Yesterday the CBC National did a feature urban living trends in Vancouver, Toronto and Montreal. For the Toronto segment they were talking about how condos are getting smaller and they featured the notorious Smallest Condo in Toronto which is one of my investment properties. I was also interviewed for the piece and you can watch the whole thing here.

The key questions that came up from the piece were:

1) Is this trend of smaller and smaller condos here to stay or just a trend that will pass? I do believe that this is the way of the future in Toronto, especially downtown but it will eventually be seen in other parts of the city as well. Don’t be surprised if someone eventually builds an entire tower of 250-400 sq ft studios. There is plenty of market demand for this type of product.

2) Have we gotten as small as we can go, or can we get much smaller? I think we still have a ways to go. 200-250 sq feet is actually very attainable given that it is designed for a single person, the layout is good, there is plenty of light from large windows, and the kitchen and bathroom are kept small and efficient.

Questions or comments? Please contact me.

Harbour Square. built around 1980. Photo courtesy downtownphotos.ca

I just got an email from a National Post writer who is writing a story about older condos and especially the trend of buying and older condo and renovating it to today’s standards. Below is an email that I sent to the writer. I have no idea if some or any of this will be published in the article but as I was writing it I realized it would make for a pretty good blog post, especially for the buyers out there who are thinking about buying a unit at an older (15 years or more) building. It’s somewhat scattered as it was an email but take a look and let me know what you think.

Background:
I have been working with a young couple,they are first time buyers. They have been priced out of the housing market in Toronto as it is basically impossible now to find a move-in ready house for less than $400K in a decent neighbourhood. They have turned to condos and are focusing on the west end around high park, junction, roncesvalles, lake shore area. This week we were in a bidding war for a renovated condo that was in a 40-year old building. This building has 8′ ceilings (standard for new buildings is usually 9′), no central heating/air conditioning systems, originally no ensuite laundry in the suites, no granite countertops or stainless steel appliances, the lobby and amenities areas are all original (think: Grandma’s apartment building), and YET, the unit received 6 offers! Similar listings in nearby old buildings have been sitting on the market for weeks with no offers. Why did this happen? several factors:

1. Unit was renovated with beautiful and on-trend hardwood floors throughout. kitchen/living/dining was made open concept. hardware in kitchen and bathrooms were updated. appliances were nothing amazing but they were only a few years old.
2. Hallways and elevators in the building had been very recently renovated making it feel like a building from 2012 when you are walking down the halls. lobby is scheduled for renovation this year to match.
3. SIZE. older units offer such tremendous size and such amazing value on a price per square foot basis that many buyers who are not into the shoe-box cookie cutter condos that are being built today are turning towards these older buildings, especially the renovated suites in them as a great alternative.

Some Numbers
Most units in this complex were selling last year for around $280K. This unit was priced at $320K and sold for $356K!
-average price per square foot for newly built (less than 2 year old) condos is about $550 right now in the city
-average price per square foot for a renovated old condo (more than 20 years old) will vary widely but in this particular area they can be had for around $300 per square foot in some cases!
Tips/Advice for Buyers

• When buying a renovated suite, it is fairly common knowledge amongst Realtors that you should include a clause in the contract that says that the seller warrants all renos were done with the consent of the condo board, BUT what most people don’t realize is that if renovations are not also done with PERMITS, the buyer opens themselves up to the risk that the city could come in at some point in the future and make you ‘undo’ all those renos if they are not done to proper code. Although extremely rare, it is something to consider. Get advice from a lawyer and understand that this may not be covered by title insurance.
• Understand that older buildings tend to have lower appreciation rates than newer buildings. condos are commodities at the end of the day (unlike houses) and when a building passes it’s best before date, even a complete gut-job of a reno with high-end materials will only get you so much back and will not change the fact that the building is old. buildings less than 5 years old have been appreciating at around 8-10%. old buildings I find tend to appreciate at around half that rate. another factor for this is because maintenance fees in old buildings tend to be much higher than new. once they pass about $500/month for a 1 bedroom or $600/month for a 2 bedroom I find that buyer interest in that condo drops off dramatically thus reducing it’s value.
• From a strictly financial perspective I’ve found that it can be worthwhile to buy an old suite and renovate it but in most cases you will not get rich flipping condos. There is a ceiling. Most of the time in my experience you would be better off (from a financial perspective) buying new, doing nothing to it and selling before the building is 10 years old. still there is more to real estate than just numbers. People buy for many reasons and with the older buildings it’s usually about the SIZE.
• The sweet spot in this market is finding an older building in a solid location that has low maintenance fees. these older buildings can out perform some of the newer ones occasionally. A good example would 77/99 harbour square which is probably the best located condo on the entire waterfront and fees are relatively in check. appreciation rates have kept up with newer buildings nearby like the Waterclub-8york, 208 and 218 queen quay. Renovated suites there always draw a lot of interest and anything facing the lake has bidding war potential.

Rogers-owned real estate  portal Zoocasa launched a new service this week called “Zoopraisals“. CTV News quoted me in a story they posted on their website which you can read here if you like. They offer anyone a free home appraisal instantly over the internet without any strings attached. This brings Zoocasa one step closer to becoming Canada’s version of Zillow.com which is an extremely powerful real estate search engine in the U.S. and they have been providing property owners “Zestimates” for several years now.

The big question always is, do services and innovations like this mean the end of Realtors as we know it? Will technology and the internet ultimately replace the traditional real estate agent model of buying and selling real estate? Will commissions soon be a thing of the past?

My answer to all these questions is obviously ‘no’. While I give kudos to Zoocasa for creating great tools for the consumer, these tools only serve to highlight the fact that any service professional who can’t prove themselves more useful than a computer model or add any more value to a transaction than an online classified ad will soon be out of business. However, those professionals who are experts in their market niches and understand the many complex variables to go into every single real estate transaction will continue to thrive for many many years. I think you know which group I plan on being a part of!

This is also a great time to plug my own condo evaluation service, which like Zoocasa’s is also free, however unlike Zoocasa it actually contains more than just a single number on a screen as it takes into account my extensive knowledge and experience working in the downtown condo market! If you’d like to know what your condo is worth, please contact me.

CBC Radio Interview from Andrew la Fleur on Vimeo.

OK. This will be the last post on this subject-I hope! I just had to share an interview I did yesterday with Charles Adler on his nationally syndicated radio program (AM640 in Toronto) about “The Smallest Condo in Toronto”.

Charles and I talked for about 6 minutes about the “micro-condo” phenomenon in Toronto. I had a lot of fun doing it and I hope you enjoy the listen! Questions or comments? Please contact me.

CLICK TO LISTEN ->Charles Adler – Sep 29th 2011 – Interview

To download the podcast in iTunes, go here.

Just 24 hours after TheStar.com wrote their article, Sympatico.ca and Yourmoney.ca picked up the story too. You can read it here.

While the articles were a fun read, what I found most interesting were the comments section of each article.

The article on TheStar.com framed me as a landlord and Realtor. The comments were mostly personal attacks on me, essentially calling me an evil, greedy slumlord and that I should be locked up for even thinking about renting out such a horrible, God-forsaken shoeb0x of a condo at such an exorbitant and oppressive monthly rate. “How dare you!”

The article on Sympatico.ca framed it as my own apartment that I would be living in (even though the author knew that it is an investment unit). The comments section on this article are full of praise for me as a smart and even ecologically sound home owner who is living within my means and not being wasteful. “Good for you for making it work!”

This contrast between the two comments’ sections provides a fascinating glimpse into the human physche, but the point I want to make is that it really underscores my belief that investing in real estate is not for everyone. Many people do not and will never understand real estate, and specifically how it can be a vehicle for wealth creation. Some of us ‘get it’. Some of us don’t. I wrote a couple blog posts last year about the difference between those who get it and those who don’t.

Questions or comments? Please contact me.

I never envisioned my face would be plastered on the front page of TheStar.com right next to a picture of Rob Ford laughing diabolically, but here we are. Check out this cute little article-with video- that Susan Pigg (The Star’s new real estate reporter) wrote about my investment unit at One Park West. What is interesting or ‘newsworthy’ of this condo is that it is possibly the smallest condo in the entire city at 301 square feet.

I guess you could say I put my money where my mouth is when it comes to the Regent Park revitalization project. I first started blogging several years ago about One Cole, then last year it was One Park West, now this week it’s Paintbox. It’s no secret I am a believer in the redevelopment that is happening in Regent Park, and I’m happy to say my own piece of the puzzle has turned out fantastic.

I know that many people within the real estate industry in Toronto are still highly skeptical that Regent Park will overcome it’s stigma and reputation as a ‘bad’ area, built progressively over the last 50+ years, but I’m not one of them. I believe when the redevelopment is complete in around 5-7 years this area will be a great middle-class, family-type neighbourhood in the heart of downtown. Something unique and an affordable area that people will not only want to live in, but also spend their free time in.

Questions or comments? Please contact me.

I guess this makes it official: everyone is talking about the Toronto condo market. I was interviewed a couple weeks ago for an article on our condo market by a writer for the Wall Street Journal, and today that article hit wsj.com. Read the entire article here. See what people on Twitter are saying about the article here.

The article certainly has a bearish slant to it, with the basic thesis being: the market has been booming for so long it therefore must crash. Certainly not something we haven’t heard before many times over the last decade, but should this article give individual investors pause as to whether or not they should be buying a condo in Toronto right now?

I was asked my opinion on the market and the prospects for a ‘correction’. What I told the writer was the same thing I’ve been saying on this blog for a while now: the likelihood for a correction in the short term is very low, the fundamentals right now are strong. However, even the most bullish investor must admit that a key driver to this market has been the lower-than-low interest rates we have had over the last few years. If rates continue to stay low, demand will continue to be strong, prices will continue to rise, and thus, the potential for a correction will grow. In other words, no market can rise at 6-8% per year ad infinitum, but as long as money is cheap, the market will likely keep its momentum.

I would love to hear your comments. Leave one below or email me.

Graphic above taken from the wsj.com article.

5:00am – Waking up at 5am. Ouch, that hurts. City is silent except for a couple hundred Realtors…

5:30am – I’m at the X2 Condo broker’s sales event lineup outside the Intercontinental Hotel on Bloor Street. I quickly discover 2 lines are formed – one on the south side of Bloor, one on the north

5:35am – After first thinking of joining the south side line, I decide to join the north side as word on the street was that was the line that Baker Real Estate had said was the true line. I feel bad for the people who apparently had been waiting as long as 10 days outside, but the police did not want people crossing the street during rush hour traffic so a line formed on the north side where the hotel is located.

6:30am – Media frenzy in full effect as CP24, CTV NEWS and 680 News all are filming and interview people on the scene. The Twitterverse is starting to buzz with reports of 2 or possibly 3 separate lines that have formed.

8:30am – after 3 hours of waiting I get my official number from Baker Real Estate. #45. Another 50 people across the street are now chanting slogans and shouting across Bloor street, holding up signs that read “UNFAIR”. Originally, numbers were to be given out at 12 noon, but they did it earlier due to the crowds and traffic chaos that would be caused on Bloor street from the crowds gathered.

9:30am – CTV news just called me to interview me about the event. See the article online here.

10:30am – off to River City sales centrer on Eastern Ave for the broker’s information session. Another line up to get in.

11:00am – doors open and about 200 agents are here. All the usual players from the downtown scene, and also plenty of ’905′ agents. Say hi and catch up with a few people. Biggest news: It’s going to be a LOTTERY BUYING SYSTEM.

12:30pm – Just got back to the office and am preparing an email for my clients with all the details about River City.

2:30pm – answering client inquiries about River City and getting prepped for X2 sales event tonight.

3:00pm – Old colleague just called and asked if I want to share my spot in line for X2 event tonight…

4:00pm – Media lining up their cameras for the sales event at X2. Obviously hoping for a fracas to break out tonight. If you are driving I recommend avoiding Bloor anywhere near avenue road!
http://pic.gd/70b3a0.

7:45pm – so cold… Fingers Falling off after 3 hours waiting to get inside the hotel. No protests or drama at sales event so far

8:40pm – still outside. Word from inside is only 2 beds still available.

10:44 – managed to get a 2 bedroom unit…I think. I’m outta here. Got to get some sleep and warm up

Check out my latest media interview, this time with CTV.ca talking about the slowdown in the US economy and whether or not the real estate market in Toronto will be affected.

Related Posts:

Interview with Eye Weekly

Interview with 680 News