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30% drop in investor condo buys

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Guest | 31 Oct 2012, 05:49 PM Agree 0
  • MortgageMan | 01 Nov 2012, 07:46 PM Agree 0
    This article states: "...investors made up an estimated 95 per cent of pre-construction condo sales in Toronto last year."

    WHERE THE HELL DOES THAT STATISTIC COME FROM?? Never heard that before. Sounds like we're DOOMED if this is true! Makes a great story though.

    Are you really trying to say that only 5% of condo buyers were actually people planning to live there? I don't believe it. Unless there's a catch to it. For example, what exactly is "pre-construction condo sales"? Maybe you are referring to a strategy used by developers, where they offer deals to real estate agents (who have investor clients) before a project goes on sale to the public. If so, you should explain this to your readers.

    A very large percentage (lot more than 5%) of the overall condo sales last year were to people planning to live there. Many were former renters.

    Please clarify where this 95% statistic came from. Thanks.
  • Robert Ede | 01 Nov 2012, 08:45 PM Agree 0
    Notwithstanding the reality that NOBODY can predict past the next 3-6 months .... the "other truth" that remains unspoken is that there is NO RESALE MARKET for the volume of "designed-for-spec-buyer" 400-600 SF units now under construction, being pre-sold and being contemplated.

    Further there are NOT ENOUGH tenants to pay 1700-1900/mth for those "spec" units.

    With 20% down, I'm sure the deals will all close ... but forget about "assignments-for-profit" and forget about pre-selling anything in the same fashion as in the past 10 yrs.

    Remember Sept 2008 thru Feb-March 2009 ... projects delayed ... ownership changes ... design changes ... deals failing?

    As David Rosenberg says "Flat is the new UP"
  • MICHAEL TEPPER | 01 Nov 2012, 09:01 PM Agree 0
    ROI on condominium is low. Property tax, maintenance, mortgage and cost of living going up. Builders need to reduce the maintenance back to the affordable level.
  • JamesRealty | 01 Nov 2012, 10:32 PM Agree 0
    "Last year, they accounted for an estimated 60 to 65 per cent of the 28,000 pre-construction condo purchases across the GTA, and some 75 to 95 per cent of pre-construction purchases in downtown Toronto, says Ben Myers, executive vice president of market research firm Urbanation."
  • Ed Nov | 02 Nov 2012, 04:38 PM Agree 0
    There is nothing worse than sensationalism, misinterpreted statistics and a little too much excitement. But let's take a step back and think about things camly.

    1. "Pre-construction" condos were largely bought by investors but the number has never been 95%. That just makes no sense

    2. Yes, everyone is holding off buying right now but that is all due to negative media that is looking for way to create unfounded excitement or depression. Bad news sells newspapers!

    3. Rents are going up and we, realtors, are now dealing with multiple offers on rentals each and every day. This has been going on for 2 years and there is no sign of things slowing down. Housing is becoming too expensive to buy, so people rent. And if they want to live and enjoy the downtown life, they will have no choice but to pay the price. Don't forget - live downtown and save on car ownership - its huge!

    4. Smart investors are will buy or sell when the time is right and are looking at a long term investment. Those who bought or buy with an intent to flip through an assignment or immediately after closing, need to get a reality check. It has never worked for many and varied reasons. And if there is anyone out there thinking that ALL investors over the past 10 years, made their money by flipping condos, needs a little education from someone who knows reality, not gossip/rumors/hearsay/stupid media.

    5. Price of land or cost of construction is not going down

    6. GTA is still receiving 80,000-100,000 people per year. They all need to live somewhere.

    7. Interest rates are low, money is cheap. If it stays like this till spring, the market will return to boom.

    8. There is nothing wrong with market being a little flat. Its OK! Everyone needs a little breather from time to time.

    9. Look at at the real estate market over the long term. It has outperformed all other investments, consistently.

    Robert Ede remembered the fall of 2008 to spring of 2009. Good example but somewhat of an incorrect conclusion. All the negative news out of the States scared the crap out of people here. But then public realized that "Hey, we are not the States! Our banks are tough and our country is safe! The money is free!" And then real estate market exploded. The only condo projects that suffered were the ones owned by small time developers who were cash poor and got scared by the media.

    So, let's al take a deep breath, be professional and work hard to disseminate correct, factual information, not crap
  • rbfman | 02 Nov 2012, 07:25 PM Agree 0
    Many excellent comments; All that is necessary to assess the heath of the housing market can be found in studying the forces and their underlying data that describe: 1) demographics 2) income vs house pricing 3) employment levels 4) interest rates – these forces acting in combination are the true measure of where your housing market is and where it may be going.
    Finally, as "Ed Nov" notes above: go into your purchases with a longer view of your investment ( by the way, all purhcaser should consider themselves investors) if you timing and circumstance allow you to benefit financially from a quick sale or assignment, then good for you, but it should not be your main strategy as compared to the much more liquid stock market investment.
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