General Urban Kitchener Updates and Rumours

[Lebronj23]

‘Kitchener- Waterloo condo sales grind to a halt’

https://12ft.io/proxy?q=https%3A%2F%2Fww...-halt.html

[panamaniac]

Ground to a halt four months ago. One waits to see which will be cancelled.

[Bytor]

‘Kitchener- Waterloo condo sales grind to a halt’

https://12ft.io/proxy?q=https%3A%2F%2Fww...-halt.html

"…simply because the math doesn't work".

Is it really because the math doesn't work, as in they couldn't break even? Or is it because they are making bank on the atrociously high prices that have jumped 20-40% per year for multiple years in a row, far outstripping any inflationary increases in construction costs, an dthey just don;t want to give up huge profit margins even though they could drop prices significantly from "what the market will bear" and still have a tidy not profit?

[tomh009]

Ground to a halt four months ago.  One waits to see which will be cancelled.

Which one ground to a halt? New applications? Which projects?

Have not seen any slowdown on the under-construction projects, and there are multiple neighbourhood meetings scheduled for upcoming projects.

And then there are the ones that were rejected in council and are already heading to the OLT: 22 Weber St W, 234/240 Frederick St and Victoria St/Park St.

[Lebronj23]

Ground to a halt four months ago.  One waits to see which will be cancelled.

Which one ground to a halt? New applications? Which projects?

Have not seen any slowdown on the under-construction projects, and there are multiple neighbourhood meetings scheduled for upcoming projects.

And then there are the ones that were rejected in council and are already heading to the OLT: 22 Weber St W, 234/240 Frederick St and Victoria St/Park St.

I think the article mentions the 25 storey HIP dev uptown Waterloo and Q-condos hasn’t sold a unit in a few months. 

Also, do you know for sure is Vic park is going to the OLT?

[tomh009]

Also, do you know for sure is Vic park is going to the OLT?

It's listed on the OLT site, yes.

[Zoo]

‘Kitchener- Waterloo condo sales grind to a halt’

https://12ft.io/proxy?q=https%3A%2F%2Fww...-halt.html

"…simply because the math doesn't work".

Is it really because the math doesn't work, as in they couldn't break even? Or is it because they are making bank on the atrociously high prices that have jumped 20-40% per year for multiple years in a row, far outstripping any inflationary increases in construction costs, an dthey just don;t want to give up huge profit margins even though they could drop prices significantly from "what the market will bear" and still have a tidy not profit?

It is that the numbers don't work. They will not make any money. What we need to start thinking is that developers need to be making a great profit or these projects won't get built or we end up with situations like Adi in burlington where these people who shouldn't be building cancel deals.

Profit isn't a bad thing. Developer profits are small or at least way smaller than they should be based on the risk.

[Bytor]

"…simply because the math doesn't work".

Is it really because the math doesn't work, as in they couldn't break even? Or is it because they are making bank on the atrociously high prices that have jumped 20-40% per year for multiple years in a row, far outstripping any inflationary increases in construction costs, an dthey just don;t want to give up huge profit margins even though they could drop prices significantly from "what the market will bear" and still have a tidy not profit?

It is that the numbers don't work. They will not make any money. What we need to start thinking is that developers need to be making a great profit or these projects won't get built or we end up with situations like Adi in burlington where these people who shouldn't be building cancel deals.

Profit isn't a bad thing. Developer profits are small or at least way smaller than they should be based on the risk.

Is it really "They will not make any money"?

Or is it "they won't have a high a net profit as they wish"?

Because, as I said, the sale price jumps of anywhere form 10% to 40% year over year for the past several years in a row have far outstripped what even 8% inflation in the past year has done to their costs.

From what I can find out is that over the past decade, average developer profits have risen from 8% to 15%.

[bravado]

It is that the numbers don't work. They will not make any money. What we need to start thinking is that developers need to be making a great profit or these projects won't get built or we end up with situations like Adi in burlington where these people who shouldn't be building cancel deals.

Profit isn't a bad thing. Developer profits are small or at least way smaller than they should be based on the risk.

Is it really "They will not make any money"?

Or is it "they won't have a high a net profit as they wish"?

Because, as I said, the sale price jumps of anywhere form 10% to 40% year over year for the past several years in a row have far outstripped what even 8% inflation in the past year has done to their costs.

From what I can find out is that over the past decade, average developer profits have risen from 8% to 15%.

Is it then reasonable to say that a lot of boom-ing developers are working with quite expensive credit and loans, since it was previously a guaranteed profit until recently?

[danbrotherston]

If it was guaranteed profit, the loans should be fairly cheap no?

FWIW, I don't really know what their profit margins have been, but capitalism has a nasty habit of failing to invest in even profitable ventures when there is greater margins to be made elsewhere. I.e., developers won't develop even profitable developments if they can make more money investing in other ventures with a higher return.

[dtkvictim]

Is it really "They will not make any money"?

Or is it "they won't have a high a net profit as they wish"?

Because, as I said, the sale price jumps of anywhere form 10% to 40% year over year for the past several years in a row have far outstripped what even 8% inflation in the past year has done to their costs.

From what I can find out is that over the past decade, average developer profits have risen from 8% to 15%.

I'm not commenting on the validity of your first two questions, but the portion I've bolded makes no sense as an argument. I'm assuming your 8% inflation is referring to CPI, which you can't in any way translate to the cost of construction. The 10-40% jumps your are referring to should even be included downstream in the shelter portion of the CPI, which should give you a hint about the incongruity.

[bravado]

This is an open-ended thought experiment/question: If the zoning were more amenable to the missing middle, what policies would need to be in place to make it a more attractive investment for developers? It's currently clear that developers see value in big new SFH/townhouse subdivisions and also in tall condos. Not much else in the middle.

[KaiserWilhelmsBust]

‘Kitchener- Waterloo condo sales grind to a halt’

https://12ft.io/proxy?q=https%3A%2F%2Fww...-halt.html

"…simply because the math doesn't work".

Is it really because the math doesn't work, as in they couldn't break even? Or is it because they are making bank on the atrociously high prices that have jumped 20-40% per year for multiple years in a row, far outstripping any inflationary increases in construction costs, an dthey just don;t want to give up huge profit margins even though they could drop prices significantly from "what the market will bear" and still have a tidy not profit?

What the fuck does that even mean. How would condo developers, who pre-sell the vast majority of their units, "make bank" on price hikes during their construction phases. Do you know how the market even works?

[ijmorlan]

This is an open-ended thought experiment/question: If the zoning were more amenable to the missing middle, what policies would need to be in place to make it a more attractive investment for developers? It's currently clear that developers see value in big new SFH/townhouse subdivisions and also in tall condos. Not much else in the middle.

I think zoning allowing it would go a long way. If somebody is developing a huge tower, the costs of going through the rezoning process, possibly including an OLT appeal, are a small fraction of the total budget. Somebody wanting to modify zoning to the same extent to build a triplex, however, won’t be able to justify the expense. Although I’m sure that a large and complicated project will have higher re-zoning costs than a small one, I believe some of the fees are flat rate and I doubt that even the more variable costs go up proportionately.

On some level, I don’t really care that much. Step 1 is, stop digging: eliminate all parking minima, allow apartment buildings up to 4 stories in all residential zones, and allow office and residential above all retail units. Then see how much of a problem there still is.

[tomh009]

Step 1 is, stop digging: eliminate all parking minima, allow apartment buildings up to 4 stories in all residential zones, and allow office and residential above all retail units. Then see how much of a problem there still is.

This would be a very good start. The problem is that redoing all the zoning (required for the above) would be highly contentious and time-consuming effort for every city.

What I think could work is provincial (note, Federal cannot work as municipalities are figments of the provincial imagination) legislation to allow construction of low-rise multi-residential in any location permitting residential use (maybe allow granny flats everywhere while they are at this). And disallowing use of parking minima and to allow residential on the upper floors of any building that has commercial zoning.

There would likely still be a hue and cry, but Ford has a majority, and the next election is far away, so he could get away with it.