Will 2019 herald in the Desperate Condo Developer?
Just look over your shoulder and analyze what has transpired through 2018; Literally dozens of condo building sites throughout the GTA have been mothballed for a variety of concocted reasons. IE: The price of concrete & steel has skyrocketed. Communication issues such as receiving building permits in a timely manner, dealing with an ever more vocal degree of NIMBY-ISM, the need for greater coverage & greater access to public transport, as well as the shortage of skilled labour, which was another well versed theme etc.
Many of these aforementioned points have some validation, however, what if insufficient demand was the root cause? Please keep in mind that condo builders generally need approx. 35% of their projects to be “pre-sold” at prices modestly above the reflective cost to build. There is a very strong supposition amongst financiers that the G.T.A condo market has fully matured & is now well past it’s stated best before date! Their fiscal terms have hardened quickly over the last 12 months.
Now for just a moment, reflectively view on what is happening in Vancouver & Calgary, as well as many of the major cities south of the border. Factually, nearly every major home developer in the United States has experienced at least a 40% pullback in the value of their publicly traded stock, since late January of 2018. If the rationale that beleaguers the housing pull-back south of the 49th parallel is being precipitated by the ubiquitous issues of affordability, rising mortgage rates & compressed wage gains, then why would the G.T.A. real estate market be any different? Please keep in mind, that it’s commonly acknowledged that we now all live in a world with 3 degrees of separation or less.
Please take a minute to read the attached Bloomberg article for a more vivid picture of what 2019 might hold in store for the G.T.A condo market!
*co-ops not included in this reference
For further information please feel free to contact any one of our three offices.