If you've been following the Toronto housing market and/or following any panicky resale agents/brokers on Twitter, you'll know that things have shifted over the last few months. Here's what broker (and my friend) Christopher Bibby had to say about the market in his most recent newsletter:
As anticipated, April has ended up being one of the defining months of the 2022 real estate market. With the recent fragility we are seeing, it is clear that the market peaked in February. In fact, the Toronto Real Estate Board, in its most recent Market Watch, claims that month-over-month prices could be down by 2.6%—which is very likely. TREB also indicated that the overall number of year-over-year transactions in March was down by approximately 30%. I deferred the release of this newsletter because weekend activity positively altered some of my previous commentary. The key takeaway, however, is that sentiment has shifted in our marketplace.
But let me paraphrase the conclusion of Bibby's newsletter with two words: who cares? If you think that Toronto (or some other city) will remain an important global city by 2025, 2030, or even 2040, you really shouldn't be fussed by what the market is doing over the span of a few months.
Moreover, I can tell you that my least favorite time to go out and buy real estate is when everyone else is submitting silly offers and clamoring to buy whatever they can find.
If you've been following the Toronto housing market and/or following any panicky resale agents/brokers on Twitter, you'll know that things have shifted over the last few months. Here's what broker (and my friend) Christopher Bibby had to say about the market in his most recent newsletter:
As anticipated, April has ended up being one of the defining months of the 2022 real estate market. With the recent fragility we are seeing, it is clear that the market peaked in February. In fact, the Toronto Real Estate Board, in its most recent Market Watch, claims that month-over-month prices could be down by 2.6%—which is very likely. TREB also indicated that the overall number of year-over-year transactions in March was down by approximately 30%. I deferred the release of this newsletter because weekend activity positively altered some of my previous commentary. The key takeaway, however, is that sentiment has shifted in our marketplace.
But let me paraphrase the conclusion of Bibby's newsletter with two words: who cares? If you think that Toronto (or some other city) will remain an important global city by 2025, 2030, or even 2040, you really shouldn't be fussed by what the market is doing over the span of a few months.
Moreover, I can tell you that my least favorite time to go out and buy real estate is when everyone else is submitting silly offers and clamoring to buy whatever they can find.
. After 8 very productive and exciting years at the company, it was time.
I joined Slate in 2016 to help start the development group. Here is the post that I wrote back then. And it all came about because of a coffee meeting at Starbucks at the corner of Yonge & King.
At the time, Lucas Manuel was looking to hire someone, and so our mutual friend, Kieran Boyd, connected us with the expectation that I would make some industry introductions. But at the end of our meeting, Lucas was quick to say, "actually, I think you should come join Slate."
And obviously, that's what I did.
Fast forward to today, and Slate has grown into a global investment and asset management company with $13 billion of assets under management across Canada, the US, and Europe. And within this platform is a supremely talented development group with an awesome portfolio of sites and projects.
Thankfully though, this is not a goodbye. Myself and the Globizen team will still be working very closely with Slate on a handful of development projects, including One Delisle and Corktown. And the intent is that we will continue to work on new projects together in the future.
I learned a lot during my time at Slate, and I have so much respect for Blair and Brady Welch and the rest of the partners. They have built an incredible global company and assembled some of the most creative, entrepreneurial, and smartest people I have ever worked with.
Thank you for everything over the last 8 years.
So what's the plan for Globizen? This will be the topic of a follow-up post.
Let's talk some more about floor plan designs and the economic constraints that form part of the decision making process. There continues to be a narrative out there that for-profit developers only want to construct small apartments (a form of social engineering perhaps) and that they aren't focused on livability. So let's dig into some of the constraints.
Consider that the average price of a new construction condominium in downtown Toronto last quarter (Q1 2021) was $1,419 per square foot. And I bet that this number has already increased. Now consider that, in the City of Toronto, the "growing up guidelines" suggest that an ideal family-sized three bedroom suite should be around 1,140 square feet.
When you multiply these two numbers together, you get an "ideal" three bedroom suite that costs just over $1.6 million. Of course, this is without parking. So if you want downtown parking, add another $100-200k (which, at this price point, is still almost certainly going to be a loss leader for the developer).
All of a sudden, you've now got a $1.7 - 1.8 million residence. This will work in some submarkets and in some locations, but certainly not all.
So what happens is that the end price becomes a constraint. And in order to make the suite more affordable, the developer will naturally look for ways to make it smaller. Turn this into a 900 square foot three bedroom and all of a sudden you shave off over $300k from the price.
The point I am hoping to make is that developers generally aspire to respond to what the (sub)market wants. If the (sub)market wants a certain price point, developers will try and meet that need. If the (sub)market wants massive apartments, developers will gladly deliver. (We're working on combining some supremely awesome suites at this very moment in fact.)
. After 8 very productive and exciting years at the company, it was time.
I joined Slate in 2016 to help start the development group. Here is the post that I wrote back then. And it all came about because of a coffee meeting at Starbucks at the corner of Yonge & King.
At the time, Lucas Manuel was looking to hire someone, and so our mutual friend, Kieran Boyd, connected us with the expectation that I would make some industry introductions. But at the end of our meeting, Lucas was quick to say, "actually, I think you should come join Slate."
And obviously, that's what I did.
Fast forward to today, and Slate has grown into a global investment and asset management company with $13 billion of assets under management across Canada, the US, and Europe. And within this platform is a supremely talented development group with an awesome portfolio of sites and projects.
Thankfully though, this is not a goodbye. Myself and the Globizen team will still be working very closely with Slate on a handful of development projects, including One Delisle and Corktown. And the intent is that we will continue to work on new projects together in the future.
I learned a lot during my time at Slate, and I have so much respect for Blair and Brady Welch and the rest of the partners. They have built an incredible global company and assembled some of the most creative, entrepreneurial, and smartest people I have ever worked with.
Thank you for everything over the last 8 years.
So what's the plan for Globizen? This will be the topic of a follow-up post.
Let's talk some more about floor plan designs and the economic constraints that form part of the decision making process. There continues to be a narrative out there that for-profit developers only want to construct small apartments (a form of social engineering perhaps) and that they aren't focused on livability. So let's dig into some of the constraints.
Consider that the average price of a new construction condominium in downtown Toronto last quarter (Q1 2021) was $1,419 per square foot. And I bet that this number has already increased. Now consider that, in the City of Toronto, the "growing up guidelines" suggest that an ideal family-sized three bedroom suite should be around 1,140 square feet.
When you multiply these two numbers together, you get an "ideal" three bedroom suite that costs just over $1.6 million. Of course, this is without parking. So if you want downtown parking, add another $100-200k (which, at this price point, is still almost certainly going to be a loss leader for the developer).
All of a sudden, you've now got a $1.7 - 1.8 million residence. This will work in some submarkets and in some locations, but certainly not all.
So what happens is that the end price becomes a constraint. And in order to make the suite more affordable, the developer will naturally look for ways to make it smaller. Turn this into a 900 square foot three bedroom and all of a sudden you shave off over $300k from the price.
The point I am hoping to make is that developers generally aspire to respond to what the (sub)market wants. If the (sub)market wants a certain price point, developers will try and meet that need. If the (sub)market wants massive apartments, developers will gladly deliver. (We're working on combining some supremely awesome suites at this very moment in fact.)
