Loft buying in toronto

[jw01]

Been thinking about getting a loft and checked out a few spots in downtown over the past couple of weeks. East liberty, Parklawn/QEW etc; I am solely interested in a 2 story loft with price range of max $400K.

I like east liberty due to its location, close to highway and ammenties but a friend of my who has a CFA etc told me to hold off from buying for another year or two. He said there is too much supply and not enough demand and the prices will come down. With interest rates looking to go up, he's like its a sure bet an easy $40K will come off the price tags for alot of these places.

I doubt interest rates will hike that much for another 2 years so my question is, is it worth buying this loft or should i wait? I am looking to get my own place and all.

Thoughts?

Happy new year to you all!

 

[Closer68]

If these "lofts" are aka condos, then your friend is right. Huge glut already on the market (have you driven down the Gardiner recently?) and more scheduled to start. In addition to the anticipated correction you mentioned, there's the issue of dealing with the association, the politics, etc. Not sure if there's a difference in Canada, but I'd never recommend anyone buy a condo in the States. Much better idea is to rent one - same lifestyle and amenities with none of the risk.

 

[basketcase]

Liberty is pretty packed and more is going up. I don't know if price will go down much but it's not an area I'd be trying to flip even though prices are still creeping up. It is a nice area though.

IMO Parklawn is in the middle of nowhere. The highway is the only benefit.

 

[fuji]

It really depends how long you plan to own. If greater then fifteen years, timing doesn't matter much. Under ten years and you might want to wait for a downturn.

My own philosophy is never sell. I do not trade up. I paid off my first home, and once the mortgage was cleared, used it as collateral for a second, renting out the first. In a few years I will repeat with my current place. Eventually I will use the rental income when I retire, so I see no reason to pay a selling commission while I am alive. My estate can pay that when I am dead.

 

[wetnose]

As an alternative, look into the condos around Carlaw/Queen that are going up. The area is on the move and it has great amenities.

 

[one.of.a.kind]

Condo market in TO is over heated. Too many units have been bought on spec. Would stay away from this market for at least a couple of years if not forever.

 

[shack]

Condo market in TO is over heated. Too many units have been bought on spec. Would stay away from this market for at least a couple of years if not forever.

A position that has been repeatedly stated for the last 4 or 5 years.

 

[jw01]

hey guys

i am interested in a loft type idea. my buddy did say rent but then i am building no equity. that being said, if i purchase my mortgage payments will be paying the interest rather than the principle so i will not be building towards any equity for a few years anyways.

i saw a loft ~900sqft and the asking price is $430 range. its in the liberty area but not sure if I should hold off from buying or not.

i am looking to get the place to live for the next 5-6 years or so and then rent it or sell it depending on the market. conversely, my buddy said if i am looking for resale value to only look in the "core" of downtown i.e. king area as that will be yield me some good return + rental is easier there compared to other spots.

again i am not looking at this from an investors point of view i.e. buy to rent it out but to live in it myself even tho i work on the west end. looking for the downtown life style to meet some ladies and enjoy the lifestyle - know what i mean.

thanks for the help!

 

[VKM]

If you are going to hold on to property for 7+ years, buy in 2014. Lots of inventory (more room to negotiate). Interest rates will be low for the next 2-3 years, and they aren't going to double overnight, so no 'crash' coming. The resale market is correcting itself as we speak, now is a better time to buy than it was in late 2010/mid 2011 (the peak)

 

[pusher69]

Word of advice for you. If you are buying to live in and its long-term (5+ years), waiting does nothing for you.
If you want to spend the $15-20K paying rent and someone's mortgage... then do it.

No one can predict the housing market and they only way its going to go South, is rates go up.
Rates went up... so did the market... what does that tell you?

So called experts have been trying to predict the market correction for the last 5-6 years.. and its still going strong.

 

[Mikehorn]

JW, go for it, mortgage rates are low, get a five year locked in rate. More importantly, I think it will really benefit you at your age to get out from under your parents' roof and experience life outside the nest.

 

[fmahovalich]

Yes?....you may not be building equity.....But to anyone that is listening....the condo market, in my estimation will be stagnant for the next 5 years minimum.

you will sell in 5 years for what you paid today!

Minus all the fees, selling commissions, upgrades etc..... It will be an overall substantial loss.


Rent for 5....spending and SAVING the same money you would have done on a condo.

then go shopping in 5-6 years with ALL YOUR SAVED MONEY.

Its too easy to say...you are not building equity. But if you buy.....your equity will be going in the wrong direction.

 

[LoveThemGirls]

If you want advice from someone who actually owns a condo here goes:

50% of the mortgage payments go to principal (I wouldn't have believed it was this much myself until I actually sat down with my bank, but use a mortgate calculator for today's rates). This is based on a 25 year amortization at 2.9%. with 15% down on a 2 bedroom 2 bath 400k condo. Monthly payments would be around $1600, maintenance around $500, tax $200, give or take, so $2300/month. Rent for the identical unit runs around $2400-$2800, so for simplicity let's just say it's the same, rental costs same as ownership costs.

In 5 years, you will have reduced your mortgage from $340k to approx. $290k. Assuming the condo stays stagnant, you have built up $50k in equity. If it goes up a few percent per year, after 5 years your condo may be worth $420-$450k, so equity can be as much as $70k-$100k.

Although anything is possible, condos are not likely to reduce in price anytime soon, they've been saying this for 10 years. I sold a townhouse on King West back in 2004 for $215k that I bought for $145k, even my realtor said a correction would be coming. That unit is now selling for $400k.

I also owned a semi-detached house in the mid 90's, sold for $183k, again everyone said a big correction was coming. That house is now selling for $650k.

The only people who say that condos are due for a massive correction are those who are rich enough to own homes or those who can't afford a condo and are just hoping for prices to come down and are bitter towards those who can actually afford to buy one. This is not Detroit, people are moving here and need places to live.
.
I will likely live in a condo for the rest of my life, there is no way in hell that I will ever be able to afford buying a detached or semi-detached house ever again, and I make 6 figures.

 

[jw01]

If you want advice from someone who actually owns a condo here goes:

50% of the mortgage payments go to principal (I wouldn't have believed it was this much myself until I actually sat down with my bank, but use a mortgate calculator for today's rates). This is based on a 25 year amortization at 2.9%. with 15% down on a 2 bedroom 2 bath 400k condo. Monthly payments would be around $1600, maintenance around $500, tax $200, give or take, so $2300/month. Rent for the identical unit runs around $2400-$2800, so for simplicity let's just say it's the same, rental costs same as ownership costs.

In 5 years, you will have reduced your mortgage from $340k to approx. $290k. Assuming the condo stays stagnant, you have built up $50k in equity. If it goes up a few percent per year, after 5 years your condo may be worth $420-$450k, so equity can be as much as $70k-$100k.

Although anything is possible, condos are not likely to reduce in price anytime soon, they've been saying this for 10 years. I sold a townhouse on King West back in 2004 for $215k that I bought for $145k, even my realtor said a correction would be coming. That unit is now selling for $400k.

I also owned a semi-detached house in the mid 90's, sold for $183k, again everyone said a big correction was coming. That house is now selling for $650k.

The only people who say that condos are due for a massive correction are those who are rich enough to own homes or those who can't afford a condo and are just hoping for prices to come down and are bitter towards those who can actually afford to buy one. This is not Detroit, people are moving here and need places to live.
.
I will likely live in a condo for the rest of my life, there is no way in hell that I will ever be able to afford buying a detached or semi-detached house ever again, and I make 6 figures.

I totally agree....it's mixed feelings when you hear one person say dont do it, the the other says do it. and of course the Realtor will say, buy lol.

anyhow, with the how expensive the houses are, i dont understand how the government or anyone for that matters expects young ppl and so to ever afford a home w/o being a prisoner to his mortgage for the rest of his life...it's messed up!

i will have ~10% down payment for the place. i am interested in a loft, not a condo but a loft. how are those for resale 5-8 years from now? again, it's hard to predict where it's all going but you are right, this is not Detroit so should not think the prices will plummet but then again, who knows.

the loft i want is listed for $430 so hopefully I can bring them down to $400 or so; it's ~899 sqft so its a decent size in liberty area. as i said before, my buddy said, if its not in the core downtown, it's not worth buying ---> is that true?

 

[Constantine]

If you want advice from someone who actually owns a condo here goes:

50% of the mortgage payments go to principal (I wouldn't have believed it was this much myself until I actually sat down with my bank, but use a mortgate calculator for today's rates). This is based on a 25 year amortization at 2.9%. with 15% down on a 2 bedroom 2 bath 400k condo. Monthly payments would be around $1600, maintenance around $500, tax $200, give or take, so $2300/month. Rent for the identical unit runs around $2400-$2800, so for simplicity let's just say it's the same, rental costs same as ownership costs.

In 5 years, you will have reduced your mortgage from $340k to approx. $290k. Assuming the condo stays stagnant, you have built up $50k in equity. If it goes up a few percent per year, after 5 years your condo may be worth $420-$450k, so equity can be as much as $70k-$100k.

Although anything is possible, condos are not likely to reduce in price anytime soon, they've been saying this for 10 years. I sold a townhouse on King West back in 2004 for $215k that I bought for $145k, even my realtor said a correction would be coming. That unit is now selling for $400k.

I also owned a semi-detached house in the mid 90's, sold for $183k, again everyone said a big correction was coming. That house is now selling for $650k.

The only people who say that condos are due for a massive correction are those who are rich enough to own homes or those who can't afford a condo and are just hoping for prices to come down and are bitter towards those who can actually afford to buy one. This is not Detroit, people are moving here and need places to live.
.
I will likely live in a condo for the rest of my life, there is no way in hell that I will ever be able to afford buying a detached or semi-detached house ever again, and I make 6 figures.

Thanks for the information you have provided. It's the number one expense anyone will ever make and still become a great investment.

 

[scouser1]

A very interesting discussion as I have myself looked into lofts or condos in general in the downtown area, and recently visited an acquaintance who had a condo in East Liberty Village and just loved the area. Can anyone recommend similar downtown areas that would be good ones to purchase a condo, sorry dont mean to hijack this thread.

 

[LoveThemGirls]

Lofts are relatively new so there isn't a lot of historical data over 10 years. They look nice but some realtors say that the style is faddish. Also with the height of lofts, there are less units per building and thus less people paying into the reserve fund. I would also investigate utility costs as you will lose a lot of heat through all those windows, not to mention the requirement for expensive window treatments (custom power blinds etc, which could go $5k+ depending on what you want).

For best resale you should get a 2 br unit and 2 baths, those will be more on demand as the singles grow into couples and families.

I should also add to my post above, if you decided to wait and pay rent for 5 years, you will have contributed $150k to paying off someone else's mortgage.

As for other areas, I personally don't like Liberty Village. It's too dense, and many days, particularly in the summer, it reeks there from the Canada Packers plant. It's also filled with wannabee hipsters. However there are great amenities and lots of cafes/shops there. Cityplace is nice, Spadina/Front area, not a ton of shops nearby but close enough to King West and Wellington and all the clubs/bars/cafes, 15 minute walk to Financial district. Tons of hot girls living there too. Those are the main large developments, there are a lot of other smaller developments around the city.

Look for a building where there are a lot of people paying into the fund, so you don't get dinged with special assessments within the first few years. Also look to see if the maintenance fees are in line with what they should be (eg. if a building is 3+ years old and the fees are still under $500 for a 700+ sq. ft unit, then it is relatively well managed).

f you can wait, the Gehry/Mirvish condos going up on King (which likely won't be for a long time, 5+ years), those should be a pretty solid investment; no doubt these will be expensive, but they will be the premium condos in all of Toronto. With the continued growth of downtown, prices should continue to rise, not to Manhattan levels but there's only a finite amount of space downtown and people want to live downtown. I know I do.

 

[youwontknow]

beside Gehry/Mirvish condos areas which area is hot to invest in downtown condo, sorry I don't mean to hijack the thread.

 

[LoveThemGirls]

I wouldn't use a condo as an investment right now. My viewpoint comes from the fact that everyone needs to live somewhere. Unless you're a couple with two incomes or a single with a huge amount of equity and an income suite, you can only afford a condo. The question is whether to buy or rent, if you can afford it right now, buy.

If you want to know an up and coming area, the Junction is one, but it's too far really from downtown for people who want to avoid the commute, unless you're biking. Bloor/Lansdowne is also up and coming, but there is still a heavy drug element there for now.

If you want to invest, buy gold bars, it's at $1200/oz right now from a high of $1900/oz. two years ago

 

[jw01]

hey lovethemgirls

thanks for the input.....i will definitely consider. i love lofts and the feel for having a bedroom from the second floor to keep entertaining and all on the main level vs. having a bed room on that level as well.

in addition, the maintenance for liberty the spot i am looking at is ~$450ish so it is reasonable...it faces exhibition place/lakeshore view and ricoh so it will be a nice view. only downfall are the train tracks that you have a view of as well.

again, i am looking to live in this unit for at least the next 4-5 years and go from there. my other option will be a brand new unit but again exploring to see what area to go in that will yield be the best results down the road vs. the price being relatively stagnant.

thanks for the help and all.