Wednesday, July 25, 2012

How is it possible that Miami condos are cheaper than Toronto's?

Seriously.

How is it possible that Miami condos are cheaper than Toronto's?

When browsing condo websites (a hobby of mine) its always fun to check out what is available. Some of the condos in Miami are dirt cheap compared to the prices in Toronto.

The median sales price of a condo in Miami is $160,000 (stats from Trulia.com).

That is pretty dirt cheap if you know anything about the ridiculous prices in Toronto which have been inflated by foreign investors.

The average sales price of a new condo in Toronto was $432,256 in June 2012. Existing condo sales averaged $364,597 in June 2012. So... basically you could buy 2 condos in Miami for the cost of 1 in Toronto and still have money left over.

But it is also fun to explore the websites that specialize in LUXURY condos. eg. Condo Sunny Isles is a good example.

Now with respect to luxury condos the prices can be pretty ridiculous. Think between $500,000 and $40 million. Yes, that is correct, $40 million for a luxury condo in Miami. For that kind of prices you have to imagine a place that comes with its own private indoor pool, tennis courts, etc...

The example I am looking at is:

100 S POINTE DR PH-2
Miami Beach, FL 33139
$39,000,000
6 BEDS, 8 BATHS
10 PARKING
11,031 square feet + 6,31 in extra lot size (parking, etc).

The place apparently comes fully furnished, marble floors, private pool on the balcony, access to the condo's various facilities (tennis courts, etc, but they're not private)...


But the funny thing is I don't think its worth "$39 million". For that kind of money a person could buy 13 smaller condos worth $3 million each, basically the whole floor of a condo building... but why would ANYONE need that many extra beds and kitchens?

Or alternatively you could buy 13 different condos in 13 different cities (Paris, London, New York, Tokyo, etc) and rent out half of the condos and then move from one condo to the next every 2 months. Just because you can. Sheer silliness.

I think you would have to REALLY love marble floors to want to spend that much extra on a single property, because lets be honest, its all the marble that has made that property so dang expensive.

And its completely unnecessary. I can see spending extra on a house that has beautiful ivy on the exterior of the building, but spending a obscene amount extra just so every room can have marble floors? Pfff!

I can only just imagine the kind of ridiculously rich person who would buy such a place. Probably the kind of person who bilked the American government out of millions during the bank bailouts and then got an annual bonus in the 10s of millions.

RBC claims Toronto housing prices will cool, not crash

Pundits and soap box real estate experts (myself included) are concerned (excited) that the Toronto real estate market might crash.

The research department at Royal Bank of Canada meanwhile has released a new report claiming that Toronto housing prices will go down, but that it will only be a cooling effect and not a crash.

This is to be expected. No big bank would EVER go on the record and predict a crash. Such a prophetic statement could be either self-fulfilling (cause real estate investors to pull out in a hurry, thus sparking a crash) or damning to the bank's reputation when said crash doesn't happen.

My point here is that RBC could know that a crash is coming and is safe-guarding itself but saying it will be a cooling effect and doesn't want to predict a crash in case they turn out to be in error.

I also see other interesting headlines like "Toronto housing prices up 23 per cent since 2008" in the Toronto Star and "BMO sees strength in commercial real estate through 2013" from CTV.

I always find it funny that the banks and mass media often provide mixed messages which investors then need to interpret. All of it is essentially "spin". Its glossing over the hard numbers and putting a friendly audience message out so that people don't panic and instead weigh their options carefully.

Which isn't such a bad thing. People SHOULD weigh their options carefully. Its the wise thing to do.

But I also believe Torontonians should be made aware of the vast numbers of overseas investors who have purchased up large swaths of Toronto's housing market, especially in the area of condos currently being built.

And I also think people should be aware that when the majority of those new condos hit the market in 2014-2015 prices are going to dip and dip BIG due to way too much supply and not enough demand. (For more details on those numbers click on "Toronto Real Estate" above to browse my other posts regarding the Toronto real estate market.)



In semi related news I am renewing my efforts in My Quest for a Condo. I took a break there after all the media fuss from the National Post and CBC attention (it kind brought out the crazies with really weird offers) and I've been super busy working and enjoying my Summer. Nevertheless I think enough time has passed and its time to start trading up again.

Popular Posts