Urban Development and Proposals Discussion

[haltcatchfire]

If it weren't for the high rise purpose rental activity, things would be pretty dead in the core.
I am still amazed at the popularity of these buildings with renters. Sure they are new and they have more amenities than a typical rental building from past decades. Also, I have heard the analysis that millenials don't want to own (although something is driving the single family demand). However rents in these new buildings are not cheap so you have to making a decent income to afford it.

With interest rates as low as they are, why wouldn't you take that payment and buy an inner city condo instead?

On top of your monthly payment you now also have condo fees, property taxes, and full insurance. Suddenly it’s not as “affordable”. Likely many also have huge student loans and no savings so even 5% down is a huge mountain. Then you also need to own long enough for your mortgage payments to start making a dent on the principal and not just covering interest. Values need to rise a fair amount just to clear the commission fees on selling to come out ahead. You also lose the flexibility of reevaluating annually and moving if a) the building isn’t good b) neighbours suck c) you get in a relationship and need more space etc.

 

[JonnyCanuck]

On top of your monthly payment you now also have condo fees, property taxes, and full insurance. Suddenly it’s not as “affordable”. Likely many also have huge student loans and no savings so even 5% down is a huge mountain. Then you also need to own long enough for your mortgage payments to start making a dent on the principal and not just covering interest. Values need to rise a fair amount just to clear the commission fees on selling to come out ahead. You also lose the flexibility of reevaluating annually and moving if a) the building isn’t good b) neighbours suck c) you get in a relationship and need more space etc.

Those factors have always existed forever. Condo fees, property taxes and building insurance are already factored into premium rents so you are paying them whether you rent or buy. Not all of your mortgage payment is going towards interest. A small portion is going to the principal. The whole point is by owning, you are building equity which you are not by renting. I get that coming up with a down payment could be a barrier however the down payment on a comparatively cheap condo in Calgary is a whole lot less than it is Vancouver and Toronto.

 

[MissingMiddle]

If you're a "young professional" looking to buy, you're not gonna find anything that you'll want to stay in for more than 7-10 years for less than 400k. At which point, it makes no sense to buy a condo that won't appreciate when a Single Family Home or Townhouse is available to you. In Vancouver or Toronto, that luxury isn't an option because of home prices. The cost of building a condo building in Van/Tor vs. Calgary isn't that much different aside from maybe land cost - which Calgary has overvalued IMO - so the profit margins just aren't worth it for a developer.

There's somehow this idea that renting is "throwing money away when you could be building equity," which is entirely disingenuous. It's only true if the rent cost equals the mortgage cost, but rent is wayy cheaper. If you rent long-term and invest the difference with a decent return ~8%, it'll end up being about the same as a mortgage, you'll actually end up with a larger net worth. Plus, you have no upkeep cost, you can move easily, and generally you can afford to live in much more urban neighborhoods. Given the trajectory of the housing market, I know a more than a handful of couples doing this instead, and they honestly seem way happier than those living in the burbs.

 

[Disraeli]

Had some time to kill so I thought I'd compare high-rise construction growth in the core (Downtown/EV/Beltline) from a little over 4 years ago years ago (Dec 2018) to today. I didn't include Bridgeland, Kensington or Mission, but I believe those neighborhoods also have more units u/c than was the case 4 years ago. I included Sunalta towers though it's not technically in the Beltline, it's close enough. I didn't include Curtis block or 11+11, even though they are still technically u/c.

For the time being our core growth in multi-family is very solid. Looking at all the projects u/c including 11+11 and Curtis Block we are looking at at least 4,130 new units for the core. This should result in a strong population boost over the next 3-4 years.

Dec 2018
U/C Units
Underwood Tower - 225
11th and 11th - 369 (site prep)
Marriott Residences - 303
One Tower - 379
500 Block South - 463
The Royal - 223
Curtis Block - 628 (site prep)
Redstone - 137 (Site prep)
Cube - 66
Total Units: 2,793


Jan 2022
U/C Units
Oliver - 866
Sunalta Towers - 333
The Hat 14th - 239
1334 10th - 80
Arris Tower west - 310
Park Central II - 460
Sierra Place - 80
West Village Towers - 554
The Fifth - 34
Nude - 177
Total Units: 3,133

That new total doesn't include the still u/c
11th and 11th - 369
Curtis Block - 628

Thanks for updating! Is there anyway we can pin this to the start of the thread for easy reference?

 

[haltcatchfire]

Those factors have always existed forever. Condo fees, property taxes and building insurance are already factored into premium rents so you are paying them whether you rent or buy. Not all of your mortgage payment is going towards interest. A small portion is going to the principal. The whole point is by owning, you are building equity which you are not by renting. I get that coming up with a down payment could be a barrier however the down payment on a comparatively cheap condo in Calgary is a whole lot less than it is Vancouver and Toronto.

Using a 1 bed 1 bath in Park Point as an example. They are currently renting for $1800/month and one is for sale at $350,000.

$350k property requires $18k down and runs a $1750 monthly payment. $363 condo fee, $176 prop taxes ($2120) and say $150 insurance and you’re at $2439. $639 a month above renting.

 

[dazzlingdave88]

Using a 1 bed 1 bath in Park Point as an example. They are currently renting for $1800/month and one is for sale at $350,000.

$350k property requires $18k down and runs a $1750 monthly payment. $363 condo fee, $176 prop taxes ($2120) and say $150 insurance and you’re at $2439. $639 a month above renting.

Take the $18k and invest it and also the additional $639 a month at a modest 6% interest and you end up with $511k in 25 years. 7% = $600K and 8% = $707K. I'd be surprised if that place is worth that much in 25 years. Also, you lose all that flexibility you guys were talking about.

The myth that housing always appreciates and makes you money is pretty shaky in the modern era. It really depends on many variables.

My wife and I bought a townhouse in Crescent Heights 8 years ago and it is still only worth 90% of what we paid for it. If we would have taken our down payment and put in in a simple index fund and rented for those 8 years, we would have an extra $250k of equity at this point. We love our place, but knowing this would we go back and have made a different decision....in a heartbeat.

 

[Surrealplaces]

At the end of the day there are pros and cons to both owning or renting. From what I've seen over the past 20 years is much of it depends on lifestyle, future plans, and also timing. It's a whole other thread worth of discussion

 

[potatopizzafan]

Another thing to consider in the rent vs buy debate is that in 25 years your house/condo will likely be paid off, dropping your monthly expenses significantly. Meanwhile rents will likely have increased by a significant margin. 2b/2b rent in 1995 was $500 and is now $1500. So you can probably expect it to be in the $3500 range in 25 years

 

[Surrealplaces]

Some basic elevation drawings have been included on the DP link for this project. No fancy renderings, but you get an idea of what this new restaurant/mixed use building on 1st Ave will look like. 2 stories, so not bad for such a small lot:

DMAP

View attachment 374558

Here's another rendering for this project. Love the proposed use, and the fact it'll fill the empty lot, but I feel the design could be a little more 'Certus' styled.

 

[haltcatchfire]

Pretty low on personality and screams laser skin clinic, insurance agent, and a dentist. For a prominent location on an urban main street in an interesting neighbourhood it doesn't cut it for me.

 

[Surrealplaces]

Agreed. I think they would do good to look at Certus for examples what could be done, or around the corner at RNDSQR's General Block.

 

[Beltline_B]

Re: rent vs owning.

There is no magic answer, for us, we rented for about 10 years and lived in four different places. It was nice to have the freedom to move around and not be tied down to any particular investment or part of the city.

We decided to buy after living in an area for a while. With that comes some burdens and blessings. It’s nice to be able to change, renovate or improve things in your living domain. Seeing as we are planning to live long-term at our current domicile it made sense to purchase.
Whenever someone asks me if it’s better to own or rent, I always tell him it can be summed up in two words: It depends.

 

[Surrealplaces]

Those factors have always existed forever. Condo fees, property taxes and building insurance are already factored into premium rents so you are paying them whether you rent or buy. Not all of your mortgage payment is going towards interest. A small portion is going to the principal. The whole point is by owning, you are building equity which you are not by renting. I get that coming up with a down payment could be a barrier however the down payment on a comparatively cheap condo in Calgary is a whole lot less than it is Vancouver and Toronto.

I wonder if it's a generational shift thing? 20 years ago, the mantra told to young people in Calgary was that it was always better to buy than rent. Home prices were reasonable enough that young people could always buy as long as they had reasonable steady income. In the early parts of the millennium, house prices saw good appreciation and it help push that idea of buying. Over the past few years, younger people seem more geared to renting for different reasons, but who knows, it's possible we may see a boom in buying in 10 years when the millennials are in their mid 30's etc, and settling more.

 

[Calgcouver]

Here's another rendering for this project. Love the proposed use, and the fact it'll fill the empty lot, but I feel the design could be a little more 'Certus' styled.

View attachment 377907

Alright, it is that time again for the MS Paint redesign over lunch. Here is what I would do to improve this, as currently it looks like a street-oriented Ford Dealership:

Minor changes and I think it would look good. Whoever is developing this, I take Cash or Certified Cheque. Thx

 

[Urban Outdoorsman]

re: rent vs buy

So, I'm thinking of buying a condo in the next few years and this conversation touches on some of my own thoughts and concerns with buying.

My plan right now is basically to buy a small condo under 150k with the cheapest condo fees I can find. Hoping to put down 20% and probably get a 25 year mortgage. At this rate, between my payments, insurance, fees, utilities, etc., I'd be paying somewhere in the ballpark of 1000$/m. This is well below average rents, albeit it probably wouldn't be the nicest condo.

Way I see it, I could probably pay it off early in 5-10 years (to save on interest) and buy another place after. Using this as a rental and putting the profit towards a downpayment on a better place. Or of course just dumping all the profits into an investment account.

Are the any obvious flaws to this plan? I'm no expert and have little knowledge of real estate beyond the basics, so I won't be surprised to learn I'm missing something obvious. But it seems like a pretty good plan to me