Tag: christopher bibby

• Investors vs. end users

  Over the years, we have spoken a lot about the role that investors play in Toronto’s pre-construction condominium market. In the media, they are often spoken about pejoratively. They are seen as being a well-capitalized group that outbids end-users for a limited supply of new housing.

  But on the other hand, we know that (1) they have been a major contributor to new rental housing in this city (they filled the gap after we decided in the 1970s that we didn’t like purpose-built rentals) and that (2) they play an important function in getting new housing financed.

  For better or for worse, we know that, without an investor market, there would have been far fewer new homes constructed over the last cycle. Pre-sales are generally always a prerequisite for a construction loan. And the fastest, and therefore safest, way to get pre-sales is/was to target investors.

  But the world has changed since then. Investor demand has diminished. So much so that you could argue that the opposite is now true.

  I was speaking to my friend Christopher Bibby this morning and he reminded me that end-users, who are passionate about specific projects and neighborhoods, are the more resilient demand base during a downturn. Because if you need a place to live, you need a place to live.

  Perhaps it’s no coincidence that every single sale that we have had at Junction House this year has been to an end-user who moved in.

  2024.04.20

• Toronto housing market has slowed — do you care?

  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.

  2022.04.19

• Construction is right-skewed and fat tailed

  My friend Christopher Bibby sent me this article over the weekend. It’s by Brian Potter — who writes an excellent newsletter on Substack about construction things — and it’s about why it’s so hard to innovate in construction.

  To explain this, he starts by showing that the distribution of cost outcomes in construction projects tend to be both skewed toward the right and “fat tailed.”

  What does this mean? It means that construction projects have a tendency to run over a budget. And that they are much more likely to be over budget than under budget (right-skewed distribution). According to some data from the US Navy, the difference in likelihood is 10x.

  At the same time, there are also instances where projects don’t just run over budget, they run really over budget (fat tail). All of this is different from your normal distribution where you have a symmetrical curve and thin tails. I guess construction isn’t normal.

  One of the reasons for this abnormal distribution is the fact that construction suffers from what Brian calls “cascading failures.” This is kind of intuitive, but it is everything in construction: In order to complete Y, you need to complete X. If X is delayed, then everything is delayed.

  Because of these dynamics, changes to the construction process are perceived as incredibly risky. This has created a bias toward incremental rather than fundamental innovations.

  For the full article, click here. It’s worth a read.

  2021.08.03

• Penthouse at 388 Richmond Street West sells for $2.4 million

  My friend Christopher Bibby — who is a real estate agent here in Toronto — is in the Globe and Mail today talking about how Toronto-area buyers have returned to downtown. The article is by Carolyn Ireland and in it Bibby cites two of his recent deals: A large 2 bedroom suite at 168 King Street East that just sold for $1.2 million and an even larger penthouse at 388 Richmond Street West that just sold for $2.4 million.

  (Sidebar: 388 Richmond Street West is one of my all-time favorite buildings in the city and was developed by Howard Cohen nearly two decades ago. For more on Howard, check out this post I wrote back in 2016.)

  These are two examples of buyers who want to live in the city. Of course, there are countless others who are making moves right now. As Bibby points out in the article, the mood has certainly shifted from what we were seeing last year in the condo space. Condo buyers today are even starting to comb through expired listings in the hopes of finding off-market deals.

  I view this kind of real estate activity as a leading indicator for what’s to come in the the city. Rental activity is naturally going to lag until people starting returning to offices en masse and downtown life fully resumes. It’s more of a short-term “buying” decision. But as a condo purchaser, it’s easy (and probably better) to look through the short term.

  I think that’s what people are doing right now and they’re saying to themselves, “yeah, I want to be in the city.” I know that’s how I feel.

  2021.04.07

• Toronto Regional Real Estate Board releases housing market statistics for April 2020

  The Wall Street Journal reported today that the median home price across the United States rose 8% year-over-year in March to $280,600. One explanation for this is that while, yes, demand did drop off, so too did supply and that has led to a shortage of available housing. The other possible explanation is that these March deals were papered earlier in the year (or late last year) when most of us were blissfully unaware of what was about to happen and so the real impact of this pandemic isn’t yet showing up in these numbers.

  Let’s drill down.

  The Toronto Regional Real Estate Board also released numbers today, but for the month of April. Not surprisingly, residential resales across the region are down by 67% compared to April 2019. The number of listings is also down by a similar amount (-64.1%). Overall though, pricing remained relatively flat (0.1% increase). And by overall I mean for all housing types and for all areas of the region. There are larger variances within specific areas and for certain types. See below.

  

  Drilling down even further, my friend and agent Christopher Bibby noted in his monthly newsletter over the weekend that transaction volumes in the central (resale) condominium market are down some 85-90%. So the market is effectively at a standstill. Those who do not need to sell or move are justifiably deciding not to right now. But just as Warren Buffet got on stage over the weekend — with some great flowy hair, I might add — and told us in Times New Roman never to bet against America, I am not about to bet against Toronto. This too shall pass.

  2020.05.05