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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May 28th, 2008 at 4:46 pm
May 28th, 2008 at 5:41 pm
RE promoters are very such honest people.
May 28th, 2008 at 9:21 pm
May 28th, 2008 at 10:05 pm
May 29th, 2008 at 1:02 am
May 29th, 2008 at 3:32 am
All of Canada is -4.3%.
And some try to talk down the economic affect of the devastation to forestry. I happened to be in Newfoundland when the cod fishery collapsed, and I saw a little of our future in BC.
http://tinyurl.com/4unr6a
May 29th, 2008 at 5:18 am
http://www.lestwarog.com/region-1.html
Are people really that stupid?
May 29th, 2008 at 6:16 am
There will be a day again when I can buy a 2,000 sq. ft. suite in prime yaletown for under $800,000. $600,000 would be real nice.
May 29th, 2008 at 6:23 am
May 29th, 2008 at 7:21 am
May 29th, 2008 at 7:24 am
May 29th, 2008 at 8:07 am
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.
May 29th, 2008 at 8:32 am
May 29th, 2008 at 9:37 am
http://www.nytimes.com/2008/05/28/busin … ei=5087%0A
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…
May 29th, 2008 at 9:50 am
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 $1,000 and is now under $900. I stopped a friend from buying in around the $1,000 mark telling him to be careful and do some proper due dilligence. It’s not smart in any market to buy at historic highs… I mean this is common sense is it not!?!? Drives me nuts saying these things its news to some.
Lastly, under that article there are plenty of people defending our proud and honorable system that have inflated the prices to these levels. I just hope those same people stand behind the system when it turns and the late-to-the-party-goers end up with huge losses and are left crying for help from the gov’t etc… to save their asses. Let’s see if their tone changes.
May 29th, 2008 at 10:49 am
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.
May 29th, 2008 at 11:48 am
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.
May 29th, 2008 at 12:28 pm
http://www.spiegel.de/international/bus … 01,00.html
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 market.
Enjoy!
May 29th, 2008 at 5:23 pm
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 a capital asset depends on the income which it returns to its owner.
May 29th, 2008 at 6:25 pm
May 29th, 2008 at 6:25 pm
This is also true of Quebec, which doesn’t have a bubble either.
May 29th, 2008 at 6:57 pm
May 29th, 2008 at 7:21 pm
$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 ?
May 29th, 2008 at 8:12 pm
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.
May 29th, 2008 at 8:23 pm
Anyone wonder why this market still has legs?
100x rent, big guy. You heard it from me first.
May 29th, 2008 at 8:27 pm
May 29th, 2008 at 9:03 pm
May 29th, 2008 at 9:48 pm
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
May 30th, 2008 at 1:23 am
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.
May 30th, 2008 at 6:31 am
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.
May 30th, 2008 at 7:08 am
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.
May 30th, 2008 at 7:54 am
I would pay $200K for a condo that I could rent out for $1,500. You must love subsidizing renters.
May 30th, 2008 at 8:01 am
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.
May 31st, 2008 at 9:48 am
It’s already down to around $300 a square foot in parts of Southern California…