Developer warns of slowing condo market

From the ‘sun predicted to set’ department of todays Province comes this article: BC developer warns of cooling condo market.

B.C.’s development industry must be nimble, disciplined and well-financed to survive the cooling of the provincial market, a veteran developer says.

The Lower Mainland has yet to experience the full impact of the U.S. housing slowdown and the troubles sweeping the Interior’s forest sector, Concert Properties president David Podmore said yesterday.

“I do think you’re going to see a continued slowing of our economy as . . . what’s happening in the Interior and the U.S. spill over,” Podmore told a conference on the future of B.C.’s housing industry.

“You’re going to have to really sharpen your skills to be successful and to compete effectively.”

Podmore said developers should stop relying on pre-sales, which he called a phenomenon of the past eight to 10 years.

The market is heading into a period where projects may take half-a-year to sell out, he said.

Disciplined developers will pull the plug on projects if it becomes clear they can’t succeed, he said.

There will be opportunities for well-financed developers to take over idled projects – but they must be fast on their feet, he said.

The ‘pulling of plugs’ has already started to happen on some projects like the Eden group Elyse.  Those that don’t pull the plug when they can get it pulled for them and go into recievership Sophia, H+H, Gardencity, etc.  There’s good news though, as the US housing slowdown continues it’s forecast that material prices will moderate.

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doug r
doug r
12 years ago

My income which is almost exactly the Canadian median, could support $200 a square foot.

It's already down to around $300 a square foot in parts of Southern California…

Warren
Warren
12 years ago

patriotz,

I don't see downtown condos going down to 100x if mortgage rates stay around their current level. If they do I'll be buying up everything the bank will let me.

If rates make it up to 10% or more, its certainly possible.

Jack
Jack
12 years ago

Alum,

I would pay $200K for a condo that I could rent out for $1,500. You must love subsidizing renters.

Tony Danza
Tony Danza
12 years ago

Take responsibility for your own lives.

Along the same lines if you can't handle the comments around here then take some responsibility for your own life and find another blog.

Mold City
Mold City
12 years ago

As for the Team 1040 talking up that Kelowna development. It’s called ADVERTISING.

The point is advertising can be done well or it can be done poorly. It just sounds sad and pathetic to use the 'act now before they're all gone' line of promotion for months on end. Clearly they aren't disappearing at a rapid rate.

Take responsibility for your own lives.

I absolutely agree with you here, that includes accepting the repercussions of your actions. If you decide a condo is worth $400k today, but in the future the only buyers around decide its only worth $200k, then DONT ASK FOR GOVERNMENT BAILOUTS.

Islander
Islander
12 years ago

Anonymous Says: And here I am just about to sign up for a 40yr mortgage on a nice leaky condo near Victoria and Hastings. RE promoters are very such honest people.

Gawd, what a baby. Did a RE "promoter" cram a pen in your hand and force you to sign the purchase agreement?

As for the Team 1040 talking up that Kelowna development. It's called ADVERTISING.

Take responsibility for your own lives.

patriotz
patriotz
12 years ago

The Kings of Queen Street:

All these crazy programs on TV — they stick ideas in your head — and we thought, 'Hey, maybe we could flip a house.' – Richard Hou

Hey guys, didn't they tell you not to build the most expensive house on the block?

Here's what $1.5 mil gets you in Rosedale

stagnate
stagnate
12 years ago

the spectrum would probably be comparable to other towers downtown, minus the granite countertops. something like the beasley would have trouble maintaining an upscale image once the marketing campaign is toast. the image versus real product helps create the $300/sq foot discrepency i suppose. the spectrum would have better views and amenities, versus closer proximity to cafes for the beasley. not one of bob rennies better comments.

condohype
12 years ago

When Bob Rennie was talking about building "affordable" housing with Ikea-level finishes to keep costs low, I imagine a condo like Spectrum. The problem is, Spectrum is priced as if it's luxury. The general consensus is that the building sucks but I think people wouldn't mind if it was reasonably priced. So long as Spectrum one-bedrooms remain in the $350K+ range, the place will be a joke.

patriotz
patriotz
12 years ago

I would buy a condo at $400K if I can rent it for $1500/month

Anyone wonder why this market still has legs?

100x rent, big guy. You heard it from me first.

-A-
-A-
12 years ago

"There will be opportunities for well-financed developers to take over idled projects – but they must be fast on their feet, he said."

This guy is better at stroking himself than Rob.

I suppose the implication is that people should buy a condo from him.

I guess well financed developers don't use numbered shell companies, and don't build leaky condos.

blueskies
blueskies
12 years ago

I would buy a condo at $400K if I can rent it for $1500/month

$1500 monthly rent would suggest a value of 100x to 200x monthly rent using standard metrics.

1500×100 = $150,000 to $300,000, would you pay more than $300k ?

Alum
Alum
12 years ago

I would buy a condo at $400K if I can rent it for $1500/month

patriotz
patriotz
12 years ago

The other big factor is that Germans don't have a cultural bias towards ownership (only about 1/2 own) and renters enjoy strong legal protections. If you like renting, there's no point in paying more to be an "owner".

This is also true of Quebec, which doesn't have a bubble either.

Anonymous
Anonymous
12 years ago

I think is going to be $200/sq ft

patriotz
patriotz
12 years ago

I always find it odd when people talk of ‘bear’ and ‘bull’ as if its a permanent condition when its an opinion based on where a market is now and where its likely to head. That is because real estate "investing" has become an ideology, i.e. a belief system with a fixed conclusion, "real estate always goes up", toward which all evidence must be twisted. Since ideologues don't accept or understand rational thinking, they assume that their opponents must support the inverse ideology. Thus to them anyone who thinks that it's not a good idea to buy RE now is a "permabear". They cannot understand that whether or not something is a good investment depends on what you pay for it. Greater fool "investing" has nothing to do with capitalism or even Marxism, which both recognize that the value of… Read more »

BBY
BBY
12 years ago

"REAL ESTATE DOLDRUMS Why the Global Housing Market Boom Bypassed Germany" http://www.spiegel.de/international/business/0,15… A RE article regarding a G8 nation at a completely different phase of the RE market cycle than what is normally discussed on our local blogs. A refreshing read. Germany became quite credit-phobic following the great depression and the great wars. I found it difficult to use a credit card there until only the last decade it seems. Recent generations are more credit-friendly, but various side-effects of re-unification have shown the hazards of credit to them now as well. Germany has a declining population and a reputation of durable housing (compared to the Vancouver crap construction), which reduces demand and prevents attrition of housing supply. Additionally there's lots of permits and approvals to get when building there. Anyhow, it's interesting see an analysis of a different western RE… Read more »

wransom
wransom
12 years ago

Interesting link YTWNboomerang – I always find it odd when people talk of 'bear' and 'bull' as if its a permanent condition when its an opinion based on where a market is now and where its likely to head. This opinion can and should change based on where the market goes.

I've been bullish on Vancouver real estate before, but I'm currently bearish on it. I think in the short term (5 years or so) its in for a beating and is presently overvalued, that doesn't mean that I think all real estate is always a bad investment.

patriotz
patriotz
12 years ago

No doubt I’d love to see it in the $200 range, but I just can’t see that happening.

Condos are going to go down to 100x rent, at least in the marginal areas. If 600 sq ft rents for $1000/month, that's a price of $100K or $167/sq ft.

And don't tell me that can't happen, houses went down to 100x in the 80's.

Vansanity
Vansanity
12 years ago

Radio ads… oh Man, I sometimes listen to the Team 1040 and they have been pumping the ever loving crap out of a development in Kelowna for months. "Hurry now or you'll miss out!!" It loses its meaning when you keep hearing the same message over and over and over. Bottom line: affordability is the issue! People won't be able to afford to keep buying. The musical chairs game of property ladder will eventually dry up because of affordability. It's a market, this is how they work. Also, people using their equity in their homes to fund further is all swell and dandy as long as the price holds, soon as it drops, it gets ugly. Remember people on this site, who will remain nameless, pumping gold saying it was headed to $1,500 – $2,000 per ounce… it lingered around… Read more »

YTWNBoomerang
YTWNBoomerang
12 years ago

The renter buys…

http://www.nytimes.com/2008/05/28/business/28leon

Of course that's only because of the massive price drops but interesting to note how most of us bears will eventually come bulls once the bottom is hit…

slade
slade
12 years ago

Warren, I can't find any Spectrum on MLS or Craigslist for under $500.Most seem to still be around 600. Saying Spectrum is marginal is flattering them.

Warren
Warren
12 years ago

I bought prime space in Yaletown in 1999 for $300/sf. I'd love things to come back to that level, but I'd buy in at $400/sf now.

Spectrum and some other marginal buildings in the area are already in the high 400s, I'd expect them to slip to 300 while prime units (L'Hermitage maybe) go for 375-400.

Anonymous
Anonymous
12 years ago

oh, and its not neccesarily the realtor that tacks on the extra 50 or $100k on the most recent sale, its usually the seller trolling for the greatest fool of all.

Anonymous
Anonymous
12 years ago

are people really that stupid? of course they are. unfortunately for them the future supply of greater fools eventually runs out of money.