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Pricing Starting to Favour Pre-Construction

Once upon a time in Toronto real estate, there was a rule  that investors followed religiously – you only buy a pre-construction condo if the price is lower than that of a comparable existing resale condo. If the price wasn’t lower than existing resale condos of similar quality in the immediate area, then it just didn’t make sense to buy. After all, why take on the risk of buying ‘from plans’ when you don’t know how long it will actually take to be delivered, what the final build quality will be like, and what additional surprise costs you may incur along the way.

When market really started to get hot sometime in mid-2007, and pre-construction condos became the thing everyone and their mom were investing in, this long-held rule was abandoned. Prices of pre-construction started to reach heights never seen in the resale market. $600 Per Square Foot was suddenly a normal rate for pre-builds, whereas resale prices were still hovering around $425 PSF.

Over the last six months, there has been a seismic shift in the resale market. Prices have escalated at about 2% per month since June 1. If you bought a condo on May 1st of this year anywhere downtown, it likely has appreciated about 12% in value. Congrats.

Prices have gone up so much and so quickly in the resale market that the value is now, incredibly, starting to once again favour pre-construction.  Resale prices in several of the ‘prime’ downtown buildings like College Park, The Hudson, The Met, 18 Yorkville, Mozo, are now routinely hitting the $550-$575 PSF range. One upper floor 1+den with parking unit at College Park recently sold for $660 PSF! With several pre-construction projects across the downtown still selling between $500-$550 PSF, it doesn’t take a genius to figure out where the best value for your investment dollar is and where it will be in the months ahead.

If you are interested in taking advantage of some hidden gems in the pre-construction market downtown, let’s talk.

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The Modern Set to Break Ground

The Modern on Richmond is set to break ground on construction this month. June 24th will be the official ground-breaking ceremony. This is great news. The Modern started selling right at the peak of the insanity surrounding the pre-construction condo market in Toronto and it was actually the same month as 1 Bloor East – November 2007. So it has been a long 19 months for purchasers who have been patiently waiting and wondering when this project would get off the ground (or under it!).

Originally The Modern was scheduled to occupy in March of 2010. With construction set to begin shortly, that date will likely be pushed back significantly. That may be shocking to some, but in actual fact it is far better than the current state of several other projects downtown which were also launched in Q4 2007  – Q1 2008 and have yet to break ground.

The Modern is about 80% sold out but there are some good units still available with pricing in and around the low to mid $400s per square foot. In my opinion, the Modern has some of the best floor plans in the city and the standard features are quite good. Several of my own clients have purchased in this project. For more info on The Modern, please contact me.

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Fly Condos: More Details Released

Fly Condos by Empire Communities. Register with me now for your chance to get on the VIP list for this exciting new development. Buy before the public and save thousands.

Empire Communities was having a Celebrity Look-Alike contest to promote Fly Condos and the winners were just announced today. Congrats to Tommy Matejka for looking like Jude Law and getting $75,000 off the purchase price of a suite at Fly if he decides to buy one. His mom must be so proud

They also released some more information on Fly Condos. Check it out below. Sounds like an exciting project.  Please contact me if you would like more information or if you have any questions.

Fly Condos is Empire Communities’ brand new condominium community coming soon to 352 Front Street West. This unique residential enclave will be situated between Blue Jays Way and Spadina in downtown Toronto. The 24-storey building will be crafted from glass and metal panels, with a unique interplay of distinctive and dramatic glass balconies on its western façade. The result of this design by Graziani + Corazza Architects will be an iconic addition to Toronto’s skyline that will complement this historic neighbourhood with its superb lines and intimate scale.

Fly combines all the essential elements: the right location,architecture, ambiance and amenities to nurture a lifestyle totally in sync with the times. Savvy Toronto urbanites will appreciate that it is possible for a whole community to be totally cool.

Fly will back onto Clarence Square – an urban park that is a true natural gem. Fly will also offer a landscaped promenade that connects to Clarence Square. Plus, the on-the-move crowd will enjoy living close to delectable restaurants, sizzling nightlife, renowned sports venues, and within walking distance to Toronto’s theatre and financial districts.
Residents of Fly Condos will live like stars in a building that features interiors and amenities by trend-setting Munge Leung Design Associates. These include the stunning white lobby with two-storey opaque green cut-glass columns, grey-veined marble floor and wall tile, white sculptural seating by Zaha Hadid, a modern chrome concierge desk, and white and gold metal origami-like birds throughout.

Residents will be able to host get-togethers in the stylish party venue with a chef’s kitchen complete with five appliances and access to the outdoor rooftop terrace with its private cabanas and barbecue station. The fitness centre is designed by George Chaker (founder of Diesel Fitness and Level V) and will feature the latest in workout equipment, a Yoga and Pilates studio, spinning area, sauna and more, all with a walkout to a private Zen courtyard ideal for meditation and seasonal yoga sessions. Overnight visitors can make use of a hotel-chic guest suite, and 24-hour concierge service will provide pure convenience.

Suites will feature ceilings that soar up to 10 feet in height at the Penthouse levels, which enhance the spacious feel of these well-thought-out designs. Each suite will also have a balcony or terrace extending the owners’ living space to the outdoors; custom-designed contemporary kitchens with sleek stainless-steel appliances and granite countertops; engineered hardwood flooring; rich ceramics and glazed porcelain tiles; plus striking views through expansive windows.

Fly Condos will offer studios, one-bedroom, one-bedroom plus den, two-bedroom, two-bedroom-plus-den, three-bedroom, and two-storey lofts with street entry. Sizes range from 480 to over 1,500 sq. ft., and prices begin from the mid-$200’s to just under $1 million. Occupancy is slated for Spring 2012.

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Mortgage Approvals for Pre-Construction Condos: Part 2

As I talked about in my previous post, understanding deposit structures and mortgage approvals is essential to purchasing a new condo from a developer in Toronto.

However, what do you do when you can get the funds for the deposits, but you run into trouble when it comes to securing mortgage preapprovals? This can occur for a number of reasons including:

• Income too low. The number one factor in getting mortgage approvals is your income. Lenders need to see you have enough coming in on a regular basis to ‘pay the bills.’
• Over leveraged. Many investors have several properties and/or contracts in their portfolio at any given time and this can stretch you thin, making the ratios that banks often use for pre approvals look out of wack.
• Self Employed or not enough employment history. Perhaps you are a new grad fresh out of school and your income is low now, but will increase substantially over the next 1-3 years. Or if you are self-employed, lenders often apply even more stringent qualifications before approving you.

So what are your options for getting pre approved? How can you overcome this hurdle and get the condo that you have been dreaming about or that is such a great investment opportunity? Here are a few ways to get around the roadblock

• Use a mortgage broker. Usually developers will have a specific lender they work with and ask purchasers to get preapproved through. And 9 times out of 10 that lender is one of the Big-5 Canadian banks. Their lending standards are often more rigorous than those used by mortgage brokers – who have access to dozens of lenders. Getting a pre-approval from a mortgage broker, if the developer allows it, can be a way around this dilemma for purchasers.
• Get a co-signer. For a number of reasons, you may not qualify for the mortgage at the time you want to purchase the suite, but perhaps you know that by the time the condo is ready for occupancy a few years down the road, your situation will likely have changed and you will qualify. In the time being, and just to get the qualification, why not get a co-signer to get you over the hump? You can always remove or change the other names on title before final closing. Time to put in the dreaded phone call to mom and dad…or your rich uncle who always liked you best!
• Negotiate. Depending on the particular developer, the stage of the marketing life cycle of the project, and the relationship that your real estate agent has with the developer, you may be able to simply remove the condition for mortgage pre-approval from the agreement, or make alternative arrangements that satisfy both parties.
• Letter of Commitment. If you are over-leveraged due to other properties or contracts in your portfolio, sometimes you can’t get a mortgage approval, but if you have a long-standing good relationship with your bank you might be able to get your branch manager or a mortgage manager to write you up a letter of commitment. A letter of commitment is similar to a mortgage approval, but it is less formal and is based more on the ‘good will’ of your relationship with the bank and their intimate knowledge of your personal finances. Sometimes this will satisfy the developer if they see that you are in very good standing with a well established lender even though you don’t technically qualify for the mortgage using traditional ratios etc.

So there you have it. Some suggestions for obtaining mortgage approval when difficulties arise when buying a new construction condo in Toronto.

If you have any questions about mortgage financing for new condos in Toronto, feel free to contact me any time.

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Deposit Structure and Mortgage Approval for Pre-Construction Condos

Not a very sexy post title I know, but just because you are buying a pre-construction condo in Toronto doesn’t mean that you can avoid the world of traditional mortgages.

Normally when you buy a pre-construction condo you have to put down a series of deposits to secure your suite with the developer. How much you pay and when you pay varies. Factors affecting the deposit structure include:

• The developer’s bank – what they require. Developers need to get mortgages too! The banks require them usually to get a 15% down payment as a minimum from purchasers.
• When you buy – when you purchase in the condo’s marketing life cycle. The earlier you buy, the less flexibility there generally is in the deposit structure. When a project has reached their benchmark amount of units sold to get their financing approvals and permits to begin construction, sometimes they ease up on the deposit structure and this is often a good time for purchasers to jump in again.
• The developer’s preferences and promotions. Some developers require more as a rule of thumb, some require less. Some offer promotions with flexible payment schemes, others do not.
• Who you are. Yes, developers have been known to practice deposit structure discrimination – that is, changing the deposit structure requirements based on who the purchaser is. Usually though this ‘discrimination’ is simply tied to whether or not the purchaser is a Canadian resident (often non-residents must pay significantly higher deposit amounts).

So deposit structure on new condos varies, but usually you can find something like 15% to be paid out in 3 or 4 installments over the course of 6-9 months after initially signing the agreement of purchase and sale. Then an additional 5-10% also is usually required at occupancy (not to be confused with condo registration date).

So you have manged to scrape together the money you need for your deposits and you are ready to go ahead with your purchase. Are you finished? By no means. The developer will gladly take your 15-25%, but they also require mortgage approval for the remaining amount. Here’s an example: say you buy a 1 bedroom and den condo for $300,000. You must pay out 20% in deposits over the next 3 years. 20% of $300,000 is $60,000. That leaves $240,000 in unaccounted for funds for which you need to get a mortgage pre-approval.

Sometimes buyers have the funds for the deposits, but for various reasons, getting a mortgage approval can be tricky. If you fit into this category, tune in the blog tomorrow for some tips on how to get around this dilemma.

If you have any questions about deposit structures and mortage approvals, feel free to drop me an email any time.

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U Condos at Bay South of Bloor: VIP Sales Event Coming Soon

U Condos coming soon from Pemberton Group. Register with me now for your chance to buy before the public at an upcoming VIP sales event.

U Condos is obviously named for it’s proximity to the University of Toronto’s St George Campus, which it shares neighbourhood space with on the corner of Bay St and St Mary St, just south of Bay and Bloor. Definitely considered one of Toronto’s best locations, Bay and Bloor is the heart of the Bloor-Yorkville and Toronto’s best shopping street.

The project will consist of two residential towers, one 45 storeys and 55 storeys high. Prices will start in the low $300s. The developer is Pemberton Group – the same developer behind another project in the neighbourhood – The Uptown Residences, Park Lake Residences, and The Boardwalk Residences in The Beach.  Contact me now for more information on U Condos.

Nov. 4 Update: Sales on now. Go to AndrewLaFleur.com/u-condos-vip for all the latest info. Plenty of great units still available. Now reserving units until Nov. 6 only! Sales office is NOT open to the public. Please Contact Me and I will send you the latest pricing and floor plans. Tower 2 will not be released until Tower 1 is sold out.

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300 Front by Tridel

300 Front St West coming soon by Tridel. For floor plans and pricing for the VIP sales event, please contact me.

Whenever Tridel launches a new project there is always great fanfare and 300 Front will be no exception. Why? Simply put, Tridel is the best developer in the city and possibly the country when it comes to condominiums. They have consistently put out a quality product at competitive prices and delivered it on time. The buzz has been building for 300 Front for a couple months now and VIP sales starting very soon . As always, my promise to my clients is that I will do everything I can to get you the unit(s) you want at the lowest price possible.

The condo tower that will be known as 300 Front St West will feature a 49 storey building with 672 suites. Occupancy date is roughly scheduled for Spring 2012.  Condos and lofts will start from 445 sq ft is size and go up to 2000 square feet (Signature suites). I have the price sheet in my possession and pricing is coming in around the $550-600 per square foot range.

Click here for 300 Front Street location
Click here for 300 Front Street site plan and amenities
Click here for 300 Front Street features (Gorgeous full colour renderings of 300 Front)

Click here for 300 Front Street floor plans

300 Front Street deposit structure:
- 5% upon signing
- 5% 90 days from signing
- 5% 180 days from signing
- 10% at occupancy

- Maintenance Fees at 300 Front St W is approx. $0.35 per square foot, plus hydro.  (parking and lockers will incur an additional maintenance fee)
- Parking at 300 Front St W is available at  $35,000
Parking available for only 1 bedroom + den and up

Contact me for Pricing for 300 Front.

I will get back to you immediately with the price sheet.

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