“Thought you might like this,” George wrote me. “Kind of unbelievable – a 19% return on investment? Actually, it IS unbelievable.”
Yawn. Another Toronto condo developer trying to move product to virgin landlords by claiming it’s a fabulous investment. This time the project is Garrison Point, a five-tower mass wedged between two sets of railway tracks overlooking the scenic Gardiner Expressway on the western flank of godless Toronto. Thirty-storey Tower One is now being flogged, with 300 boxes selling from $275,000 (496 square feet with a fabulous view of train wheels) to $1 million.
Just another few hundred condos added to the 105,000 currently being built or sold in the GTA, where cranes blot out the sun. Just another developer luring the young and the innocent, this time with a year’s free condo fees and guaranteed rent for newbie investors. The marketing is clearly aimed at Gen Yers and Millennials, like so many. But this development is special. It has Erin.
Erin Bury, says the Garrison Point blog she contributes to, “is a first-time home buyer and the Managing Director at 88 Creative. Find her at @erinbury on Twitter.” She’s also young and attractive. And smart. Erin writes a monthly column for the Financial Post and comments on techy stuff for CTV. She’s appeared (says her bio) in the New York Times, Forbes, CNN and Canadian Business. She was named one of Marketing Mag’s top 30 Under 30 whizkids. And she’s the team leader at this leading edge marketing company, housed in a loft full of beams and Apples.
In short, one helluva endorser – a generational leader and role model to all those pathetic Millennials still living in their mom’s basement. And Erin, amazingly enough, has just bought a unit in Garrison Point! So it must be cool.
“As a Gen Y first-time purchaser,” Erin writes, “I want to take you through my journey from perennial renter to new condo owner, and show you why it’s easier than you think to own a home, and why pre-construction is an affordable way to own.
“I’ve lived in downtown Toronto since I graduated from university in 2007 and have been a renter ever since, first with a roommate and now with my boyfriend. I’ve always wanted to buy a home, and for years I’ve considered buying a resale condo, but without a full 20% down payment I was always hesitant to incur CMHC penalties, and putting only 5% down would make my monthly bills too expensive. I know I could move to the suburbs to get a cheaper place, but I love the downtown lifestyle, and have no plans to move to the suburbs (or even north of Bloor) anytime soon.
“The best alternative to moving to the boonies? Buying a pre-construction condo. I just purchased my first condo at Garrison Point, and here are the reasons I think pre-construction is the way to go.”
Well, says Erin, buying a condo that doesn’t exist yet gives you more time to save money you don’t yet have to make a down payment, and means you can secure a unit with just 5% down. “Who has $100,000 laying around in their 20’s? Not me.” Plus you can save money for new furniture, moving, and pesky closing costs. Second, buying this way means “you don’t have to worry about market fluctuations,” which is kind of an intriguing thought. “As a first-time buyer you don’t know what to believe, and after years of watching people speculate I’ve learned that no one knows for sure,” Erin says of those who warn that maybe – just, maybe – having 105,000 condos go up at the same time might skew the demand/supply metric. But she’s not worried.
She also tells her readers this is a great investment. “You’re buying a unit at today’s market price, and moving in 2-3 years down the road when the price per square foot will have inevitably gone up. And when people say it’s only a great investment if the market is doing well… I tell them that if the time isn’t right to sell, I can always rent it out.” Wow. Where do I start?
Of course, a normal market correction would wipe out Erin’s equity and leave her with a mortgage potentially bigger than the value of the condo. Interest rate increases (which are coming, of course) will make each mortgage renewal more difficult and wound the market. Owners like Erin will always pay more to live in the same unit than it costs to rent – which means she’ll be in negative cash flow if she does bail, can’t sell, and gets a tenant. And, of course, buying an unbuilt condo is like taking out a futures contract. You risk cash today, gambling that three years from now you won’t be crushed.
But, wait. “Down the road …the price per square foot will have inevitably gone up.” This is Erinomics. Pay attention, kids.
Finally, why did Erin buy here? She says:
“So why did I purchase at Garrison Point over the other pre-construction projects in Toronto? Well there are a million reasons I chose this specific development. First is the location – King & Strachan, which is on the streetcar line and also close to Liberty Village. Second is my unit – I purchased a two bedroom-plus-den unit with two balconies and a lot of space, so I can have a family there. Third is the planned community – when completed the project will be five buildings, retail stores, a 4.5-acre park, a planned community pool, and unobstructed views of the lake and downtown thanks to the rail lines on either side. I feel it’s not only a great home for a young family, it’s a great investment.”
There may be a fourth reason. She’s paid to.
Erin Bury’s employer, 88 Creative, is owned by BuzzBuzzHome, one of Canada’s most successful condo marketing companies and sites. And Garrison Point is a client of 88 Creative, where Erin is in charge of things as managing director. In fact, her company created the Garrison Point blog that Erin writes, under pretense.
At least, that’s what 88 Creative claims on its corporate site: “We’ve built the online community using Twitter, Facebook, Instagram, and a Garrison Point blog, directly impacting project registrations and raising the profile of the brand.”
And here I thought this was the generation of transparency. How naïve of me.