While sorting through my mail this afternoon, I began reading a real estate flyer from a company that shall remain nameless.
They had an outlook for the 2008 condo market which I found very interesting.
Half the things I read I completely agreed with, and half the things I found outrageous…
Every week, I must throw out about five pounds of flyers for pizza, Chinese food, gym memberships, RRSP’s, and other crap that I don’t read.
I do, however, read all the real estate flyers from my competitors….er….colleagues.
I got this one flyer today that was rather interesting. They called it a “Market Forecast,” but in my mind, it was anything but. Once unfolded, the flyer was six full pages, consisting of: one page of photos of their sales agents, four pages of their current listings in size 7.5 font, and ONE single page for their “Market Forecast.”
When I hear the term “Forecast” used in the business world, I expect to see countless statistics, charts, graphs, and data backing up the opinions.
This flyer I received today was comical, at best. Ask Alan Greenspan what he thinks about this “forecast.”
Their “forecast” consisted of five bullet points, and no more than a hundred words. Below are their bullet points in bold, with my accompanying comments.
HOW THE CONDO MARKET WILL PERFORM IN 2008:
1. 2008 will be a record year for condo resales downtown – at least 8% higher.
When you say “another record year,” perhaps you should elaborate on what this refers to. Do you mean last year was a record year? Or that some year, at some point in the last million years was a record? And where do you get the 8% figure from? Just pulled it out of thin air? Thought so. There is just nothing to base this claim on, other than pure speculation. With more and more condos being built and subsequently completed in Toronto, there are more condos in existence with each passing year. It might seem to reason that sales will increase when the product does as well.
2. Condo prices will increase by 10% (last year was the first year of double digit increases in condos and most markets can absorb three years of double digit increases before a correction).
Again, I’d love to see some data to back up this figure of 10%, because I just don’t believe it. Some condos may have gone up 10% or more, but as a whole, the market did not. I think this claim of “three years of double digit increases before a correction” is too cute a rule of thumb. If condos increase 8%, 8%, 9%, 9% in four years, why will subsequent increases of 10%, 10%, and 10% be the cause of a correction? There is no correlation between “double digit increases” and a correction, in my mind. I do agree that condo prices as a whole should increase close to 10% this year, however some buildings will see a 2% increase, while others will see bidding wars, multiple offers, and upwards of a 15% increase in their value.
3. Look for the Etobicocke Waterfront to increase in popularity as more buyers over 50 enter the condo market. It is lower priced than either of Downtown or Port Credit.
I completely agree with this statement. Last February, I had clients move from Calgary back here to Toronto where they had lived previously. They didn’t want to own a house, as they were interested in the more care-free lifestyle that condos offered, and they wanted to live by the water, with a killer Lakefront view. They purchased a unit at Palace Pier for $1,100,000 that was over 3000 square feet, and they are happy as can be. They travel “into the city” when they need to, but are fully content to live on the outskirts of Toronto.
4. One-bedroom condos are second choice. Buyers want a minimum of one plus den.
Well I want a date with Jessica Alba, but sometimes your wants are more than you can afford (does Jessica like eating at Sizzler?). Half the people who purchase one-bedroom condos can barely afford to do so. What a buyer “wants” is almost irrelevant. And why would a single person purchase a 2-bedroom condo? And if a person needs 2-bedroom or 3-bedroom condo or more, why wouldn’t they buy a house? I have a huge problem with the above statement, and yes, perhaps my opinion is a reason why. I think 80% of all “dens” are useless because they are too small, too irregular, don’t have closets, or merge with the foyer (ie. when the den is right in the doorway). In terms of investment, a 1-bedroom provides the best income stream.
5. While parking spots at $30,000 are quickly becoming the norm downtown, buyers are learning to live without a car or parking spot!
I disagree once again, but not as vehemently this time. A parking space makes a great investment for two reasons: 1) A condo is much easier to sell with a parking space, 2) A space can rent for $150/month if you aren’t using it, which is 7% of the value, assuming $25K. Most people who own a condo also own a car, and even if they take TTC to work, they still drive. Look, most adults own a car, and I honestly don’t run into many people who sell their cars so they can move into a condo that doesn’t come with a parking space. I knew a girl who sold her space because she didn’t own a car, against my advice. When she went to sell her condo a year later, it was much more difficult than it would have been if she still owned the parking space, and countless prospective buyers said “I love this unit, but there’s no parking!”
Well, there you have the Re/Max Condos Plus “Market Forecast.” Oops, I promised I wasn’t going to use their name…
The part I love the most is the introduction on this flyer: “We have always been known as the most aggressive forecaster of the Toronto Condo Market. We have also been the most accurate.”
BASED ON WHAT????
SAYS WHO? You??
Following Re/Max Condos Plus’ lead, my slogan will now be as follows: “I have always been known as the most sexy real estate agent on planet Earth, as well as planet Provex189.. I also have the best hair, grammar, ability to spot j-walkers, and my sense of smell is quite above average.”
Why not make outrageous claims if you can’t and won’t ever be held accountable?
There is a second section of this Re/Max Condos Plus flyer titled “WHAT YOU NEED TO KNOW ABOUT TODAY’S CONDO MARKET.” I think I’ll review this (and by “review” I mean satirize, ridicule, scorn, and disparage) on Thursday…