Friday, January 30, 2015

1 Bloor nearing Completion

The photos to the right and further below are of the new building at 1 Bloor Street East. The photos were taken around 6:30 PM on January 29th.

The condo / hotel / shopping mall / movie theatre / gym / etc will have a plethora of things for people who live in the building to do, or people just visiting the building because of the entertainment venues that will also be available to the residents / hotel guests.

The structure is being built in Toronto during a bubble in condo construction, largely fueled by overseas investors and not based on locals buying the condos. This is ever so much true about 1 Bloor, which has been embroiled in scandal and fraud since its inception the property changed hands because the original developers could not commit to building.

The prices of the condos in what has been billed as the most desirable condo to live in (in Toronto, and arguably all of Canada) however have been outrageously expensive. People buying a condo there are ridiculously rich compared to the common standards of most Canadians. Think celebrities, oil tycoons, the mafia - and quite a few wealthy foreigners - all in the same building.

I think it would funny if the condo bubble in Toronto burst right around the time people finally get to move into the finished building, and condo prices fell about 30% in the space of 1 year. People who bought an expensive condo during the years prior to the bubble bursting will be crying at the potential savings they could have had, and those who bought their condos on a mortgage may run into the problem of trying to refinance their mortgage and being denied by the banks because the value of their condos has changed so dramatically.

Accompanied by the drop in prices Toronto will also experience a recession as many construction workers are laid off, which in turn will hurt other industries as the flow of cash in the city will slow dramatically and cause layoffs in those industries. The manufacturing and services sectors will be hurt the most.

The real danger of such a recession is whether Vancouver and other cities across Canada also experience a recession around the same time. If it is just localized recession the impact and dip in the economy won't be so deep, but if it effects most of Canada then it will effect many more Canadians.

At present, judging by the current slowing of the Canadian economy, combined with the finish dates for many condos in Toronto, I expect the localized recession in Toronto to happen in 2016. If the slowing of the economy hurts other real estate markets across Canada however we may experience a nation wide recession instead.

The white blurs you see in the photo below are from snowflakes zooming down past the camera lens.

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