This story goes way beyond the laws of supply and demand.
There are FIVE similar units for sale at 160 Frederick Street, all priced within a few thousand dollars of eachother.
The buyers certainly have their choice, but I still think it’s tough sell…..like the photo below…
Have you ever heard of “Olde York Place?”
It’s not new, and it’s not sexy, and for those two reasons alone, I think the market might have a tendency to ignore it.
Olde York Place consists of two buildings: 25 George Street and 160 Frederick Street.
These buildings are each ten stories, and contain roughly fifty units each. That’s only five units per floor.
The location is impeccable – the heart of the St. Lawrence Market!
But I can’t ignore the fact that the market seems to be bypassing older buildings right now.
Everybody wants what is new, newer, and newest!
I have clients that won’t look at anything older than two years!
I would estimate that 160 Frederick Street is 25-30 years old, although it is far from decrepit. The building is well maintained, the facilities are upgraded, and the decor is neutral.
But I would also estimate that there is a reason there are FIVE units available for sale at the moment – roughly 10% of the building!
Even more disconcerting for the sellers is that these five units are almost identical.
The five units are priced as follows:
Two of the units are 2-bed, 2-bath models measuring 2,125 square feet, and three of the units are 2-bed-plus-den, 3-bath models, measuring 2300 square feet. The prices ($649 – $729) are hardly respective of the miniscule difference in size between the two models, but rather the style, decor, and finishes.
On a per square foot basis, we’re looking at as low as $282.
That’s obscene. Just obscene.
So let’s just assume that all five of these units show their age, and they need to be upgraded. Let’s just assume that the layouts are less-than-desirable as well.
Are these two reasons enough to overlook the obscenely low price?
The area is prime: everybody loves the St. Lawrence Market neighbourhood!
And as far as the boundaries of the SLM are concerned, Frederick Street between King and Front is directly in the heart of the area.
So why then, are there FIVE properties on the market at once, none of them moving?
Maybe the fact that five units are listed at once is reason enough for buyers to ignore them!
Maybe buyers just assume that there must be something wrong with the building. I know I might…
From a supply & demand standpoint, the owners of these five units have no leg to stand on when negotiating. The pricing of these units is so intricate, since you can go up two floors, find the same identical unit, and then add or subtract for the newer/older appliances, the carpet/hardwood, etc.
As a seller, you can’t pull a fast one, and you can’t ask for more than fair market value.
And with identical units sitting on the market next door and upstairs, you have to consider that you might not get anything remotely close to fair market value.
If a buyer were interested in the unit at $699,000, he could lowball the owner and simply fall back on one of the four cheaper units listed for sale. How would the owner negotiate?
Seeing similar or even identical units for sale in a building is nothing new, but we almost never see it in this price point, and with this size of unit. Sure, you’re bound to find the “07” model of some crappy CityPlace building replicated 3-4 times on MLS at any given moment, but certainly not 3-4 units of 2300 square feet!
And we know that the buyer pool shrinks as we move up the price scale, so if there are 10,000 current buyers in Toronto for condos in the $300,000 range, there are likely only 1,000 for condos in the $699,000 price range.
So what do buyers generally do when contemplating a $699,000 condominium purchase? They look at what else their money can buy!
What type of $699,000 house can you buy?
What other condominiums are for sale for $699,000?
There is one thing I can say in support of these five condos at 160 Frederick Street, and that is simply the fact that you can’t find this kind of value anywhere else in the downtown core. Show me a “new” 2300 square foot condo and I’ll show you a $1,300,000 price tag!
There is so much value in these older condos, but the market is turning a blind eye.
Why does the market ignore older buildings? What does today’s buyer look for in a new condominium?
Let’s take a look tomorrow…