Cost of lumber has increased a lot.
[/QUOTE]
Did thd trees get a raise ?
[/QUOTE]
Did thd trees get a raise ?
How`s your house pricing doing?..
- Thread starter Glenn/RZ500
- Start date
Dresden
Well-known member
I'm in the very small minority of people I know who think we are much closer to the bottom in Toronto/GTA condo real estate than most people believe. That doesn’t mean prices can’t fall further, just that the decline likely won’t continue at the same velocity or magnitude.
My reasoning (specific to GTA/Toronto condos):
Demand
If we rewind to the golden years of 2016–March 2020, several major themes were driving demand:
Once COVID hit, no one wanted to be in a condo building due to concerns about virus transmission. If anyone disputes this, I’d remind them that people were sitting meters apart in parks and wearing masks in condo hallways for almost a year until vaccines became widely available.
Then, staying true to her stark-raving-mad tendencies, Olivia Chow finally comes through with the final nails in the condo-owner’s coffins just in time while demand had already fallen off a cliff:
Supply Side Problems:
Development Charges
The City is unlikely to reduce development charges, as someone has to pay for the $100M+ Net Zero community centres, infrastructure, and the growing municipal payroll. Development charges have more than doubled in recent years, with increases accelerating in recent years.
Construction & Material Costs
Have roughly doubled since COVID began. Across the board subcontractor pricing is now almost twice what it was in 2019, which was already considered expensive. Regulatory changes and asinine climate-related policies have increased costs throughout the supply chain including transportation of materials. Then add in the global shutdown, border restrictions, and massive renovation demand fueled by cheap money, and costs spiked quickly.
I work in the AEC industry and saw this unfold firsthand. M&E, steel pricing are still dramatically higher than pre-COVID levels (let’s not forget Trump 1.0’s steel tariffs before COVID and the China trade war ~2018 as contributing factors.
No More Condo Supply Coming for a Long Time
The Federal Government has given a GST tax break to developers who build rental buildings, as long as construction begins by Dec 31, 2030. In addition, through CMHC developers can get ultra-low interest rates for construction financing (which is one of their major costs/risks). This is why so many condo projects that couldn’t find buyers have magically turned into rental projects in high-demand areas. The developer gets most of their profit through the tax break and then exits to a REIT, who makes their money by managing the rentals.
So what’s the takeaway? No new condo stock is coming to market for a LONG time.
So how about pricing? It’s all relative.
Inflation is up roughly 25% since 2020, and wages have risen equally. Ex. Minimum wage has gone up 26% from $14 in Jan-2020 to today. No, minimum wage earners aren’t serious condo buyers but even do-nothing City of Toronto coordinators with a couple of years of paper-pushing experience are now earning $70K–$80K!! up from around $60K in 2019.
That $500K one-bedroom in 2019, which people lined up all day for, is now at $425K with zero offers. But ironically $500K in 2019 is equivalent to roughly $600K today, and salaries have also risen about 25%. So really, you’re stretching 1/2 as much to get it now... yet people are still complaining about it being too "expensive" just because the number appears large. FFS If this were a company's stock, you’d be drooling to buy it at half the Price to Earnings ratio.
The price to build one of these condos today is around $700/sf. And that's without too many frills and profit. Land acquisition costs are a part of it, but building costs, construction financing, etc. is the bulk. Good luck thinking we can build 1,000sf. condos for the average person for $400K.
The big thing holding prices back is sentiment. IMO that’s the biggest shift that will happen over time. Prices eventually stop going down. People get fed up with renting forever, and when rents start climbing again, the market will react. Especially the College kids of today who never grew up with the idea that they could own a home right out of school and a nice condo with a view will be a luxury.
Lastly, if you made it thus far:
More people should know that there are some seriously powerful people behind the “Century Initiative” in Canada that's pushing for 100M population by 2100. Dominic Barton (former McKinsey global partner) and Mark Wiseman (former Prez & CEO of Canada Pension Plan) and several higher ranking folks in Trudeau’s/ liberal administrations .. you can look this stuff up, I’m not making it up.
Carney is turning on the taps again, but in a very quiet way .. publicly “tightening PR targets” to given the impression of being tough on immigration while simultaneously passing [repeated] “one time” measures to boost PR admissions above the target: Example:
https://www.thestar.com/news/canada/ottawa-has-launched-program-to-grant-33000-foreign-workers-pr/article_3f788d97-9446-4377-ae78-54f42ee686ca.html
City of Toronto will eventually abandon the Vacant Tax and AirBnB policies as both are negligible revenue drivers. The political pressure will mount eventually and perhaps Chow is on her way out.
—
Bottom line, I’ll come back to this periodically, but I maintain my stance that:
1. Demand and sentiment will gradually recover in the next few years as new players enter the economy.
2. Regulations that hurt supply will be rolled back.
3. The lack of new or under-construction condos will support existing unit prices. We simply cannot build new stock for less than the current selling prices.
4. Immigration will rise, not fall, driven by long-term plans as devised by the powers at be.
Anyway, thanks for coming to my unnecessary Ted Talk but I feel like I'm taking crazy pills. Every single person I talk to is convinced the world is collapsing. I have done well in life by looking up when my peers look down and vice versa.
Life is tough for those that relied on their homes going up by $100K/year and spending the majority of those paper gains on fun stuff.
When you live your whole life on easy street, normal seems like poverty.
P.s. if this gets some traction - if someone's selling a Ducati Paul Smart with reasonable mileage DM me!
My reasoning (specific to GTA/Toronto condos):
Demand
If we rewind to the golden years of 2016–March 2020, several major themes were driving demand:
- International student visas and temporary worker permits were abundant.
- Airbnb was extremely popular.
- During the early Trump 1.0 years, major tech companies began looking to Toronto as the “Silicon Valley of the North.” If anyone remembers, this was a big deal at the time.
Once COVID hit, no one wanted to be in a condo building due to concerns about virus transmission. If anyone disputes this, I’d remind them that people were sitting meters apart in parks and wearing masks in condo hallways for almost a year until vaccines became widely available.
Then, staying true to her stark-raving-mad tendencies, Olivia Chow finally comes through with the final nails in the condo-owner’s coffins just in time while demand had already fallen off a cliff:
- Airbnb restrictions (policy in 2018, enforcement beginning in 2021)
- Vacant Home Tax (policy 2021, enforcement 2022)
Supply Side Problems:
Development Charges
The City is unlikely to reduce development charges, as someone has to pay for the $100M+ Net Zero community centres, infrastructure, and the growing municipal payroll. Development charges have more than doubled in recent years, with increases accelerating in recent years.
Construction & Material Costs
Have roughly doubled since COVID began. Across the board subcontractor pricing is now almost twice what it was in 2019, which was already considered expensive. Regulatory changes and asinine climate-related policies have increased costs throughout the supply chain including transportation of materials. Then add in the global shutdown, border restrictions, and massive renovation demand fueled by cheap money, and costs spiked quickly.
I work in the AEC industry and saw this unfold firsthand. M&E, steel pricing are still dramatically higher than pre-COVID levels (let’s not forget Trump 1.0’s steel tariffs before COVID and the China trade war ~2018 as contributing factors.
No More Condo Supply Coming for a Long Time
The Federal Government has given a GST tax break to developers who build rental buildings, as long as construction begins by Dec 31, 2030. In addition, through CMHC developers can get ultra-low interest rates for construction financing (which is one of their major costs/risks). This is why so many condo projects that couldn’t find buyers have magically turned into rental projects in high-demand areas. The developer gets most of their profit through the tax break and then exits to a REIT, who makes their money by managing the rentals.
So what’s the takeaway? No new condo stock is coming to market for a LONG time.
So how about pricing? It’s all relative.
Inflation is up roughly 25% since 2020, and wages have risen equally. Ex. Minimum wage has gone up 26% from $14 in Jan-2020 to today. No, minimum wage earners aren’t serious condo buyers but even do-nothing City of Toronto coordinators with a couple of years of paper-pushing experience are now earning $70K–$80K!! up from around $60K in 2019.
That $500K one-bedroom in 2019, which people lined up all day for, is now at $425K with zero offers. But ironically $500K in 2019 is equivalent to roughly $600K today, and salaries have also risen about 25%. So really, you’re stretching 1/2 as much to get it now... yet people are still complaining about it being too "expensive" just because the number appears large. FFS If this were a company's stock, you’d be drooling to buy it at half the Price to Earnings ratio.
The price to build one of these condos today is around $700/sf. And that's without too many frills and profit. Land acquisition costs are a part of it, but building costs, construction financing, etc. is the bulk. Good luck thinking we can build 1,000sf. condos for the average person for $400K.
The big thing holding prices back is sentiment. IMO that’s the biggest shift that will happen over time. Prices eventually stop going down. People get fed up with renting forever, and when rents start climbing again, the market will react. Especially the College kids of today who never grew up with the idea that they could own a home right out of school and a nice condo with a view will be a luxury.
Lastly, if you made it thus far:
More people should know that there are some seriously powerful people behind the “Century Initiative” in Canada that's pushing for 100M population by 2100. Dominic Barton (former McKinsey global partner) and Mark Wiseman (former Prez & CEO of Canada Pension Plan) and several higher ranking folks in Trudeau’s/ liberal administrations .. you can look this stuff up, I’m not making it up.
Carney is turning on the taps again, but in a very quiet way .. publicly “tightening PR targets” to given the impression of being tough on immigration while simultaneously passing [repeated] “one time” measures to boost PR admissions above the target: Example:
https://www.thestar.com/news/canada/ottawa-has-launched-program-to-grant-33000-foreign-workers-pr/article_3f788d97-9446-4377-ae78-54f42ee686ca.html
City of Toronto will eventually abandon the Vacant Tax and AirBnB policies as both are negligible revenue drivers. The political pressure will mount eventually and perhaps Chow is on her way out.
—
Bottom line, I’ll come back to this periodically, but I maintain my stance that:
1. Demand and sentiment will gradually recover in the next few years as new players enter the economy.
2. Regulations that hurt supply will be rolled back.
3. The lack of new or under-construction condos will support existing unit prices. We simply cannot build new stock for less than the current selling prices.
4. Immigration will rise, not fall, driven by long-term plans as devised by the powers at be.
Anyway, thanks for coming to my unnecessary Ted Talk but I feel like I'm taking crazy pills. Every single person I talk to is convinced the world is collapsing. I have done well in life by looking up when my peers look down and vice versa.
Life is tough for those that relied on their homes going up by $100K/year and spending the majority of those paper gains on fun stuff.
When you live your whole life on easy street, normal seems like poverty.
P.s. if this gets some traction - if someone's selling a Ducati Paul Smart with reasonable mileage DM me!
Last edited:
Good post @Dresden but while you’re focused on the real estate you don’t mention much about the fact that literally everything else has gone up.
So while salaries may have gone up (I disagree with the 25% on the bottom low wage workers) real world available money to spend has shrunk.
Salaries jumped but now are tapering and layoffs are happening while things continue to get more and more expensive.
It’s not even the cost that’s gone up. It’s the GREED behind the cost of everything.
I spent $42 yesterday on a burger, 1 beer, and 2 cokes at Earls last night. WTF!
I think more hard times are coming for those on the lower end of society, while those at the top continue to enjoy and earn more and more.
Let’s also remember that a large lot of investment in real estate came from mom and pop investors that used their equity to buy up properties. Some will be fine, some are in for a world of hurt as rents continue to lower monthly due to less demand. If they can survive this storm, they will make out like bandits.
I want a 3-plex but looking at prices, it’s a decade before I see any income and not have to put in money monthly.
There is also rumblings of inflation spiking due to Trumps war with Iran and fuel choke from the region…once inflation spikes BoC will crank rates again. Guess how that’ll end for those seeking relief from lower rates.
So while salaries may have gone up (I disagree with the 25% on the bottom low wage workers) real world available money to spend has shrunk.
Salaries jumped but now are tapering and layoffs are happening while things continue to get more and more expensive.
It’s not even the cost that’s gone up. It’s the GREED behind the cost of everything.
I spent $42 yesterday on a burger, 1 beer, and 2 cokes at Earls last night. WTF!
I think more hard times are coming for those on the lower end of society, while those at the top continue to enjoy and earn more and more.
Let’s also remember that a large lot of investment in real estate came from mom and pop investors that used their equity to buy up properties. Some will be fine, some are in for a world of hurt as rents continue to lower monthly due to less demand. If they can survive this storm, they will make out like bandits.
I want a 3-plex but looking at prices, it’s a decade before I see any income and not have to put in money monthly.
There is also rumblings of inflation spiking due to Trumps war with Iran and fuel choke from the region…once inflation spikes BoC will crank rates again. Guess how that’ll end for those seeking relief from lower rates.
Mad Mike
Well-known member
We already gave you a lesson on that!
2 guys quit from our team so we went out to say our ‘see you later’.
Starting to think I’m the idiot for staying and not looking for a new job.
Stay tuned for new job search thread!
Not to mention subscriptions and their kin.
What does the internet really cost you?
In the world of Leave it to Beaver the Cleaver's total communication bill for the month would have likely been $35.00 for the rotary phone for the whole family.
Now it would be ~$200 a month for four cells and land line. Add $100 for fiber internet. Add for cable so you can binge watch soccer 24/7.
A hundred a year for updates to your computer.
Virus protection. Does anyone else see the humour in Bill Gates discussing virus protection with Jeffrey Epstein?
Right to repair is bad enough but the diagnostic equipment isn't practical for a lot of the DIY types.
DIY got a bad rap from the post industrial mantra, dirty fingernails etc.
Then there's the special screwdrivers designed to discourage amateurs from tinkering. Do we really need another "Philips" variant?
Control modules and obsolescence?
Tipping above 15% and suddenly it's suggested on more services. Tip an auto mechanic already charging $125 an hour?
The corporate world is on the ropes. Investors are demanding their dividends and they don't care where or how they get another percent. It can't be fixed.
Carney wants a chunk of our home equities and one way or another he will reduce our ability to provide for our offspring. What would happen to the Cheetah population if they had to carry a sandbags around their necks 24/7?
Charlie Munger doesn't see a problem with greed. If you want a $5 M house figure out how to do it and make it happen. The problem is envy.
After you get your $5 M house, someone builds a $6 M house cross the street and you have to go for an $8 M house. Rinse repeat.
We are doomed.
Glenn/RZ500
Well-known member
But, but...isn`t the never ending tsunami of tech supposed to make our lives easier, more beneficial and affordable? Try explaining this to the average hammerhead with their face in a phone 24/7. No argument from me, we`re done.
He's taking notes from the prosperity preachers. Take a world event and blame it for the mess but don't let your taxes or tithes come in late.
