# Cost-plus pricing

> Today, Urbanation released its Q4-2018 market highlights report for the Greater Toronto Area. The general media will pick up these numbers and tell you that there’s been a precipitous decline in the number of new condominium sales. But the reality is that 20,028 units were sold in 2018, which is actually in-line with 10-year averages for this region. 2017 was a particularly frenetic, and unsustainable, year. The average pre-construction sold price for a new condominium in the former City of T...

URL: https://paragraph.com/@brandondonnelly/cost-plus-pricing
Author: Brandon Donnelly
Published: February 1, 2019
Categories: apartment, cities, condo, construction, cost-plus-pricing, developer, developers, development, greater-toronto-area, new-construction, new-home-sales, real-estate, real-estate-development, toronto, uncategorized, urbanation, urbanism

Today, Urbanation released its Q4-2018 market highlights report for the Greater Toronto Area. 
The general media will pick up these numbers and tell you that there’s been a precipitous decline in the number of new condominium sales. But the reality is that 20,028 units were sold in 2018, which is actually in-line with 10-year averages for this region. 2017 was a particularly frenetic, and unsustainable, year.
The average pre-construction sold price for a new condominium in the former City of Toronto (the core) was $1,117 psf last year, and $921 psf across the broader region. These numbers represent significant double digit increases from the year prior. But again, what I don’t think many people appreciate is that the cost environment has also changed dramatically over the last few years.
Construction costs are way up, as are development charges and a myriad of other pro forma line items. The above numbers are simply a result of cost-plus pricing. Here’s where costs are at and here’s where we need to be to make the project feasible. Margins haven’t increased; in fact, they’ve probably been squeezed for many developers.
I think this is an important topic that deserves more transparency and visibility. So I’m hoping to work with a developer friend of mine and publish something more substantial in the coming months.