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Sometimes The Best Deals are NOT Advertised

New condos are launching at a rate of about one per week right now in the downtown core. However, don’t be mistaken in thinking this means solid investment opportunities are coming at a rate of one per week! In fact, there is usually a negative correlation between the number of new condo launches and the number of quality investment opportunities available. The opportunities are actually quite rare right now in my opinion. There are only a handful of projects that I am comfortable in recommending to my buyers and investors.

As with any other product or service, the best deals in real estate are often unadvertised. If you see a billboard or glossy ad in a magazine proclaiming the “suite of the month” or “special offers on now”, chances are there is no deal to be had here. You won’t find the best deals on a billboard or in a glossy magazine or taking up a page in the Globe and Mail. As with any other product or service of any value, the best deals in real estate are often the unadvertised ones.

This past weekend, some of my investor clients were able to take advantage of such an opportunity at a A1 condo project downtown. I received nothing more than a good old fashioned phone call from one of the developer’s sales reps informing me that if the developer sold a certain number of units in a certain period of time they would get a better rate on their construction loan. The developer was motivated and thus, offered significant CASH discounts off the list prices of their remaining inventory. Not a dime was spent on marketing or advertising this deal. The only people who heard about it were a handful of Realtors like myself who were called directly. My clients are very happy and the deal is now done. Prices are back up to the list prices.

My reputation and track record as one of the top Realtors downtown for pre-construction means my clients get access to these exclusive, unadvertised deals from time to time. To get on my list for these types of deals in the future, simply contact me and I will be happy to include you on future opportunities.

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Developers Rolling Out Incentives

There has been such a crush of new condo launches in the past 6 weeks that developers are now actually being forced to compete with each other for buyers! Who’da thunk it! There have been so many launches (or at least soft launches to the Realtor community), representing thousands of units of inventory that even though most of these developments are selling very well (Tableau reportedly received ~1000 worksheets submitted for ~400 units), they are not selling ‘enough’ units in the eyes of the people responsible for selling them. When this happens, incentives start rolling out for buyers (developers are loathe to actually reduce adjust prices.)

Over the past few years, prices have risen dramatically on a per square foot basis. I was just talking to an investor today who bought at the Ritz Carlton for $650 PSF about 5 years ago. Now that is pretty much the going rate for mid-market condos in the same area. But while price on a per square foot basis have been soaring, the actual prices of the average 1 bedroom, 1+den, 2 bedroom etc. have remained somewhat flat. Developers have been shrinking suites and getting creative with their floor plans. A $300K 1 bedroom is a lot easier to sell to the masses than a $450K 1 bedroom is. But we’ve reached a point where suites can’t really get much smaller and so the average investor off the street is starting to get downright scared by the prices that they see: $400K+ for 1 bedrooms, $500K+ for 2 bedrooms, $45K for parking etc.

Incentives are starting to roll out even for projects that are still in the VIP selling stage, which is not something you usually see. Incentives that I have personally seen are something like $5-20K in rebates at final closing, or slightly discounted parking spots, or 15% deposits instead of 20% (up front). Nothing earth shattering, but these did not exist 3 months ago. Still, I don’t see this as a fundamental problem with the market, or a pre-cursor to some sort of market correction, but rather I think it’s due to 3 factors:

1. Timing issue (too many projects launching at the same time all vying for the same investors)
2. Perception problem ($400K 1 bedroom units)
3. Lack of differentiation. So many of the developments that have launched lately are very ‘vanilla’. Nothing about them really ‘stands out’.

Contact me with any questions or to find out which developments are offering the best incentives downtown!

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ART Condos Wants to Start Construction

From time to time I am able to offer my buyer clients special privileges because of either my own relationship with a particular developer or because of my brokerage’s affiliation with one. This week I have a special offer from ART Condos. Art is a 150 suite boutique loft building on Dovercourt, one block south of Queen Street. Suites range in size from @500sf to 1650sf 2 storey three bedroom with a patio. Prices are from $227,990 and parking is $30,000.

ART condos in Queen West is very close to hitting their sales targets for starting construction. They only need about 17 more units sold. In order to expedite the last few sales, they are offering an exclusive to my clients and other clients of Remax Condos Plus. On Wednesday June 23 they are having an exclusive sales event.

Special incentives for buyers at this event

• Zero assignment fee
• $2500 cashback on closing for studios, one bedroom and one bedrooms and den
• $5000 cashback for 2 bedrooms, 2 bedrooms and den and 2 storey 2 bedrooms
• Deposit Structure for select units has been reduced to only 10% in 90 days + 5% at occupancy!

If you are interested in purchasing a unit at ART condos, this is a great opportunity to get in before construction begins. Contact me for more information.

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Fly Condos Set to Relaunch

Fly Condos launched about 7 months ago and sales were decent at first but then quickly dropped off as the market changed in October/November quite dramatically.

Like many developers, Empire is not just sitting around waiting for buyers to walk through the door. They are getting aggressive with pricing and incentives. Recently they launched an advertising campaign announcing suites from $159,900. This number has gotten them a lot of attention as investors and first time buyers alike are salivating at the prospect of buying a condo at Front and Spadina for under $200K.

They have redesigned the building and split up many larger suites into smaller suites. Originally the price per square foot was averaging around mid $500s. Now, prices will be averaging about $465 per square foot. This is represents a significant drop in prices and Empire is banking on investors and first time buyers by making 60% of remaining suites priced under $300K.

This just might be the perfect opportunity for buyers who have been sitting on the sidelines to enter the market.

Check back here later this week as by then I should have all the new prices and floor plans for an upcoming broker’s VIP sales event. Register with me if you want to be first to get the info.

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Giraffe Condos Offers Confidence Guarantee

Giraffe Condos is offering a three-part guarantee for buyers. From their website:

EMPLOYMENT GUARANTEE:

Worried about the financial crisis and possibly losing your job? Purchase with confidence that in the case of a job loss, we will refund all deposits made towards your new home.*

PRICING GUARANTEE:

Take the fear out of buying at the wrong time and dropping home prices.  Purchase with confidence knowing that if the price of your home is lowered we will pass on the savings to you.*

FLEXIBLE DEPOSIT STRUCTURE:

Talk to our sales representatives about structuring your payments so that it makes financial sense to your personal savings and cash flow needs.*

They all have *asterisks* behind them, so make sure you read the fine print, but nonetheless another sign of the time we  are in and kudos to TAS Design Build especially for including the 2nd point about the pricing guarantee. These types of incentives are now a major trend in the Toronto market. If you are buying into a development and they are not offering you good incentives, demand that they do!

I wasn’t around for the last major real estate correction in 1989, but I highly doubt developers at that time were introducing programs like these to stimulate a slagging real estate market. Expect developers to get more and more aggressive with the incentives for the remainder of 2009.

Questions? Comments? Contact me.

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Monarch Introduces “Sales Tax Protection Program”

I received an interesting email from Monarch today that stated:

Unsure of how the Harmonized Sales Tax (HST) will affect your condominium purchase?

Rest assured!

Let your confidence soar with Monarch!

Monarch understands your concerns about the Government of Ontario’s intentions to harmonize the PST with the Federal GST.

To ease your concerns of buying a new condominium and to assure you that the purchase price of your suite is not increased by the harmonized PST, Monarch has implemented a “Sales Tax Protection Plan*” which guarantees you that Monarch will pay the additional tax if the additional “Harmonized” PST applies to the Purchase Price of your Suite while this program is in place.

As the email states, Monarch is offering to pay the additional taxes incurred if the Provincial government goes through with its proposal to harmonize the PST and the GST which will effectively mean that all new homes and condos will be subject to a 13% tax (as opposed to just the 5% GST).

They are the first developer I have heard to do this. I suspect others will follow with similar promises.

Yet another example of a developer trying to instill confidence in buyers and stimulate demand in a stagnante market.

The most interesting thing from my perspective is that it shows that developers (even large ones like Monarch) are getting more responsive and are adapting faster to the marketplace. And they need to. Buyers are looking to buy in developments where they feel that the developer ‘gets it’ and does not have their head in the sand with respect to the current economic conditions.

Current projects by Monarch include Twenty Gothic at High Park, Couture at Bloor and Jarvis, and Vibe in Liberty Village, and Quay West at Tip Top.

I’d love to hear your thoughts. Leave me a comment or contact me directly.

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Cityplace Offers 20% Off Units*

*I had to put an asterisk right in the title of this post because of course there are plenty of stipulations on this promotion from Concord Adex. It may sound too good to be true…but it’s not entirely.

It’s starting to feel like 2007 all over again as would-be buyers have been lined up at Concord’s sales office near Front and Spadina for a few days now to take advantage of this sales event happening this Saturday at 12 noon. It is in celebration of Concord’s 20th anniversary in Canada.

The conditions:

• 20% off is applied as a cash rebate at final closing (so you pay $300K for the unit and Concord promises to rebate  you $60K at final closing)
• Only applies to the first 20 purchasers in line on Saturday March 28th at noon (First unit purchased will receive the 20% cash-back, any subsequent units purchased by the same person will get 15% cash-back)
• Only applies to units at Parade Tower 1 for Cityplace, and for buildings A,B and D at Park Place (Concord’s other mega-development at Leslie and Sheppard)
• Subsequent purchasers who buy units on March 28 will receive a 15% cash rebate – not a bad consolation prize

The first 20 spots are already locked up by people who have been camping out at the sales centre, but if you are an investor or first time buyer looking to get a good deal, the 15% off could be a great opportunity. As long as you are not too picky about what suite you purchase, because most of the prime suites are long gone from Parade 1.

If you would like more information on this promotion from Concord feel free to contact me.

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Developers Getting Aggressive With Buyer Incentives

Resale prices have dropped, sales figures are a fraction of what they were a year ago, and buyers are out there but reluctant to pull the trigger. What’s a Toronto condo developer to do?

In a slow market, developers are loathe to actually lower their prices as it devalues the entire project, pisses off previous purchasers and investors, and is generally considered to be a major sign of weakness. So how does one sell condos en masse in this market? More and more developers are getting creative with buyer incentive programs.

The Ritz-Carlton just started a promotion where, for the next 10 units sold, buyers will receive $250,000 in travel vouchers, redeemable in $25,000 increments every year for the next 10 years at for visits to any Ritz-Carlton hotel in the world. Wow. Even I am impressed by that. There are 29 units still available, ranging from $1.3-million to $9-million for 1,400 to 6,000 square feet. One of two lower penthouses is still available.

Bloor Street Neighbourhood and Casa – both projects by Cresford near Yonge and Bloor under construction and occupying in about 12 months – are offering purchasers of 2 bedroom units to ‘live free for a year’. How this works out is a credit upon closing that is equivalent to 1 years worth of mortgage payments on your condo. Doing the math on the purchase of a $660,000 unit, this promotion amounts to roughly $31,000 or 4.7% of the purchase price. Not too shabby and certainly much better than anything that was available to purchasers in the fall of ’08.

Expect to see more and more of these incentives popping up at new developments as developers and marketers attempt to lure would-be buyers off the fence and into a new condo.

Photo from Urban Toronto member Solaris

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