I agree entirely with what has been said. Prices need to come down another 15-25% for the risk reward to balance out again. Too much risk at current valuations.
Sold my condo in April of 2023 and bought a freehold townhouse (no maintenance fee!) closer to my new job completely outside of the GTA. Based on the forecasted 10% yearly increases in fees plus the general carelessness of residents that has gotten worse since the pandemic, I completely agree that the glory days are over.
Congrats on your sale. This is the general sentiment that I felt. I still think condo ownership can work, I typically felt the expiry of a building starts between 10 - 20 years old where you can see if it's working or not. This is also where the best purchase value was relative to when big repairs would start. These days I think the 'expiry' of buildings comes even sooner, which is why I think the risk is greater. For the right price I'd still consider owning a condo, but it has to be in a great building, otherwise it's too big of a gamble.
Vas this is.a great topic and not to name condos or some lofts in Toronto, but I'm curious how many of these locations are pulling this off these low fees without cutting corners or using special assessments as ways to cover bigger project costs. I wish condo boards would have some type of convention to gather and look at best practices, more regulation etc but that kind of coordination might be too much to hope for. I think trades are often under performing and because of lack of good competition, many buildings are taken advantage of. I would also wonder how the various property management companies are governed and regulated - it feels like the wild west. I know having been on a board and having had a hard time getting good property managers, quality of service and talent is a challenge.
All great points, and artificially keeping fees low is an issue in this city. The boards feel they are doing everyone a favour, but ultimately they are just kicking the can down the road.
When someone's roof leaks or their furnace breaks in a freehold, people don't tend to blame the asset class. Special assessments happen, especially early on in the life of a building when the reserve fund isn't as built up. But most of the time, your reserve fund means you pay nothing extra for major capital repairs. It's forced savings.
Valid comment in the sense that a freehold property isn't free of maintenance, they both cost money and I don't want to make this a debate about one or the other. With condos you are tied to certain contractors and their prices, there is less competition and you as the owner have no choice in the matter and are bound by the decision making of the board which typically doesn't think long term. Short term thinking in real estate upkeep ends up being a lot more expensive overall. The BC insurance premiums is a prime example of that.
@@CityEstates I agree with you on the board being crucial and the risks associated with investor-dominated new builds. I think it really is up to real estate agents to learn about the buildings in their area and educate their buyers accordingly. I just find the psychology (generally not yours) around reserve funds and special assessments is a little strange.
@@aaronginsberg4993 Agree on all accounts, I've bought in well managed buildings WITH special assessments, the values to this date hold well and clients are very happy with their purchases. This unfortunately is the outlier buyer, special assessments are the boogieman with condos. Send one to a lawyer for a review, they will immediately flag it and then the buyer is scared. Sometimes rightfully so and other times not so much. On the flipside lawsuits are also another major red flag with multi million dollar lawsuits with legs at various buildings downtown that will without a doubt impair values. In the end I think it will become clear, you will have well run condos holding strong with strong pricing and healthy reserves and you will have something across the street for 25%+ less, but riddled with problems that will likely never be fixed.
Great info Vas. I think that the likes of Air BnB has driven the condo market downtown so as an investor they don’t really care about the building as much as an owner. Once the cash flow becomes negative for these investors and we have stagnant capital growth there will be a huge influx of condos on the market. The only thing holding up the condo market know is CHMC as this is the only affordable entry point into owning a home.
People will still buy them, like you said they are the most readily available and "affordable" option. There are great buildings out there just getting harder to find.
People do this to themselves. They seek out the condos with the lowest condo fees. Can't tell you how many times I have seen people assume that a condo with "low fees" means it is "well run". I ask them "What is the reserve fund situation like?" and they say "What's a reserve fund?"........ so yeah..... people are dumb generally and they also go for the "Shiny, pretty, glass buildings". I live in a stucco condo that people call ugly, build 15 years ago, solid as a rock, no issues, moderate condo fees. The glass condos go for 2x more and will require way more maintenance.
So true, a lot of people focus on fees per square foot and think that's the ultimate metric, without the context of what's on the horizon in terms of expenses it really is meaningless, but it's how you pander to the normal consumer who is unaware.
You mention there are great buildings in the core. How do you find them? Is an agent really going to steer you away from a condo you love if they think you might buy? Maybe I just met the wrong agents over the years, but in my experience number one was the purchase or sale
Knowing good buildings comes from on the ground experience, years of reviewing hundreds of status certificates, and knowing people in industry like property managers, people on boards, etc. You also have to stay current because a good building can turn bad with a big lawsuit or some catastrophic failure. As far as agents I am not sure how they run their business, but I can give you an example of how I do it. There are two types of condo buyers, end users and investors. Investors shop on price and tenant profile, they will consider mediocre buildings for a good enough discount. I educate them on the risks of a specific building, but if it’s a money maker then it’s a money maker. With end users my approach is different, once I know what you want I will shortlist a handful of buildings and if they work the goal is to secure a unit there, this way we avoid all the messy ones. I’ve also had clients who were adamant about certain buildings because of location or some other very specific reason and we’ve purchased them. That said when they bought they were fully aware of all issues and understood the downside, no surprises.
I think freehold detached has much greater issues especially alot of immigrnts has absolutely no idea whats involved in upkeeping tge property. I know a guy just leave the house for like 6 months in china and when he comes back there is a hole in the roof and water leaked everywhere. Its just a disaster. I know another person doesnt even know he has to cut the lawn once in a while . And its like a jungle
listen zoolander I dont take your alarmism lightly
🤣🤣
I agree entirely with what has been said.
Prices need to come down another 15-25% for the risk reward to balance out again.
Too much risk at current valuations.
this video tinted my windows
🤣🤣
this guy just going hard with the all black like fuck a background
Trying to pretend I don't exist like in real life.
Sold my condo in April of 2023 and bought a freehold townhouse (no maintenance fee!) closer to my new job completely outside of the GTA. Based on the forecasted 10% yearly increases in fees plus the general carelessness of residents that has gotten worse since the pandemic, I completely agree that the glory days are over.
Congrats on your sale. This is the general sentiment that I felt. I still think condo ownership can work, I typically felt the expiry of a building starts between 10 - 20 years old where you can see if it's working or not. This is also where the best purchase value was relative to when big repairs would start. These days I think the 'expiry' of buildings comes even sooner, which is why I think the risk is greater. For the right price I'd still consider owning a condo, but it has to be in a great building, otherwise it's too big of a gamble.
Vas this is.a great topic and not to name condos or some lofts in Toronto, but I'm curious how many of these locations are pulling this off these low fees without cutting corners or using special assessments as ways to cover bigger project costs. I wish condo boards would have some type of convention to gather and look at best practices, more regulation etc but that kind of coordination might be too much to hope for. I think trades are often under performing and because of lack of good competition, many buildings are taken advantage of. I would also wonder how the various property management companies are governed and regulated - it feels like the wild west. I know having been on a board and having had a hard time getting good property managers, quality of service and talent is a challenge.
All great points, and artificially keeping fees low is an issue in this city. The boards feel they are doing everyone a favour, but ultimately they are just kicking the can down the road.
When someone's roof leaks or their furnace breaks in a freehold, people don't tend to blame the asset class. Special assessments happen, especially early on in the life of a building when the reserve fund isn't as built up. But most of the time, your reserve fund means you pay nothing extra for major capital repairs. It's forced savings.
Valid comment in the sense that a freehold property isn't free of maintenance, they both cost money and I don't want to make this a debate about one or the other. With condos you are tied to certain contractors and their prices, there is less competition and you as the owner have no choice in the matter and are bound by the decision making of the board which typically doesn't think long term. Short term thinking in real estate upkeep ends up being a lot more expensive overall. The BC insurance premiums is a prime example of that.
@@CityEstates I agree with you on the board being crucial and the risks associated with investor-dominated new builds. I think it really is up to real estate agents to learn about the buildings in their area and educate their buyers accordingly. I just find the psychology (generally not yours) around reserve funds and special assessments is a little strange.
@@aaronginsberg4993 Agree on all accounts, I've bought in well managed buildings WITH special assessments, the values to this date hold well and clients are very happy with their purchases. This unfortunately is the outlier buyer, special assessments are the boogieman with condos. Send one to a lawyer for a review, they will immediately flag it and then the buyer is scared. Sometimes rightfully so and other times not so much. On the flipside lawsuits are also another major red flag with multi million dollar lawsuits with legs at various buildings downtown that will without a doubt impair values. In the end I think it will become clear, you will have well run condos holding strong with strong pricing and healthy reserves and you will have something across the street for 25%+ less, but riddled with problems that will likely never be fixed.
Great info Vas. I think that the likes of Air BnB has driven the condo market downtown so as an investor they don’t really care about the building as much as an owner. Once the cash flow becomes negative for these investors and we have stagnant capital growth there will be a huge influx of condos on the market. The only thing holding up the condo market know is CHMC as this is the only affordable entry point into owning a home.
People will still buy them, like you said they are the most readily available and "affordable" option. There are great buildings out there just getting harder to find.
People do this to themselves. They seek out the condos with the lowest condo fees. Can't tell you how many times I have seen people assume that a condo with "low fees" means it is "well run". I ask them "What is the reserve fund situation like?" and they say "What's a reserve fund?"........ so yeah..... people are dumb generally and they also go for the "Shiny, pretty, glass buildings". I live in a stucco condo that people call ugly, build 15 years ago, solid as a rock, no issues, moderate condo fees. The glass condos go for 2x more and will require way more maintenance.
So true, a lot of people focus on fees per square foot and think that's the ultimate metric, without the context of what's on the horizon in terms of expenses it really is meaningless, but it's how you pander to the normal consumer who is unaware.
You mention there are great buildings in the core. How do you find them? Is an agent really going to steer you away from a condo you love if they think you might buy? Maybe I just met the wrong agents over the years, but in my experience number one was the purchase or sale
Knowing good buildings comes from on the ground experience, years of reviewing hundreds of status certificates, and knowing people in industry like property managers, people on boards, etc. You also have to stay current because a good building can turn bad with a big lawsuit or some catastrophic failure.
As far as agents I am not sure how they run their business, but I can give you an example of how I do it. There are two types of condo buyers, end users and investors. Investors shop on price and tenant profile, they will consider mediocre buildings for a good enough discount. I educate them on the risks of a specific building, but if it’s a money maker then it’s a money maker. With end users my approach is different, once I know what you want I will shortlist a handful of buildings and if they work the goal is to secure a unit there, this way we avoid all the messy ones. I’ve also had clients who were adamant about certain buildings because of location or some other very specific reason and we’ve purchased them. That said when they bought they were fully aware of all issues and understood the downside, no surprises.
I think freehold detached has much greater issues especially alot of immigrnts has absolutely no idea whats involved in upkeeping tge property. I know a guy just leave the house for like 6 months in china and when he comes back there is a hole in the roof and water leaked everywhere. Its just a disaster. I know another person doesnt even know he has to cut the lawn once in a while . And its like a jungle
At least it's in your control fix/remedy, imagine a condo filled with tenants where no one cares about anything?