Greed

4. March 2010

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Greed is bad. Greed distorts reality and greed in the condo market hurts both buyers and sellers, consumers and developers. Recently I’ve noticed some signs of greed finding its way into the downtown condo market. To me, this is a sign the market is about to change as an impending inventory surge in the resale market in the latter half of this year will affect all sectors of the market including new developments.

Here are a few recent observations:

  1. One developer recently offered 5% deposits on their remaining suites, but they also raised their asking prices by as much as $20K on each suite! I was very excited about this particular offering for my clients until I discovered the massive price increase that preceded it, therefore I could not in good conscience feature it on my blog.
  2. Another developer I have been dealing with is ‘capping’ closing costs at $8000 for 2 bedrooms and $7000 for 1 bedrooms – not much of a cap at all when you consider the industry average is something more like $5000 which is up from about $3000 a few years ago.
  3. Finally, another developer, in my opinion, raised prices far too much between the VIP stage and the public release stage. They had huge demand for suites at the VIP stage but they shut buyers out by limiting the number of suites they released, then after they raised prices demand seemed to wane off significantly as buyers moved on to other projects.

These are just anecdotes, but in my opinion they show that the tide has turned in the condo market – we have reached a tipping point and moving forward prudent developers will recognize buyers won’t buy just anybody’s cockatoo – they need to offer value and need to be reasonable, especially with investors.

Questions or comments?  Leave a comment or email me.

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How Bad is The Market? Not “That” Bad

20. February 2009

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“How’s the market doing?” It’s the classic question that I get asked daily from clients, friends, family, and even strangers. No one wants to know how I’m doing or how the family is, it’s all about THE MARKET! 

The current assumption right now is that the market is bad. Really bad. It seems the various headlines in the newspapers and websites talking about the plummeting sales and falling prices have changed the mindset of the population. Just as the mainstream media hyped up the rise of the Toronto Condo market over the past several years, they are now doing their best to broadcast it’s apparent downfall. 

There is a perception that sellers are in desperate times, that firesales are happening left and right, and that buyers are getting massive discounts from asking prices. Truth be told, it’s really not that bad.

I’ve been in 4 separate offer situations (on both the buying side and the selling side) in past 10 days where an offer was put in writing but the deal did not happen for the same reason: buyers want a deal and sellers do not want to give them one.  

I am not seeing any panic selling.  Sellers are for the vast majority, not in any desperate situation where they will sell at any price. 

Some may say that sellers are just avoiding reality, that they are still stuck in the past and think they can command any price for their properties. Personally I think that it is just a slow market. There are many properties that will sell after 60 or 90 days on the market and the selling price will be 97-99% of the asking price. 

Edit: There are always exceptions to the rule. Since first drafting this post, one of my ’4′ offers that did not work out, actually did work out. The sellers gave in to my buyers somewhat ridiculous demands and so my buyer-clients are walking away with what I think is a really amazing deal.

Questions? Comments? Contact me or leave me a comment below.

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July Statistics for New Condo Sales

26. August 2008

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When it comes to real estate statistics, I always take everything with a grain of salt. Fact is, most real estate statistics are compiled and released for general media consumption by the real estate industry: Real Estate Boards, CMHC, Real Estate Marketing companies, Realtors, Lenders, etc. They have a vested interest in a robust housing market. Inevitably this bias will shine through.

I was just reading through the latest numbers from BILD (Building Industry and Land Development Association) and if you just read the headline from the press release, you might conclude that everything is rosy in the new homes and condominium market in Toronto.

The headline reads: “Condo Sales Reach New Heights in July”. Now this can be interpreted in several ways and ‘New heights’ could mean just about anything. In this case it is referring to the fact that new home sales in the high-rise category (i.e. condos) were the highest for the month of July when compared to any other month so far this year. However, looking closer at the numbers clearly shows that the sales figures for July for new condo sales are actually down about 21% compared to July of 2007. Overall, new condo sales in the GTA are down about 22% for the YTD for 2008 when compared with 2007.

Also interesting from this press release is that condos appear to be taking up a greater and greater share of the overall market for new homes in the GTA. The reason given is land that land is becoming scarce. Builders are building up rather than out.

If you have any questions, feel free to drop me an email or leave a comment.

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