BC apartment sales drop by half

From the Globe and Mail:

The commercial market for apartment buildings in British Columbia has “come to a near standstill,” according to a report issued Monday by real estate firm Avison Young (Canada) Inc.

“There is now a standoff between purchasers, who in the wake of the global credit meltdown have changed their pricing expectations, and vendors, who are looking for yesterday’s pricing in a much more challenging market,” Avison Young principal Rob Greer said in releasing the report.

The number of real estate transactions in British Columbia’s “multi-family market” has dropped to 76 so far this year, down from 153 in the corresponding period of 2007, according to a survey by Avison Young.

“The total value of multi-family investment transactions year-to-date … amounts to $270-million – approximately 52 per cent of the $519-million recorded in all of 2007,” Avison Young said.

Local private investors accounted for the majority of buyers and sellers in 2008.

Prices for apartment buildings are likely to fall even more next year, Mr. Greer said.

“Should financing troubles continue through 2009, we may see values move as much as 20 per cent as investors re-evaluate their required returns on investment,” Mr. Greer said.

Avison Young said in its report that the “once prevalent multiple-offer situations have shifted to ones of price reductions and lingering listings.

“Of the current 130 listings on the market, approximately one-quarter have received at least one price reduction in recent months. This does not include any recent sales that involved a price reduction to induce the sale,” according to the report.

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islander
islander
11 years ago

What drives me nuts is when the real estate boards, associations and hired economists – all paid with MY dues – deliberately spin yarns. Telling people that prices are up, steady or only going to decline slightly is such a misrepresentation of reality that it's no wonder sellers are still looking for last year's price while buyers are waiting on the sidelines.

Why not just publish all available data and drop the spin? The sooner sellers get with the program, the sooner prices drop and the sooner buyers buy. Which means I get to make money.

That's self-interest. But at least it's honest.

NO -LYMPICS
NO -LYMPICS
11 years ago

Perhaps a tie in between the Olympics and the condo market. http://www.redpepper.org.uk/The-Olympics-and-the-… QUOTE: ( RE: 2004 ATHENS OLYMPICS AND FUTURE ONES ) " The Olympic bandwagon has moved on, but the city’s inhabitants are still coming to terms with the legacy of the Games – including the destruction of public spaces, a massively increased security apparatus, and a huge public debt. So why is the field to host the 2012 Olympics the most competitive ever? Competing to consume: The key to this paradox lies in the promotion of competition between cities under conditions of neoliberal globalisation. Increasingly, local government and corporate strategists look at the development of cities through the framework of international competitiveness. With the decline of production-based jobs, the leisure industry is seen as vital to economic growth. This was certainly the case with the Athens Games, which… Read more »

patriotz
patriotz
11 years ago

Oh another reason why the condo should have a lower price/rent is that the multis have older structures, i.e. they are closer to depreciation to land value. Same reason why new houses have lower price/rent than crapshacks,

patriotz
patriotz
11 years ago

There is no reason other than the fool factor (aka "ownership premium") why a condo should have a higher price/rent than a multi-unit residential. Indeed the condo should have a lower price/rent because the condo owner incurs a higher risk than the multi owner due to lack of control over building costs and rentals by other condo owners.

jesse
jesse
11 years ago

"This blog was a lot more fun when the MSM didn’t agree with the prediction of prices drops and slower sales. Now that this is common knowledge, what’s coming next?"

The MSM and its normal flock of quoted experts are still way off on the size of upcoming price drops. We still hear predictions of 5% per year appreciation after "prices stabilize", and a correction lasting only until 2010. Good luck with that. Even though they may have the direction of the market right, they are way off on the magnitude.

Pastrick is getting close but is not quite there yet. (You can do it Helmut!) CMHC is out to lunch. Most others I won't even bother with because their motives are obviously suspect.

jesse
jesse
11 years ago

This is a good segment of the market to watch because it is an unadulterated investment market without owner-occupiers. If you want to see where prices will end up, watch these properties as a leading indicator.

NO -LYMPICS
NO -LYMPICS
11 years ago

I remember when the MURBS were out there in the late 1970s and early 1980's and huge swaths of Richmond were converted from SFH to 3- storey rental apartments. The interest rates shot up to 22 %, a glut happened,…and the MURB apartments offered all sort of weird perks inlcuding "job loss" insurance and free rent. After the MURBS, God invented Bob Rennie and the multi- family residential market switched from rental to outright ownership, Now….With a glut of condos " For Sale "….the potential exists for the these to be converted back to rentals ( subject to strata bylaws). If I was considering purchasing a rental property ie an apartment building, I would have to wonder about the vacancy rates new condos " For Rent" may create. That's just common sense. In addition, many of those companies that have… Read more »

markx
markx
11 years ago

Well, if the vacancy rate is 0% or less, why are the apartment owners having trouble selling buildings? The CMHC rental data is completely useless, and it gets quoted repeated on MSM.

Purp
Purp
11 years ago

This blog was a lot more fun when the MSM didn't agree with the prediction of prices drops and slower sales. Now that this is common knowledge, what's coming next?????

NO -LYMPICS
NO -LYMPICS
11 years ago

I'm # 3

… I tink…

gadwin
11 years ago

Not surprised. The financial crisis has taken it's toll on the shoebox condo bubble in Vancouver. What's worse is that a glut of new condos will be arriving on the market in the next two years as more and more condo project complete.

All those shoebox condo replica prices have nowhere to go but DOWN, DOWN, and DOWN.

bezar
bezar
11 years ago

So WTF ?