Because it is amazing to live downtown where I can walk to dozens of different great restaurants and shops, work and anywhere else I need to go on the average day. If I have kids they can get around easily without needing to wait until they turn 16 and can get a drivers license.
City life isn’t everyone’s preference but it is clearly desirable by many people. $1M is a huge price tag but if you can afford it and you want to live in the city then you will pay it if you need to. Many people do.
The only hope is that with supply increasing the price tag will start dropping. Additionally to dropping price of current stock hopefully builders will start targeting lower pricepoints as well. (Right now most of the new condos are targeted at more “luxury” audience because it is more profitable, now that the market has been saturated other markets will start to be addressed.)
Have they tried building average, affordable condos instead of luxury condos?
All the new condo developments I’ve been seeing everywhere are more expensive than a townhouse nearby, and half the size of nearby apartments that are also half what the mortgage would be on a 1-2M fucking condo.
Pretty sure they can do away without the penthouse pool and hot tub and bring the price down, but it wouldn’t be nearly as profitable for them so they won’t.
Nobody is actually trying to help lower home prices because everyone’s retirement plan depends on houses being unaffordable.
Luxury needs some heavy sneer quotes. They are all made of low quality materials and then they put a stainless steel fridge in there and some quartz counters and call it luxury.
Yup, bought a townhouse, and paid a premium because the finishes were very nice, and everything looked good, even passed a pre-purchase inspection by someone with a lot of industry experience.
The tub leaked three times and ruined the ceiling in the dining room each time. The shower wasn’t properly waterproofed, so that was a $35k rip-repair-replace. None of the furnaces had proper condensation drains, so my upstairs neighbour’s A/C unit dripped condensation into my hallway for 4 days while we were on vacation, ruining the walls, causing mould. Our unit’s A/C was mismatched - the outside unit didn’t match the inside unit, and for 4 years we were constantly repairing it, until I spent $12k to replace it. There was a bunch of other small shit, but if I ever lay eyes on the builder, I’ll punch him in the face.
Have they tried building average, affordable condos instead of luxury condos?
They don’t want to, because that would mean less money. If they slap some cheap faux marble and an extra sink in the bathroom, they can charge tens of thousands of dollars more for the same space.
The rich will not accept making the same or less money for a year or so. They have to have more. A lot more.
Condos need to be built for families, give me more three or four bedrooms in the city, and make it more affordable.
Condo developers can’t build these affordable three or four bedrooms though, because on average these layouts are about 20% larger in size to their comparable European unit layout. This is all to due to building code, and something called “point access layout” vs “common corridor layout”.
If we could get more families in the city buy making costs comparable in sq/ft to a single family home in the suburb we could make cities more enjoyable and give people a better sense of belonging, as opposed to just commuting in for a few hours.
Developers made condos as tiny as humanly possible, to the the point where a bedroom could just barely fit a queen sized bed into it with nothing else.
That because they aren’t primarily meant for people who buy them to live in, they’re just suppose to be flipped after a few years by investors or rented out.
I worry about what this means for home construction in general. With interest rates relatively high, a shortage of building supplies, and a shortage of construction workers, I suspect developers are gonna stop developing.
If governments aren’t willing to pick up the slack, that means we won’t come anywhere near the 3+ million homes we need to get prices back to something reasonable.
All of the federal and provincial policies I’ve seen for home construction have been mArKeT iNcEnTiVeEs that rely on the private sector.
In the middle of a housing crisis, this is just good news.
But frankly, the developers themselves don’t deserve too much hate. They are just local optimizers and ultimately if we want to build more housing they are the ones that know how to do it.
If anyone deserves hate and schadenfreude here it is the Canadian banking sector. They are the global optimizers that turbocharged the bubble. They created and made insane amounts of money off of the bubble. And they are in an oligopolistic position and with enough political pull that if this turns into a crunch they would be getting bailed out at the taxpayers’ expense.
We don’t need to hate on the developers, but neither should we respect them. They were taking advantage of a bubble, knowing full well it wasn’t sustainable, and if they get burned by it, meh.
I’m perfectly fine with hating and even blaming developers. These are people who have decided that making money is a good enough excuse to cause suffering.
I find it hard to blame people for doing what they are incentivized to do. Sure, I would love if everyone is morals first but given the open to build a “luxury” condo that gets N% return on investment or a “basic” condo that gets %M return on investment they are going to build whatever one is higher.
Most of the blame should lie on the government for not creating the correct rules and incentives.
In the US, and I’m guessing most everywhere else, developers are part of the problem. They buy properties that may currently have affordable housing on them and redevelop to more expensive units. They’re also responsible for the disappearance of ownable housing - over there past decades, they’ve been buying houses that have come on the market and turned them into rentals, or torn them down and put in denser rental units. They’re responsible for urban sprawl, turning farmland into suburbs.
Some of this is supply and demand, but don’t discount marketing and encouraging growth in demand for suburb housing over more sustainable urban housing.
Finally, when articles like this talk about “developers,” they don’t mean the people who know how to build buildings: they mean the mega corporations who are purchasing property to own indefinitely, removing properties from ever being able to be purchased by families. Even in cases as in the article, “condos” are just fancy rentals. You “buy” it, but the developer (who is also usually the ultimate property manager) gets maintenance and other fees - they’re for-profit HOAs.
“Developers” provide little benefit, and such is vastly outweighed by the damage they’ve caused in contributing to the current housing crisis: the inability of younger generations to afford to buy houses, or afford rent, and the increase in homelessness in western countries.
One of the larger Nordic cities - Stockholm, Helsinki, something like that - passed laws a few years ago to restrict property developers in order to preserve affordable housing and prevent gentrification.
That, and they also either renovate in pseudo-luxery or build fairly luxurious condos in a world of HOAs going absolutely out of control and making sure you can’t actually live in there even if you could afford it because your next door karen will file a noise complaint every time you flush the toilet.
Number of constructions I’ve seen actually designed to be affordable in the last couple years: zero. None. They all target rich people that could afford a normal house anyway.
Even new apartment buildings, the thing that people that can’t get a mortgage get, is now also all designed for 3000+ monthly rents.
Once upon a time, but most of their work (in Ontario) was put onto the Municipalities to make things cheaper, in exchange there were development charges put in place to offset some of the cost. Now they removed those but kept the municipalities doing the work. Developers serve no purpose anymore
I’m not sure what you mean when you say that developers serve no purpose. Maybe there is a definitional problem here. Maybe you are thinking of planners rather than developers. Developers organize, design, finance, and gain approvals for housing projects. Often they are also the general contractor for the building phase. Planners, on the other hand, ensure that projects meet the requirements of municipal Official Plans and the Planning Act (in Ontario).
It is true, though, that a lot of developers submit shitty plans that municipal planners have to fix. That’s because the average developer doesn’t give a single shit about the public good and only seeks to maximize personal profit. So, they treat the Planning Act as an obstacle to work around rather than making a good faith effort to follow the principles of good city planning.
In seriousness, this is the problem: capital won’t take a haircut because line must go up, and labour is absolutely tapped out. There’s no more easy debt to leverage, and thanks to inflation, and more thanks to rampant profiteering and an immigration policy designed to suppress wages and strip-mine new Canadians, no new wealth generated.
The game of musical chairs that is the real estate market was always going to stop, it was only a question of who was going to be left standing at the end. What will be interesting is, is this the first domino in the chain, as the dearth of condo-to-home buyers in the pipeline blows up everything else?
My hope is that this whipsaws through the economy and hurts so many people so badly that a) we learn to never let it happen again, and b) that it emboldens governments to finally tax the shit out of the rich.
If you guys are a stupid as us, your southern neighbors, whipsawing through the economy will mean that 1. this loophole closes and two more open so there will be future whipsawings 2. no wealthy people will be taxed, they will be given loans and handouts and 3. you will elect more dimwits from the same party whose shitty legislation caused the problems in the first place.
My hope is that this whipsaws through the economy and hurts so many people so badly that a) we learn to never let it happen again, and b) that it emboldens governments to finally tax the shit out of the rich.
I’m so glad some people realize this: we are past the point of wishing things just get slowly better. History has taught me that in this world, when people are so apathetic to important issues, things need to get so bad sometimes so everyone gets a wake up call.
Nobody is buying anything, my friend. It’s the natural result of real estate speculation. Prices have to keep going up for investors to make their money, but at some point residents can’t afford to buy, so they don’t, and we wait for the bubble to burst. The whole field ought to be illegal, because housing is a human right.
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.
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
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.
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