Want a Condo? Take a Number
Despite recent doom and gloom predictions for the Canadian real estate market, people are still lining up for condos here in Toronto. Case in point: College Park Phase 3: Aura. After watching the conversation on my last post on the development degrade into a weird debate on the validity of Chinese numerological beliefs, I thought maybe it was a good time to update the subject.
The line up for the broker's event grew slowly but steadily in the days before the event, and by the time they opened up the doors there were well over 200 agents waiting for a number. Yes, that's right, buying a condo in this town is not all that different from buying a nice cut of meat in Kensington.
Many of the 200+ agents were turned away as the developer only released a few hundred units for the broker's event and agents were permitted to sell a maximum of 2 units each. Predictably, they sold out all the units they released within a few hours. Still, it wasn't the bedlam that was witnessed at 1 Bloor, and more importantly, most thought they were treated relatively fairly by the developer and prices were more or less as advertised.
Anecdotal evidence suggests that Aura had a decidedly strong appeal overseas with many buyers hailing from Asia, Europe and the U.S..
Photo from Singtao
Andrew la Fleur is a registered real estate agent and regular contributor of blogTO.
Comments (31)
Those foolish to buy in this market will require even bigger fools to buy that pretty concrete box...I mean condo, off them. Best of luck, what with the US in a downturn and Canada soon to follow. You have to wonder nowadays, when the average family can't affort to buy an average home, who are all the resale consumers for these investment purchases?
But do they have a 4th or 13th floor? What happens if a mirror in the lobby breaks, will there be an exodus? Are black cats allowed?
"mac",
You think they are foolish? I'd say you are foolish, the Toronto market on a global scale is completely undervalued. For what Toronto offers these prices are a steal right now. Any foreign investor would be wise to grab a condo downtown Toronto. 5, 10, 20 years from now, Toronto will definitely be among the world class cities, and anyone who owns property in the downtown core will be singing.
I love the "Toronto is completely undervalued" argument. I remember hearing that in the 1980s before the last big real estate bust.
Big run-ups in real estate values are inevitably followed by corrections of varying degrees, just as stink always follows a fart.
"Mac" & "Patrick" I follow the real estate market in Toronto, Vancouver and New York. The properties in Toronto will level off at some point however globally they are under valued. The what you refer to the bust in the 80's was 1989 and the market is no where near the shape as it was then. The conditions are much more stable than it was then. Condos in the downtown core will double in 10 years -Then who will be laughing ??
Danny and jon, please understand, you need to derive value in living in the core to sustain the real estate prices. Unless I'm in the market for lousy club music or work at the banks, what's the desire to remain in the urban core? You have WAY too many condos going up (think cityplace) with no streetscape and as such, no pedestrian traffic. If the desire is to live downtown with no sence of urban anchor or sense of self, I suppose to each his own, though this isn't something that I would ever consider urban or attractive " on a global scale".
Here's a tip. Once the milkman, the doorman and every blue collar worker in-between start talking about how great an investment is, it's usually set to collapse. (if hostory is any indication). Caveat emptor.
I agree with you, mac. But I'd add this:
Any time you hear "it's different this time around" in reference to a massive runup in housing/stock/tulip prices, you should probably be skeptical.
Trust me, I've seen it before and been burned. Smart money never buys during a mania.
Danny, have you SEEN how many condos in the core are for rent nowadays? The market is flooded. Anyone who says there's no speculation in this market is kidding themselves.
Still, I hope you are right.
In the next 25 years the population of the GTA is forecasted to increase by at least 2 million (40%). Prices may not go through the roof in the next few years due to the current economic climate, but basic economics dictates there will be a very large demand for homes/condos for the foreseeable future.
Andrew,
No "doom and gloom predictions" here my friend. Just cold hard facts. The proof is in the pudding.
Real Estate sales in Toronto down 18% again for the month of March from the same time a year ago. Its the 3rd month in a row that has shown a double digit sales drop.
See a trend?
Toronto Real Estate Board Says GTA Resale Housing Market Still Down in March
http://www.marketwire.com/mw/release.do?id=834284&k=toronto%20real%20estate%20board
the reality is that people who bought CP1 or CP2 a few years ago based on floor plan, now easily make over $100k per unit if they decide to sell... same with the Met.. as for why living in downtown.. well, I used to live in uptown for almost 10 yrs, got really sick of the traffic and subway, which is NEVER reliable, plus the commuter parking lot at Finch is a joke.. so I have decided to live closer to work in dt... as for the view..I live on high floor, it is absolutely stunning! imagine you can see the lake, the city, and firework on July 1st and air show in the summer.. it is worth it..I would have bought a few more units in cp1 or cp2 if i had the money... probably not cp2(aura) coz the floor plans really suck
I'll be the fourth person to ask......WHY ARE THEY ALL ASIAN? Will a gold cat waving it's right paw be part of the design? I don't get it.
I think the bigger worry is going to be what happens to all those condos in 5 - 10 years when the young and single/couples start having families. You're going to raise a child or two in 850 sq ft? With a two bedroom? Not going to happen. There's going to be a huge exodus at some point and most people will probably have a hard time selling their condos.
Another reason why these aren't a good long term investment - take a look at how hard it is to sell condos that are 5 - 10 years old. There's too many new ones going up!
As for that link that was posted, yes real estate is down 18%, but the article says sales for condos in the downtown core are actually up double digits:
Toronto's Downtown core (C01) has also experienced healthy sales activity so far this month, due to strong condominium apartment sales as well. Overall sales in this area were up 11 per cent compared to a year ago.
This string of comments is cracking me up so much. Honestly, I'm kind of curious to know myself now.
OK I give...My attempt at an answer to the question that seems to be on everyone's mind:
First off, they were not all Asian, it just looks that way from this particular photo. There were over 200 people there and trust me, they were not all Asian.
Next, many of them are Asian because many of the agents were from a particular Real Estate brokerage that has a very strong connection to the Chinese community and this particular brokerage worked very closely with the developer on CP1 and CP2.
Finally, anecdotal evidence suggests many Asian buyers are attracted to TALL buildings. Aura is supposed to be 75ish storeys tall making it one of the tallest if not the tallest residential building in Canada.
ok, let me answer the question why they are all asian... reason being asians are brought up to believe in home ownership.. I once remember an uncle telling us.. whenever you move to a new place, first thing to do is buy real estate! His parents were immigrants from china to taiwan, and they became very well off with this strategy...essentially, when you buy, you force yourself into saving. In the long run, property value ALWAYS goes up.. the increase covers the mortgage you paid..etc.. also home ownership is a status symbol in Asia..if you are renting, you are "nobody" among your asian friends and relatives.. for the guys, if you don't own a property, no women will be interested in dating you.. it is this simple.
Is this a photo of Hong Kong or Toronto? Every SINGLE person is Asian. Where is our supposedly glorious multicultural city?
interesting...you think there is only ONE culture within the asian community? even within the chinese community, it is already multiculture
1. They are mostly Asians because there are enormous pockets of capital in Canada that are buying pre-construct condo units 10 at a time. Each one these buyers probably represents 10 sales. They are the group that is primarily fueling this unsustainable rally. The giant oversupply caused by all this speculative buying will hurt the market exactly as it has in Miami, Arizona, Las Vegas, etc. All fast growing areas incidentally.
Toronto is certainly recover and I agree that over the longer term (10+ years) you can probably count on 4%+ annual returns given the projected positive immigration however,
in the next few years things could very easily get ugly in this market.
As far Toronto being cheap by world standards, all I can do is laugh. What do apartment prices in Toronto have to do with apartment prices in New York? If you live in NY I don't think that it is practical to commute from your CityPlace apartment!
It's like saying that golf club memberships in Toronto are cheaper than golf club memberships in San Francisco so buying a golf club membership in Toronto is a smart move! LOL!
Why do people fall for this illogical marketing trick so easily?
Is this also the day they released it to the owners of CP1 and CP2? The Aura floor plans are just too ridiculous, but for investors with money that's just sitting in the bank anyway, definitely a good nab.
The CP2 unit a family friend has easily made $100K from the time of pre-construction till now. It gives hope to my box in CP2!
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