Vancouver condo projects canceled on financing difficulty

The Eden Group is cancelling two local development projects citing difficulty getting financing and skyrocketing construction costs. The Elyse, a 119-suite condominium complex at 7th and Scotia Street in Vancouver had pre-sold 55 units, but letters are now going out and deposits will be returned.

“The industry itself — very difficult to get financing,” Eden said on Monday. “Basically, it’s extremely uncertain whether I can actually complete that building.”

Eden is also cancelling a $30 million townhouse development, with that site already up for sale. A Third Eden project at 11th and Sophia is currently under construction and will be completed as planned.

Hmmm.. Now why would it be difficult to obtain financing in a booming real estate market?

Full story on the CBC website

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Anonymous
Anonymous
12 years ago

The cost of labour will hit the roof this year. This is because the developers are in a rush to finish off their projects before the market crash. Everything is on the go.

If the market is on the rise, the bank will be more concerned if 100% of the units were sold. This is because if revenue is fixed and expense in on the rise, we have an issue. By having only half the units sold, in a rising market, the developer could re-adjust the price of the remaining units to increase revenue to cover expense. Now why would the bank be concerned?

The bank will not lend because R/E price is dropping while construction cost in the short term in rising. Again only short term. Same time next year the construction cost will be half that.

Drachen
Drachen
12 years ago

TD:"I don't know who's arguing that falling lumber prices will affect Vancouver RE…"It's been brought up in the past and I'd argue that if it depresses the BC economy it will play out in Vancouver RE eventually, right now it's just one reason of hundreds why our current level is unsustainable.My point is we can't just accept all bear arguments without giving them due scrutiny and then throw out Bull arguments without saying WHY we refute them.You and I agree on the broad strokes and I really don't see any point in belabouring this issue.

Tony Danza
Tony Danza
12 years ago

"It's a financing issue. It's a scheduling issue. And it's a labour issue,"And we can't sell 50% of the project so the bank won't give us any money. Thumbsuck since you're so knowledgeable why don't you educate us as to the RE project financiers typical requirements for funding the completion of a project? In other words how many units need to be "sold" before the financiers are willing to go all in?

ThumbsUp
ThumbsUp
12 years ago

tony,because they choose not copy cat river band."It's a financing issue. It's a scheduling issue. And it's a labour issue," he said. "I refuse to put my investors in harm's way — we're selling the site."

Tony Danza
Tony Danza
12 years ago

But if we're going to discuss things like housing starts in Arizona and how that will affect lumber prices and lumber prices will affect BC's economy and THAT will affect Vancouver's real estate prices we have to accept things like the DOW as fair game to bring to the table. I don't know who's arguing that falling lumber prices will affect Vancouver RE, but lumber prices have been at historical lows for more than a year now. The reason that Vancouver RE prices will fall is supply and demand, pure and simple, and you can link them to affordability.

Tony Danza
Tony Danza
12 years ago

can you pass that theory of demand,supply,and cost which settle up the price of things,to tony danza ha.my princess can you tell him construction cost is a problem which does not help the sky rocketing prices to come down.Thumbsuck, If prices are skyrocketing then why couldn't Elyse sell 50% of assignments? So you have effectively no demand, not enough to complete the project, so that takes care of your supply, canceled project, and prices will follow.Thanks for the lesson moron.

Drachen
Drachen
12 years ago

TD"Drachen, I'm disappointed:'That said, the DOW is about as linked to the reality of the US economy right now as the value of Vancouver RE is linked to local fundamentals right now.'The stock market and the economy are two different beasts."I didn't express myself very well.The DOW is an indicator (although often a poor one) of US economic position. Right now it is an extremely poor one and so it's essentially irrelevant.But if we're going to discuss things like housing starts in Arizona and how that will affect lumber prices and lumber prices will affect BC's economy and THAT will affect Vancouver's real estate prices we have to accept things like the DOW as fair game to bring to the table. We can then shoot them down as irrelevant in this instance (ie the 300 point surge) but I don't… Read more »

ThumbsUp
ThumbsUp
12 years ago

Georgia,well saidCan you pass that to tony please.I mean can you pass that theory of demand,supply,and cost which settle up the price of things,to tony danza ha.my princess can you tell him construction cost is a problem which does not help the sky rocketing prices to come down.Over all tell him this case also bring into our notice that current market price are right.

Scullboy
Scullboy
12 years ago

ThumbsupSatV said:"if the developer is un able to find buyer on listed price, he must reduce the price to sell the remaining units. "Gosh sweetie, NOW you're getting it! Just switch "Specuvestor" (or "owner if you like) and you have the point every one has been trying to drill into your head for years.

ThumbsUp
ThumbsUp
12 years ago

Christina,i mean Scullboy,offer issue is leaning with projects from day one and will stay there for rest of life."It is good method to keep the sq.ft. price on same scale, otherwise they can screw up your unit price. "you might have read this first time here but this is old story since the begining of condo's or appartments ,houses or town houses.

ThumbsUp
ThumbsUp
12 years ago

the Elyse developer did, of 119 units he sold 55 in 11 months.tony,you are good up to there after that if the developer is un able to find buyer on listed price, he must reduce the price to sell the remaining units. otherside construction cost keep the up trend firmly, there is no bargain.lets say your project worth 50 millions and construction cost is 100 million,who is going to beg for financing and who is going to lend money.on last comment i suppose to mention do not ask for more but this time i give you more room. if you did not settle up yet, please move forward unless you feel good.

Scullboy
Scullboy
12 years ago

Hey Tony,Don't be so hard on Ol' thumbsupSat… he's really useful. The day he gives up his bullish sentiments is the day I will buy. He's the voice of all the fact-free bulls in the city. Just a few days ago someone mentioned that first we'll see developers offring rebates and upgrades in an attempt to move stalled units. Anon mentioned this has happened already in his development.And sure enough ol' ThumbsupSat had some kind of justification for it. It's not that the whole bubble is about to pop (or already has). "It is good method to keep the sq.ft. price on same scale, otherwise they can screw up your unit price. "Although one must point out is real estate is forever up up UP, the developer wouldn't have to offer these incentives….

Tony Danza
Tony Danza
12 years ago

Thumbsuck, satv, rob, aaron, said:don't tell me that things are not being sold, as i said Developers or owners are intended to sell their units on current market prices.I didn't tell you that, the Elyse developer did, of 119 units he sold 55 in 11 months. Did labour costs rise 10-11-09% since February? We're not talking about a project started two years ago, we're talking about something that is less than one year since the start of sales. Go back to your warehouse/numbers blog you fool.

Tony Danza
Tony Danza
12 years ago

Rob (Satv,Thumbsup, whatever), You think the stock market volatility is caused by retail investors with 5-10k, not the thousands of quant funds trading hundred million volumes every day? Don't quit your day job genius.

Tony Danza
Tony Danza
12 years ago

Drachen, I'm disappointed:That said, the DOW is about as linked to the reality of the US economy right now as the value of Vancouver RE is linked to local fundamentals right now.The stock market and the economy are two different beasts.

Drachen
Drachen
12 years ago

"I realize that I will be flamed for buying in this market, but has anyone experienced this trend recently?"I don't think anyone here will flame you for that. We only flame people who provide incoherent, inconsistent or fallacious arguments for the continued appreciation of Vancouver RE without any useful points to add to the discussion. People who buy but don't shove it in our faces how they're much 'smarter' than us poor bears mostly only get sympathy.And on that note, you have my condolences.

ThumbsUp
ThumbsUp
12 years ago

to obtain the only unit in the project I was interested in. anon,that's too common to put offers free upgrade and maintenance off for 2 to 3 year,because of left over units some time hard to sell.floors view e/w/s/n/ kind of stuff play important role.It is good method to keep the sq.ft. price on same scale, otherwise they can screw up your unit price. so for that reason they do not bring down the price, but offer some alternative from their own pocket.

Anonymous
Anonymous
12 years ago

I have experienced a different tactic by a developer (a large and supposedly reputable one) I bought a presale condo on opening day (Oct.15th.) to obtain the only unit in the project I was interested in. Within a month the developer, who I presume is frightened by poor sales and imploding market began to offer future purchasers package up grades or GST rebates, thereby reducing prices by 5 % or more.I realize that I will be flamed for buying in this market, but has anyone experienced this trend recently?

M-
M-
12 years ago

Here's the link to Brad Setser's blog, where the scary graph originated:http://tinyurl.com/2fqbb4

Anonymous
Anonymous
12 years ago

Thumbs Rob, Satv, How did Aaron Flash do at the open house?

ThumbsUp
ThumbsUp
12 years ago

Remember every one, piece of evidence or information can come from any source. first part of this thread is different than the second part thanks every body.

misanthropic curmudg
misanthropic curmudg
12 years ago

infamous Satv Thumb is Rob the Realtor man. funny you should say that!i'm left with impression that the convoluted speech is typical REIC rhetoric passed through babelizer a sort of knuckle-dragging drooling Ozarks type rendition of the English language

Clarke
Clarke
12 years ago

If major finance is bailing on condo developments, it is pretty safe to assume the peak has passed.There is no shortage of idiots, but there is not enough money to lend…..

Anonymous
Anonymous
12 years ago

Behind the veil of the phony broken English, check out the style, the word usuage,writing style, and the progression of the argument as presented, and I am sure we can all agree the infamous Satv Thumb is Rob the Realtor man.