A couple of articles have caught my eye this past week. Naomi Powell wrote in the National Post on April 3 that Millennial’s are behind the surge in home buying intentions which is no surprise with some help from the family. The Toronto condo market continues to be hot with a recent launch of a waterfront tower offering units for $1200 square foot. Toronto market has been compared to a micro New York condo market but what happens when buyers hit the wall on pricing. Recent proposed launch of a 25 acre redevelopment site in NY with potential condo pricing an the $3000 per square foot range when completed. However an article today in the National Post by Bloomberg noted that home sales in Manhattan have slid the most since 2009 with a 5.2% drop in unit prices this year. “Even with New York real estate prices, you do hit a point in which resistance sets in,” said Frederick Peters, CEO of brokerage Warburg Realty. “People are very anxious about overpaying.” With borrowing costs and new federal limits on tax deductions for mortgage interest and state and local levies also are making home ownership more expensive, giving shoppers even more reasons to push back on a listing’s price — or walk away. An article in The Real Deal in March of 2016 noted the slow down in development site purchases with buyers not willing to pay more that $800 buildable square feet. The demand for high end condos is diminished in Manhattan. In Toronto development land prices continue to rise but is there limit? How much can the buyer pay entering into the market today and more importantly tomorrow? This is a primary question that impacts future urban infill projects. Toronto is an expensive place to build with government process and fees raising cost and the time to market.
Finally the Economist House Price index shows how we are doing in Canada compared to the neighbour’s to the south and our friends in Hong Kong. Cheers, Bob