Making Headlines, Not News
By Sam R on Oct 21, 2014
A recent Reuters article in the Financial Post comes down hard not just on builders and the government, but also on condo investors, accusing the trio of colluding to create the probability of a bursting housing bubble — and a future of urban slums as well.
Some condos are shabbily built and will need significant remedial work before year 20, it says. Investors are to blame, it says. Canada’s boring but safe banking system is to blame, it says. The truth is, we don’t know much and we certainly don’t know what will happen in the future.
There are no numbers on how many of our condos are being bought up by foreign investors, with the article estimating the number at between 5% and 50% — but that’s quite a gap. In my experience, just the idea of “foreign investment” can bring out the racist in some people, and yet most of us have a limited understanding of the process. For example, offshore investors are held to higher deposit structures that help ensure they will pay what’s due.
Because a certain percentage of sales are required before building can begin, without foreign investment, there are projects that would never, literally, get off the ground. That means fewer jobs and less revenue.
Investors just don’t care, it says. “Less important are the finer points of the condos,” the article says, “with investors primarily focused on value, location, and amenities.” But aren’t those the same aspects on which every buyer focuses?
A lot of the mud is slung at The Building Condo and the Condominium Act, dismissed by one “condo buyer turned realtor” as a “joke.” “The City of Toronto relies on the permits, the fees for its tax base, and construction and condos are what is carrying the city. You do not kill the goose that lays the golden egg.” Toronto’s Auditor General (the province looks after the Building Code’s administration but it’s up to the municipalities to inspect and enforce it) finds its enforcement lax and due for review, with two-thirds of open building permits across the city having had no inspection for over a year, and that more violations are issued than closed each year.
Well, Okay, that might even be accurate, but what government agency isn’t mired in inefficient bureaucracy? It’s hardly unique to the building business.
Foggy view of Toronto skyline from Canary Park
As for quality of construction, wander with me down this little thought-path. Condominium problems are to house problems as plane crashes are to car crashes. (Just bear with me through this metaphor — I do have a point.) When one person has a car accident, we very seldom and only under the most distinct circumstances blame the manufacturer. We rarely change laws or move mountains to make sure it doesn’t happen again. We don’t overhaul whole paradigms. There may be an evolutionary shift towards safety — air bags and such — but in general, we believe in the safety of our vehicles and that most often, when there’s an accident, it’s the driver’s fault.
Up the stakes exponentially, and when 400 people are involved in a plane crash instead of one driver hurt, we scream for justice. We insist on a zero-tolerance policy for airplane accidents, even though air travel’s safety record is far superior to anything on the road.
Both the development of condominiums and low-rise communities involve a complex process involving hundreds of trades and years of endless communication among more channels than you can imagine — subcontractors for dozens of trades, the marketing and PR teams and their agencies, office and financial staff, executives and planner, architects, designers and decorators, lawyers, sales staff. But because condos are booming in the GTA right now — we hear so much more in the media, and are that much more outraged, as if buyers have been bilked.
As for the urban slum? That’s pure conjecture. If residents nurture a genuine community and these buildings are smartly managed — things that are entirely in the hands of the residents themselves — any building shortcomings will be addressed. Life is what you choose to make it.
Even given what I do for a living, I’m not prone to empty praise of the building industry. There are some things I think are done very well, and others done poorly, but it’s a business like any other. They get it wrong sometimes. But a slow news day doesn’t mean anything is going to burst our bubble anytime soon.
