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October 16th, 2008 at 10:11 am
There are simply too many condo developments that are flooding the market with supply. The city is drowning in a glut of condo developments and nobody is buying because of the impending recession and layoffs to come.
The smart specuvestors have already cut their price agressivley to sell as quickly as possible. The not so smart specuvestors are losing thousands of dollars every month, watching their life savings go down the drain.
October 16th, 2008 at 10:00 am
Bob Rennie. From what I think he is doing ok even in this downturn. He had signed 2 or 3 years deal to market a condo project for development. He is collecting fees whether or not the Condo are selling.
His operations is very flexible in terms of expenditure. He may earn less commission, but should be doing ok if he doesn’t hold a lot of inventory himself.
he’ll be probably the first one to unload his inventory, since he is in the know than all of us here.
October 16th, 2008 at 9:58 am
Lehman probably would have backed out anyways, even if they didn’t go bust. For the last 6 months, Lenders have been exercising their escape clauses, even with signed commitment letters – this has put many more deals in jeopardy than has been advertised. Commercial properties will be next in line for the chopping block. Too many bought in at low cap rates, expecting “normalized” returns.
October 16th, 2008 at 9:34 am
Dingus, seems pretty upset with all this talk of real estate. Seems odd that he would be posting his comments on a real estate/condo website (ie.. maybe your more interested into this topic than you let on).. and as for a big ass crash.. don’t forget that behind all those losses is real people, and serious problems associated with a crash. However saying that, a crash or correction will bring the market to a real level where average people can afford their mortgages and banks won’t go crazy with glee handing out money. Just too bad so many might lose while others gain..
October 16th, 2008 at 9:17 am
High density is OK if we make sure we have the infrastructure and amenities support it. Places like Whalley and New West probably don’t have it and can’t charge developers enough to get it. I see slums.
October 16th, 2008 at 9:12 am
NO -LYMPICS Says: October 16th, 2008 at 8:28 am
“The real estate disaster is fathered by the SkyTrain.”
I have to disagree with you here. Density is best for Vancouver long-term, and increasing density around mass-transit is just what we should be doing.
I don’t mind municipalities putting out too many permits, that just improves affordability. What I don’t like is municipalities issuing permits for low density and/or areas not connected by mass transit, thereby increasing urban sprawl.
October 16th, 2008 at 9:05 am
Apparently there are several local developers looking to take over this project; the problem is Lehman Brothers is not interested in returning any phone calls.
October 16th, 2008 at 8:29 am
“when “Cab driver’s ,housewifes, firemen, and BC Tel employees” are building houses…. time to get O-U-T.”
It’s a frickin’ cult in this city. Close friend of mine, a marketing manager who worked construction summers when he was in undergrad, just started on a spec house. Nice timing. As you say when Joe Everybody jumps in, the top is in.
I’m hoping for a big-ass crash for the simple reason that I am sick to death of real estate being the core of the culture in this town. Every conversation here ultimately turns to the market, to renovations, to who bought what house on what street, blah blah blah. Going to parties and listening to someone blather on excitedly about where to get cheap cedar shingles, or how to fix cracks in a foundation, or tips and tricks on redoing hardwood floors, or gee it’s so hard finding good tenants. It’s just sooooo BORING. Is there nothing else going on here? I like living here, but having to tune out the real estate obsession is driving me insane.
October 16th, 2008 at 8:28 am
The real estate disaster is fathered by the SkyTrain.
Councils are scrambling to change their OCP’s to convert land near SkyTrain to Hi Rises. If the average Hi -Rise needs about an acre of land..that same acre could support about 20 condo units…or several hundred condo units in the Hi Rise.
Councils rake in the revenue,claim they are going ” Green “, and printing building permits like Germany printed money in the 1930′s. Remember, the Councils rake in the DCC $$$ before the project is even started….so it is in their interest to process each Hi – rise application. A few towers can total several hundred units…several towers can total a few thosuand units.
Should Councils act as gatekeepers and perhaps limit the permit numbers ? I don’t think that will ever happen, they tend to be the greediest bunch whoever is in office.
Follow the money…and SkyTrain…connecting the dots is pretty straight forward.
October 16th, 2008 at 8:14 am
As my own indicator, I think the best canary in the mine is Oil prices. I think this $150 was the tipping point that pushed the economy into the abyss. This forced people to change various spending habits , which resonated through the economy like a bad virus. Oil companies and oil speculator’s , in my view, tend to mount a periodic attack on the world economy like drunken pirates, consequences be damned.
CNN is also a good source. What amazes me re: the Real Estate are the foreclosure stories in the U.S. One couples house had a value of $160,000 and was auctioned of at $20,000. However, the bank did the dirty work of foreclosure,ie acting as a sheriff/bailiff, but wasn’t the lender.
You would thing they could scrape enough coin together to buy the house back at $20,000, but maybe that’s also a sign of how bad it is in the US if they were eligible to buy a house and what ended up to be a very inflated price.
October 16th, 2008 at 8:06 am
The $25 billion that Harper put into the Canadian banking system seems a little suspicious these days. The banking system itself says it doesn’t really need the money because they are in such fine shape, but they took it anyways.
This smells a little like what the US banking system was preaching in the not to distant past.
My guess is that the $25 billion will be needed to lend out for “current business as usual” practices while the banks try to figure out what to do with their very well hidden “off the books” derivative debt that would alarm the general public if they knew the real scope it’s size.
The banks, with the help of taxpayers money, will try and unload this bad debt over many,many years through higher interest rate margins and fees etc.
October 16th, 2008 at 8:04 am
If we had laws limiting the number of permits granted,
That’s backwards. Restricting supply would encourage even more speculation. The more elastic supply is, the sooner speculative demand is exhausted, and the fewer the opportunities to make speculative profits.
The other part of your argument is correct. Restricting financing reduces speculative demand.
October 16th, 2008 at 7:58 am
Vansanity:
Good comments, and I guess the most appropriate saying is “You can’t cheat an honest man”.
I think the first warning sign was the real estate orgy in the late 1970’2 /early 1980′s when property values shot up, and interests rates hit over 20%. Anecdotes include one person telling me that in a hot market they would simply drive up to the property and buy it from the sidewalk, not go inside and kick the tires at all.
When Hong Kong wave came over…a whole new market dynamic kicked in….offshore investment and pre-sales. It appears that Gov’ts and Banks wanted to avoid the 20%+ interest rates , and manipulated the money suppply via offering low interest rates. This almost forced people to try to “keep up” by extending themselves , living on credit, and speculating. BAD!
Any viable economy depends on stability and predictability.
We don’t have that, it’s time we did. I think it is clear the the dreaded “R” word will resonate more ie “REGULATION”.
October 16th, 2008 at 7:36 am
Sorry, that was me. Why does WordPress do that, anyway?
October 16th, 2008 at 7:34 am
Gold getting hammered out there, flirting with $800. Randallbard: You know all about gold, what is going on? Is this just to scare off the non-true believers before it rockets to $2000?
October 16th, 2008 at 7:11 am
Another one bites the dust…
Talking to a few people closely affiliated with the construction industry, the sentiment is the same: The party is over. Developers are feeling the heat, we all saw profit margins disappear about 8 months ago. Seeing them file for bankruptcy protection now is no surprise.
Supply has exceeded demand, as is the case in any speculative market eventually. We watched speculators camping out in the street to buy a presales. It was common to hear of people owning 7 or more properties. What once was a “sure fire bet” has now become one of the riskiest investments of their lives, with borrowed money to boot!
When these projects wrap up though, that’s when the s*** will really hit the fan. When construction goes from employing 225,000 down to 150,000 or less next fall, what industry will absorb all the unemployed? Are you as tired as I am of boom-bust economies, and greed fueled speculation? If we had laws limiting the number of permits granted, or maintained stricter practices with lending or speculation in commodities, I doubt we would be in as big a mess as we’re currently in. The system encourages it.
October 16th, 2008 at 7:02 am
70 out of 248 downtown listings at unique accommodations are vacant. That’s a good indicator of a 28% REAL vacancy rate for “high end” condos. They are EMPTY which = NO income. As these are an example of individual landlords these units are not counted in rental stats unless one owner has more than three under the same name. I think our “low” vacancy rate is total BS.
October 16th, 2008 at 6:42 am
Olympics canceled, get real chicken little.
October 16th, 2008 at 6:34 am
I think “Infinity” is the tip of the iceberg. BC was ” built” by a local mafia of developers… but it seems that everyone and their dog has jumped onto the building bandwagon. I recall a seminar I attended on contracting to build one’s own house… and the builder that taught the course said that when “Cab driver’s ,housewifes, firemen, and BC Tel employees” are building houses…. time to get O-U-T.
The local mafia of builders can likely control their own fate with street smarts re: the local market…but the wannabees can easily screw up the market. Too much money was pumped into a market based on speculation…and if 150 year old Lehman Brothers were the backers of infinity and they collapsed, how many fly by night firms were backing these wannabees? If “Infinity” couldn’t get financing from local banks in a hot real estae market, there was your first warning sign that maybe the banks knew something waaaay back .
Again, I sense the floodgate opening…and if I had a condo still being built….I’d be crapping right now, regardless of the builder
October 16th, 2008 at 6:14 am
Gordo wouldn’t mortgage the province. He’d just lease it out. For a 1000 years. Full payment up front (that’s how a “lease” is commonly arranged, isn’t it?).
Actually, I’m a little less worried about security costs than I was. With the troubles coming on strong nobody will come to guard against. TV audiences can’t throw things>
October 16th, 2008 at 6:14 am
All of the buyers deposits are protected by statute governing trust accounts, so the people need not worry. Further, if buyers wish to “back out” of their obligations, any major change to the development requires a disclosure statement amendment setting out the change in detail. I’m not certain if the change is is of such a nature that it would allow for rescission, but probably so. Finally, it was only a matter of time before this happened. Based on escalating building costs and Infiniti sale prices at the time, the developers were probably looking to re-coup some profits on the subsequent buildings as didn’t make a dime on the first 2. Over 50% of their buyers were investors who chose not to close on their contracts after they realized they could not re-sell their contracts, and this did not help matters either. A very unfortunate situation, but a recipe for financial disaster given a development of this size.
October 16th, 2008 at 1:11 am
World War III or Mad Max.
Gordo’s party will go on come hell or high water, even if he has to mortgage the whole province. That’s pretty much what happened in Montreal after all.
October 16th, 2008 at 12:36 am
An opportunity for wild speculation: how bad would things have to get for the Olympics to be cancelled?
October 15th, 2008 at 11:21 pm
“bdk Says: October 15th, 2008 at 5:45 pm
Yowzer! Japan is down over 10% in early trading. It’ll be a bloodbath on the North American exchanges on Thursday”
I didn’t write that, sometimes this blog populates a different user name.
Well said Bearette, the nicer areas of downtown are in trouble what’ll happen to highly speculative purchases of new units in Canada’s poorest postal code that also has the highest rate of HIV in the developed world.
Seriously would you want your partner walking around there at night? or your family?
Going to the Cambie pub with a bunch of friends is one thing….
October 15th, 2008 at 10:52 pm
how much Hee could a Hee Yong Yang if a Hee Yong could Yong Yang?
October 15th, 2008 at 10:33 pm
I just can’t wait til those W units are completed and the flippers try to sell them…into this bottomless-pit market. Why buy in a crack den when you’ll soon see the same prices in Kits?
Bob Rennie’s “a thousand people must be wrong if one blogger is right (VHB)” quote is going to come back and bite him … hard.
I think after the Vancouver SHTF Rennie is suddenly doing to be offered “an incredible marketing opportunity for a new business venture” somewhere nice and remote.
October 15th, 2008 at 10:22 pm
“Any guess to what projects are next to run into trouble?”
Maybe the DeGelder project in New West, Marinus at Plaza 88 or whatever its called. I’ve heard vague rumours of trouble.
October 15th, 2008 at 10:06 pm
Another on-line story refers to this project’s financing being supplied by …..drum roll…Lehman Brothers.
Since Lehman Brothers collapsed, the financing for Infinity has dried up and they can’t pay the bills.
Everything else seemed to be running fine.
The only problem is , in this current market crisis, who is going to fund ANY project, regardless of the so -called positive aspects.
In my view the key was financiers such as Lehman Brothers being author of their own demise in Catch 22 , and effectively creating a glutted and overpriced real estate market by financing much more supply than any realistic demand could absorb, again via very poorly regulated financing of bad credit risks.
October 15th, 2008 at 10:03 pm
bdk Says: October 15th, 2008 at 5:45 pm
Yowzer! Japan is down over 10% in early trading. It’ll be a bloodbath on the North American exchanges on Thursday.
I’m not too familiar with the markets but, looking at the charts, aren’t the North American markets followed by the rest of the world instead of the other way around? The Asian markets hadn’t tanked this week until now, after the US.
Happy End of the 0/40 Day!
October 15th, 2008 at 9:44 pm
I think the Vancouver Olympic Committee Should put up the money and buy the project.
When all those wealthy visitors from all over the world come and visit us in 2010, they will buy the little leaky boxes, oops I mean condos.
The profits can be used to offset the security costs which should come in at just under a $Billion.
October 15th, 2008 at 9:44 pm
Gadwin wrote:
>Nope, according to this news release, the developer ran >into trouble with the credit tightening:
>‘Robert Millar, lawyer for Jung Developments and Hee Yong >Yang says “Yang has been adversely impacted by these >changes and world wide tightening in the credit and >financial markets.”‘
>source: http://www.news1130.com/news/t…..4519_22272
I’m not really sure what Millar means (seems like everyone is using the global credit issue as an excuse). I do know that Infinity’s issues started way before the global economy tanked.
October 15th, 2008 at 9:27 pm
MY stocks down 40+%
mutual funds down 30+%
(Canaries in the coal mine)
Main holding is cash earning 4% waiting to buy my house at minimum 30% off
Im with others that have been on this and the VHB boards that have had to listen to friends, family and co-workers tell me over the last 4 years how real estate is a sure thing/cant lose. I don’t wish these people close to me any harm and certainly don’t control the outcome but wow vancouver housing prices are going to get ugly. It will start to get really bloody next spring/summer and continue to ???. Glta
October 15th, 2008 at 9:24 pm
I bet in a few years, leaking problem will emerge in the first tower; I would not be surprised if they used some sub-standard materials to cut costs in order to complete it.
October 15th, 2008 at 8:55 pm
Any guess to what projects are next to run into trouble?
How about ‘mantra’ or ‘pulse’ in kits..
And what ended up happening with the financing trouble at the olympic village?
October 15th, 2008 at 8:40 pm
My prediction is most projects that are already above ground will be completed but some will have difficulties and someone with lots of money in the bank will be picking up the worse off ones for a song and a dance.
The projects that aren’t started yet will all be re-evaluated and probably delayed, only the well financed and thought-out projects will still advance, the rest will be deferred until the next boom whenever that is.
October 15th, 2008 at 8:34 pm
Any guess to what projects are next to run into trouble?
October 15th, 2008 at 8:31 pm
Everybody stay calm and cool unless you have unloaded your life savings into this investment. Patience always prevails
October 15th, 2008 at 6:43 pm
If anyone has bought an apartment from Infinity please
call this number 604-609-5800.
News
October 15th, 2008 at 6:20 pm
There seems to be some confusion on this project, Jung sold it off quite a while ago, the project is now owned by Young In Developments. The Media should do a little research before breaking a story.
Lets see how this plays out, I agree it doesn’t sound good though.
October 15th, 2008 at 5:49 pm
Maybe someone read this article here.
October 15th, 2008 at 5:45 pm
Yowzer! Japan is down over 10% in early trading. It’ll be a bloodbath on the North American exchanges on Thursday.
October 15th, 2008 at 5:43 pm
Remeber the stories of all of those South Koreans who have been buying up westside SFH the last few years? I wonder how long until those folks are net sellers rather than net buyers?
October 15th, 2008 at 5:40 pm
I heard that the first tower (which is occupied) was built by a different developer because the 1st guy ran into trouble.
It wasn’t long ago people would have argued that it was a good investment, what a difference a few months make.
Even the Perma Bull idiots like Krrrrrrish and Dosh are hiding now.
October 15th, 2008 at 5:39 pm
T-1000 wrote:
>I believe the developers are Canadian residents and used
>their own equity + those of other residents/institutions.
>So I don’t think it’s a question of cathing S. Korean’s
>flu (although Korea does have its own severe debt issues).
Nope, according to this news release, the developer ran into trouble with the credit tightening:
‘Robert Millar, lawyer for Jung Developments and Hee Yong Yang says “Yang has been adversely impacted by these changes and world wide tightening in the credit and financial markets.”‘
source: http://www.news1130.com/news/t.....4519_22272
October 15th, 2008 at 5:35 pm
Gadwin mentioned Korea’s troubles. Yes, I guess news like this could make one lose interest in a development halfway around the world.
October 15th, 2008 at 5:32 pm
I believe the developers are Canadian residents and used their own equity + those of other residents/institutions. So I don’t think it’s a question of cathing S. Korean’s flu (although Korea does have its own severe debt issues).
October 15th, 2008 at 5:30 pm
You can still live the lifestyle, just with fewer showers.
Except this is Vancouver. In the fall… Lots of showers….. Oh, you meant HOT showers. Never mind.
October 15th, 2008 at 5:08 pm
Look on the bright side, if you’ve gone broke speculating on condos at least now you can legally camp in a city park close to cafes and everything. You can still live the lifestyle, just with fewer showers.
October 15th, 2008 at 5:04 pm
Wow, the financial meltdown in South Korea finally hit Vancouver’s shores. It’s a testament to how severe this financial crisis really is.
Those specuvestors that bought in Infinity might have gotten lucky if they can pull out of their pre-sale contracts.
As for the other specuvestors out there that are stuck in bad pre-sale contracts, remember to cut price fast when your unit hits the market if you want to offload a bad gamble.
October 15th, 2008 at 4:59 pm
It looks like Infinity was more finite than originally expected. Does ‘bankruptcy protection from creditors’ mean that pre-sales buyers can’t back out of their contracts without losing their deposits?