Real Estate

K Shaped Condo Curve. PSF $500

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  • Dec 23rd, 2020 3:19 pm
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[OP]
Banned
Nov 3, 2020
15 posts
14 upvotes

K Shaped Condo Curve. PSF $500

I've been analyzing the condo market, even potentially dipping my toes into buying one.
Have been recently talking to some insiders in various dev companies, and there's whispers mentioning there's a K shaped curve between detached, semis and townhouses and condos.

One even mentioned they wouldn't be surprised if condos hit $500 psf.
So for a 1000 square foot condo (a box in the sky), it would be $500,000 which would be a reasonable valuation.

Curious to see what happens in 2021! This temporary blip increase in prices is too small of a statistical signifiance to actually determine market trends.
35 replies
Jr. Member
Dec 5, 2020
101 posts
106 upvotes
Are these the same insiders that told you that "Blue Horseshoe Loves Anacott Steel"?
Deal Addict
User avatar
Nov 5, 2018
2916 posts
5186 upvotes
Toronto
KEEP DREAMING!

I mean if that DID happen, you load up the truck. But it won’t. Cost of new construction including land acquisition in the core is $1,000 a foot. I am HIGHLY doubtful of these “insiders”. Face With Tears Of Joy
Called the bottom.
Deal Guru
Feb 22, 2011
10141 posts
12553 upvotes
Toronto
Development fees and taxes alone are $100k per unit. Then add in land, materials, labour, financing. There is a lower limit to what they can be built for.
Member
Oct 22, 2019
332 posts
308 upvotes
condodweller1 wrote: I've been analyzing the condo market, even potentially dipping my toes into buying one.
Have been recently talking to some insiders in various dev companies, and there's whispers mentioning there's a K shaped curve between detached, semis and townhouses and condos.

One even mentioned they wouldn't be surprised if condos hit $500 psf.
So for a 1000 square foot condo (a box in the sky), it would be $500,000 which would be a reasonable valuation.

Curious to see what happens in 2021! This temporary blip increase in prices is too small of a statistical signifiance to actually determine market trends.
Maybe for a condo in Calgary...definitely not in Ontario
Last edited by JD_Inv on Dec 22nd, 2020 4:02 pm, edited 1 time in total.
Deal Guru
Feb 29, 2008
14185 posts
10503 upvotes
At least think it through. Builders will not build for 500/ft. Will wages go down along with cost of materials as well? Taxes too? Insurance? None of it makes any sense. Builders build for profit, not charity.
Member
Jul 23, 2020
279 posts
227 upvotes
mazerbeaner wrote: Development fees and taxes alone are $100k per unit. Then add in land, materials, labour, financing. There is a lower limit to what they can be built for.
Do you have any sources on this? this might be the case now but not 5 years ago when most buildings that finished had precon pricings in the 300's range
Deal Addict
User avatar
Nov 5, 2018
2916 posts
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Toronto
JayLove06 wrote: At least think it through. Builders will not build for 500/ft. Will wages go down along with cost of materials as well? Taxes too? Insurance? None of it makes any sense. Builders build for profit, not charity.
It goes beyond even a builder “willing” to build there. You would make massive losses. You would never get loans against the property for this. It is absolute delusion to promote this happening. Entertaining, but wishful thinking.
Called the bottom.
[OP]
Banned
Nov 3, 2020
15 posts
14 upvotes
With the tear that houses in the suburbs are going, these developers will start building smaller homes instead of these massive, and unprofitable condos..
Member
Jul 23, 2020
279 posts
227 upvotes
mazerbeaner wrote: It's actually $121k on average, $186k for houses lol

https://www.bnnbloomberg.ca/government- ... -1.1069051
Looking at the report, things like ltt are included and cmhc insurance because they assume only 15% down payment, only significant fees the builder would pay is the development charge, which has risen in toronto to 80k a unit in Nov 2020, was half of that before.
Lame excuse to blame condo pricing to be high because of government charges, prices are high because builders think they can sell it at that price, government charges are so little its a drop in a bucket.
Deal Addict
User avatar
Jan 14, 2009
2333 posts
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Vancouver, BC
JayLove06 wrote: At least think it through. Builders will not build for 500/ft. Will wages go down along with cost of materials as well? Taxes too? Insurance? None of it makes any sense. Builders build for profit, not charity.
Typical entitled Canadian. Everything is over priced except me, I want a raise.
Deal Guru
Feb 22, 2011
10141 posts
12553 upvotes
Toronto
ricodeals wrote: Looking at the report, things like ltt are included and cmhc insurance because they assume only 15% down payment, only significant fees the builder would pay is the development charge, which has risen in toronto to 80k a unit in Nov 2020, was half of that before.
Lame excuse to blame condo pricing to be high because of government charges, prices are high because builders think they can sell it at that price, government charges are so little its a drop in a bucket.
$80k per unit is a drop in the bucket? That's just one expense that went up. Labour cost is up, raw material is up, land value is up. Not like they are pulling in 30-40% margins.
Deal Addict
Mar 2, 2017
1398 posts
2550 upvotes
Toronto
condodweller1 wrote: I've been analyzing the condo market, even potentially dipping my toes into buying one.
Have been recently talking to some insiders in various dev companies, and there's whispers mentioning there's a K shaped curve between detached, semis and townhouses and condos.

One even mentioned they wouldn't be surprised if condos hit $500 psf.
So for a 1000 square foot condo (a box in the sky), it would be $500,000 which would be a reasonable valuation.

Curious to see what happens in 2021! This temporary blip increase in prices is too small of a statistical signifiance to actually determine market trends.
This is BeigeCorolla level trolling, snuck in under the radar for sure. A+
Realtor, Investor, CPA
Member
Jul 23, 2020
279 posts
227 upvotes
mazerbeaner wrote: $80k per unit is a drop in the bucket? That's just one expense that went up. Labour cost is up, raw material is up, land value is up. Not like they are pulling in 30-40% margins.
you do realize that the land that most if not all these condo units are being built on was acquired decades ago by developers, labor and raw material costs are passed to the customers, do you think that builders are cutting margins because costs are going up? margins stay the same or are increased why do you think prices for precons are nearing 1800psf
Deal Fanatic
Apr 5, 2013
5810 posts
2958 upvotes
keenland
JayLove06 wrote: At least think it through. Builders will not build for 500/ft. Will wages go down along with cost of materials as well? Taxes too? Insurance? None of it makes any sense. Builders build for profit, not charity.
happened in the 90;s
lots of hurt precon buyers that took the hit back then..but builders did too
Deal Guru
Feb 29, 2008
14185 posts
10503 upvotes
ricodeals wrote: Looking at the report, things like ltt are included and cmhc insurance because they assume only 15% down payment, only significant fees the builder would pay is the development charge, which has risen in toronto to 80k a unit in Nov 2020, was half of that before.
Lame excuse to blame condo pricing to be high because of government charges, prices are high because builders think they can sell it at that price, government charges are so little its a drop in a bucket.
Dude, ask any condo builder what government charges are now compared to 10 years ago. Night and day.

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