Sunday, January 5, 2020
Toronto Condos Burning
The charts show that Toronto condo prices are still creeping up. But I think that's because new luxury condos are being completed, and people are taking possession, which is registered as buying. You are only getting some indication that it is becoming difficult to dump a condo. They are building condos out in the boonies, and they should join the houses there with a 50% drop. But, we'll never get these figures printed out in the media.
I'm always on a jag about condos because they are built so cheaply. I always wonder how they can push the building codes so much. Put a condo beside a bank tower and see the difference. I suspect technical corruption of the Boeing and VW type ("Design a cheap building or we'll kill you!).
The cheap chickens come home to roost with insurance costs. You can't always have the 'Clueless Swiss' coming in and insuring fire traps for song. After a lot of losses, they wake up.
A condo building has to be insured for total replacement. Condo boards can't find this insurance any more. Right now it is affecting fire and flood zones, but earthquakes and wind damage are going to come into play. A condo is so cheap that the seismic capacity is next to nothing in terms of occupancy. Sure, the whole thing won't pancake, but ground motion of only 10 cm/s will knock things out of kilter so much that the building has to be torn down.
This all comes from building like a house of cards. A strong wind will knock out the glass. A single fire knocks out the building for a year. As the price crashes, people will rent out more to sad people. Sad.
This is just a trend I'm seeing. Don't worry about it if you own a condo. Be happy! Don't do a 'Buffalo' and burn your condo. :) When everybody starts doing that, condos will be a thing left in the smoky dust.
ps - the other side of the insurance issue is ridiculous alarms. I attended a party in a monster complex, all sharing rec facilities. The alarm went off during the party and all the elevators shut down for an hour past the alarm, which took an hour to stop. This happens all the time. If I were insuring the building, I'd insist that all the alarms are on a hair trigger. :)