Thursday, April 12, 2007

Who can afford these condos?

We all know that there's very little speculation in the Alberta market. That's why we have some ads like these.
Seriously, does Edmonton have the demographics to support 900 sq ft condos selling for $450k?
This is clear cut Vancouver or even San Diego pricing. Any guesses on who will be the potential owners for such an apartment?Lawyers making $120k? Software consultants making $100k per year? How many such people do we have in the city?
Also, take a look at this one in a lowrise. This building was developed in front of my eyes and is now almost 50 to 60% occupied. $318k for a downtown condo that doesn't have anything fancy. Similar units in this building rent for $1300 that includes condo fees. The launch price for these just a year and a half ago was close to $160-180k. What is the expectation here? Finding another greater fool? Or that the rents will go up to $2000 to make it a worthwhile game for whoever is buying? I strongly doubt that 2 br apartment is going to increase to $2000 in Edmonton even in the next 5 years. In the last 2 years, the average 2 bedroom apartment has gone up from $800 to around $1000 to $1100. This is based on my random market inquiries during last week.
I think we are running into the affordability wall, at least for some of these condos, the Alberta boom notwithstanding. Or may be there are still enough 'investors' out there who have far greater prescience than I do.

Update: Here's a very interesting link on relative comparison of various world cities.

The 10 most expensive were Paris, followed by Moscow at $688, Seoul $630, Vancouver $577, London, England $532, Calgary $500, Athens, $375, New York City $375, Tokyo $325, and Edmonton, $322.

So Edmonton and Calgary are now officially expensive even by world standards. Of course, we are a truly world class city.
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