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October 2nd, 2008 at 11:30 am
11 dosh Says:
August 2nd, 2007 at 2:07 pm
whats with the obsession with the US market? last i checked we were in a different country. i know we do some trading with them, but geez, lets get real!
Current score: 0
October 2nd, 2008 at 11:16 am
All my investments grow in value.
OK you don’t sound like some
fly-by-night operator so I’ll ask
you for some advice.
I have a significant amount of frequent flyer points accumulated. Should I be cashing these in or holding for the longer term.
I ask because I really don’t want to bail on the original investment. TIA
October 2nd, 2008 at 11:10 am
costs also go beyond just the price of land and construction
Right, there’s marketing to be considered as well. Because who in their right mind would pay $600 a square foot for a tiny concrete box without slick ads filled with glowing copy about ‘lifestyle’ and glossy photos of coffee?
October 2nd, 2008 at 10:58 am
Iorem, I didn’t say that, Alan did. I am the one who pointed out that his number was out to lunch.
Development costs also go beyond just the price of land and construction cost.
October 2nd, 2008 at 10:30 am
Downtown highrise condo construction costs are about double Dave’s guess of $150, at about $310/ft2:
http://www.bty.com/q407final_bty.pdf
The problem with pulling numbers out of your ass is they tend to smell like bullshit.
October 2nd, 2008 at 10:21 am
I don’t buy depreciating assets. All my investments grow in value. I strategically buy vehicles and condos which I know are in demand or will be in the future. It’s worked very well. I have tons of HELOCS and the credit card offers continue to arrive in the mail daily.
October 2nd, 2008 at 10:17 am
dbcooper (nice handle by the way)
John is a joker, he’s just being intentionally ironic. Just ignore him.
October 2nd, 2008 at 9:55 am
Businesses buy depreciating assets with borrowed money all the time. Including real estate of course. In fact, all physical assets (except land) depreciate.
The issue is not whether the asset depreciates, but whether the yield net of depreciation exceeds financing costs.
October 2nd, 2008 at 9:34 am
john:
you are buying depreciating assets with borrowed money? could you explain your mindset please?
October 2nd, 2008 at 9:01 am
RJB, the link to the xls doc is back up at the top of the post, or you can click here to download it. I temporarily removed it for cleaning – thats why you couldn’t see it.
October 2nd, 2008 at 8:48 am
Hey John, did you get your Ferrari yet? I think I saw you driving a silver one on Royal Oak in Burnaby last night.
Man, you should definitely put a pillow under your butt – you seemed like you can’t see crap over the dashboard…
October 2nd, 2008 at 8:45 am
Did anyone else go to the PHN private client conference at the westin last night?
During their presentation they showed a 1.18 million unrenovated tear down in Vancouver and compared it to a renovated castle in Normandy France that was $7,000 less.
It amused the crowd which John will be pleased to know included many rich asians!
October 2nd, 2008 at 8:16 am
This is why I focus on downtown condos only. Surrey has an arson problem. Rich asians know this and stay away as well. I’ve got a line on a ferrari so I might be getting one of those with one of my HELOCS. Got a new credit card today too.
October 2nd, 2008 at 7:49 am
I know some of you were looking forward to the debates, but sadly I must inform you, the major networks have all preempted the broadcasts for a special round table discussion of two world leading authorities on housing.
Aaron Best and Rob Chipman will be debating several Yale and Princeton, professors on the mythological housing bubble.
This is a government sponsored effort to offset the recent cant touted by Robert Shiller through the Canadian media in his recent visit to Canada.
October 2nd, 2008 at 7:22 am
Monterey “Aren’t fire-walls usually made of concrete? In a 100% wood structure, wouldn’t you have fire-walls basically the first thing you put up after the foundation”
In wood frame construction firewalls are made of double ply fireguard drywall each side of wood studs, so they are not really finished (fire proof) until the units are ready for interior painting. At that time any penetrations of the firewall (pipes etc) would finally be sealed.
October 2nd, 2008 at 7:16 am
Quattro development up in smoke this morning. I think it was the last phase of it, trying to find some details.
Also – TSX down 451 pts early.
October 2nd, 2008 at 7:11 am
What’s a little freaky to me is that I am here predicting the Barclay will suffer the same fate as Quattro. I certainly hope nobody gets hurt or suffers hardship in Barclay… afterall that reno is partially occupied.
I really wonder if perhaps it’s the builder setting the place ablaze. I mean, he’s nearing construction complete status, realizes the bottom has dropped out of the market and is perhaps worried that the assignments might get dropped. Does he take the insurance money, and hope he can rebuild for even LESS in this market environment so that he can profit on the re-build too?
Probably, not, but lets ask another question. Aren’t fire-walls usually made of concrete? In a 100% wood structure, wouldn’t you have fire-walls basically the first thing you put up after the foundation? I’m (obviously) not a construction type, but it seems logical to me, so I wonder if this building even HAD firewalls.
Yikes. All I can say is Yikes.
October 2nd, 2008 at 12:40 am
This is such a disgusting act. What if firefighters or construction workers had died?
Whoever did this deserves to be publicly humiliated and jailed for years on end. Here’s to their capture.
October 2nd, 2008 at 12:29 am
I can understsand 1 apartment burning down, but how does the 2nd one “conveniently” catch fire?
Besides that, somebody tried to set another fire to the same building earlier on Monday:
“This is the second blaze at this location in the past two days.
On Monday afternoon, a smaller fire, which officials called “suspicious,” was set on the first level of what appears to be the same four-storey Quattro building at 13789 107A Ave.”
http://www.bclocalnews.com/news/30056284.html
It’s obviously a deliberate arson.
October 1st, 2008 at 11:27 pm
Don’t think you really meant to say it, but this reads like a drop in condo prices is conditional on a drop in land costs.
Land prices and/or cost of construction DO NOT set housing prices.
Not at all. What I am saying is that housing prices is the independent (in this context) variable. Land prices is the dependent. Cost of construction is the least variable factor, and is somewhat dependent (on level of activity) due to marginal pricing pressures.
In other words, land prices ought to be the delta between home prices and construction costs (including developer profit).
October 1st, 2008 at 11:09 pm
Condos could drop in half and it could still be profitable to build … IF land prices fall enough.
Don’t think you really meant to say it, but this reads like a drop in condo prices is conditional on a drop in land costs.
It’s the other way around – a fall in the market price for condos will lead to a decrease in land costs. Land sells only for what developers are willing to pay.
October 1st, 2008 at 11:04 pm
Developers are able to charge $600-$700 per foot for the finished product simply because previous projects have been selling well. It has less to do with the cost to build, and more to do with what the market can absorb at a given time.
Well since developers compete for buildable land, it is really that:
Going housing prices less cost of construction cost sets land prices.
Land prices and/or cost of construction DO NOT set housing prices.
October 1st, 2008 at 11:01 pm
Construction costs are around $150 per foot for downtown condos.
Still we see the oft repeated argument that prices will go up because costs of construction go up. Obviously it is garbage because:
1. The entire adjustment could easily occur in the land portion. Condos could drop in half and it could still be profitable to build … IF land prices fall enough.
2. As mentioned, the cost of construction FALLS when demand for housing falls.
October 1st, 2008 at 11:00 pm
Could someone post a link to Monterey’s spreadsheet? I can’t see it.
October 1st, 2008 at 10:10 pm
Construction costs are around $150 per foot for downtown condos. This does not include the land cost which varies a lot depending on the FSR. For a 30storey tower, I would estimate around $100 per foot for the land portion if it’s in or around downtown. A lot of buildings including the new Woodwards building are using made in China cabinets, fixtures, flooring, etc to save on construction costs. Developers are able to charge $600-$700 per foot for the finished product simply because previous projects have been selling well. It has less to do with the cost to build, and more to do with what the market can absorb at a given time.
October 1st, 2008 at 9:20 pm
Dowtown high-rise condo development site will cost between $220 to $270 per square foot of buildable area (say floor space ratio of 5.0 to 7.0 and times that by site area, say 15,000 square feet), plus/minus for location, etc. Construction costs (hard, soft, financing and holding) should be close to the same, depending on quality of finish. The rest is profit, which most developers want 25%. Development sites arn’t moving and construction costs have stabilized in last 12 months or so and likely to head down also with downturn.
October 1st, 2008 at 9:16 pm
Property’s value is based on it’s potential not on what is currently there, that piece of land is zoned for 4 stories in height and that is with setbacks both towards Robson and to the lane behind. You could not build 15 stories, if you could that piece would be worth roughly 4 times more. So you’re obligated to construct the ground floor as commercial that leaves you with 3 buidable residential floors but not at a full floorplate, bet that increases your costs a good chunk.
By the way the zoning info for sites is provided free by a handy program provided by the COV called vanmaps, you can even see previous assessments plus recent satellite photograhy. Great utility.
October 1st, 2008 at 9:02 pm
$3 million buys a 66ft lot at Gilford and Robson in the West End. I don’t know what the zoning is or how many stories one could build there.
Assuming one could build 60 suites (4x 600 sq/ft, 15 floors) each suite would use up $50K worth of land. OK, that is more then my 1st guess, but still does not come anywhere close to justifying a price of 500-600 sq/ft.
October 1st, 2008 at 8:54 pm
Land doesn’t cost anything to make. It’s already there.
Land sells for whatever builders are willing to pay for it, and can and does fall to zero if the market price of finished buildings falls to less than construction costs.
October 1st, 2008 at 8:28 pm
So, educate me. What are realistic land and construction costs? If sources for the information can be provided, that would be useful also.
October 1st, 2008 at 7:23 pm
There is no safe haven for real estate in Vancouver if the crisis in the U.S. worsens.
RE would be headed for a bust in Vancouver even if everything were okey-dokey south of the border. The numbers make no sense here regardless of any external factors.
October 1st, 2008 at 6:39 pm
http://vancouver.en.craigslist.....93755.html
“$211900 Smoking Quattro Deal (Whalley)”
Yikes, this was just put up yesterday, and ends with “Hurry!”
October 1st, 2008 at 6:22 pm
No way I expect my charges to decrease with the bust. Should have read NO WAY! I expect my charges to DECREASE with the bust. Sorry!
October 1st, 2008 at 6:19 pm
Dave “tjwappraiser, as are the construction costs. But let’s not ruin the fantasy. ” Dave old buddy you are right EXCEPT construction costs are based on demand. Although not in construction but more building operations / maintenance my fees have trebled in the last two years. Do I think this is my actual cost plus mark-up? No way I expect my charges to decrease with the bust. Right now I turn away far more contracts then I can possibly full fill as I can’t find the experienced staff. Do I think I’ll be making these rates in two years? Not a chance. Bubble owners pay bubble costs, construction costs will nose dive with real estate prices.
October 1st, 2008 at 5:57 pm
Bad News, NO INSURANCE COVERAGE…..news said a worker said someone wanted the buildings destroyed and had attempted this before.
October 1st, 2008 at 5:52 pm
Wow, desperate, desperate, specuvestor:
“This is the second fire at this location in the past two days.
On Monday afternoon a fire, which officials called “suspicious”, was set on the first level of a four-storey building currently under construction at 13789 107A Avenue.
The fire was extinguished by site personnel before it caused any major damage.”
http://www.bclocalnews.com/news/30056284.html
October 1st, 2008 at 5:28 pm
So we did a poll of all our major developers the last two weeks: alomst every one has dropped prices 4-10%. The only ones who have not dropped prices are those with existing presales that have yet to close (they don’t want to piss off the existing presales). Also, they’re trying everything they can to reduce prices without actually reducing list price (free TVs, etc).
October 1st, 2008 at 5:14 pm
“Any bets as to how deep that developer was in the red?”
I don’t see how setting a fire is going to help. They still own the land and any insurance they have will cover construction costs to date and cleanup only, not much more.
October 1st, 2008 at 5:04 pm
Huge fire in Whalley condo development this hour. Any bets as to how deep that developer was in the red? Any thoughts on if the media will ask that question?
October 1st, 2008 at 5:00 pm
west end fair price is $250 sq. ft.
buyers strike in effect until this metric is reached… you heard it here!
October 1st, 2008 at 4:38 pm
“But let’s not ruin the fantasy.” I guess Dave can relate to fantasy, because we all know how much he is enjoying his fantasy as the local spurious RE bull.
October 1st, 2008 at 4:31 pm
Quattro Developments..hmm could it be angry speculators who realized that a condo across from a porn shop and methadone clinic is NOT going to be worth a million dollars upon completion? Seems a little suspicious…or maybe I’m just too cynical ;p
October 1st, 2008 at 4:22 pm
Something big is burning in Surrey. I wonder what it is.
October 1st, 2008 at 4:08 pm
You should remove the spreadsheet author’s name and employer from its properties.
October 1st, 2008 at 3:49 pm
tjwappraiser, as are the construction costs. But let’s not ruin the fantasy.
October 1st, 2008 at 3:35 pm
Alan
You are way out on your land value. By way out I mean completely out to lunch.
October 1st, 2008 at 1:05 pm
Construction costs are what < $200 sq/ft?
A few million in land value divided by a hundred or two suites adds what? $25 sq/ft?
Sounds better value to get together with 100 of your closest friends, buy a couple of lots and hire a contractor to build it for you!
October 1st, 2008 at 1:02 pm
Great data thanks for all the work.
I agree on the Barclay a dark dank looking holes ready to be broken into.
What do people think a realistic price per square foot will be in the westend?
October 1st, 2008 at 12:59 pm
Ha, I love it! Monterey, your comments show that you are afflicted with the same bug as I. It is the oddest thing but when you watch and update the same properties day after day, it is almost as though you begin to sense each seller’s strategy and how many either do not understand economics, the psychology of sales, or cannot unhinge their emotions from their investing (most likely).
Comparing houses in N.Van, where I would like to buy eventually, is challenging as each has its own perks and problems; these apartments downtown are great to compare as they are like a stack of egg cartons, all identical – with multiple units for sale in the same buildings, every price drop is mimicked by the other units, any buyer watching this knows all they have to do is sit back and enjoy the show; it’s a dutch auction with no reserve!
October 1st, 2008 at 12:25 pm
Downtown condos are just going to get wacked with the ongoing financial crisis and eventual economic downturn that is coming.
There is no safe haven for real estate in Vancouver if the crisis in the U.S. worsens.