Real Estate

Canadian real estate gold rush?

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  • Dec 9th, 2019 11:10 am
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Dec 2, 2019
82 posts
46 upvotes

Canadian real estate gold rush?

Just wondering what people here think of the trend of all the baked-in appreciation we're seeing on pre-constructions in Toronto?

How does it make sense from a retail investor standpoint? Even with higher maintenance fees, resales are way better value. I don't get it.

This came out today:
https://www.morningstar.ca/ca/news/1975 ... -rush.aspx
I like coupons and turtles.
63 replies
Deal Fanatic
Feb 22, 2011
7299 posts
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Toronto
I just bought a prebuilt that was a bit higher than the surrounding area. I did it for a few reasons. No rent control on new builds. Can pay slowly over time the deposits, easier than coming up with $150k right away. Lower maint fees and less worries for 5-10 years. Bought in a neighborhood I expect to grow in the future that currently doesn't have condos I'd want.
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Oct 30, 2019
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mazerbeaner wrote: I just bought a prebuilt that was a bit higher than the surrounding area. I did it for a few reasons. No rent control on new builds. Can pay slowly over time the deposits, easier than coming up with $150k right away. Lower maint fees and less worries for 5-10 years. Bought in a neighborhood I expect to grow in the future that currently doesn't have condos I'd want.
Which project did you buy?
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Feb 22, 2011
7299 posts
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Toronto
lovestock wrote: Which project did you buy?
Pinnacle Toronto East

Which I know a lot of people will not like because it's technically in Scarborough but I see it as having a lot of potential. Within 10-15 years I think they will end up extending the Sheppard line. It's right by DVP/401/Fairview. It was also affordable when I got in with 1 beds starting at $350k and only needing 20% down. I also limited myself to Pinnacle/Tridel because I wanted a builder I could be confident they wouldn't cancel the project.

Also in terms of gains over the last 5 years I saw my Scarborough condo go up a higher % than my downtown one, even though the dollar amounts were obviously higher DT. Some units I was even looking at in Scarborough in 2014 are up over 100% whereas the DT ones are up like 70-80%.

Also the rent difference is nuts. This unit will probably rent for like $1700 whereas my DT one worth almost 100% more will rent for 50% more. I won't buy in DT again, just hold what I have there and look for value around it.
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Oct 30, 2019
193 posts
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Toronto
mazerbeaner wrote: Pinnacle Toronto East

Which I know a lot of people will not like because it's technically in Scarborough but I see it as having a lot of potential. Within 10-15 years I think they will end up extending the Sheppard line. It's right by DVP/401/Fairview. It was also affordable when I got in with 1 beds starting at $350k and only needing 20% down. I also limited myself to Pinnacle/Tridel because I wanted a builder I could be confident they wouldn't cancel the project.

Also in terms of gains over the last 5 years I saw my Scarborough condo go up a higher % than my downtown one, even though the dollar amounts were obviously higher DT. Some units I was even looking at in Scarborough in 2014 are up over 100% whereas the DT ones are up like 70-80%.

Also the rent difference is nuts. This unit will probably rent for like $1700 whereas my DT one worth almost 100% more will rent for 50% more. I won't buy in DT again, just hold what I have there and look for value around it.
Compared to all of the new pre-con prices, that is a very good deal. Ever since the fall, prices have gone wacko, unfortunately. It was easier at the beginning of the year.
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Oct 21, 2016
791 posts
525 upvotes
mazerbeaner wrote: I just bought a prebuilt that was a bit higher than the surrounding area. I did it for a few reasons. No rent control on new builds. Can pay slowly over time the deposits, easier than coming up with $150k right away. Lower maint fees and less worries for 5-10 years. Bought in a neighborhood I expect to grow in the future that currently doesn't have condos I'd want.
There's no rent control but if you over price your rent in comparison to units in the same area your property will sit vacant. If you increase your rent yearly beyond competitors in your area then your tenants will move out and your unit will sit vacant. Check bungol to compare active listings and ones that rented recently in the downtown core and the trend is apparent. Just because you have no rent control it doesn't mean you will be successful in jacking up your rent yearly beyond your competitors. Tenants will simply move no one likes to overpay for rent. Market will dictate your rent.
Sr. Member
Oct 21, 2016
791 posts
525 upvotes
mazerbeaner wrote:
Pinnacle Toronto East

Which I know a lot of people will not like because it's technically in Scarborough but I see it as having a lot of potential. Within 10-15 years I think they will end up extending the Sheppard line. It's right by DVP/401/Fairview. It was also affordable when I got in with 1 beds starting at $350k and only needing 20% down. I also limited myself to Pinnacle/Tridel because I wanted a builder I could be confident they wouldn't cancel the project.

Also in terms of gains over the last 5 years I saw my Scarborough condo go up a higher % than my downtown one, even though the dollar amounts were obviously higher DT. Some units I was even looking at in Scarborough in 2014 are up over 100% whereas the DT ones are up like 70-80%.

Also the rent difference is nuts. This unit will probably rent for like $1700 whereas my DT one worth almost 100% more will rent for 50% more. I won't buy in DT again, just hold what I have there and look for value around it.
Aren't the newish Fairview mall condos going for 450k for a one bedroom. It's a better area and on the subway line. Did you consider that ?
Deal Fanatic
Feb 22, 2011
7299 posts
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Shaun80 wrote: Aren't the newish Fairview mall condos going for 450k for a one bedroom. It's a better area and on the subway line. Did you consider that ?
I had to go precon for numerous reasons so those were ruled out and I wanted to stick to a builder I knew would complete the project.
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Feb 22, 2011
7299 posts
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Toronto
Shaun80 wrote: There's no rent control but if you over price your rent in comparison to units in the same area your property will sit vacant. If you increase your rent yearly beyond competitors in your area then your tenants will move out and your unit will sit vacant. Check bungol to compare active listings and ones that rented recently in the downtown core and the trend is apparent. Just because you have no rent control it doesn't mean you will be successful in jacking up your rent yearly beyond your competitors. Tenants will simply move no one likes to overpay for rent. Market will dictate your rent.
That is when it is first occupied. If 2 years later market rents go up 20% you can now increase it 20% vs the whatever cap is now 2%.

I have one tenant downtown paying $1900 and the market rent is like $2500.
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Jul 14, 2008
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Ontario
Shaun80 wrote: There's no rent control but if you over price your rent in comparison to units in the same area your property will sit vacant. If you increase your rent yearly beyond competitors in your area then your tenants will move out and your unit will sit vacant. Check bungol to compare active listings and ones that rented recently in the downtown core and the trend is apparent. Just because you have no rent control it doesn't mean you will be successful in jacking up your rent yearly beyond your competitors. Tenants will simply move no one likes to overpay for rent. Market will dictate your rent.
That doesn't happen in practice because the people paying below market rates are current tenants. Any tenant, including existing, looking for a new rental unit won't have the option of choosing from a unit with and without rent control, in terms of market rate. Any new unit that becomes available to rent has been reset to the current market rate, so competition will be based on other factors. In fact, landlords who own units not under rent control could even price the unit lower than competition if they are happy with the rate - if they need to increase the rent to cover increasing costs, they can evaluate the need annually. Whereas a unit under rent control would need to price it as high as possible to include the risk of long tenancy and the inability to capture increased cost above the max allowable.

Many landlords, even in these forums, would happily keep the rental rate steady and evaluate every 2-3 years or when a tenant leaves, since we would have the freedom to recoup costs if they increase. However, post rent-control measures, landlords now have to price in that uncertainty (a higher rate), and increase the rent annually according to the max allowable to keep up with the bare minimum of cost recovery on increasing costs to the landlord.
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Jul 14, 2008
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mazerbeaner wrote: That is when it is first occupied. If 2 years later market rents go up 20% you can now increase it 20% vs the whatever cap is now 2%.

I have one tenant downtown paying $1900 and the market rent is like $2500.
Right, this.

The tenant paying $1900 can't find units anywhere near his price in the area now charging $2500. So there is no competition from a tenant paying below market rates - he in fact helps raise the market rate on new units because of a lower supply and lower vacancy rate.
Deal Guru
Feb 29, 2008
12555 posts
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mazerbeaner wrote: That is when it is first occupied. If 2 years later market rents go up 20% you can now increase it 20% vs the whatever cap is now 2%.

I have one tenant downtown paying $1900 and the market rent is like $2500.
Same.
Sr. Member
Feb 19, 2019
847 posts
923 upvotes
Stouffville ON
mazerbeaner wrote: Pinnacle Toronto East

Which I know a lot of people will not like because it's technically in Scarborough but I see it as having a lot of potential. Within 10-15 years I think they will end up extending the Sheppard line. It's right by DVP/401/Fairview. It was also affordable when I got in with 1 beds starting at $350k and only needing 20% down. I also limited myself to Pinnacle/Tridel because I wanted a builder I could be confident they wouldn't cancel the project.

Also in terms of gains over the last 5 years I saw my Scarborough condo go up a higher % than my downtown one, even though the dollar amounts were obviously higher DT. Some units I was even looking at in Scarborough in 2014 are up over 100% whereas the DT ones are up like 70-80%.

Also the rent difference is nuts. This unit will probably rent for like $1700 whereas my DT one worth almost 100% more will rent for 50% more. I won't buy in DT again, just hold what I have there and look for value around it.
I am not a fan of the area but at this price for 1bdr (which I believe is just a tad over 500sf, and good layouts), I am a fan, I think and hope you will do very well.
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Feb 19, 2019
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Stouffville ON
Shaun80 wrote: Aren't the newish Fairview mall condos going for 450k for a one bedroom. It's a better area and on the subway line. Did you consider that ?
It's definitely a better area and on the subway, as of today you will be hard pressed to find 1bd in that area for $450K, if you do they will be either very small under 500sf, or terrible layout such as units at 2015 Sheppard. For $100K less is I think it's worth considering going to Warden. Different story for the units priced at over $400K at Pinnacle.
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Feb 22, 2011
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senasena wrote: I am not a fan of the area but at this price for 1bdr (which I believe is just a tad over 500sf, and good layouts), I am a fan, I think and hope you will do very well.
It was actually 700 a sq ft.

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