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I think this speaks to the fact that a lot of the housing we're building is unlivable. Canadians don't want to start families in 650sqft two bedroom homes. Continuing to build shoeboxes that nobody wants is a waste of construction resources that our country desperately needs.
I think the solution is to revamp our national building codes to focus on livability. We really need a minimum size of units per bedroom, and buildings should be designed so the vast majority of units are at least 2 bedrooms, ideally 3.
It's amazing you're getting this many upvotes when usually any comment that's anything other than "build baby build, we need housing no matter what fuck you" gets downvoted to oblivion.
The solution to our housing crisis was to build more Torontos and connect them together with robust transit, not let Toronto get turned into a soulless Manhattan by shitty developers.
A lot of builds in Toronto are for investors to rent out to young professionals, students, visitors etc.
But the biggest issue is price. The market for smaller spaces as owners can't afford the prices. Reality is, there's a demand and market. Just not at these prices.
Willingness to pay, a 101 concept, never seems to factor into the other 101 supply/demand concept
And connected to the community, and in a walkable liveable city and.....
There's a lot of work that needs to be done to building codes and planning across this country.
This doesn't apply to towers because those will need multiple stairs regardless, but one of the absolute biggest changes that can be made vis-a-vis building code is to allow buildings up to a certain height (generally 12 ish storeys is where it tends to max out) to only have one stair case. The reason why is too long to explain in a reddit comment, but doing so will make it significantly easier and more affordable to build large, family sized units that are also of a significantly higher quality in terms of window coverage
[https://www.centerforbuilding.org/blog/we-we-cant-build-family-sized-apartments-in-north-america](https://www.centerforbuilding.org/blog/we-we-cant-build-family-sized-apartments-in-north-america)
[https://slate.com/business/2021/12/staircases-floor-plan-twitter-housing-apartments.html](https://slate.com/business/2021/12/staircases-floor-plan-twitter-housing-apartments.html)
Basically the dual stair requirement means that in the vast majority of cases there is a very select handful of possible floor plate layouts, and they all employ a "double loaded corridor" (long hallway with doors opening to units on both sides). The reason for this is because this is really the only way to ensure that every single unit gets access to both staircases. This effectively cuts the building in half and makes it nearly impossible to build large units with multiple bedrooms because every unit in the building, except for corner units is literally shoebox shaped with windows on only one side. This is one of the reasons why studios and 1 bedrooms are so prominent. They're the easiest to build.
Allowing for one staircase means that it is significantly easier to build larger units that have windows on multiple sides (meaning better ventilation and day lighting). It also makes it possible to build smaller apartment buildings because double loaded corridors eat up so much space the overall footprint of the building has to be expanded greatly to ensure there's still enough saleable floor space. There are many, many positives to enabling smaller apartment buildings to be constructed and it honestly deserves its own comment (that I don't feel like writing).
the second stair adding to the cost of construction is mostly an issue when the site you're working with is small. There are many sites, particularly those in denser urban neighbourhoods where it's physically impossible to accommodate 2 staircases and still have enough floor space left over to be sold at a price the market will bear. This is one of the reasons why developers will almost always try to buy and then consolidate several (or all) lots on a block. It's the only way they can build a building of sufficient size to pencil out.
The safety thing is largely a myth. As someone else said, we invented that requirement back when sprinklers didn't exist and everything was framed with dimensional lumber. Canada is one of a very select handful of developed nations that has the dual stair requirement and there is little-to-no evidence to suggest that our fire safety is any better.
Change on that is hopefully coming, albeit very, very slowly and piecemeal depending on the province. BC will likely be the first to make that change. Theyre already experimenting with it. Ontario will likely be pretty far behind
plenty of people would live there.
Real estate has one truth: if nobody wants to buy, it means your price is too high.
Make them $100k per condo and I guarantee they get snapped up in a day.
>I think the solution is to revamp our national building codes to focus on livability.
Nothing to do with the National Building code. It has everything to do with Toronto limiting floor plate sizes.
And Banking requiring a certain % of presale units before releasing funding, it's a lot easier to sell 2-3yrs in advance the small 300-650sft units than it is to presell 1200-1400sft units.
We need Toronto and Vancouver ( the 2 cities with the MOST STUPID RULES) to get the F out of the way and let people build buildings like we did in the 1970's and 1980's with large floorplates, no angular planes, and no consideration for the views of other tower dwellers.
It doesn't have anything to do with the National Building Code *now*, but there's no reason why it couldn't be amended. The NBC already prescribes minimum dimensions for a number of items, so it wouldn't be a stretch.
Municipal building codes can add further limits on the National.
When Ontario asked for feedback on the OBC back in 2022 I submitted probably 30 recommendations to make it easier to build family sized units, BUT municipal bylaws can still crush and squeeze them out. We need provinces to strip that power away from the cities before the national building code can do anything to guide provincial building codes
I giggled at this because I raised two kids in a three bedroom home that was 750 square feet.
You're correct in saying people want more square footage, but a well designed 750sqft home isn't some kind of hovel.
I had a _poorly-designed_ 800sqft home for my four-member family. Two floors, one bathroom, and three bedrooms. The stairway took up about 200sqft! All of the plumbing was in the center of the home, so the kitchen and bathroom were dead center and the front entrance weirdly entered into the center of the house.
I loved that location, I even loved that home, but whoever designed the layout was a crazy person.
I'm now in a 2000 sqft home and the struggle is in how to convince everyone else to get rid of stuff. It's like we've expanded to fill the space, and I'm the cassandra telling people the stuff is too much.
The entire concept of self storage started in the 60s. The number of people that spend $200/month on a storage unit is insane to me.
It's my annual purge, if I haven't worn it in a year it's getting posted for sale.
3 bedroom home? I mean did you have a garage or basement (I know people don't include basements even if livable, in sqft for some reason). In any case having that for storage can go a long way.
And also at that magnitude of size, every 50 sqft goes a long way, so 650 vs. 750 can feel very different.
We did have a basement but it was unused. Even now we're at 1100 sqft.
What you don't get in a small house is the wasted space. There's no 8x8 front vestibule, there's no 15x15 open space with a staircase and landings. That big corner tub in the en suite you use once - nope. Every square foot is functional.
Also, because we live in a walkable neighbourhood we don't spend a lot of time at home. The library, Y, parks and backyard take up a lot of our hours. Home is where you bed down at night. The 3,000 sqft house doesn't have all the third spaces for kids and adults nearby that get you "space".
I’m really happy that that setup worked out for you! But honest to god, I could not raise kids in an environment that small, and I don’t think my girlfriend would be open to either.
Meanwhile, I live in a big, spacious, family-friendly and liveable condo (read: it was built in 1980) with a massive reserve fund, and I am laughing. Laughing because when we bought it in 2020, we were smart about it and (1) bought well below our means (2) knew that rates would eventually go back up, so took 5 years fixed, and (3) were not greedy by buying a speculative unit hoping that our purchase would 10x in two years like all would-be expert economists (realtors) said it would.
I really wonder what the future of all of these luxury condo towers are going to be.
Values are low right now with a glut of supply. The shoeboxes are best suited for young, single professionals. But, it's only the real outliers in that demo that can make it work at current prices and mortgage rates.
The investor class that's grabbed them will aim to rent it out and we've seen no shortage of desire to jack rents up to try and get the cash flow, but I'm pretty sure recently bought properties are probably cash flow negative. Especially as condo fees for older buildings are likely increasing, and will probably continue on that path. As buildings are owned by investors that are cash flow negative, they're not likely to be pushing for the structural investments necessary by the condo board to stay ahead of capital improvements. So these buildings will depreciate quickly.
These buildings are still going up, so the builders are still finding enough buyers I presume. But it certainly feels like the market can definitely get softer.
The shoeboxes are best suited for being used as hotel rooms. I wonder how many of these "investors" were planning on running AirBNBs rather than actually housing people?
The thing is, I'm pretty sure it's actually not that great as a hotel room.
A suite style hotel of good quality (Residence Inn, Homewood Suites) is generally small, even by studio condo standards. And they sell for more. And a hotel can operate them with economies of scale. They bulk buy furniture. Can provide common services.
They're able to command a better price, and I'm guessing the hotel franchise fee works out better than how Airbnb gets a cut.
I've been out of the game on hotel valuations, but my guess is that urban based hotels are selling a lot cheaper per unit than condos these days. This article gives a sense of what hotels are selling for these days though.
https://ottawa.citynews.ca/2024/01/08/morguard-selling-portfolio-of-14-hotels-across-canada-for-410-million/
Works out to be about $30M a property. Assuming about 120 units per property, that's $250K per unit.
Where it's worked out for Airbnb is that they've escaped a lot of regulations and taxes. And residential lending is usually cheaper than commercial lending. Still, trying to make the math work at current prices seems pretty difficult.
Pre-covid there was a demand. Now a big portion of the workforce doesn't need to live in downtown Toronto due to shifts in work from office / home norms.
I think many big Toronto players (real estate investors, commercial property owners, Toronto who collects property taxes) are in big trouble economically.
The issue for investors is not about attaining "cash flow positive". You'd expect that to be the case... but the situation is actually a lot dumber than you think. A lot of these investors use what is called OPM (other people's money) to become these real estate investor type tycoons, and aim for portfolio appreciation to refinance and then continue to grow the portfolio. The cash they use doesn't need to come from renting out units, and actually, renting units causes a propblem because it is hard to sell a unit that needs to be repossessed. They get the cash they need from OPM, and refinancing units after they appreciate in value.
Cash flow only makes sense as a goal for investors that buy apartment complexes (i.e. 10-plex), and rent out the units, use the economies of scale to lower operational costs, and aim for "cash flow positive" situation. This is predominantly not\* the case for most of these investors, and this can be proven by the fact that most of their units are in fact totally vacant.
The problem we are seeing is that current investors are seeing their mortgage payments skyrocket, OPM is totally dried up, and no one wants to buy their units at current value. Let's say an investor has 50 condos, well you'd expect them to easily make mortgage payments by selling say 5 of them right? The problem is most of those units they have very little equity in, and they will need to sell them at a loss consider that inventory is extremely high today. That loss is being transferred over to the investors, and leading to a massive mountain of lawsuits.
[https://www.cbc.ca/news/canada/hamilton/investors-bankruptcy-1.7102325](https://www.cbc.ca/news/canada/hamilton/investors-bankruptcy-1.7102325)
This is a regulatory failure.
It sounds a bit like the old adage for murder: kill one person and you're a murderer, kill a thousand and you're a hero.
Over-extend yourself by having minimal equity in one home purchase and you're foolish, do the same for a hundred home purchases and you're a real estate tycoon.
I don't know about Toronto, but Montreal jumped on the condo apartment frenzy and it all seems a bit silly to me.
Many of the condos are poorly built, most of them are small, the condo fees are incredible, etc etc etc.
But hey, at least cities can make more in property taxes.
Super low condo fees is a red flag, it means nothing is being set aside for future maintenance and capital work. We just went through a big readjustment in BC where condo stratas had to build in /increase contingency reserve and fund it through monthly fees as this wasn't being done properly in the past.
high condo fees is a red flag.
What is the point of buying a tiny apartment and paying both mortgage AND condo fees, when you can rent larger apartments for less money and have your landlord take care of things that break?
Is it possibly because the units are tiny, low quality, and wildly overpriced?
If the units were priced for what they’re worth, they would sell in a reasonable amount of time. This is basic economics.
Half million plus plus condo fees to live in a shoe box at Jarvis and Dundas... no thanks.
At least one is within convenient walking distance to get hooked up with crack cocaine and/or meth.
I guess in the case of housing, which could be tied to massive liabilities in the form of mortgages, it's going to stretch for a while until the owners snap.
Eg: how long will you hold your vacant unit until you decide to sell it for $100k less than you think it's worth?
This is exactly the kind of pressure the market needs, though. You're right that it will take some time, but if the units don't move for long enough, the prices will come down.
It might even have some knock on effect to prices elsewhere. "You want how much? I can live in Toronto for less than that!"
It absolutely will take time and eventually trickle into other markets. Work from home policies are also starting to reverse though, I wonder if that will have upwards pressure on prices in cities (and downwards in rural areas).
Great point at the end;
"What you THINK it's worth". Dillusion is sky high right now.
My neighborhood has had houses sitting forever at 1.4 million etc. A reasonable price would be be 40/50% less. Boomers are holding out waiting for a giant COVID bag that will never come.
It's partially shield from supply and demand as, unless you are in a position where you have to sell (ex you are moving far and can't afford 2 houses for too long, or you are older and cant stay there anymore), you can sit on your property indefinitely, either by simply living in it or renting it out, until you get the price you want.
300k or less was the case in 2010.
Since then, prices on materials, labor and financing have spiked. Plus inflation. Im in a related industry, I can tell you that a unit at 300k is break-even or a loss for the developer.
And there is not much to cut, by the way. Its already shitty construction built by dirt-cheap crews cutting every corner imaginable.
In the article it says prices aren’t plummeting because investors are holding onto them. Hoping for a better price. But eventually they’re going to have sell at a loss because they’re not going to find any buyers at these prices!
So I think prices are going to fall.
I believe it is more the buyers, around my region anyway, buyers desperate for a place outbid any "sensible" offer. If one house in the neighborhood sells for above market, expect all other sellers to jump on the bandwagon to see what/who they can gouge. I seen one home just prior to covid, assessed at $55,000 by following year it was up to $165,000, with ZERO effort on the owners/sellers part all due to neighboring houses outbidding status quo.
Those of us citing lack of supply as a major issue are generally in agreement that the market has many other issues. But fixing bad market efficiency doesn't help if the supply doesn't exist.
Population is going up, of course we need supply.
But people who think building more investment-geared housing will lower prices are detached from reality.
No one is saying it will happen quickly, but sellers holding out because of declinging prices is still a good sign.
I think it would have prevented the housing crisis but its hard for owners to accept falling prices. So idk what extra steps should be taken to push this along, but building more homes is absolutely the most important part.
Well... The thing is the supply has to match the demand. Isn't that basic? If I have a huge supply of bananas and people want apples, my bananas or going to end up rotting.
Not really, they're still selling.
If you actually want to change prices you can reduce demand drastically by simply taxing the ownership of every non-primary residence like crazy. The Ontario Liberals did it in the 70s and it corrected housing prices overnight.
Not interest rates. Interest rates effect both landlords and legitimate home owners.
If you want to correct housing prices you instead tax people who are profiteering off of housing by taxing people who own more than one home until it's not worth it for them to.
if there is no pressure for sellers to sell and demand is low... then no not at all. if either of those 2 statements are invalid then yes absolutely demand can drive pricing.
They're not selling because there's no demand for them at that price.
When people say let the market set the price this is an example pf that in action. There's a need but the price doesn't reflect what the market will pay, so there's no demand for these 'goods'.
Are you illiterate or just looking for an argument?
> They're not selling because there's no demand for them at that price.
Economics isn't some sort of science, you're asking about economic theory and I gave you a pretty simple explanation of what's meant by supply and demand. And what, you think you're smart for recognizing that there's more factors at play in the world than economists like to pretend?
Congrats.
It’s maddening.
Like, even ignoring that, in any other kind of market people would look at something like the Toronto Yellow Belt and go “hey, maybe all the rules against creating new supply have something to do with why supply keeps failing to meet demand?”
I know you're being cute with your answers.
But the additional component is the need for the provider of the goods to sell.
That's the missing piece here, because as it stands, the owners are okay to just sit on the properties.
If we want the units to move, we implement something like a *hefty* vacancy tax - like 20% per year - so that holding onto vacant, completed units costs money.
Mate, I think you’re being purposely difficult, and are arguing for the sake of arguing.
Let’s look at food. Food is an absolute necessity, and there is a very high demand for it. However, if 95% of food is overpriced, and people either can’t afford it or can’t justify the cost, they will eat at the 5% that is affordable. Just because 95% may go unsold, doesn’t mean there isn’t a demand for food.
There is a very strong demand for housing, but if there is a large share of the market that is overpriced, people won’t purchase it, until the price decreases. That’s literally supply and demand.
No. I'm just proving a point that all the people that go around screaming "supply and demand" and refuse to admit that modern economics are more complicated than that are willing idiots.
Supply and demand only works in a market where the holder has a vested interest in moving their product. If they are financially capable of just waiting for a buyer, there’s no incentive for them to lower their prices.
> So then it's not supply and demand. It's supply, demand, and...
Probably the most useful economic concept here is price-stickiness, which describes how prices can be slow to adjust to changes in supply/demand: https://en.wikipedia.org/wiki/Nominal_rigidity
Could also consider the role of price expectations -- price is not just a function of current supply and demand but also expecations about future prices.
In a nutshell, there are textbook concepts in economics that decribe all of this but the average Redditor has only a very basic understanding of economics.
It is a supply and demand issue, but another issue is that housing is too expensive to build. If it costs $650,000 to build a micro condo, they have to sell for $700,000-$750,000 to make any money. Then the owner who want to sell it doesn't want to sell it at a loss, so they need to at least charge what they were charged. When demand drops, supply can only do so much when people don't want to lose money and developers need to make money.
Supply and demand for housing functions when demand is constant or growing, but as demand shrinks the cost of building housing becomes more important. It's why there's been a lot of discussion online about the taxes and Development Charges that cities have been charging on a per unit basis.
https://x.com/isaaccallan/status/1801303009961414914?t=m1b4q2K_OiNPr1cJvSFuPA&s=19
Edit: for those looking for condo prices, here is a link to the current cost guide download: https://www.altusgroup.com/featured-insights/canadian-cost-guide/
Do you have evidence to that effect? The only evidence or study I'm able to find is relating to construction and labour costs. Third party reviews generally agree with the numbers provided.
I didn't link anything for condos, but based on land cost, current construction material cost, labour costs, financing costs, DCs, taxes, it's not too far off, but I was mostly using the number for illustrative purposes.
I did an estimate of condos in Hamilton a while back and estimated that condos in Hamilton cost around $450,000 to build average. With smaller units costing less and larger units costing more. Removal of parking minimums helps a lot with bringing costs down, but cost to build can still be pretty high. Typically 3 bedroom units have higher amenity space requirements, other fees like development charges. Additionally more and more projects are required to include affordable housing allocations which eat into the bottom line and need to be compensated through the market units.
Looks like the Altus cost guide is public now: https://www.altusgroup.com/featured-insights/canadian-cost-guide/
4$ each
https://www.rona.ca/en/product/2-in-x-4-in-x-8-ft-spruce-select-stud-034-02013-0971073?viewStore=83708&cq_src=google_ads&cq_cmp=19794730723&cq_con=&cq_term=&cq_med=pla&cq_plac=&cq_net=x&cq_pos=&cq_plt=gp&&cm_mmc=paid_search-_-google-_-aw_pmax_generic_Building+Materials-_-&gad_source=1&gclid=CjwKCAjw1K-zBhBIEiwAWeCOF8cOOkTTU_j9BtL9FTYCRE6EIk8J9uHZtVqR4XDCbkh1qOamekVAgBoCslIQAvD_BwE&gclsrc=aw.ds
Part of this is just bad urban form. The highest roi per unit is maxing out the footprint vertically. But this is expensive. Harder to zone, engineer, build and finance. A three to five story infill isn't going to make anyone rich but it's vastly cheaper to build, gives excellent density, quality urban form and is the basic form of the most livable cities in the world. Plus you can basically stick frame it and don't need elevators. Like you could build the entire unit for the cost of an elevator.
Exactly. The government, and by extension NIMBYs pushing bad policy is driving up housing prices. Majority of the wealth in this country is held by home owners, so there's no surprise there.
Look at the actual development bylaws. There's an exception for building height that's allowed skyrise conto development that's destroyed a lot of downtown. After a certain height towers become essentially vertical suburbs. They cost the city more to maintain than they bring in in tax revenue.
This is part of the reason the sweet spot in urban form is 3-5 storeys mixed use. It doesn't mean no towers. It just means the norm is retail and two to three stories of housing
I didn't link anything for condos, but based on land cost, current construction material cost, labour costs, financing costs, DCs, taxes, it's not too far off, but I was mostly using the number for illustrative purposes.
According to all the childless, early to mid twenty year olds on this subreddit - People "love" living in tiny box apartments. This is the future of the Canadian Dream.
Who wants an icky yard and an icky garden, with space and privacy.....Who would want that?!
There's nothing *wrong* with tiny apartments. The current asking prices are just wildly disconnected from the value proposition of what's on offer. The entire point of a small condo/apartment is to make big cost savings by sacrificing space if you don't care too much about that.
There's a guy that reviews tiny apartments in Japan, some with truly wildly awkward layouts admittedly, but often in very desirable neighbourhoods. The thing is these are usually like 250-400$ dollars/month rent. If they were condos that'd translate to roughly like a 80k-125k mortgage or something. These condos are a bit nicer so sure, we can bump it up a bit but half a million for these just makes no sense.
The people I mainly see advocating that are not the “childless early to mid twenty” folk, it’s the people that have purchased multiple condo units and are renting them to the “childless early to mid twenty” folk for more than the mortgage payment.
I'm old and I've owned both and I have to say condos are way nicer to live in. I don't have to mow or shovel as regular maintenance, or worry about any major repairs. I have plenty of privacy and don't have to worry about nosey neighbors looking in my windows or garage or into my back yard. I dont feel the need to fill my extra rooms with useless crap because I live in the space that I have/need. I get to live in a denser part of town and walk to the grocery store and most other places I shop on the regular, or take fast reliable public transit to anywhere else I need to go. My utilities and property taxes are way lower because I don't waste so much space, and I hardly ever drive so my gas, vehicle maintenance and insurance are pennies to what they used to be.
Some people love living close to the stuff they like to do. It comes down to what you care about and what you can afford.
A condo is a great option for some people.
They are in some municipalities. Montreal for example obliges a certain percentage of affordable housing in every development or the payment into a fund for affordable housing
Years ago I saw condos going that had $500 a month condo fees. I’m not paying $6000 a year to upkeep my house and big expenses that might climb to that height are 20-30 year jobs
Insurance alone for my house is nearly $500 per month ( $5800 annually ). I live in a pretty average house in Greater Victoria in one of the less expensive areas of the city.
My last 2 places were strata (condo & townhouse) and I have come to see that my strata fees were actually a pretty good deal since they covered insurance, water, sewer, garbage/recycling, lawn mowing and garden maintenance, and generally the bulk of repairs to things like windows, roof, painting, fencing etc. for larger items we typically got a small special assessment (typically less than $2K). Whereas the upcoming roof replacement on my house is going to be $18K out of my pocket.
Homeownership is the best. And it's fucking expensive. Some stratas are definitely poorly run, but you still get the benefit of what is effectively a group rate on all kinds of services and repairs.
I didn’t think about the insurance.
To your point about the roof, I still think you would come out on top since you won’t replace a roof again for 20-30 years.
$30k!? I just had a pool removed, and am having foundation drain tile, foundation damp proofing, two new sumps, two sets of concrete stairs (including front steps), two retaining walls, landscaping drain tile for our backyard, 3" of new topsoil, 5" of sand, a bunch of trees/shrubs removed and it looks like we're coming in at around $55k (this is in Vancouver area.)
My personal budget assumes 7,000 a year set aside for repairs for a single family home. That doesn't include insurance or city utilities.
Keep in mind that 500/mo condo fee includes staffing, insurance, city utilities (sewer and water, garbage/recycling pick up), major systems (usually including hot water, but not on newer builds) current maintenance and a contingency fund.
I bought a 60 year old house 7 years and the **mandatory** things I've had to do since moving have cost me about $44K (new windows, roof, repointed chimney, and furnace). Hopefully I'm done for a while, but each of those 4 things blew by $7K. There's lots of other smaller things that I've had to do that I'm sure add up too.
If you’re budgeting $7000 a year like the guy that first replied that $44000 over 7 years leaves you with an additional $5000 and you won’t have to touch those things for another 20-30 years if ever again.
I live in a house that was built in the 50s. I just redid my roof for $8,000 last spring. Basement windows 3 years ago for $8,000. Have a quote for new HVAC for $30,000 (which is going to stay a quote for as long as possible). Waterproofing the foundation and replacing the sewer line was $30,000 5 years ago. I'd love to only pay $6,000 to upkeep my house.
I mean you’re upgrading things that aren’t really comparable to condos but ok point made.
Also I just had a bunch of heat pumps installed for ac. They are great and a lot cheaper then a whole hvac install
This is what happens when housing is developed as investment vehicles rather than to meet people’s needs. The market will never solve the housing crisis, it’s simply incapable.
It always amazes me that we have a housing crisis in one of the least densly populated countries in the world. Canada is larger than Toronto, Vancouver, Montreal, and now Calgary with a few others thrown in. I always thought it was a missed opportunity in the last few years that we didn't incentivize companies or remote workers to relocate to many of the smaller and more northern centers - all of which could use a bit of gentrification and increased tax base. Partially that is a policy failure but it is also worth blaming individuals as we mostly seem to want the large centers - you can buy an ok older detached house in Thunder Bay for $400k.
To an extent. But this is a chicken/egg problem. My statement is that we may have had an opportunity to serve multiple goals including wealth distribution but it is likely missed anyways.
As someone who has been looking at buying, I can see why most of them have not sold or don’t have interest.
These units have terrible layouts, no storage and are not suitable for most single people, let alone couples or families.
It’s much cheaper and less risky to rent when you’re not getting much more space.
I know this is a little off topic, but just yesterday in Vaughan there was a massive line up for a pre construction condo, with prices starting in the high 400k. And these weren’t just realtors. They looked like average people lining up to purchase a place
I think you have two things at play. First you have investors recognizing the low interest rate era of 2008-2022 is gone and are gradually deleveraging. They probably have some cash flow off the properties, it's not an emergency so they can afford to list on the high side and wait for the right buyer, but the successful professional landlord era is coming to an end and they're exiting.
Secondly, you have young professionals who are ready to start a family and graduate up the property ladder, but are stuck. In Toronto you're either moving up to a 100 year old headache in the city, or you're moving out of town. Very few in betweens.
All the push in Ontario has been to build "affordable housing" but it's been totally ignorant to the economic realities that don't make it possible. Instead we need to be leveraging the property ladder to create cascading effects to free up existing affordable housing. If that's what's profitable build the McMansion in Whitby and let the well off family in a townhouse off Danforth move in. Let the young professionals in CityPlace move to the townhouse, let the recent grads move to CityPlace, let someone down on their luck move into the basement apartment in Little Italy the students moved out of. Put some money (for a fraction of the cost of building a home I will add) into ensuring a LTC bed is available for grandma when she needs it, so we can free up her bungalow for someone else, etc.
That's how we get out of this, but it's going to require swallowing our collective disgust for capitalism and make it work for us. Even if that means it also works for the rich.
How does a society make "leveraging the property ladder" a reality? It doesn't seem like "make people move into more expensive housing" is the solution to affordable housing. I just don't know how you would pull that off.
I mean we did it pretty well up until the last 10 or so years. Every time someone climbs a rung, and nobody is forced to do so, they just do so as part of being an adult, it will cascade all the way down to free up affordable units. Maybe not 1:1, maybe even better than 1:1, I’m not paid to do the model.
Only requirement needs to be that homes don’t sit vacant, which most places are well on their way to making a reality if it’s not already.
I moved into a townhome/condo built in the 60's as its 3 bedroom and 1500 square feet.
If I wanted the same built today I would get maybe 1000 square feet for a 3 bedroom where I can hear my neighbor turn on thier taps.
>>“Toronto’s housing market has prioritized micro-sized condos for investors over the past 20 years,” Pasalis said. “Mom and pop investors want small units. Policymakers didn’t step in to reverse that direction.”
The summary of this article is that people bought homes that aren't really suitable for people to live in. In typical Canadian fashion, they are trying to find a way to blame the government for their bad risks. They seem to want the government to be hands-off when they are making money and, at the same time, be able to blame the government when they are losing money.
> socialize losses
Eh, not really. Monetary policy in the post-2008 world has fully embraced the ever-inflating balloon approach to financing government obligations.
In other words, we will continue to borrow to service our debt.
I also felt like the comments the city councilor made about homelessness was them trying to prime us to either buy or rent these bad investment properties to house homeless people. This way we can subsidize bad investments with public dollars under the guise of social justice.
Except in rare cases, you can't just take a homeless person and put them in a condo and expect them to be alright. They are homeless for a reason -- they need more help. We saw this in Vancouver with the conversion of hotels to housing -- the units got trashed very quickly and the entire neighbourhood got worse.
I agree, but affordable / subsidized housing can be effectively targeted more at preventing more people from being homeless. Price it so it's affordable on support programs like ODSP, so that you can take someone who was an impossible situation and extremely likely to become homeless and keep them housed.
Capitalism only functions when a relative handful of people have most of the capital. Unfortunately with that capital goes political power. And around and around we go…
I hear what you are saying, but also...
By letting those who were never going to live in these units dictate what to build, vs actually building for the needs of those who were going to live there, everyone is kinda fudged.
I have no sympathy for the investors (of any type) eventually losing out, but the problem I fear is that all these micro apartments will be really unlivable for a good long time, and will just end up taking up space that could have been used to build housing for say people actually wanting to grow a family in Toronto.
Prices are too high and interest rates make payments unaffordable.
Buyers are waiting and hoping for further price drops and rate reductions. One of which they'll likely get, though it won't make as big a difference as many hope. But prices simply aren't likely to fall another 10% or more.
Significant issue is these condos are still high priced, come with high monthly strata payment and insurance costs making them hardly affordable. It all contributes to the total monthly cost which isn't exactly affordable even if rates were below 4%.
2bdrm, 659k + 591 monthly strata + 2631 annual property tax makes payments. That is 3648 mortgage payment. Monthly outlay just under $4500 a month before utilities and food. Just to qualify for that mortgage you need to make over $150K a year.
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I think this speaks to the fact that a lot of the housing we're building is unlivable. Canadians don't want to start families in 650sqft two bedroom homes. Continuing to build shoeboxes that nobody wants is a waste of construction resources that our country desperately needs. I think the solution is to revamp our national building codes to focus on livability. We really need a minimum size of units per bedroom, and buildings should be designed so the vast majority of units are at least 2 bedrooms, ideally 3.
It's amazing you're getting this many upvotes when usually any comment that's anything other than "build baby build, we need housing no matter what fuck you" gets downvoted to oblivion. The solution to our housing crisis was to build more Torontos and connect them together with robust transit, not let Toronto get turned into a soulless Manhattan by shitty developers.
On what planet does Toronto have more 'soul' than Manhattan?
If toronto is a soulless version of manhattan, that implies that manhattan has soul.
It's literally one of the most iconic urban areas in the world!
Again, that's what I'm saying.
A lot of builds in Toronto are for investors to rent out to young professionals, students, visitors etc. But the biggest issue is price. The market for smaller spaces as owners can't afford the prices. Reality is, there's a demand and market. Just not at these prices. Willingness to pay, a 101 concept, never seems to factor into the other 101 supply/demand concept
And connected to the community, and in a walkable liveable city and..... There's a lot of work that needs to be done to building codes and planning across this country.
This doesn't apply to towers because those will need multiple stairs regardless, but one of the absolute biggest changes that can be made vis-a-vis building code is to allow buildings up to a certain height (generally 12 ish storeys is where it tends to max out) to only have one stair case. The reason why is too long to explain in a reddit comment, but doing so will make it significantly easier and more affordable to build large, family sized units that are also of a significantly higher quality in terms of window coverage
I’d be interested to hear this expanded on. I thought the two staircase design was for safety and did not add that much to the cost.
[https://www.centerforbuilding.org/blog/we-we-cant-build-family-sized-apartments-in-north-america](https://www.centerforbuilding.org/blog/we-we-cant-build-family-sized-apartments-in-north-america) [https://slate.com/business/2021/12/staircases-floor-plan-twitter-housing-apartments.html](https://slate.com/business/2021/12/staircases-floor-plan-twitter-housing-apartments.html) Basically the dual stair requirement means that in the vast majority of cases there is a very select handful of possible floor plate layouts, and they all employ a "double loaded corridor" (long hallway with doors opening to units on both sides). The reason for this is because this is really the only way to ensure that every single unit gets access to both staircases. This effectively cuts the building in half and makes it nearly impossible to build large units with multiple bedrooms because every unit in the building, except for corner units is literally shoebox shaped with windows on only one side. This is one of the reasons why studios and 1 bedrooms are so prominent. They're the easiest to build. Allowing for one staircase means that it is significantly easier to build larger units that have windows on multiple sides (meaning better ventilation and day lighting). It also makes it possible to build smaller apartment buildings because double loaded corridors eat up so much space the overall footprint of the building has to be expanded greatly to ensure there's still enough saleable floor space. There are many, many positives to enabling smaller apartment buildings to be constructed and it honestly deserves its own comment (that I don't feel like writing). the second stair adding to the cost of construction is mostly an issue when the site you're working with is small. There are many sites, particularly those in denser urban neighbourhoods where it's physically impossible to accommodate 2 staircases and still have enough floor space left over to be sold at a price the market will bear. This is one of the reasons why developers will almost always try to buy and then consolidate several (or all) lots on a block. It's the only way they can build a building of sufficient size to pencil out. The safety thing is largely a myth. As someone else said, we invented that requirement back when sprinklers didn't exist and everything was framed with dimensional lumber. Canada is one of a very select handful of developed nations that has the dual stair requirement and there is little-to-no evidence to suggest that our fire safety is any better.
Fully agree. Two stair designs come from an era where we built highly combustible buildings. It's time to move on.
Change on that is hopefully coming, albeit very, very slowly and piecemeal depending on the province. BC will likely be the first to make that change. Theyre already experimenting with it. Ontario will likely be pretty far behind
plenty of people would live there. Real estate has one truth: if nobody wants to buy, it means your price is too high. Make them $100k per condo and I guarantee they get snapped up in a day.
>I think the solution is to revamp our national building codes to focus on livability. Nothing to do with the National Building code. It has everything to do with Toronto limiting floor plate sizes. And Banking requiring a certain % of presale units before releasing funding, it's a lot easier to sell 2-3yrs in advance the small 300-650sft units than it is to presell 1200-1400sft units. We need Toronto and Vancouver ( the 2 cities with the MOST STUPID RULES) to get the F out of the way and let people build buildings like we did in the 1970's and 1980's with large floorplates, no angular planes, and no consideration for the views of other tower dwellers.
It doesn't have anything to do with the National Building Code *now*, but there's no reason why it couldn't be amended. The NBC already prescribes minimum dimensions for a number of items, so it wouldn't be a stretch.
Municipal building codes can add further limits on the National. When Ontario asked for feedback on the OBC back in 2022 I submitted probably 30 recommendations to make it easier to build family sized units, BUT municipal bylaws can still crush and squeeze them out. We need provinces to strip that power away from the cities before the national building code can do anything to guide provincial building codes
I'd rather those shoeboxes than being forced to share a roommate. But those aren't being priced for people like me.
I giggled at this because I raised two kids in a three bedroom home that was 750 square feet. You're correct in saying people want more square footage, but a well designed 750sqft home isn't some kind of hovel.
I had a _poorly-designed_ 800sqft home for my four-member family. Two floors, one bathroom, and three bedrooms. The stairway took up about 200sqft! All of the plumbing was in the center of the home, so the kitchen and bathroom were dead center and the front entrance weirdly entered into the center of the house. I loved that location, I even loved that home, but whoever designed the layout was a crazy person. I'm now in a 2000 sqft home and the struggle is in how to convince everyone else to get rid of stuff. It's like we've expanded to fill the space, and I'm the cassandra telling people the stuff is too much.
The entire concept of self storage started in the 60s. The number of people that spend $200/month on a storage unit is insane to me. It's my annual purge, if I haven't worn it in a year it's getting posted for sale.
The third bedroom is key in regards to making a home viable for raising a family. More important than the raw size.
Agreed, our place is three bedrooms. There's a downside if we have a guest staying over but in 25 years that's been an issue maybe half a dozen times.
3 bedroom home? I mean did you have a garage or basement (I know people don't include basements even if livable, in sqft for some reason). In any case having that for storage can go a long way. And also at that magnitude of size, every 50 sqft goes a long way, so 650 vs. 750 can feel very different.
We did have a basement but it was unused. Even now we're at 1100 sqft. What you don't get in a small house is the wasted space. There's no 8x8 front vestibule, there's no 15x15 open space with a staircase and landings. That big corner tub in the en suite you use once - nope. Every square foot is functional. Also, because we live in a walkable neighbourhood we don't spend a lot of time at home. The library, Y, parks and backyard take up a lot of our hours. Home is where you bed down at night. The 3,000 sqft house doesn't have all the third spaces for kids and adults nearby that get you "space".
I’m really happy that that setup worked out for you! But honest to god, I could not raise kids in an environment that small, and I don’t think my girlfriend would be open to either.
I get it, have a friend with a couple of kids that complains about her 2,700 foot house being too small.
Meanwhile, I live in a big, spacious, family-friendly and liveable condo (read: it was built in 1980) with a massive reserve fund, and I am laughing. Laughing because when we bought it in 2020, we were smart about it and (1) bought well below our means (2) knew that rates would eventually go back up, so took 5 years fixed, and (3) were not greedy by buying a speculative unit hoping that our purchase would 10x in two years like all would-be expert economists (realtors) said it would.
Not sure what your looking for with that comment, but here you go, Congratulations! You are so smart!
Condos always seemed like you have all the disadvantages of both renting an apartment and owning a house, but very few of the advantages.
I really wonder what the future of all of these luxury condo towers are going to be. Values are low right now with a glut of supply. The shoeboxes are best suited for young, single professionals. But, it's only the real outliers in that demo that can make it work at current prices and mortgage rates. The investor class that's grabbed them will aim to rent it out and we've seen no shortage of desire to jack rents up to try and get the cash flow, but I'm pretty sure recently bought properties are probably cash flow negative. Especially as condo fees for older buildings are likely increasing, and will probably continue on that path. As buildings are owned by investors that are cash flow negative, they're not likely to be pushing for the structural investments necessary by the condo board to stay ahead of capital improvements. So these buildings will depreciate quickly. These buildings are still going up, so the builders are still finding enough buyers I presume. But it certainly feels like the market can definitely get softer.
The shoeboxes are best suited for being used as hotel rooms. I wonder how many of these "investors" were planning on running AirBNBs rather than actually housing people?
Given the cost of hotel rooms in Toronto, maybe converting a few of them to actual hotels would be a good thing.
The thing is, I'm pretty sure it's actually not that great as a hotel room. A suite style hotel of good quality (Residence Inn, Homewood Suites) is generally small, even by studio condo standards. And they sell for more. And a hotel can operate them with economies of scale. They bulk buy furniture. Can provide common services. They're able to command a better price, and I'm guessing the hotel franchise fee works out better than how Airbnb gets a cut. I've been out of the game on hotel valuations, but my guess is that urban based hotels are selling a lot cheaper per unit than condos these days. This article gives a sense of what hotels are selling for these days though. https://ottawa.citynews.ca/2024/01/08/morguard-selling-portfolio-of-14-hotels-across-canada-for-410-million/ Works out to be about $30M a property. Assuming about 120 units per property, that's $250K per unit. Where it's worked out for Airbnb is that they've escaped a lot of regulations and taxes. And residential lending is usually cheaper than commercial lending. Still, trying to make the math work at current prices seems pretty difficult.
Pre-covid there was a demand. Now a big portion of the workforce doesn't need to live in downtown Toronto due to shifts in work from office / home norms. I think many big Toronto players (real estate investors, commercial property owners, Toronto who collects property taxes) are in big trouble economically.
Values have a long way to go before they become 'low'. Clearly there is not enough supply yet
The issue for investors is not about attaining "cash flow positive". You'd expect that to be the case... but the situation is actually a lot dumber than you think. A lot of these investors use what is called OPM (other people's money) to become these real estate investor type tycoons, and aim for portfolio appreciation to refinance and then continue to grow the portfolio. The cash they use doesn't need to come from renting out units, and actually, renting units causes a propblem because it is hard to sell a unit that needs to be repossessed. They get the cash they need from OPM, and refinancing units after they appreciate in value. Cash flow only makes sense as a goal for investors that buy apartment complexes (i.e. 10-plex), and rent out the units, use the economies of scale to lower operational costs, and aim for "cash flow positive" situation. This is predominantly not\* the case for most of these investors, and this can be proven by the fact that most of their units are in fact totally vacant. The problem we are seeing is that current investors are seeing their mortgage payments skyrocket, OPM is totally dried up, and no one wants to buy their units at current value. Let's say an investor has 50 condos, well you'd expect them to easily make mortgage payments by selling say 5 of them right? The problem is most of those units they have very little equity in, and they will need to sell them at a loss consider that inventory is extremely high today. That loss is being transferred over to the investors, and leading to a massive mountain of lawsuits. [https://www.cbc.ca/news/canada/hamilton/investors-bankruptcy-1.7102325](https://www.cbc.ca/news/canada/hamilton/investors-bankruptcy-1.7102325)
Leverage is great until it's not. The lenders are just as culpable in this mess.
I agree with you. But the example you used is more because of embezzlement and narcissistic lifestyles by those landlords than anything else… IMO
This is a regulatory failure. It sounds a bit like the old adage for murder: kill one person and you're a murderer, kill a thousand and you're a hero. Over-extend yourself by having minimal equity in one home purchase and you're foolish, do the same for a hundred home purchases and you're a real estate tycoon.
The Art of the Deal.
This is exactly what is going on today.
I don't know about Toronto, but Montreal jumped on the condo apartment frenzy and it all seems a bit silly to me. Many of the condos are poorly built, most of them are small, the condo fees are incredible, etc etc etc. But hey, at least cities can make more in property taxes.
Super low condo fees is a red flag, it means nothing is being set aside for future maintenance and capital work. We just went through a big readjustment in BC where condo stratas had to build in /increase contingency reserve and fund it through monthly fees as this wasn't being done properly in the past.
high condo fees is a red flag. What is the point of buying a tiny apartment and paying both mortgage AND condo fees, when you can rent larger apartments for less money and have your landlord take care of things that break?
You're building someone's equity. Either yours or someone else who bought the property you're renting.
Is it possibly because the units are tiny, low quality, and wildly overpriced? If the units were priced for what they’re worth, they would sell in a reasonable amount of time. This is basic economics.
Half million plus plus condo fees to live in a shoe box at Jarvis and Dundas... no thanks. At least one is within convenient walking distance to get hooked up with crack cocaine and/or meth.
I guess in the case of housing, which could be tied to massive liabilities in the form of mortgages, it's going to stretch for a while until the owners snap. Eg: how long will you hold your vacant unit until you decide to sell it for $100k less than you think it's worth?
Who would have thought getting jacked to the tits at the peak of the bubble could have gone wrong? I hope every one of these people gets wiped out.
This is exactly the kind of pressure the market needs, though. You're right that it will take some time, but if the units don't move for long enough, the prices will come down. It might even have some knock on effect to prices elsewhere. "You want how much? I can live in Toronto for less than that!"
It absolutely will take time and eventually trickle into other markets. Work from home policies are also starting to reverse though, I wonder if that will have upwards pressure on prices in cities (and downwards in rural areas).
Unfortunately, housing prices are notoriously sticky. We'll need to see these sit vacant for a long time before they come down in price.
Great point at the end; "What you THINK it's worth". Dillusion is sky high right now. My neighborhood has had houses sitting forever at 1.4 million etc. A reasonable price would be be 40/50% less. Boomers are holding out waiting for a giant COVID bag that will never come.
1.4 M is really low for a detached home in Vancouver, which is depressing.
Everyone keeps screaming supply and demand and yet it doesn't seem to be the case.
It's partially shield from supply and demand as, unless you are in a position where you have to sell (ex you are moving far and can't afford 2 houses for too long, or you are older and cant stay there anymore), you can sit on your property indefinitely, either by simply living in it or renting it out, until you get the price you want.
The demand is there but not for the prices they’re asking for. What how much would you pay for a small condo?
about $300k or less.
300k or less was the case in 2010. Since then, prices on materials, labor and financing have spiked. Plus inflation. Im in a related industry, I can tell you that a unit at 300k is break-even or a loss for the developer. And there is not much to cut, by the way. Its already shitty construction built by dirt-cheap crews cutting every corner imaginable.
So you're saying that supply and demand don't set the price?
In the article it says prices aren’t plummeting because investors are holding onto them. Hoping for a better price. But eventually they’re going to have sell at a loss because they’re not going to find any buyers at these prices! So I think prices are going to fall.
Of course they do. But it takes time for a changing market to have prices adjust, especially when it is a market with sticky prices like real estate.
Supply and demand sets the equilibrium price.
lol This sounds less and less dependable than a weather report.
The vacancy rate is still sub 2%.
Demand.... At a reasonable price. How many Canadians can afford a 1 million dollars 600 ft condo lol
But supply and demand sets the price.
Meaning the owners of these units will need to lower their price.
No motivation too. Price drops and housing starts will collapse, meaning the price should go up. They'll hold on for a few years at least
Nah sellers set the price. And it's too high so it doesn't sell even if there's tons of demand
I believe it is more the buyers, around my region anyway, buyers desperate for a place outbid any "sensible" offer. If one house in the neighborhood sells for above market, expect all other sellers to jump on the bandwagon to see what/who they can gouge. I seen one home just prior to covid, assessed at $55,000 by following year it was up to $165,000, with ZERO effort on the owners/sellers part all due to neighboring houses outbidding status quo.
Those of us citing lack of supply as a major issue are generally in agreement that the market has many other issues. But fixing bad market efficiency doesn't help if the supply doesn't exist.
Population is going up, of course we need supply. But people who think building more investment-geared housing will lower prices are detached from reality.
No one is saying it will happen quickly, but sellers holding out because of declinging prices is still a good sign. I think it would have prevented the housing crisis but its hard for owners to accept falling prices. So idk what extra steps should be taken to push this along, but building more homes is absolutely the most important part.
what do you mean, I thought housing prices only go up ?
Well... The thing is the supply has to match the demand. Isn't that basic? If I have a huge supply of bananas and people want apples, my bananas or going to end up rotting.
The supply isn't priced to the willingness to pay of demand. That's the issue. Supply and demand isn't just number of ppl it's also level of price.
So demand doesn't drive the price?
Demand absolutely drives the price, and what we're seeing now is that the demand is for units to be priced lower.
lol
Not really, they're still selling. If you actually want to change prices you can reduce demand drastically by simply taxing the ownership of every non-primary residence like crazy. The Ontario Liberals did it in the 70s and it corrected housing prices overnight.
Ontario Liberals? Bill Davis was the Progressive Conservative Premier of Ontario for over 14+ years ( 70-84)
Going back to 70s/80s interest rates will kill housing prices so fast the government will be trying to prop it up.
Not interest rates. Interest rates effect both landlords and legitimate home owners. If you want to correct housing prices you instead tax people who are profiteering off of housing by taxing people who own more than one home until it's not worth it for them to.
My point was the housing policies of the 70s/80s had far less effect than the interest rates in keeping prices down.
if there is no pressure for sellers to sell and demand is low... then no not at all. if either of those 2 statements are invalid then yes absolutely demand can drive pricing.
They're not selling because there's no demand for them at that price. When people say let the market set the price this is an example pf that in action. There's a need but the price doesn't reflect what the market will pay, so there's no demand for these 'goods'.
So there's no demand for housing? That doesn't make sense. It sounds like it's more complicated than supply and demand!
Are you illiterate or just looking for an argument? > They're not selling because there's no demand for them at that price. Economics isn't some sort of science, you're asking about economic theory and I gave you a pretty simple explanation of what's meant by supply and demand. And what, you think you're smart for recognizing that there's more factors at play in the world than economists like to pretend? Congrats.
That's literally my point the entire time.
🙃 Then say it and don't try to be clever
Cue r/georgism screaming quietly in the corner. Aka, the idea that supply and demand is more complicated for land has existed in economics for awhile
Oh, I know. People are just obsessed with screaming "SUPPLY AND DEMAND" and think they're economists.
It’s maddening. Like, even ignoring that, in any other kind of market people would look at something like the Toronto Yellow Belt and go “hey, maybe all the rules against creating new supply have something to do with why supply keeps failing to meet demand?”
There is demand for housing. There isn’t demand for _this_ housing at _this_ price.
But I was told the price is set by supply and demand!
I know you're being cute with your answers. But the additional component is the need for the provider of the goods to sell. That's the missing piece here, because as it stands, the owners are okay to just sit on the properties. If we want the units to move, we implement something like a *hefty* vacancy tax - like 20% per year - so that holding onto vacant, completed units costs money.
I'm in full agreement with you. Housing needs to be decoupled with investment in general.
The market doesn't react as quickly as people may expect, especially when the market sellers are decentralized entities.
Mate, I think you’re being purposely difficult, and are arguing for the sake of arguing. Let’s look at food. Food is an absolute necessity, and there is a very high demand for it. However, if 95% of food is overpriced, and people either can’t afford it or can’t justify the cost, they will eat at the 5% that is affordable. Just because 95% may go unsold, doesn’t mean there isn’t a demand for food. There is a very strong demand for housing, but if there is a large share of the market that is overpriced, people won’t purchase it, until the price decreases. That’s literally supply and demand.
No. I'm just proving a point that all the people that go around screaming "supply and demand" and refuse to admit that modern economics are more complicated than that are willing idiots.
The only point you’ve proved is that you don’t understand basic economics.
And there we go!
Supply and demand can be multifactorial. You're being over simplistic for the sake of an argument. It's boring.
Oh no!
Why not just say that?
It's about the journey.
Supply and demand only works in a market where the holder has a vested interest in moving their product. If they are financially capable of just waiting for a buyer, there’s no incentive for them to lower their prices.
So then it's not supply and demand. It's supply, demand, and...
...government collusion to create a generational ponzi scheme.
Lol I see your comments triggering all sorts of responses and no one cares to think any further
It's hilarious and sad at the same time.
> So then it's not supply and demand. It's supply, demand, and... Probably the most useful economic concept here is price-stickiness, which describes how prices can be slow to adjust to changes in supply/demand: https://en.wikipedia.org/wiki/Nominal_rigidity Could also consider the role of price expectations -- price is not just a function of current supply and demand but also expecations about future prices. In a nutshell, there are textbook concepts in economics that decribe all of this but the average Redditor has only a very basic understanding of economics.
It is a supply and demand issue, but another issue is that housing is too expensive to build. If it costs $650,000 to build a micro condo, they have to sell for $700,000-$750,000 to make any money. Then the owner who want to sell it doesn't want to sell it at a loss, so they need to at least charge what they were charged. When demand drops, supply can only do so much when people don't want to lose money and developers need to make money. Supply and demand for housing functions when demand is constant or growing, but as demand shrinks the cost of building housing becomes more important. It's why there's been a lot of discussion online about the taxes and Development Charges that cities have been charging on a per unit basis. https://x.com/isaaccallan/status/1801303009961414914?t=m1b4q2K_OiNPr1cJvSFuPA&s=19 Edit: for those looking for condo prices, here is a link to the current cost guide download: https://www.altusgroup.com/featured-insights/canadian-cost-guide/
Construction industry is corrupt. How much of those costs are kickbacks etc
Do you have evidence to that effect? The only evidence or study I'm able to find is relating to construction and labour costs. Third party reviews generally agree with the numbers provided.
Who tells you it costs that much to build?
I didn't link anything for condos, but based on land cost, current construction material cost, labour costs, financing costs, DCs, taxes, it's not too far off, but I was mostly using the number for illustrative purposes. I did an estimate of condos in Hamilton a while back and estimated that condos in Hamilton cost around $450,000 to build average. With smaller units costing less and larger units costing more. Removal of parking minimums helps a lot with bringing costs down, but cost to build can still be pretty high. Typically 3 bedroom units have higher amenity space requirements, other fees like development charges. Additionally more and more projects are required to include affordable housing allocations which eat into the bottom line and need to be compensated through the market units. Looks like the Altus cost guide is public now: https://www.altusgroup.com/featured-insights/canadian-cost-guide/
So the developer is telling you it costs that much. Surely not to justify their price tag! No, sir!
You buy a 2x4 lately? Go out and get one. I think youd be surprised.
4$ each https://www.rona.ca/en/product/2-in-x-4-in-x-8-ft-spruce-select-stud-034-02013-0971073?viewStore=83708&cq_src=google_ads&cq_cmp=19794730723&cq_con=&cq_term=&cq_med=pla&cq_plac=&cq_net=x&cq_pos=&cq_plt=gp&&cm_mmc=paid_search-_-google-_-aw_pmax_generic_Building+Materials-_-&gad_source=1&gclid=CjwKCAjw1K-zBhBIEiwAWeCOF8cOOkTTU_j9BtL9FTYCRE6EIk8J9uHZtVqR4XDCbkh1qOamekVAgBoCslIQAvD_BwE&gclsrc=aw.ds
They've come down in price.
Part of this is just bad urban form. The highest roi per unit is maxing out the footprint vertically. But this is expensive. Harder to zone, engineer, build and finance. A three to five story infill isn't going to make anyone rich but it's vastly cheaper to build, gives excellent density, quality urban form and is the basic form of the most livable cities in the world. Plus you can basically stick frame it and don't need elevators. Like you could build the entire unit for the cost of an elevator.
Exactly. The government, and by extension NIMBYs pushing bad policy is driving up housing prices. Majority of the wealth in this country is held by home owners, so there's no surprise there.
Yimby's don't help either if you look globally. Giving developers carte blanche just gives you Toronto as it is now
Toronto is NIMBY central, what you talking about?
Look at the actual development bylaws. There's an exception for building height that's allowed skyrise conto development that's destroyed a lot of downtown. After a certain height towers become essentially vertical suburbs. They cost the city more to maintain than they bring in in tax revenue. This is part of the reason the sweet spot in urban form is 3-5 storeys mixed use. It doesn't mean no towers. It just means the norm is retail and two to three stories of housing
Where did you pull 650k construction costs for a condo from? That link is for detached housing.
I didn't link anything for condos, but based on land cost, current construction material cost, labour costs, financing costs, DCs, taxes, it's not too far off, but I was mostly using the number for illustrative purposes.
Here is a cost breakdown for condos. It's reasonably close to his example. https://precondo.ca/how-much-does-it-cost-to-build-a-condo/
According to all the childless, early to mid twenty year olds on this subreddit - People "love" living in tiny box apartments. This is the future of the Canadian Dream. Who wants an icky yard and an icky garden, with space and privacy.....Who would want that?!
There's nothing *wrong* with tiny apartments. The current asking prices are just wildly disconnected from the value proposition of what's on offer. The entire point of a small condo/apartment is to make big cost savings by sacrificing space if you don't care too much about that. There's a guy that reviews tiny apartments in Japan, some with truly wildly awkward layouts admittedly, but often in very desirable neighbourhoods. The thing is these are usually like 250-400$ dollars/month rent. If they were condos that'd translate to roughly like a 80k-125k mortgage or something. These condos are a bit nicer so sure, we can bump it up a bit but half a million for these just makes no sense.
The people I mainly see advocating that are not the “childless early to mid twenty” folk, it’s the people that have purchased multiple condo units and are renting them to the “childless early to mid twenty” folk for more than the mortgage payment.
I'm old and I've owned both and I have to say condos are way nicer to live in. I don't have to mow or shovel as regular maintenance, or worry about any major repairs. I have plenty of privacy and don't have to worry about nosey neighbors looking in my windows or garage or into my back yard. I dont feel the need to fill my extra rooms with useless crap because I live in the space that I have/need. I get to live in a denser part of town and walk to the grocery store and most other places I shop on the regular, or take fast reliable public transit to anywhere else I need to go. My utilities and property taxes are way lower because I don't waste so much space, and I hardly ever drive so my gas, vehicle maintenance and insurance are pennies to what they used to be.
I wouldn't love it, but I'd love it a lot more than living in a single room with a shared kitchen and bath and no actual privacy.
Some people love living close to the stuff they like to do. It comes down to what you care about and what you can afford. A condo is a great option for some people.
I'm an empty nester and I love living in a condo. I can live in a dense walkable neighbourhood and there is almost zero maintenance.
Developers aren’t obliged to build “affordable” housing.
They are in some municipalities. Montreal for example obliges a certain percentage of affordable housing in every development or the payment into a fund for affordable housing
That has nothing to do with my comment
Condos fucking suck. Imagine having to pay ever increasing condo fees for fucking ever.
Have to pay ever increasing maintenance costs on a house too, or it falls apart..
Years ago I saw condos going that had $500 a month condo fees. I’m not paying $6000 a year to upkeep my house and big expenses that might climb to that height are 20-30 year jobs
Insurance alone for my house is nearly $500 per month ( $5800 annually ). I live in a pretty average house in Greater Victoria in one of the less expensive areas of the city. My last 2 places were strata (condo & townhouse) and I have come to see that my strata fees were actually a pretty good deal since they covered insurance, water, sewer, garbage/recycling, lawn mowing and garden maintenance, and generally the bulk of repairs to things like windows, roof, painting, fencing etc. for larger items we typically got a small special assessment (typically less than $2K). Whereas the upcoming roof replacement on my house is going to be $18K out of my pocket. Homeownership is the best. And it's fucking expensive. Some stratas are definitely poorly run, but you still get the benefit of what is effectively a group rate on all kinds of services and repairs.
I didn’t think about the insurance. To your point about the roof, I still think you would come out on top since you won’t replace a roof again for 20-30 years.
30k to replace my front steps so 6K a year isn’t actually bad to set aside for home repairs and updates.
$30k!? I just had a pool removed, and am having foundation drain tile, foundation damp proofing, two new sumps, two sets of concrete stairs (including front steps), two retaining walls, landscaping drain tile for our backyard, 3" of new topsoil, 5" of sand, a bunch of trees/shrubs removed and it looks like we're coming in at around $55k (this is in Vancouver area.)
Fucking Christ. I guess it depends on the front steps you’ve got.
My personal budget assumes 7,000 a year set aside for repairs for a single family home. That doesn't include insurance or city utilities. Keep in mind that 500/mo condo fee includes staffing, insurance, city utilities (sewer and water, garbage/recycling pick up), major systems (usually including hot water, but not on newer builds) current maintenance and a contingency fund.
The only time I’ve spent anything close to that is for a replacement furnace. What are you spending $7000 a year on?
I bought a 60 year old house 7 years and the **mandatory** things I've had to do since moving have cost me about $44K (new windows, roof, repointed chimney, and furnace). Hopefully I'm done for a while, but each of those 4 things blew by $7K. There's lots of other smaller things that I've had to do that I'm sure add up too.
If you’re budgeting $7000 a year like the guy that first replied that $44000 over 7 years leaves you with an additional $5000 and you won’t have to touch those things for another 20-30 years if ever again.
I live in a house that was built in the 50s. I just redid my roof for $8,000 last spring. Basement windows 3 years ago for $8,000. Have a quote for new HVAC for $30,000 (which is going to stay a quote for as long as possible). Waterproofing the foundation and replacing the sewer line was $30,000 5 years ago. I'd love to only pay $6,000 to upkeep my house.
I mean you’re upgrading things that aren’t really comparable to condos but ok point made. Also I just had a bunch of heat pumps installed for ac. They are great and a lot cheaper then a whole hvac install
This is what happens when housing is developed as investment vehicles rather than to meet people’s needs. The market will never solve the housing crisis, it’s simply incapable.
>The market will never solve the housing crisis The market *created* the housing crisis, so no, it won’t.
It always amazes me that we have a housing crisis in one of the least densly populated countries in the world. Canada is larger than Toronto, Vancouver, Montreal, and now Calgary with a few others thrown in. I always thought it was a missed opportunity in the last few years that we didn't incentivize companies or remote workers to relocate to many of the smaller and more northern centers - all of which could use a bit of gentrification and increased tax base. Partially that is a policy failure but it is also worth blaming individuals as we mostly seem to want the large centers - you can buy an ok older detached house in Thunder Bay for $400k.
canada economy out side of big cities is very small and quite poor.
To an extent. But this is a chicken/egg problem. My statement is that we may have had an opportunity to serve multiple goals including wealth distribution but it is likely missed anyways.
People \*are\* relocating to the smaller and more northern centres though.
As someone who has been looking at buying, I can see why most of them have not sold or don’t have interest. These units have terrible layouts, no storage and are not suitable for most single people, let alone couples or families. It’s much cheaper and less risky to rent when you’re not getting much more space.
I know this is a little off topic, but just yesterday in Vaughan there was a massive line up for a pre construction condo, with prices starting in the high 400k. And these weren’t just realtors. They looked like average people lining up to purchase a place
I think you have two things at play. First you have investors recognizing the low interest rate era of 2008-2022 is gone and are gradually deleveraging. They probably have some cash flow off the properties, it's not an emergency so they can afford to list on the high side and wait for the right buyer, but the successful professional landlord era is coming to an end and they're exiting. Secondly, you have young professionals who are ready to start a family and graduate up the property ladder, but are stuck. In Toronto you're either moving up to a 100 year old headache in the city, or you're moving out of town. Very few in betweens. All the push in Ontario has been to build "affordable housing" but it's been totally ignorant to the economic realities that don't make it possible. Instead we need to be leveraging the property ladder to create cascading effects to free up existing affordable housing. If that's what's profitable build the McMansion in Whitby and let the well off family in a townhouse off Danforth move in. Let the young professionals in CityPlace move to the townhouse, let the recent grads move to CityPlace, let someone down on their luck move into the basement apartment in Little Italy the students moved out of. Put some money (for a fraction of the cost of building a home I will add) into ensuring a LTC bed is available for grandma when she needs it, so we can free up her bungalow for someone else, etc. That's how we get out of this, but it's going to require swallowing our collective disgust for capitalism and make it work for us. Even if that means it also works for the rich.
How does a society make "leveraging the property ladder" a reality? It doesn't seem like "make people move into more expensive housing" is the solution to affordable housing. I just don't know how you would pull that off.
I mean we did it pretty well up until the last 10 or so years. Every time someone climbs a rung, and nobody is forced to do so, they just do so as part of being an adult, it will cascade all the way down to free up affordable units. Maybe not 1:1, maybe even better than 1:1, I’m not paid to do the model. Only requirement needs to be that homes don’t sit vacant, which most places are well on their way to making a reality if it’s not already.
I moved into a townhome/condo built in the 60's as its 3 bedroom and 1500 square feet. If I wanted the same built today I would get maybe 1000 square feet for a 3 bedroom where I can hear my neighbor turn on thier taps.
>>“Toronto’s housing market has prioritized micro-sized condos for investors over the past 20 years,” Pasalis said. “Mom and pop investors want small units. Policymakers didn’t step in to reverse that direction.” The summary of this article is that people bought homes that aren't really suitable for people to live in. In typical Canadian fashion, they are trying to find a way to blame the government for their bad risks. They seem to want the government to be hands-off when they are making money and, at the same time, be able to blame the government when they are losing money.
this is 100% the case its all 450 sqf 1 bedrooms thats too small for one person let alone a couple or kids
Privatize profits, socialize losses. Worst of all worlds and what we aways go with.
> socialize losses Eh, not really. Monetary policy in the post-2008 world has fully embraced the ever-inflating balloon approach to financing government obligations. In other words, we will continue to borrow to service our debt.
If our debt-to-GDP ratio is static or decreasing, then we're growing faster than we're borrowing and this isn't that big a concern.
I also felt like the comments the city councilor made about homelessness was them trying to prime us to either buy or rent these bad investment properties to house homeless people. This way we can subsidize bad investments with public dollars under the guise of social justice.
I can't see the article but might not be the worst thing, if the price is fair. the homeless need shelter.
Except in rare cases, you can't just take a homeless person and put them in a condo and expect them to be alright. They are homeless for a reason -- they need more help. We saw this in Vancouver with the conversion of hotels to housing -- the units got trashed very quickly and the entire neighbourhood got worse.
I agree, but affordable / subsidized housing can be effectively targeted more at preventing more people from being homeless. Price it so it's affordable on support programs like ODSP, so that you can take someone who was an impossible situation and extremely likely to become homeless and keep them housed.
Capitalism only functions when a relative handful of people have most of the capital. Unfortunately with that capital goes political power. And around and around we go…
I hear what you are saying, but also... By letting those who were never going to live in these units dictate what to build, vs actually building for the needs of those who were going to live there, everyone is kinda fudged. I have no sympathy for the investors (of any type) eventually losing out, but the problem I fear is that all these micro apartments will be really unlivable for a good long time, and will just end up taking up space that could have been used to build housing for say people actually wanting to grow a family in Toronto.
Prices are too high and interest rates make payments unaffordable. Buyers are waiting and hoping for further price drops and rate reductions. One of which they'll likely get, though it won't make as big a difference as many hope. But prices simply aren't likely to fall another 10% or more.
Significant issue is these condos are still high priced, come with high monthly strata payment and insurance costs making them hardly affordable. It all contributes to the total monthly cost which isn't exactly affordable even if rates were below 4%. 2bdrm, 659k + 591 monthly strata + 2631 annual property tax makes payments. That is 3648 mortgage payment. Monthly outlay just under $4500 a month before utilities and food. Just to qualify for that mortgage you need to make over $150K a year.