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Tag Archives: new condos in toronto

An urban planner warns: Beware of the too-cheap Toronto condo

Tara Perkins – The Globe and Mail

Ute Lehrer, an associate professor at York University, would like to see people paying more for Toronto condos.

Why? Because you get what you pay for, she says.

“Sometimes you have to invest more up front in order to save later,” says Ms. Lehrer, who has a PhD in urban planning. “If I had the authority to advise, I would actually suggest that the entire building industry produce higher-quality condominiums over all, and that, of course, means higher prices.”

Comment: But the consumer wants lower prices. That is why condos keep getting smaller, people don’t want to pay more. Decent-size condos that are built well are simply too expensive for the average buyer. Blame it on Groupon, but everyone wants a deal.

Her desire to see higher prices runs counter to calls for more affordable housing. Homes in Toronto are now more expensive than those in New York or Tokyo when you compare prices to income levels, the Paris-based Organization for Economic Co-operation and Development pointed out this month. Condos are providing a more affordable alternative to houses in Toronto. The costs of owning a two-storey house amount to 65.3% of household pretax income for average families in Toronto, while for condos it’s 34.2%, according to the most recent numbers from Royal Bank of Canada.

Comment: That makes NO sense. The median sale price in NYC is $1,170,494, as compared to $582,100 in Toronto in mid-June. Tokyo is harder to compare, especially since it is in the middle of a rebound after 20 years of dropping prices due to the whole Asian Financial Smashup from the 1990s. From the little in English I can find, there are studios for $500,000 and 2-bedroom condos for $750,000 – US dollars. Some luxury condos are selling for $1,941 USD / sf. And there are some new ones over $2,200/sf. Those are closer to NYC prices than Toronto prices. So no, Toronto is NOT more expensive that NYC or Tokyo, quite the opposite. Income levels aside. I am sure I could find a ratio of rent to tomatoes to make any one of those 3 cities more or less expensive than the others. At the end of the day, it is the sticker price that matters.

Cheap Toronto Condos
Condo prices in Toronto have been stagnant for about two years, as policy makers and economists have worried that too many units are being built. Toronto-Dominion Bank has forecast a 4% drop in prices this year, followed by a further 4% drop next year, because a large number of new units will be completed. Developers are holding the line on prices and offering incentives to keep sales going. The benchmark price of a new unit in the city is now $437,663 according to RealNet Canada Inc.

Comment: That is the stupidest and most tired argument out there. And false. A condo must be 70-80% sold before you see a crane. By the time the building is completed, it is usually around 90% sold. At registration, the average is 96.5% sold. How can there be too much building when almost everything is already bought when it is built? Developers do not build condos and then try to sell them. Even though that is what the media makes it sound like. Secondly, condo prices and sales have risen every month this year new and resale. TD is way off, with condo prices up 7.6% in May, a far cry from a 4% drop. Lastly, condo developers – and house builders – have offered incentives since the dawn of time. It is not new, it is not something they are being forced to do to make sales. I bought my first new house in 1999 and we got upgraded kitchen cabinets and floor tiles, plus a whirlpool tub in the master. Others get stainless steel appliances or granite counters or hardwood. Free Metropasses, no condo fees for a year, you name it. And condo prices have been anything but stagnant for the past 2 years. The average condo price in June 2012 was $364,597 an $397,942 as of mid-June 2014. That is a 9.1% increase in prices in 24 months. And sales rose 10.6% in that same time frame. Those numbers are the exact opposite of stagnant.

The reason Ms. Lehrer is concerned about prices boils down to construction standards, which she thinks are often not up to par. In her opinion, it’s the majority, not the minority, of Toronto condo developers who are not paying enough attention to quality. And that, she says, will result in headaches down the road – not only for condo owners, but for Toronto residents who will have to put up with more construction and repairs.

“These buildings, within 10 or a maximum of 20 years, will need major renovations,” she says. “And that’s pretty scary.”

Comment: Umm… all condos need renovations at 20 years. Same as the roof of a house wears out and needs replacing, so does a condo roof. Hallways need new carpet, much as units need new flooring. In fact, 20 years is the generally accepted repair cycle for condos and apartment buildings, office buildings as well, any large facility like that. It is not new, nor is it news. That is what condo fees go toward, the reserve fund. That is used to elevator maintenance, garage repairs or roof work.

She notes that while house owners can determine whether or not to do preventative maintenance such as redoing a roof, condo owners do not have the ability to single-handedly make those decisions because they are in the hands of condo boards. And she wants people to know that money spent now can become money saved later.

Comment: Actually, no. If your roof is leaking, as a homeowner, you have to repair it. Pay less now or more later, that is how it works. And condo boards have meetings and elections, the average owner does have say in things. Go to meetings, vote, participate. Run for the board, have a say in the governance of your building.

While problems such as falling glass get attention, she says the bigger problem could be the issues that aren’t so hazardous. “It’s about the everyday life experience that comes from the quality of the building,” she says.

“Toronto has not been known for paying attention to high-quality buildings,” Ms. Lehrer says. “I’m not an inspector, but from talking to people in the business, a lot of them have said that over the last three years, there have been quite a number of companies that are cutting more and more corners.”

Comment: Wow, what a load of hearsay!

“We know that in 10, 15 years, these buildings will need major renovations, and we are going to have to deal with that in a city that is pretty dense and built-up,” she says.

Comment: But I do agree. In the race to build fast and build cheap, there are bound to be corners cut.

Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto real estate agent with Century 21 Regal Realty.
He did not write these articles, he just reproduces them here for people who
are interested in Toronto real estate. He does not work for any builders.