Condo sales numbers in and around Toronto have taken a drastic tumble so far this year, and now that the market is starting to lean towards buyers …
Condo sales numbers in and around Toronto have taken a drastic tumble so far this year, and now that the market is starting to lean towards buyers …
I’m going to be more sympathetic for the developers which is that they likely spent a ton of money for the land already when prices were high and after expensive building costs they’re struggling to not lose money.
Oh no!
Anyway
On a serious note, they shouldn’t have been so greedy then and waited until prices had fallen again… This looks exactly like the dotcom bubble crashing because investors just couldn’t hold their horses.
Many condo projects take years to complete. Are you suggesting that years ago, when housing prices reached their peak, condo developers should have stopped development?
That’s a point I didn’t actually think about, touché. Let’s go through this then:
Before Covid (in my country at least), there was this massive push for more homes, because the interest rates were so low. Everyone was building a house, because it was so very cheap (in interest at least, not necessarily in costs). At that point, wise developers might have decided to not take on any big new projects, focusing on finishing their current ones instead of trying to ride out this bubble.
Then Covid hit and the supply chains broke down. That was sudden and couldn’t be expected, I’ll give you that. But now, four years later, the main reason (in my opinion) for the low occupancy is the newfound interest for WFH, also resulting from Covid. Who needs an expensive condo in a crowded city if you can have a cheap flat in a small town instead?
So in this case, I’ll (partially) retract my prior opinion and instead state that while a crash could’ve been seen somewhere on the horizon, Covid with all its consequences certainly couldn’t have been foreseen.
I’m not familiar with the housing prices in Toronto compared to smaller cities in Canada, but perhaps those developers need to bite the bullet and lower their asking prices, because I’d imagine selling for less is still better than holding onto dead weight, praying for demand to go up again.
Well, they choose to take that risk, that is what an investment is, you buy somethibg that you hope will increase in value, but sometimes you make a bad investment and loose money, that is all part of the game
Oh I’m not saying they should be bailed out or anything, just that I wouldn’t call developers ‘parasites’ as they actually are building homes.
The parasitic part is not the building home part, but the charging you as much as they can part.
I know, I just described capitalism…
They spent money to make money off of someone else’s needs.
They can cry a second Lake Ontario.
Would you rather that no one builds any condos?
Yes!
I have a family member who got into mobile flipping. What they would do is target retirement communities. When a person died, my family member would put in an offer, generally no more than $10,000 to the family. Enough to cover the funeral.
This person would then put about $10,000 into renovation (almost only ever cosmetic) and then turn around and sell it for $60k, not realizing that if he was selling 50 year old mobile homes for that Mich, everybody else in the area was doing the same.
After 5 years, this family member was selling 40 year old mobile homes for $120,000 but purchasing them for $85,000, and eventually, he was making maybe $10,000 in profit for a 3 month process.
Greed is good until it prices you out of the market you yourself created, but they never see their own actions as being the cause of any of this.
He was making $40k a year and that was enough to upend the entire regional market?
That is per mobile home. But yes, eventually he got priced out of doing multiple mobiles at once.
If it was only him doing this, the system would have corrected itself. The issue is thousands of people were doing this.
Capitalism, bruh.