What is wrong with this picture? it might be that our civic government is letting people occupy the street for no reason other than to garner more publicity for the condo being built at the corner of Yonge and Bloor, when they just as easily could have given them all numbers and let them go home. Or it might be that we have seen it so many times before, at or just after the peak of some boom like when gold hit $ 700 twenty years ago and people lined up on Bay Street to buy it, only to see it drop to 300 and stay there for years. Or the last condo crash in the early nineties.

This week's Fortune magazine analyzes the American housing crash and chalks it up to a very simple cause: prices got out of whack with rents. Like any other commodity, people expect a return on investment; in housing, low interest rates and no money down loans let housing prices rise so fast that there is no way that current market rentals come close to covering costs. But it is no longer about investment, it is now about speculation; it is now a bubble.

All kinds of crazy things happen in bubbles; people start waxing eloquent about location being perfect when it is across the street from the two ugliest office buildings in the city and you cannot stand on the corner in winter without being blown away. Looking at the wall of the Hudson Bay store- that's location?

People stop looking at track records and Tarion complaints and happily purchase from Kazakhstani developers that nobody has ever heard of, building to a height that nobody has ever done in Toronto for a residential building.

People start talking about all the international money flowing into Toronto as such a wonderful place to own real estate when we can't pave our streets or keep our buses running or our tourist attractions going because nobody comes here anymore, the dollar is so high. So where are all these international buyers coming from?

People forget that developers don't borrow money to build, they build to borrow money, they are gamblers who will keep doubling their bets as long as suckers come to the table and the banks keep financing them. The second the banks decide "gee, we are over-exposed in real estate" (which they will, any day, all at the same time) the industry will shut down, just like it did in 92.

Then we can go back to real estate being about places to live, not invest.

1. The first time I heard about this building was when I read about it in The Star back in March. The article I read featured an interview with Kyle Rae, where he clearly demonstrated the near-sightedness of bubble-headed decision-making.

   Rae celebrated the 80-story luxury development saying, “it’s the intersection of two subway lines,” implying that “Having so many people living atop a bustling public transit junction speaks of civic efficiency…” Building housing at a prime public transit access point does make perfect sense. But putting multi-million dollar housing there? Who are these people kidding? When was the last time Donald Trump took the subway? Promoting transit use, environmental sustainability, walkable cities, and social equity requires building housing in walkable neighbourhoods and adjacent to key transit points that is accessible to people who walk and take transit. Unless my admittedly classist assumptions are wrong, this development does nothing to further those objectives.

   The other reason Rae put forward for favouring the development was, “I sorely would like to hide the Royal Bank building on the northeast corner. It’s brutal. Hiding that building at the northeast corner by this one on the southeast corner would, I think, be a gracious thing to do. I’m in favour of masking the unfortunate.” Not only is Rae’s logic here wholly faulty (the only thing a tall building “hides” is the sunlight), but it expresses a sickening lack of vision for a person who is a key decision-maker in the the hyper (re)development of the downtown core.

   Kyle Rae’s bubble-headed thinking, “shock and awe” philosophy, and bed full of developers are having a stunning impact on both the social and physical environment-and very identity-of downtown TO. Condo buyers may be making some potentially unwise investments these days, but what really concerns me are the potentially unwise investments we’re making to our city’s landscape.

   Does anyone happen to know how this building got approval for 80 storeys in height? Was there some sort of Section 37 deal made? If so, does anyone know what it was?

   Posted by  on  11/15  at  03:36 AM

2. I blogged that anyone buying a condo in Toronto or Vancouver these days is an idiot though I missed the excellent point you made about shady developers.
   There was a Re/Max press release that went out estimating that up to eighty-five percent of condo sales are to these so-called investors.
   The thing is, when there are more of these people buying condos than there are people buying condos to live in only a fool would deny there was a bubble.
   But I get people commenting, insisting that real estate is still a ‘good investment’ and the fundamentals are sound because of baby-boomers, lack of land, etc.

   Posted by littleblackduck  on  11/19  at  05:59 PM

3. The corner’s will apparently have one less ugly tower – The RBC Tower is supposed to go through major renovations, Halt Renfrew has plans to expand out to yonge/bloor while the whole tower will be reclad. I think it might even be turned into a condo – a friend of mine had worked on the project.

   Posted by  on  11/26  at  12:00 PM

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