Jeff Johnston, Sales Representative RE/MAX Condos Plus

Home for Sale in Joshua Creek, Oakville

2012-05-03T17:59:00Z

Shows 10+++

Oakville Real Estate, MLS #W2353013 - Gorgeous 4 Bedroom Home In Desirable Joshua Creek. Approx. 3000 Sf Of Luxurious Finishes + Professionally Finished Lower Level with 2 Additional Bedrooms. Great Layout W/9' Ceilings, Hardwood Floors (No Carpet Anywhere), Granite, S/S Appliances, Central Vacuum, California Shutters, Moldings & More. Premium 50' Lot Backing Onto Greenspace.

Extras: S/S Fridge, Stove, B/I Dw, Central Vac., Security Sys., 1X Egdo, Jungle Gym, Wdw Cvrgs/California Shutters & All Elfs. Professionally Landscaped W/Patterned Concrete Driveway & Lg. Patio. Great Local! Cl 2 Schls, Parks, Trails & Shopping.

*** Also available for Rent @ $3900/month (MLS #2353184)

Property information

April/May 2012 - Toronto Condo Real Estate Market Report

2012-04-26T18:11:00Z

Overall trends for March are what we would expect to see - Sales up 8% and Prices up 10% year over year - but you need to dig deeper to really understand the trends and what it all means for your neighbourhood. Read belwo to find out what's going on in the 416 vs 905 and the house vs condo market.

If you'd like to find out more about the neighbourhood you live in, please feel free to contact me.

SALES COMMENTARY:

March sales on the Toronto Real Estate Board continued the trend of previous months. Sales were 8% higher than March of 2011, and average prices were up by almost 10% from a year ago. These overall results mask a clear division within the market. Condo sales were unchanged from this month a year ago. Within the 905 Region, condo sales were ahead by 3%, whereas the 416 Region recorded a 2% drop from March of 2011. In terms of downtown condo sales, the results were even worse – sales were lower by 13%! Condo sales for the Etobicoke waterfront, which usually trails the downtown market, were up 10% from the previous March. Sales from the first two weeks of April confirm these trends that first began in February. House sales are outperforming the condo market in terms of sales growth and price appreciation.

So how do we explain the downtown condo market? A lack of overall listings is not the simple answer. In fact Active Listings are up 6% over March of last year. Either the number of end user buyers for condos is levelling off or buyer needs are not matching available listings. Developers better hope it is the latter and that they need to build bigger units. That’s a challenge as the product in the pipeline – preconstruction sales –consists of even smaller condos on average than units in today’s resale market. Buying opportunities exist in the resale market, particularly in bigger units over 1,000 sf. Condo resale prices continue to appreciate but at a much smaller pace – less than 4% on average.

To support this position, we looked at sales at The Element, at 20 Blue Jays Way in the heart of the Entertainment and Business District. Built by Tridel, it has great amenities that appeal to younger buyers. Condo fees are 56 cents/sf/mo. The first unit we tracked was a two bed/two bath unit with balcony and parking. It sold in December for $464,000. The same unit sold previously in June of 2008 for $406,000 and in July of 2007 for $365,000. The one year increase from 2007 to 2008, when the market was peaking was 11%. Note the market correction was 2008/2009. Over the last three and a half years, the increase was only 14%. The unit is 880 sf which translates into a price of $527/sf (including parking). The second unit we looked at was a one bedroom plus den, balcony, and parking. It sold in June of 2011 for $350,000. The same unit also sold in 2008 for $308,000. Over 3 plus years, it has appreciated by 13%. At 655 sf, it currently sells for $534/sf. Both units are on lower floors in this 24 story building, so views are limited. Again compare this building and prices to pre-construction prices in the Entertainment District today and it is hard to justify the premium being placed for future delivery in four years’ time.

RENTAL COMMENTARY:

Rental activity started to accelerate with units being leased for May and June 1 occupancy. Volumes almost doubled from last month and rental rates were unchanged. Studios averaged $1350. Over 350 one-bedroom units were leased at rates starting at $1500 without parking to $1750 for parking and a den. Two-bedroom units started at $2,000 and went as high as $2550 on average which included parking and a den. This month three, three-bedroom units were leased at an average of $3,000 and all of them were leased within seventeen days. The list to lease ratio is virtually 100% for all units. For investors, there is no problem in leasing your unit. The issue is that rental rates do not support current prices and because of this, we would expect to see a drop in new investors because they cannot cover their interest and operating costs.

1599 Hallstone Road in Streetsville Glen Estates is Sold!

2012-04-11T19:21:00Z

Streetsville Glen Estates, Brampton - The 2 story at 1599 Hallstone Road has been sold.

Property information

What is Concord doing to protect their Glass Balconies?

2012-04-11T15:27:00Z

I'm posting this letter from Concord's VP & CFO for the benefit of anyone who has an interest in Concord City Place and Concord Park Place. In short, they are taking proactive measures to protect their glass balconies by installing a protective mesh at Parade, Discovery I and Discovery II beginning April 9, 2012.

April 10, 2012

Dear Realtor,

As a responsible member of the community we take the safety of those who live and spend time at Concord CityPlace and Concord Park Place seriously. For this reason we want you to know the proactive measures that Concord Adex is taking to protect the safety of your clients and the residents of our buildings.

As we all know, last year brought forth industry-wide concerns around balconies, and in particular the safety of glass panels. Since all of this has happened, we have worked diligently to investigate all of our buildings for potentially defective panels. Where we found deficiencies, we fixed the problem immediately.

As an additional safeguard, we have made the decision to install protective mesh on balcony glass at Parade, Discovery I and Discovery II beginning April 9, 2012. Please note that this is a voluntary action that was not mandated by government and is being initiated for preventative purposes only. We have no conclusive evidence that suggests the glass at these buildings is deficient. However, given that construction on these projects falls within a period of time when others in our industry experienced similar issues and a common supplier is involved, we are not taking chances with people’s safety. The installation of protective mesh will prevent panels from falling should glass become compromised and shatter while at the same time allowing residents to enjoy their balcony. Until a permanent industry solution is identified, we believe this temporary measure is the safest and most comprehensive way of protecting residents and community members.

You should also be aware that Concord Adex is working with a leading glass expert, architects and structural engineers in an effort to understand the issues at play and move forward with a resolution that meets the highest safety standards.

For the last 15 years, we have been proud to build beautiful buildings and work with you in creating strong foundations where communities can thrive. As members of our realtor family, we value the work you do every day on our behalf. It’s because of our partnership with you that Concord CityPlace and Concord Park Place are now home to more than 16,000 Toronto residents.

We will keep you informed as new information emerges. Please contact us if you have any questions or concerns at realtorenquiry@concordadex.com.

Sincerely,

Dennis Au-Yeung
Vice President and CFO
Concord Adex

23 Spadina Avenue, Toronto, Ontario, Canada M5V 3M5
Tel.: 416.813.0333 Fax: 416.813.0300

Downtown Mississauga Condo For Rent: 33 Elm Drive, Suite 1002

2012-04-03T18:19:00Z

Lakeview & Close to Everything!

• 600 sq. ft., 1 bedroom,1 bathroom Condo - MLS® $1,275.00 CAD Monthly - Great South West View!

Highway 10 / Burnhamthorpe, Mississauga Real Estate - Luxury Daniels 1 Bedroom Condo Available July 1st. Steps To Square One & All Amenities. High Floor, South West Exposure, Lake View & Tons Of Natural Light. Includes 5 Appliances, Upgraded Bathroom Vanity, Hardwood Floors., Open Balcony, Parking & Locker.

Extras: Fantastic Rec. Facilities, 24 Hr. Concierge, Indoor Pool, Sauna, Indoor/Outdoor Hot Tub, Rec. Room, And Gym. Tenant Pays Hydro & Cable.

Include Employment Letter, References, Rental App., Credit Report, Dep. Sched. & Lease Clauses, with all offers. Landlord Requests Non-Smokers & No Pets. AAA Tenants.

Mississauga Property information

Jeff Johnston, Sales Representative, RE/MAX Condos Plus

1349SF Condo For Sale: 58 Marine Parade, Suite 1002

2012-03-30T00:26:00Z

Gorgeous Designer Condo!

• 1,349 sq. ft., 2 bedrooms, 2 bathroom Condo - MLS® $685,000 - Dare to Compare!

Parklawn/Lakeshore, Toronto Real Estate - Welcome to Monarch's Explorer! Gorgeous 2 Bedroom Plus Den (could be 3rd Bedroom) Condo with 9 Foot Smooth Ceilings Throughout, Fantastic 1349 SF Split Bedroom Layout, with over $36,000 in Builder Upgrades. Features Include; Gorgeous Hardwood Floors, 4 Walk-outs to a Private 46 foot wide Balcony with 285 Square Feet of Outdoor Living Space and a Picturesque Lake, Park and City View. Includes 5 Premium, Stainless Steel Appiances, 1 Parking Spot, 2 Lockers, Granite Counters, Crown Mouldings, Oversized Marble Tiles, Pocket Door, Wine Fridge, Designer Light Fixtures & Window Coverings. Absolutely turn key Property!

Dare to Compare!! Only $500 per. SF vs Monarch LAGO (across the street) @ $600 + per. SF. Spacious 2 Bdrm +Den w/lots of Upgrds: Brkfst Bar,Crown Mouldings,SS Appl, Designer Decor. 5 Star Amenities, Including Indoor Pool, Gym, Exercise Room, Guest Suites, Theatre Room, Party Room, Business Centre, Lakeview Meeting Room, 24 hr. Concierge, Visitor Parking & Lakeside Restaurant in the Building!

Extra: SS Stove & Fridge w/ice maker,SS Dishwasher,BI Microwave,SS Wine Fridge,Washer,Dryer,Desgner Elec. Lght Fixtures & Wdw Covergs,1 Prem Pkg Spot,2 Lckrs,. Talk to L.A. about Exec. Furniture Pkg.

Property information

Jeff Johnston,RE/MAX Condos Plus, Sales Representative, Top 1% in Gross Toronto Condo Sales (2009, 2010, 2010)

March/April 2012 - Toronto Condo Real Estate Market Report

2012-03-28T20:23:00Z

Well folks, here you have it! Looks like the spring market has sprung early in the 905 area code. As for the downtown market, well, we don't see as much seasonality, so the kick off to spring was more muted here. Read below to find out more....

SALES COMMENTARY:

February was another strong sales month on the Toronto Real Estate Board with sales ahead by 16 % over February of last year. But this increase masks some subtle changes within the market. When you compare the 905 Region to the 416 Region, sales were up by over 20% in 905 versus less than 8% in 416. In fact, 61% of all sales occurred in the 905 Region. By property type, detached house sales were up 24% for the month versus only 10% for condos. In the Downtown condo market, sales were actually 4% lower than in February of 2011. Why? First off, the mild winter meant that the Spring Market started much sooner in the outlying areas. The Toronto market has always been less seasonal. Secondly, there is a shortage of quality listings in 416 for both houses and condos.

Mid-month results for March confirm these trends. Overall sales are 7% higher for this year than in 2011. The house segment is ahead by 10% but condos by only 4%. In terms of prices, there is an even bigger gap between houses and condos. Year over year, house prices are 10% higher, while condos are up by just 4%, and downtown by only 3% on average. So why do the experts focus on a price bubble for condos and not houses? Our guess is that there is more press to be gained from forecasting a price correction with condos (all those cranes) than with houses.

In this Report, we looked at sales at 7 King East. This is a former office building converted to condos in the late nineties. In terms of location, you can’t get any closer to King and Bay than this prime location with PATH and subway access. The first unit we looked at was a one bedroom plus den with two baths, locker and parking. With 9 ½ ft. ceilings, it sold in November of 2011 for $450,000. At 860 sf, the price was $520 per sf. The same unit sold in 2004 (seven years ago) for $282,000. The annual appreciation was 7%. The second unit we tracked was also on the same floor. It is a two bedroom, two bath unit with parking and locker. It sold in September of last year for $495,000. At 960 sf, this averages $515 per sf. The same unit sold earlier in 2006 for $357,000. Over five years, the rate of appreciation was 6.7%. While these price increases are high by historical standards, they are in no way approaching ‘bubble market’ territory. By our definition, you need double digit increases over three consecutive years. While price increases should moderate, it seems highly unlikely that prices will decrease from current levels. On the other hand, we would be cautious about pre-construction developments which are being offered for sale in the same financial district for $700 per sf without parking.

RENTAL COMMENTARY:

The rental increases reported in January were confirmed with the February sales figures. Rental volumes for February (usually one of the slowest months) matched those of January. Downtown, nineteen studios were leased for $1350 on average. These listings lasted only nine days on average. The market for one bedroom units without parking starts at $1500. If you want parking or a den, you can add another $125 per month. If you want both the den and parking, the number is $1775 on average. The one plus one with parking is the most requested unit type with just under a 100 units rented at an average 100% of list price. Two bedroom units start at $2100 without parking and will reach $2500 for a unit with den and parking. Interestingly, two bedrooms without parking take about 25 days to lease on average versus just 14 days for those with parking. The rental market is tight and there is little room for tenants to negotiate.

SOLD: 2189 Coldwater St @ Appleby/Upper Middle in Burlington

2012-03-28T20:17:00Z

• 2,300 sq. ft., 3 Bedroom Home, 4 Bathrooms -MLS®$529,900

Appleby/Upper Middle, Burlington Real Estate - Immaculate, All-Brick 3 Bedroom Fernbrook Home on Quiet Kid Friendly Street in 'The Orchard.' Approx. 2300 SF Plus a Professionally Finished Basement w/3 Piece Washroom, Den/4th Bedroom & Wet Bar. Exceptional Open Concept Layout w/Generously Sized Bedrooms, Hardwood Floors, Large Pantry, 6" Baseboards, Gas Fireplace & 5 Pc Ensuite with Large Soaker Tub

Extras
Existing Gas Stove, Fridge, B/I Dishwasher, Washer, Dryer, California Shutters, All Window Coverings, All Elfs, Main Floor TV Wall Mount Bracket, Central Vacuum, 2nd Bedroom Window Cushions Excluding Basement Wine Fridge. HWT(R)

Burlington : Property information

Jeff Johnston, Sales Representative, RE/MAX Condos Plus

Upcoming Changes to the Toronto Condo Market

2012-03-27T14:34:00Z

RE/MAX Condos Plus recently blogged on the upcoming changes they see to the Toronto Condo Market, in particular, new condo developments. Here's what they had to say.....

There are big changes underway in the downtown Toronto Condo market: not just in the number of cranes that dot the sky, but in the underlying economics.

This will be the last year of the pre-construction boom in condo sales! The developers know it! Why do you think there are more new projects being rushed to market than ever before? The pre-construction market is dominated by investors. Investors buy pre-construction for only two reasons. First they buy on the expectation that prices they pay today will be lower than prices four years out, when the unit will be ready for occupancy and registered. Today investors are being tempted by projects in the financial district at $700-$800 per sf without parking. In comparison, you can buy resale for $520 per sf at 7 King East, and that includes parking. For today’s resale prices to reach today’s pre-construction prices in four years, you need the resale market to appreciate at 9+% per year. It’s never going to happen.

The second reason that investors buy, is for rental income. When condo prices exceeded $500 per sf, most ‘Rate of Return’ investors (read North Americans and Europeans) left the market. The remaining buyers are what we call ‘Wealth Preservation’ investors (read Middle East, Asians, and SE Asians). They want a safe place to park their money and earn a return. At $600 per sf, they were able to achieve a ‘cash on cash’ return of about 4%. At $800 per sf, the return drops to 2%. Why would any investor put their money in a condo versus the bank?

There is no logical reason for investors to buy at these pre-construction prices. Eventually the message will sink in. Still, there will be a pre-construction market in 2013. It will be smaller in offerings and the prices will be lower than today

So how do these changes impact the resale condo market? Are these markets not interconnected? The answer is: not really. The resale market is dominated by end users. They qualify based on their income and the level of mortgage rates. Since 2004, prices have risen by 7% per year on average. This is not sustainable going forward as incomes are only rising by 2-3% on average. The reason for the big jump in prices was the drop in mortgage rates from the 5-6% range to 3%. Going forward, rates are not going to fall further. In fact we would expect them to start to increase slowly. The end result is that resale condo prices will level off at current prices and then increase in the 3% range (the historical average increase for real estate).

Remember that most sales in the resale condo market take place because of lifestyle changes and not economic changes. People buy condos for the space they need today – not for five years from now. And when Grandma dies, I have never heard an Executor ask me about the condo market and whether they should rent the property out for a year. It is always sell! Worried about those buyers with 5% down, not being able to afford their condo if interest rates rise? Worry not. All these buyers have five year locked in mortgages. Why? They qualified at their own mortgage rate (3%) versus the posted rate of over 5%. With a 25 year amortization, after 5 years, these buyers will have repaid 15% of the principal and will have 20% equity in the property even if it`s value does not increase in those five years! This will help minimize the impact of an interest rate increase for current home owners.

There you have it. The resale condo market will continue to grow in size going forward. Lifestyle and continuing migration to Toronto will ensure that more and more people will want to live downtown. Prices will not increase like the past, but they surely won’t go down either!!

Just Reduced!! Streetsville Glen Estates Home For Sale

2012-03-20T14:49:00Z

Streetsville Glen Gem!

• 2,400 sq. ft., 3 Bathrooms, 4 Bedroom - MLS® $729,000 - Great Value!

Streetsville Glen Estates, Brampton - Streetsville Glen Gem! Enjoy this Spectacular 2 Storey, 4 Bedroom plus Den, 2 ½ Bath Home Situated on a Wide, Premium 60 Foot Lot. Extensively Upgraded with Top Quality Materials! Gorgeous, American Walnut Floors Throughout, Polished Marble Floors in the Foyer and Elegant Porcelain Tiles. Rod Iron Spindles & Solid Wood Staircase, Devine, Plaster Mouldings, 9' Ceilings on the Main Floor & California Shutters Complete this Masterpiece. The Kitchen is Equipped with High-End Stainless Steel Appliances, Granite Counters with a Large Breakfast Bar, Glass Tiled Backsplash and room for an Eat-In Breakfast Area with a Walk-out to the Backyard Gardens. As If all this wasn’t enough, over $25K Has Been Spent in Professional Landscaping, Exterior Lighting, Large Deck, Extensive Stonework and Beautiful Perennial Gardens.
Streetsville Glen is conveniently located close to the Meadowvale and Streetsville Go stations with Quick Access to the 407 and 401. For those looking to enjoy the outdoors, there are numerous parks and recreation facilities in the area including the extensive Meadowvale Conservation lands, Churchill Village, Meadowvale Sports Park, Streetsville Glen and Lionhead Golf and Country Club.

Real Estate Property information

3 Bedroom Home FOR SALE in Burlington's "The Orchard"

2012-03-15T12:29:00Z

• 2,300 sq. ft., 3 Bedroom Home, 4 Bathrooms - MLS® $529,900

Appleby/Upper Middle, Burlington - Immaculate, All-Brick 3 Bedroom Fernbrook Home on Quiet Kid Friendly Street in 'The Orchard.' Approx. 2300 SF Plus a Professionally Finished Basement w/3 Piece Washroom, Den/4th Bedroom & Wet Bar. Exceptional Open Concept Layout w/Generously Sized Bedrooms, Hardwood Floors, Large Pantry, 6" Baseboards, Gas Fireplace & 5 Pc Ensuite with Large Soaker Tub

Extras
Existing Gas Stove, Fridge, B/I Dishwasher, Washer, Dryer, California Shutters, All Window Coverings, All Elfs, Main Floor TV Wall Mount Bracket, Central Vacuum, 2nd Bedroom Window Cushions Excluding Basement Wine Fridge. HWT(R)

Real Estate MLS information

For Sale: 58 Marine Parade, Condo #1002 @ Parklawn/Lakeshore in Toronto

2012-03-15T04:00:00Z

• 1,349 sq. ft., 2 Bedroom, 2 Bathroom Condo - $659,000 - Dare to Compare!

Parklawn/Lakeshore, Toronto - Welcome to Monarch's Explorer! Gorgeous 2 Bedroom Plus Den (could be 3rd Bedroom) Condo with 9 Foot Smooth Ceilings Throughout, Fantastic 1349 SF Split Bedroom Layout, with Gorgeous Hardwood Floors, 4 Walk-outs to a Private 46 foot wide Balcony with 285 Square Feet of Outdoor Living Space to take in the Picturesque Lake, Park and City Views. Includes 5 Premium, Stainless Steel Appiances, 1 Parking Spot, 2 Lockers, Granite Counters, Wine Fridge, Designer Light Fixtures & Window Coverings. Absolutely turn key Property!

Dare to Compare!! Only $488 per. SF vs Monarch LAGO (across the street) @ $600 + per. SF. Spacious 2 Bdrm +Den w/lots of Upgrds: Brkfst Bar,Crown Mouldings,SS Appl, Designer Decor. 5 Star Amenities, Including Indoor Pool, Gym, Exercise Room, Guest Suites, Theatre Room, Party Room, Business Centre, Lakeview Meeting Room, 24 hr. Concierge, Visitor Parking & Lakeside Restaurant in the Building!

Extra: SS Stove & Fridge w/ice maker,SS Dishwasher,BI Microwave,SS Wine Fridge,Washer,Dryer,Desgner Elec. Lght Fixtures & Wdw Covergs,1 Prem Pkg Spot,2 Lckrs,. Talk to L.A. about Exec. Furniture Pkg.

Real Estate Property Information

1704-45 Southport St in Windermere/Queensway is Sold!

2012-03-06T13:24:00Z

Windermere/Queensway, Toronto - The single story at 1704-45 Southport St has been sold.

Property information

February/March 2012- Toronto Real Estate Market Report

2012-02-29T16:09:00Z

The Real Estate market in January continues to trend strongly. There is a lot of press out there (as there has been for the last couple of years!) for a potential housing crash. While we don't see the signs of that happening, all indicators continue to point to a more balanced market with low to moderate growth in 2012.

SALES COMMENTARY:

January is in the books – TREB sales are up 8.8% over January of 2011. For February, sales are running about 9% higher than the same month in 2011. So where does that put those people calling for a market correction in 2012? It certainly won’t be the spring and summer markets, so guess we will have to wait until the fall to prove the bears wrong! On the other hand, the condo market has been the slowest segment of the market. Overall condo sales were down by 1%. The supposed red hot condo market downtown produced a drop in sales in January of 10% compared to 2011. At the same time, ‘active listings’ were 22% lower! There is the problem with the condo market. Last spring we had almost 1500 listings downtown and the bears were saying that the condo market cannot absorb all these listings. Today we have just over 800 active listings.

However, our biggest concern is that there is a growing disconnect between the resale condo market and the pre-construction market. The resale market is populated by end users who have real jobs and mortgages. The pre-construction market is investor based. Investors are betting that prices will keep on rising. When we suggested in our 2012 Forecast that $800/sf was not sustainable and that the real market is in the $500 to $600/sf range, we received some criticism from the development industry. In January we are starting to see developers offering more incentives, including some price reductions, to sell these new projects.

To prove our point, we looked at resale prices in one of the more popular buildings on the Toronto Waterfront – the Waterclub at 8 York St. This 8 year old building with great views and amenities is very popular with first time buyers. The first unit we tracked was a one bedroom, one bath, with parking. On a high floor but with a city view (no water), it sold first in 2004 for $206,000. It sold again in 2011 for $330,000! Over seven years, the property has appreciated by 60% or 7% per annum. At 555 sf, this calculates at just under $600/sf. (If you remove the parking spot, the price would be $535/sf). The second unit we examined was a two bedroom, two bath with den and parking. It sold in 2004 for $383,000. The same unit sold again at the end of 2010 for $587,000. Again the rate of appreciation was 7% per year. At 1092 sf, the unit sold for $537/sf and it possessed great water views. When prices are rising at 7% (and salaries are not keeping pace), there must eventually be a leveling off of prices. Historically, real estate prices tend to increase in the 3-5% range.

RENTAL COMMENTARY:

January, usually one of the slowest rental months, was extremely active. Fifteen studios were leased along with 268 one bedroom units, and 136 two bedroom units in the downtown market. While rental numbers were slightly higher than a year ago, we see a significant increase in rental rates. Today, studios rent for just under $1400 versus $1250 a year ago. The average rent a year ago for a one bedroom unit without parking to a one plus one with parking was $1450-$1650. Today the range is $1550 -$1750. For two bedroom units, the range last year was $1850 -$2200. Today one can expect to pay from $2100 without parking to $2500 for a unit including den and parking. We are already seeing the type of increases we predicted in our 2012 Market Forecast. Note that most condo units built after 1997 are excluded from rent controls.

Would you pay $800/sf for a Pre-Construction Condo in Toronto??

2012-02-28T17:09:00Z

Some Developers are charging $800/sf for Pre-Construction condos. Seems like a lot, it is a lot. So, here`s what you should know before investing in such a unit.

In today's Downtown Toronto market, it's not unrealistic to pay $500+/sq for a new condo building, for a prime location that could rise to $650+/sq, and for luxury buildings in prime locations (i.e. Yonge&Bloor, Yorkville) the price per square foot rises to $750+/sq.

For investors, when they buy at $800 they are betting or guessing that resale prices will be at that level in four years. Currently prices are $500+. If you assume an average rate of appreciation of 5% then you will only get to $600+. At 7% (not likely) the number is $650+. If capital gains are not the reason that investors buy, then it must be rental income. The best returns are usually with studios. So take a 400sf studio costing $500,000. Assume it rents for $1400 (in four years time) and that taxes and condo fees combined are $300/mo. The return on your investment before financing is 2.6%! If you finance you have negative leverage! We know that many non-resident investors pay cash. But their bottom line is still 4%!

Now let’s look at the developer. We know he can build for $200+/ sf and soft costs (commissions to agents and other fees from architects to advertising) will come in at another $100+/sf. We are told that the culprit in rising prices is land costs. Take a parcel of land that will convert into 400 units at an average size of 700 sf. Land costs of $100/sf would translate into a purchase price of $28 million. At $200/sf, land costs would be $56 million. So the total cost to developers is $500/sf at the outside. To prove my point, Menkes bought 90 Harbour St. for $76 million and intends to build 1400 condo units on the site (plus a commercial tower). At $100/sf the price is $98 million and the commercial is free!!

So before you jump to paying $800/sf, make sure you do your math, taking into consider location and building upgrades.

Feel free to call me to discuss your investment options and to gain VIP access to Pre-Construction Condos.

Jeff Johnston, Sales Representative, B.A. (jeff@jeffjohnston.com, 416-203-6636)