Trouble in New Yaletown
It looks like all is not going according to plan in Surrey’s efforts to turn Whalley, a neighbourhood known for its crack dealers and methamphetamine users, into a new Yaletown. There was the massive fire that destroyed phase 2 of the Quattro development and then there was last weeks story about money trouble at Infinity, the largest housing project ever built in Surrey.
Surrey Mayor Diane Watts and Quattro developments principle Charan Sethi held a meeting with buyers this weekend to update them on the current situation. The uncertainly and delays in completing these large projects comes at a time when house and condo prices are declining adding more stress to buyers, some of whom are trying to get out of their presales contracts.
But Sethi disappointed buyers who hoped the development company would buy units back from investors who wanted out. He said that wasn’t an option. And he was unable to provide buyers with a solid timeline on move-in dates.
“We are desperate. We are homeless,” said buyer Carol Lobo, in an emotional confrontation with Sethi. “When can we move in?”
“Trust me,” said a smiling Sethi. “Give us another 10 days and we’ll have a better idea.” The answer wasn’t good enough for Lobo, who came to the meeting with her two-and-a-half-year-old daughter. “We don’t have anywhere to go.”
Lobo was looking for other answers as well. “What about damage from the water, will the condo be toxic? What about another fire, and security?”
Concerns about further delays or cancellation of these project is being dismissed by the developer and financial backers.
RSS 2.0 comments feed. Both comments and pings are currently closed.Greg Sprung, senior vice-president and regional general manager for Canadian Western Bank, reiterated the bank’s commitment to work with the developer. “We’ve been with the project from the beginning and we intend to stay with it until the end.”
However when The Vancouver Sun asked what might happen if future buyers lose confidence in the development, or in the face of continued declines in the real estate market, he was less reassuring.
“That’s something we would have to deal with at the time. We approve phase by phase. Projects do get put on hold due to market slowdowns. I don’t know anyone that would build something for which there is no demand.”
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Crash Says:
October 20th, 2008 at 11:11 am
My prediction: Quattro will not be rebuilt and the buyers will get burned (please excuse the pun).
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patriotz Says:
October 20th, 2008 at 11:40 am
No actually if Quattro is rebuilt the buyers will be burned.
If it’s not they will have to be given their deposits back.
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jesse Says:
October 20th, 2008 at 11:53 am
Deposits, paid back with interest. Probably one of the best investments going.
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jesse Says:
October 20th, 2008 at 11:57 am
CBC is reporting that Quattro condo project will be rebuilt: developer
More money for lawyers and still no easy exit for depositors. What’s the bet they have a full time crew continually hosing down the new development 24 hours a day?
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Gadwin Says:
October 20th, 2008 at 11:57 am
Too bad for all those specuvestors hoping to get their deposit back. Now that the construction of all their units are delayed, by the time their units are ready, the market will have tanked that much more!
And when those units are released to the market, they will just add more supply to unsold glut of inventory. These specuvestors will probably lose 50% of what they paid for by the time their units are ready.
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jesse Says:
October 20th, 2008 at 12:11 pm
“These specuvestors will probably lose 50% of what they paid for by the time their units are ready.”
Don’t forget leverage. Try 200-300%+ losses with recourse. Ouch.
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pricedoutfornow Says:
October 20th, 2008 at 12:23 pm
Too bad, so sad. Hard to feel sorry for them though, that’s the price you pay for being a speculator!
For those who say they planned to live in the units…I think “why?” Did they realize that Quattro is in the worst area of Whalley and is right across from 1)a porn shop 2)an early-morning “pharmacy” aka methadone clinic 3)a body rub place and 4)various dodgy-looking bars within a block. Hmm…not the best place for raising children, I would think. That woman who says “we are homeless, we have nowhere to go” I simply don’t get, as far as I know Quattro 1 wasn’t going to be occupied until Christmas. Does this mean that there are thousands of presale condo owners living on the street waiting for their condo to be completed? That would put a whole new perspective on the market now wouldn’t it?
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Anonymous Says:
October 20th, 2008 at 12:36 pm
not related to surrey, but aren’t these guys also the ones involved in financing the olympic village? not a good sign for the olympics, i think
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Anonymous Says:
October 20th, 2008 at 1:15 pm
Why doesn’t VANOC just build some more condos to pay off Fortress’s debt? Someone get Bob Rennie up there, STAT!
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NO -LYMPICS Says:
October 20th, 2008 at 1:25 pm
I am curious as to the story behind the story, if any.
The Quattro Builder must have been insured for loss prior to completion, the bank would have insisted on it, wouldn’t it ? Then what is the actual coverage…the losses to that point or more ?
Then one wonders why they are actually intending to rebuild …has anyone thought about collecting the insurance (if possible) , refunding the buyers deposits , and then putting the project on the backburner till market conditions get better ?
Not much of this makes sense or adds up, it almost appears as if the builder is obligated to continue in some cost versus benefit analysis even in a collapsing market. We had a similar incident in our area where some arsonist scouted out a project and torched it…it took a long time to settle and then re-commence construction…the only benefit was that the economy was also “heating up” and the builder probably made more money later in the hotter market due to the delay. However, the exact opposite will happen with Quattro in a slow market.
I am very curious as to how many Quattro units are “sold” and how much money in downpayments is on deposit ? It might also be very useful to get a copy of the sales agreement and see how and why these buyers are so locked into this agreement
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jesse Says:
October 20th, 2008 at 1:42 pm
“I am curious as to the story behind the story”
The developer makes a profit by making the land productive otherwise he makes no money plus and holding vacant land (bad). The fact the development is sold out well before completion — by no means a sure thing — means there are profits on the table.
Why wouldn’t the developer want to complete in such a situation?
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Strataman Says:
October 20th, 2008 at 1:53 pm
“The Quattro Builder must have been insured for loss prior to completion, the bank would have insisted on it, wouldn’t it ? Then what is the actual coverage…the losses to that point or more ?” Typical builders insurance is not a cash payout but rather payment of work completed to re-build.Similar to ICBC for partial damages, they don’t give you the cash they go out for a repair/rebuild and pay the contractor. I suspect that no rebuild means no insurance pay out.
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NO -LYMPICS Says:
October 20th, 2008 at 2:10 pm
That’s whay I am asking the question. How secure IS their(developers) investment ? I am fully aware of their costs to date( as you say land costs etc. ), probably a pile of $$$’s in DCC’s already paid, but is Quattro in fact “Sold Out” ? , and what does sold out mean with respect to this project ?
Worst case scenario…if people who bought can’t or won’t complete ,..and they bail en masse in the next month , will the developer even bother to rebuild ? It’s best to eat a small loss versus a BIG one. I think it is fair to say that the money referred to won’t be refunded is the “deposit” money only. It seems these Quattro buyers are not all that sophisticated and never heard of the 3 rules of Real Estate ie (i)Location (ii) Location (iii) Location … and only now are seeing what the neighbourhood is really like. These types may also find it hard to part with a downpayment, too stubborn, when other more sophisticated people may not hesitate to walk away. The Developers must have been full aware of the nature of the market, a lot of speculation in the buyers pool, so no sympathy when the house of cards collapsed as they inevitably do.
This Quattro project is secure only if all monies owed are paid in full , …..if not, it ain’t (and don’t sneeze !) I think the developer is in a Mexican standoff with the purchasers…he has to make the first move and pursue this path, and we’ll see who blinks first.
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Drachen Says:
October 20th, 2008 at 2:16 pm
“putting the project on the backburner till market conditions get better?”
I’m sure they thought about it, then they realized that they’d probably all be dead before conditions get better.
We are ending a once in a lifetime bubble, it’s unlikely any of us will see these prices again.
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Alexas Says:
October 20th, 2008 at 2:29 pm
Back on Track
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NO -LYMPICS Says:
October 20th, 2008 at 2:49 pm
Curiouser and curiouser…
I was wondering why Quattro had the Mayor Watts in attendance at yesterday’s meeting , was a bit unusual . Found an old Vancouver Sun story from March 2007. Apparently Surrey reduced its DCC cost by 60 % to kickstart development in the Whalley area. I guess the City’s ass is in a sling too. Lot of ego and other political equity in all this and the need to make it happen
FYI:
re Quattro
Phase One : 140 units starting at $114,000
Phase Two : 116 units averaging $ 215,000
Future Phases. 1150 units
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Clam Chowderhead Says:
October 20th, 2008 at 2:52 pm
As much as I don’t like this project and the location, I can’t see why any buyers would want to walk. Maybe I’m wrong but wasn’t this the project that was selling for $129K and up for Phase 1? Even with the downturn I imagine any of the speculators on this project could still walk away with sizeable profit. Well maybe not sizeable anymore but profit none the less. Can anyone confrim what the purchase prices were? I have a hard time pictures current market prices are below that.
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Clam Chowderhead Says:
October 20th, 2008 at 2:54 pm
Sorry looks like it was $114K and up, I don’t know the Surrey market well enough to gamble on it, but it would seem to me that they could sell today for more then $114K no?
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Drachen Says:
October 20th, 2008 at 3:28 pm
Clam Chowderhead
They are not complete today. They will be complete in several years when similar condos in Yaletown are selling for less than 100k.
For comparison, in Montreal a newish condo right downtown will set you back 80k. This is realistic pricing and this is the future of Vancouver. Condos in realistic markets start at under six figures, often way under.
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Strataman Says:
October 20th, 2008 at 3:36 pm
clam “but it would seem to me that they could sell today for more then $114K no?” I don’t know a lot of the present buyers expressed concern at the conferance that even if this phase is redone and finished they had bought into the total redevelopment of the area, that would mean to me that any reduction even in stages not started in this and other projects would decrease the apparent value irregardless of the market. Those prices in that area without the complete redevelopment will be ridiculous and many other areas in Coquitlam and Burnaby will be in the same price range and far better areas.
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ILoveING Says:
October 20th, 2008 at 3:49 pm
“They are not complete today. They will be complete in several years when similar condos in Yaletown are selling for less than 100k.”
Yaletown condos for less than 100k. I’ll take 10 and so will anyone else with half a brain which is why the prices will never fall to that point.
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Anonymous Says:
October 20th, 2008 at 4:07 pm
Yaletown condos for less than 100k. I’ll take 10 and so will anyone else with half a brain which is why the prices will never fall to that point.
All those condos are just duplicated cardboard cutouts of each other. They have no identity and they are all the same. So when the owner cuts price of one of them and it doesn’t sell, that price cut drags down all the rest.
Have you even looked at all the new condo developments in downtown? Owners are getting desperate and cutting the price left and right but they still aren’t selling. Downtown is flooded with condos but the buyers have all disappeared.
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exx Says:
October 20th, 2008 at 4:32 pm
From Maggie’s blog – these are stats for last month.
There is a 5 month supply of Vancouver Downtown condos under $300,000. A 6 month supply between $300,000 and $400,000. 22 months of supply between $400,000 and $500,000. Over 3 years supply for condos between $500,000 and $1 million and over $1 million there is a three and a half year’s supply.
Good thing there are still Condo’s being completed or we might run out.
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NO -LYMPICS Says:
October 20th, 2008 at 4:40 pm
There ya go…
When one compares prices of condos…the obvious variable is the land costs( Surrey versus Vancouver), assuming the materials and labour are the same . Selling a condo in Surrey at $114,000 shows you what the land must have sold for, and in a hot market at the time ,….unless it was a long term holding.
Shows you how much gouging and pimping is going on by spec builders seeking spec buyers , all collectively trying to cater to a pseudo -wealthy clientele that has turned tail and bailed out.
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Drachen Says:
October 20th, 2008 at 4:43 pm
ILoveING
“Yaletown condos for less than 100k. I’ll take 10 and so will anyone else with half a brain which is why the prices will never fall to that point.”
Yes, you put that exactly right. People with half a brain believe that price would be a steal. People who are a little smarter know better.
So tell me, why should a condo in Vancouver be worth significantly more than an identical condo in Montreal?
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arit Says:
October 20th, 2008 at 4:52 pm
“Yes, you put that exactly right. People with half a brain believe that price would be a steal. People who are a little smarter know better.”
Bravo!
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Lager not logger Says:
October 20th, 2008 at 5:04 pm
I’ll take 10 and so will anyone else with half a brain
That’s assuming someone with half a brain can get their hands on 1 million in cash or financing, I hear its not so easy these days.
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Gursk Says:
October 20th, 2008 at 5:26 pm
So tell me, why should a condo in Vancouver be worth significantly more than an identical condo in Montreal?
Because people believe that the Vancouver condo is worth more and barring a correction larger in magnitude than any in history, they will continue pay more for it.
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bdk Says:
October 20th, 2008 at 5:35 pm
Gursk,
are you saying that due to a high perceived quality index will cause prices to increase despite being unprofitable to rent and costing over two times as much to own (versus renting) while depreciating on a daily basis simply because their owners believe they are worth more?
Does this mean the seller controls the sale price?
Please elaborate on your theory I’m obviously not getting it.
Thanks,
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blueskies Says:
October 20th, 2008 at 5:40 pm
Yaletown condos for less than 100k. I’ll take 10
no you won’t .. given your inadequate resources you won’t be able to leverage even 1… your dreams of RE mogulhood are about to be shattered…..
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blueskies Says:
October 20th, 2008 at 6:10 pm
according to the scuttlebutt over on rob’s blog sales registered today for Metro Van is
zero….
nada…
zilch….
zip…
i’ve run out of negative superlatives
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Drachen Says:
October 20th, 2008 at 6:24 pm
Gursk
“barring a correction larger in magnitude than any in history”
Bzzzt! Wrong answer.
1) There have been plenty of corrections larger (albeit not in Vancouver real estate).
2) There has been no bubble as big in Vancouver real estate history, an unprecedented rise sets the stage for an unprecedented fall.
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Drachen Says:
October 20th, 2008 at 6:26 pm
“zero….
nada…
zilch….
zip…
i’ve run out of negative superlatives”
Here’s some more.
Bubkiss
zippo
nil
goose egg
Krrish’s IQ
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Bubble Lad Says:
October 20th, 2008 at 6:30 pm
news from Whistler:
http://www.canada.com/vancouve.....6ce2f5b0eb
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Markoz Says:
October 20th, 2008 at 7:20 pm
Gursk has hit on what I believe is a relevant point. People in Vancouver believe in real estate the way fundamentalist Christians believe in Jesus. I personally think real estate will not correct as much as it should simply because there are many people (at least in my acquaintance) who would consider that a drop of 20% would make Vancouver real estate a bargain. It wouldn’t be, but if enough people believe it (and have access to money)…
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patriotz Says:
October 20th, 2008 at 7:51 pm
To hold prices above rent equivalence, you need an continuing supply of dumb money – i.e. money that will be invested without yield – because investors can be paid back only by the entry of new investors willing to pay a higher price (greater fools), rather than by yield.
For this reason prices cannot stabilize at a point above rent equivalence. They have to keep rising, or they will start falling.
Even if everyone in Vancouver were willing to keep buying indefinitely, they would necessarily run out of financing at some point.
Meanwhile you have an unlimited supply of new condos.
It’s a pyramid scheme and must collapse. And it has collapsed.
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Krish Says:
October 20th, 2008 at 7:55 pm
“it wouldn’t be, but if enough people believe it (and have access to money)… ”
How many of your acquaintances make $150,000 a year who don’t already own real estate?
Do you have 10,000 friends who’re going to buy the new supply and do they have enough friends to cover all the already completed inventory?
Do all of them have perfect credit and are they prepared to wait 35 years to make a profit on the rental?
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Drachen Says:
October 20th, 2008 at 7:57 pm
Markoz
“I personally think real estate will not correct as much as it should simply because there are many people (at least in my acquaintance) who would consider that a drop of 20% would make Vancouver real estate a bargain.”
The same thing has held up every bubble since tulips. They’ve all crashed back to fundamentals. There probably are people who will be fanatic in their belief and continue buying on the way down. There always are. But, if demand is at 90% of normal levels and supply is at or above normal levels prices will drop, that’s how things work. It doesn’t take zero demand for prices to fall.
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Brittanny Says:
October 20th, 2008 at 8:12 pm
Vancouver condos are a long ways from the bottom. The US hasn’t even hit bottom yet and we are just getting started. The credit crisis has not really even begun to effect consumer spending yet. China and India are starting to unwind with signs of lower growth. This will be the largest global decline in history. In a few years no one will even be talking about real estate prices, rather the focus will be on food and heat and how in the hell did this happen.
After the shit has been scared out of everyone on the planet, most will be willing to accept whatever global government voodoo plan is being offered. Most likely one that benefits few and enslaves most.
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bcubbins Says:
October 20th, 2008 at 8:14 pm
there are many people (at least in my acquaintance) who would consider that a drop of 20% would make Vancouver real estate a bargain
Even if there are, why would they jump in if prices are continuing to fall?
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sheeplessinvancouver Says:
October 20th, 2008 at 8:25 pm
Prices are lower in Montreal because
- prices in PQ are lower in general
- a larger proportion of the population are renters so there are fewer buyers around
- everybody moves on the first of July
- it’s colder than Vancouver
- you have to be fairly fluent in French to get a job
- the roads are full of pot holes and bad drivers. Yes, they really are worse than those in Vancouver.
On the plus side, they have a great cultural and artistic scene,an excellent transportation system and good food. It is a wonderful city to visit, but not a practical place to live. The people I know who have lived there have either left for good, used it as a stop while going to college or commuted to Ottawa every morning for work.
Anyone correct me if I’m wrong, but don’t rental apartments there come without appliances?
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patriotz Says:
October 20th, 2008 at 8:43 pm
All of your reasons are wrong.
Valid reasons for Vancouver being more expensive than Montreal are:
- rents in Vancouver are higher (not by a lot, but they are higher).
- lack of population growth in Montreal (lower expected future rents).
- property taxes and income taxes in Vancouver are lower.
Put these together and I think legitimately prices should be about 50% higher in Vancouver.
The remainder of the difference in price is just speculation and Mr. Market will deal with it.
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sheeplessinvancouver Says:
October 20th, 2008 at 8:52 pm
“I personally think real estate will not correct as much as it should simply because there are many people (at least in my acquaintance) who would consider that a drop of 20% would make Vancouver real estate a bargain.”
Me too. They are the same people who express disbelief when I tell them I’d be willing to move elsewhere if the right opportunity came along. They have either never lived outside of the Lower Mainland or, if they have, have lived through some awful winters on the prairies and think the rest of Canada is like that. They would never consider moving away from friends and family. They either grudgingly buy around the peak of the market or are saving for a larger down payment and waiting for the prices to drop a bit.
The shortage of affordable rentals doesn’t help much either. It will be interesting to see how all this turns out.
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scullboy Says:
October 20th, 2008 at 8:53 pm
SHeepless:
I lived in Montreal for a year. I assure you, the apartments come with appliances. THey’re beautiful old buildings. Generally they are immaculate with original hardwood floors. THey include heat AND two months’ free rent.
Prices are lower in Montreal because rents are lower and so are salaries. Relatively speaking, Montreal is *way* more affordable.
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sheeplessinvancouver Says:
October 20th, 2008 at 9:37 pm
All good points, patiotz, but deciding on a place to live is not always a logical decision. Not many people look at property taxes and rents when deciding to buy unless they are investors.
More likely they’re considering the commute to work, proximity to schools, parks, friends and family and all those things that make life more pleasant. Affordability is the trade off for getting into the market. Given a choice, I think most of us would choose Kits over Whalley. People move to Whalley because they can’t afford Kits, but not too many are willing to move to Montreal for the same reason.
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Gekko Says:
October 20th, 2008 at 9:42 pm
“539000 Brand New House for Sale plus Trip for Two to Hawaii (Langley ) (map)”
http://vancouver.en.craigslist.....51244.html
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sheeplessinvancouver Says:
October 20th, 2008 at 9:56 pm
scullboy
Lucky you for having the chance to live in such a wonderful city. I’ve only spent a few days there and so had no way of comparing affordability between the two cities. I’m not able to leave Vancouver, at least in the short term, but Montreal is on my nice places to maybe live list. Most of the Vancouverites I know will probably shake their heads in dismay the day I pack up and move East…
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Drachen Says:
October 20th, 2008 at 10:10 pm
sheepless
“prices in PQ are lower in general”
True, but only really true since the bubble here took off, so that’s not saying much.
The rest of your points were pretty irrelevant, none of them should affect the market significantly. The real reason Montreal is reasonably priced is that they have a different culture of home ownership, it’s not seen as something people need to be happy. Which is not to say that prices should be higher here because of that, just more volatile.
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patriotz Says:
October 20th, 2008 at 10:15 pm
All good points, patiotz, but deciding on a place to live is not always a logical decision. Not many people look at property taxes and rents when deciding to buy unless they are investors.
All it takes is the investors, because they are both the marginal buyers and marginal sellers who set prices.
That is the fundamental truth that the permabulls just can’t get.
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Drachen Says:
October 20th, 2008 at 10:15 pm
Patriotz
“- rents in Vancouver are higher (not by a lot, but they are higher).
- lack of population growth in Montreal (lower expected future rents).
- property taxes and income taxes in Vancouver are lower.”
Ok rents are slightly higher, I said “significantly”.
Montreal growth around 1%, not a lot but population growth was an excuse for the bubble here, not a reason (other than it’s effect on psychology).
Taxes, are lower, but wages are much higher in Montreal, I’d guess it more than cancels out.
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Drachen Says:
October 20th, 2008 at 10:18 pm
Scullboy
Salaries are much higher in Montreal than here. Vancouver is four or five from the bottom of Canadian cities for wages. Only Abbotsford, St John’s and a couple others are below us.
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patriotz Says:
October 20th, 2008 at 10:21 pm
Taxes, are lower, but wages are much higher in Montreal,
Not according to Statscan – median family incomes in Montreal and Vancouver are about the same: both among the lowest of big Canadian cities.
Higher income taxes mean a lower rent/income, and higher property taxes mean a lower price/rent. Both legitimate reasons for prices in Vancouver to be higher than in Montreal – but nowhere near the difference we see today.
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Patiently Waiting Says:
October 20th, 2008 at 10:49 pm
Trouble at Victoria Hill?
http://vancouver.en.craigslist.....79753.html
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patriotz Says:
October 20th, 2008 at 11:30 pm
The real reason Montreal is reasonably priced is that they have a different culture of home ownership, it’s not seen as something people need to be happy.
In other words, if people are not willing to pay more to buy than to rent, it will not cost more to buy than to rent.
So simple, yet so hard to understand for many.
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anonymous Says:
October 21st, 2008 at 12:21 am
Shit, there’s just too many people here for the amount of land, i hate driving around this town any time of day. I’m not suprised housing is expensive as it is, this city was designed for 300,000 people. As soon as the credit crunch is unfrozen the next boom starts here, sucks, we’re going to see more crappy condo advertisements. Actually i have friends who moved to Montreal, they like the cost of living there!
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Keepin an Eye on the Pimps Says:
October 21st, 2008 at 5:42 am
“Whistler Mayor Ken Melamed expressed concern Monday about reports that the owners of the Whistler Blackcomb ski resort are fighting to keep resort operator Intrawest afloat by restructuring $1.68 billion in debt.”
Dear Mr. Campbell:
Please raise my taxes, so that we can help these people out.
I am sure if you could convince Bill Good to run a special on his show, and highlight what an economic engine Whistler is; many other people like me will come forward and volunteer to have their taxes raised to avoid an embarrassment with the World Olympic Organizers.
http://www.canada.com/vancouve.....74d30c1e73
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NO -LYMPICS Says:
October 21st, 2008 at 6:40 am
Whistler gong broke?
Well, call in Ritchie Brothers, sell off the assets, and start dismantling that yuppie scum sh*thole. Maybe they can also stop that useless highway project and we can cut our losses as well. Sure would be funny if it was in receivership too during the 2010 Olympics.
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vanguy Says:
October 21st, 2008 at 7:20 am
Trouble at an Onni property? That would surprise me…do keep us informed!
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crabman Says:
October 21st, 2008 at 7:53 am
One more reason why Vancouver is more expensive than Montreal: the majority of expensive North American cities are on the coast.
BTW, why do so many people seem to think Yaletown condos will be worth less than 100k?
Even that crappy Robinson tower at Helmcken and Richards was more than 100k pre-bubble. In Jan 2001, a 611 sq ft unit in that building sold for $117,700.
Be careful not to be too bearish, or you will miss out on the next buying opportunity.
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VHB Says:
October 21st, 2008 at 8:08 am
Crabman–I hear you and on the balance of probabilities I agree with you. However, I wouldn’t completely dismiss the ultra-bear outcome for the following reason: SUPPLY. We now likely have about 3X as many downtown shoebox condos as we did in 2001, with very little population growth underlying it. Still, if one could rent a shoebox out for $1K a month, a guy could ake some cashflow if purchased at 100K.
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alexcanuck Says:
October 21st, 2008 at 8:25 am
Be careful not to be too bearish, or you will miss out on the next buying opportunity.
Very good point! But carefully balance it with “Don’t try to catch a falling knife”!
BTW, I don’t think the bottom will be a brief window. Lots of time to watch the market and shop carefully. Remember, (if I’m right) we are entering a nasty, lingering global recession, and no-one will have the cash AND inclination to jump back in the deep end.
Those with cash don’t jump, jumpers will have no cash, and easy credit won’t be back for a long time.
If I’m wrong I won’t be carefully shopping with cash, so my place that I won’t be able to buy will be on the market for you. Nice place too!
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Drachen Says:
October 21st, 2008 at 8:47 am
Ok, I got it wrong, St John’s is higher wages than here, Montreal is lower.
http://www40.statcan.ca/l01/cs.....tropolitan
St John, Saguenay, Sherbrooke, Trois Rivieres, Montreal and Abbotsford are the only places below us of the 28 cities in Canada measured.
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crabman Says:
October 21st, 2008 at 9:06 am
Yeah, VHB, that supply is going to be crazy isn’t it? Back when you were posting units planned or under construction, it was over 10,000 for DT, IIRC. Do you still keep track of that info?
Alex,
Agreed! I won’t consider buying anything until prices are 35% off peak. When this happens, it should be clearer if we will see 50% declines or if 35% is good enough to jump back in. But I really can’t see more than 50% in any scenario, as that would put prices well below the real pre-bubble levels.
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Montreal Matt Says:
October 21st, 2008 at 9:46 am
I just recently relocated to Montreal from Vancouver for work and was lucky (very lucky) to sell my studio apartment in east vancouver in June at a great profit.
After living here (Montreal) for a few months you come to appreciate the natural beauty and convenience that Vancouver has to offer over Montreal. I can’t wait to move back to Vancouver in a few years.
Housing is a BIT cheaper here, but not that crazy. Rent can be very cheap if you look around. I’m not going to buy a place here, since I don’t see myself sticking around for that long.
Hopefully Vancouver prices will be way low when I return after the olympics
As for Quattro, shame on the owners for buying in such a scummy neighborhood.
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jesse Says:
October 21st, 2008 at 10:17 am
“The real reason Montreal is reasonably priced is that they have a different culture of home ownership, it’s not seen as something people need to be happy.”
Quoi? When it comes down to it buy vs rent is normally a personal choice and not really a financial one unless there is a bubble. The mere presence of a rental market with landlords trying to make a profit, along with owners and landlords competing over the same housing stock, requires fundamentals to be the same for both.
It’s actually a difficult concept for those who prefer to own and are willing to pay a premium to do so.
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betamax Says:
October 21st, 2008 at 10:31 am
But I really can’t see more than 50% in any scenario, as that would put prices well below the real pre-bubble levels.
The market isn’t influenced by such arbitrary distinctions; it’ll go as low as it goes. No one in 2001-2003 (or the late 1990’s for that matter) was saying that housing was cheap at the time, so it could certainly fall to those levels — or lower, depending on the depth of the recession just beginning.
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patriotz Says:
October 21st, 2008 at 10:32 am
The mere presence of a rental market with landlords trying to make a profit, along with owners and landlords competing over the same housing stock, requires fundamentals to be the same for both.
In the long term, not the short term.
The more buyers you have in any market who are willing to pay more to buy than to rent, the more time you will spend in bubble territory and the bigger the bubbles will be.
But the bubbles will end, inevitably.
What this means is that in a place like Vancouver you can only get a reasonable price about 20% of the time. But wait for it, it will arrive again.
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betamax Says:
October 21st, 2008 at 10:36 am
there are many people (at least in my acquaintance) who would consider that a drop of 20% would make Vancouver real estate a bargain
By the time it drops that far, and it will, most people will be scared sh*tless it will drop further, and many will be worried about keeping their jobs, let alone investing.
Look to the US for numerous examples of previously booming areas where prices have dropped 20% — no crowds are lining up to buy at 20%, though some have started to buy in where there are 50% drops — that’s considered a bargain, though even that evaluation may change in time.
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Gadwin Says:
October 21st, 2008 at 10:37 am
VHB wrote:
However, I wouldn’t completely dismiss the ultra-bear outcome for the following reason: SUPPLY. We now likely have about 3X as many downtown shoebox condos as we did in 2001, with very little population growth underlying it.
Supply, supply, supply. Too many shoebox condos out there. We are drowning in a glut of inventory. By next year, we will probably exceed 25K inventory for REBGV, and from there, who knows how high inventory will get.
Maybe we will be like Phoenix where inventory goes off the charts. Will Vancouver become the Phoenix of Canada?
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jesse Says:
October 21st, 2008 at 10:50 am
“What this means is that in a place like Vancouver you can only get a reasonable price about 20% of the time. But wait for it, it will arrive again.”
This is true historically however there is a decent chance of a protracted period of “reasonable” prices. The “I know lots of people who will buy when prices drop even 20%” — the so-called pent-up demand — argument really does ignore the investor component of the market who need properties to cash flow. These investors will inevitably set the price, much to the chagrin of the knife catchers.
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Bubble Lad Says:
October 21st, 2008 at 11:08 am
No-lympics raises an interesting point: why does BC insist on making roads to nowhere (Whistler after the crash), transit that serves no function (the Sky train to…I forget), and ferries that end up mothballed. Is it a strange compulsion to build concrete metaphors for BC’s “road to nowhere, get rich and get out” philosophy?
Just asking…
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Raincouver Says:
October 21st, 2008 at 12:26 pm
…This will be the largest global decline in history. In a few years no one will even be talking about real estate prices, rather the focus will be on food and heat and how in the hell did this happen.
After the shit has been scared out of everyone on the planet, most will be willing to accept whatever global government voodoo plan is being offered. Most likely one that benefits few and enslaves most.
True. Seems most people can’t connect the dots. This is a manufactured financial crisis – it was done, not by incompetence, but by design.
I had my ‘lightbulb’ moment back in 2005, right around the time I found VHB and HBB. I saw the banksters deliberately driving the bus off a cliff … then, figured they could come back to the taxpayer and make them pay for the privilege of being financially screwed. Then the next ‘lightbulb’ realization – when this all shakes out, probably the last thing on anyone’s mind will be Real Estate.
When the banksters can do this for their own profit and amusement, what do you think they have planned for us down the line? People talk like real estate will bounce back in 2009 or 2010 and we will go back to business as usual and live happily ever after.
I’m pretty sure the intentional crating of the global economy will end badly (not for them, but for us). I could be wrong, but I’m not.
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crabman Says:
October 21st, 2008 at 1:11 pm
Maybe we will be like Phoenix where inventory goes off the charts. Will Vancouver become the Phoenix of Canada?
We’re 2 years behind Phoenix (they peaked in spring 2006). In October of 2006, their inventory was 41k. This works out to 1 listing per 112 residents. Our current inventory is 20.5k, or 1 listing for every 123 residents. We might already be the Phoenix of Canada.
The Phoenix inventory peaked at 50k, so if we hit 27.5k, we will be at the equivalent of Phoenix’s highest level.
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Raincouver Says:
October 21st, 2008 at 2:27 pm
Maybe we will be like Phoenix where inventory goes off the charts. Will Vancouver become the Phoenix of Canada?
I used to think that, too. Someone pointed out that in Vancouver’s case, inventory has already exceeded any ability to suck it up. The unaffordability wall has been hit hard – it is almost meaningless now what inventory is. We’ve already passed a realistic absorption rate.
That’s probably true, the inventory numbers now will become irrelevant. It’s a new fiscal game.
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mark Says:
October 28th, 2008 at 1:47 pm
Montreal is affordable for a reason.
This is basic supply and demand. Economics 101.
Vancouver real estate is more expensive because WAY more people want to live here and move from other parts of the Canada and the World.