeful/delusional about the reality of the market. I'm sure anyone who reads this blog aced econ 101, because we are just that type of crowd ;) I don’t think anyone is saying that prices will not go down on new condos. But I think that the reason why prices are still rising (or at least not falling), are because the pipeline has essentially been cut off completely, and developers are stubborn/hopeful/delusional about the reality of the market.

I’m sure anyone who reads this blog aced econ 101, because we are just that type of crowd ;)

]]> By: Brad J. http://truecondos.com/new-condo-market-sales-statistics-december-2008/comment-page-1#comment-2583 Brad J. Fri, 30 Jan 2009 16:45:11 +0000 http://andrewlafleur.com/?p=497#comment-2583 Toronto Bear, do you have any sources? The author is saying that because developers can constrict supply to match demand (on newbuilds only), prices on newbuilds should remain relatively stable. So far that's the case and it explains the mismatch between hi and lo rise price patterns int he second graph. Anyone who's passed Econ 101 can draw a supply/demand curve and verify this themselves. http://en.wikipedia.org/wiki/Supply_and_demand Toronto Bear, do you have any sources?

The author is saying that because developers can constrict supply to match demand (on newbuilds only), prices on newbuilds should remain relatively stable. So far that’s the case and it explains the mismatch between hi and lo rise price patterns int he second graph.

Anyone who’s passed Econ 101 can draw a supply/demand curve and verify this themselves.

http://en.wikipedia.org/wiki/Supply_and_demand

]]> By: Toronto Bear http://truecondos.com/new-condo-market-sales-statistics-december-2008/comment-page-1#comment-2570 Toronto Bear Fri, 30 Jan 2009 03:09:55 +0000 http://andrewlafleur.com/?p=497#comment-2570 It might be prudent to point out that the trend you highlight has been seen around the globe in the initial phases of the housing busts. Drastic drops in sales which are accompanied by smaller and smaller price increases. I realize you are not in the business of forecasting, but I will state for your readers that this is a global trend and TO is no different. I'd be happy to put a friendly "farmer's bet" that price declines on new condos are not far off! It might be prudent to point out that the trend you highlight has been seen around the globe in the initial phases of the housing busts. Drastic drops in sales which are accompanied by smaller and smaller price increases. I realize you are not in the business of forecasting, but I will state for your readers that this is a global trend and TO is no different. I’d be happy to put a friendly “farmer’s bet” that price declines on new condos are not far off!

]]> By: Brad J. http://truecondos.com/new-condo-market-sales-statistics-december-2008/comment-page-1#comment-2501 Brad J. Tue, 27 Jan 2009 19:20:39 +0000 http://andrewlafleur.com/?p=497#comment-2501 Sounds about right. It's interesting to see that 2008 new condo sales were above or at the same level as years 2000-2004 inclusive, although the first quarters of 2008 may have been much more brisk than the final quarters. I would also agree that financing a project is key, because new financing has all but dried up. I suppose there is plenty of supply in the pre-owned market for would-be buyers of new developments to opt for existing units instead. I also wonder about the profit/loss change from a builders' perspective. A $300K condo may cost the firm $260-270K to develop, plus the comission of the selling/buying agent (~$18K). Suddenly a $10-20K discount to the selling price could affect P&L dramatically. Sounds about right. It’s interesting to see that 2008 new condo sales were above or at the same level as years 2000-2004 inclusive, although the first quarters of 2008 may have been much more brisk than the final quarters.

I would also agree that financing a project is key, because new financing has all but dried up. I suppose there is plenty of supply in the pre-owned market for would-be buyers of new developments to opt for existing units instead.

I also wonder about the profit/loss change from a builders’ perspective. A $300K condo may cost the firm $260-270K to develop, plus the comission of the selling/buying agent (~$18K). Suddenly a $10-20K discount to the selling price could affect P&L dramatically.

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