By Stig Harvor –
The frantic pace of sales of new condos is finally slowing down. September sales were down 34% over September a year ago. Is it because of an oversupply of units?
After all, the Toronto skyline today is filled with high-rise construction cranes almost twice as many as in any other city in North America. And numerous new projects are in the planning stage. The situation is reminiscent of the in-born habit of the private sector to overbuild in the euphoria of having found a new market to be exploited for profit.
Or is the slowdown because condo buyers are becoming more conscious of the manifold implications and duties of condo ownership?
So far, many innocent buyers have been swept up in the frenzy of an over-hyped form of housing. Such buyers ought to have had access to the sobering and useful information provided at a Canadian Urban Institute forum on September 28 at the Ryerson Ted Rogers School of Management, Dundas St. W.
The forum had the somewhat mystifying title: “ Density Redux: Can Condo Communities Avoid the Fate of Toronto’s Towers?” (An overview of the proceedings can be found at www.canurb.com, see Navigation, Events Archive.) Previous tower booms occurred in the post-war 1950’s to the 70’s. They were rental. The first condo appeared in Ottawa in 1967 after the passing of the first Ontario Condominium Act later revised in 1998 and enacted in 2001.
The earlier residential towers scattered throughout our city are aging. Many have both material and management problems. They have not contributed well to building communities. Similar concerns are now being raised and faced for the jungle of new condo towers, particularly in our centretown area.
Stories and articles are appearing about the many realities of condo ownership. Basically, the developer turns over the completed, occupied building accompanied by relevant documentation to a volunteer, elected condo board. The developer then conveniently walks away.
Board governance can be a problem. There can be issues of personalized, recurring dissension among both board members and individual condo owners. Board members can be persons inexperienced in assessing and managing their multi- million dollar real estate. The day-to-day management is usually delegated to a paid, property management company whose competence is not regulated.
It is estimated an astounding 75%-95% of pre-construction condo sales Downtown have been made to absentee overseas and local speculators, called investors. (This compares with 30% five years ago.) They do not occupy but rent out their units. This can make it difficult to achieve the required minimum attendance for decision-making at annual general condo meetings. Speculative owners are often also more concerned to keep operating costs low for the short-term.
Already many owners are upset that the monthly maintenance charges are escalating beyond the ones quoted by the developer. They were set without any guarantees at a low range as a simple inducement to buyers. Boards may react by fatally providing insufficient funds for short and long-term maintenance and repairs. Some boards are also today spending money on expensive law suits against developers and others involved in the design and construction of their condo.
The provincial Ministry of Consumer Services is aware of growing problems. They have been nudged into action by our persistent Downtown provincial NDP member, Rosario Marchese. The ministry began a review this August of the condo act with a final report for the end of 2013. (Condo owners can participate by e-mailing comments to oncondo@ontario.ca. Information about the progress of the review can be found at www.sse.gov.on.ca/mcs/en/Pages/condo_rev.aspx.)
Condo rental units, however, are a boon to rental housing which is not being built today by private developers who find selling condos more lucrative. Rental housing requires concern about long-term costs of operation and maintenance. Condo developers conveniently pass such concerns on to the often unsuspecting new condo owners.
Many condo units are shoe-box sized, one room bachelor apartments, called studios. They are more expensive per square foot of area. Such small units create a young transient population making community building more difficult. From a comprehensive city building perspective, stable, balanced and active communities are essential for long-term liveability and a socially healthy city life.
To sum up Toronto housing today: Lots of condos, no affordable housing. Our city must insist on inclusionary rules demanding a proportion of affordable units and also family-sized ones in all new housing, public and private.
We already have that in the Downtown public-sponsored, successful St. Lawrence Neighbourhood. Today public-sponsored Waterfront Toronto (WT) is implementing a modest version of such farsighted policy on waterfront public land, including the West Don Lands now under construction just west of the Don River (see illustration).
The frantic pace of sales of new condos is finally slowing down. September sales were down 34% over September a year ago. Is it because of an oversupply of units?
After all, the Toronto skyline today is filled with high-rise construction cranes almost twice as many as in any other city in North America. And numerous new projects are in the planning stage. The situation is reminiscent of the in-born habit of the private sector to overbuild in the euphoria of having found a new market to be exploited for profit.
Or is the slowdown because condo buyers are becoming more conscious of the manifold implications and duties of condo ownership?
So far, many innocent buyers have been swept up in the frenzy of an over-hyped form of housing. Such buyers ought to have had access to the sobering and useful information provided at a Canadian Urban Institute forum on September 28 at the Ryerson Ted Rogers School of Management, Dundas St. W.
The forum had the somewhat mystifying title: “ Density Redux: Can Condo Communities Avoid the Fate of Toronto’s Towers?” (An overview of the proceedings can be found at www.canurb.com, see Navigation, Events Archive.) Previous tower booms occurred in the post-war 1950’s to the 70’s. They were rental. The first condo appeared in Ottawa in 1967 after the passing of the first Ontario Condominium Act later revised in 1998 and enacted in 2001.
The earlier residential towers scattered throughout our city are aging. Many have both material and management problems. They have not contributed well to building communities. Similar concerns are now being raised and faced for the jungle of new condo towers, particularly in our centretown area.
Stories and articles are appearing about the many realities of condo ownership. Basically, the developer turns over the completed, occupied building accompanied by relevant documentation to a volunteer, elected condo board. The developer then conveniently walks away.
Board governance can be a problem. There can be issues of personalized, recurring dissension among both board members and individual condo owners. Board members can be persons inexperienced in assessing and managing their multi- million dollar real estate. The day-to-day management is usually delegated to a paid, property management company whose competence is not regulated.
It is estimated an astounding 75%-95% of pre-construction condo sales Downtown have been made to absentee overseas and local speculators, called investors. (This compares with 30% five years ago.) They do not occupy but rent out their units. This can make it difficult to achieve the required minimum attendance for decision-making at annual general condo meetings. Speculative owners are often also more concerned to keep operating costs low for the short-term.
Already many owners are upset that the monthly maintenance charges are escalating beyond the ones quoted by the developer. They were set without any guarantees at a low range as a simple inducement to buyers. Boards may react by fatally providing insufficient funds for short and long-term maintenance and repairs. Some boards are also today spending money on expensive law suits against developers and others involved in the design and construction of their condo.
The provincial Ministry of Consumer Services is aware of growing problems. They have been nudged into action by our persistent Downtown provincial NDP member, Rosario Marchese. The ministry began a review this August of the condo act with a final report for the end of 2013. (Condo owners can participate by e-mailing comments to oncondo@ontario.ca. Information about the progress of the review can be found at www.sse.gov.on.ca/mcs/en/Pages/condo_rev.aspx.)
Condo rental units, however, are a boon to rental housing which is not being built today by private developers who find selling condos more lucrative. Rental housing requires concern about long-term costs of operation and maintenance. Condo developers conveniently pass such concerns on to the often unsuspecting new condo owners.
Many condo units are shoe-box sized, one room bachelor apartments, called studios. They are more expensive per square foot of area. Such small units create a young transient population making community building more difficult. From a comprehensive city building perspective, stable, balanced and active communities are essential for long-term liveability and a socially healthy city life.
To sum up Toronto housing today: Lots of condos, no affordable housing. Our city must insist on inclusionary rules demanding a proportion of affordable units and also family-sized ones in all new housing, public and private.
We already have that in the Downtown public-sponsored, successful St. Lawrence Neighbourhood. Today public-sponsored Waterfront Toronto (WT) is implementing a modest version of such farsighted policy on waterfront public land, including the West Don Lands now under construction just west of the Don River (see illustration).