BC apartment sales drop by half
From the Globe and Mail:
RSS 2.0 comments feed. Both comments and pings are currently closed.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.
November 25th, 2008 at 1:53 am
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.
November 24th, 2008 at 1:14 pm
Perhaps a tie in between the Olympics and the condo market.
http://www.redpepper.org.uk/Th.....d-the-City
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 sought to project the image of a ‘competitive mega-city’, a regional hub for the Eastern Mediterranean and a desirable tourist destination. But it is equally true of London, where the Greater London Authority has promoted the vision of a ‘world city’ in which financial services and corporations flourish.
The Olympic Games, whose five-ring symbol is recognised by around 90% of the world’s population, is the mega-event of choice in the bidding race for consumer-oriented development. But the costs of such a strategy are stark, since it can lead to greater urbanization and the deepening of the divide between core and periphery. As a result of the 2004 Games the unequal allocation of resources between Athens, where almost half of the Greek population resides, and the rest of the country has grown more severe. The Olympics has also polarized Athens itself, with the evidence pointing to gentrification rather than regeneration in the areas that it has touched. In the most extreme case, it resulted in the forced resettlement of Roma families to make way for Olympic venues.
Athens is by no means unique, however. Gareth Poynter of the University of East London points out that “the consumption-led services growth model, implicit to Olympic bid strategies, has tended to generate an acceleration of an urban regeneration and development process that has exacerbated income and wealth differentials within cities.” The risk of Olympics-led regeneration is that it displaces poverty rather than redistributing wealth. And that is a story that East London residents, who have seen the Docklands developments of the 1980s and the Millennium Dome pass by without the promised ‘trickledown’ effects, know only well.”
Translation: The global snake oil salesmen have been here too, will be gone in early 2010. NEEEEEEEXT !
November 24th, 2008 at 1:13 pm
This blog was a lot more fun when the MSM didn’t agree with the prediction of prices drops and slower sales.
Yeah, it’s no fun being a contrarian when everyone agrees with you. But now we start the real fun: watching the ‘experts’ and salespeople in the media flail against reality. You may have already seen the US version of this whole story, but Canadian content laws require us to create our own version:
http://vancouvercondo.info/wik.....te-tracker
November 24th, 2008 at 11:56 am
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,
November 24th, 2008 at 11:51 am
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.
November 24th, 2008 at 11:48 am
“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.
November 24th, 2008 at 11:38 am
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.
November 24th, 2008 at 11:21 am
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 bought older apartment buildings have been upgrading them and evicting current tenants and raising the rent. Gov’ts may take advantage of these tough economic times and try to win brownie points with the renters and make it tougher for landlords to do so, rightly or wrongly .
Thus: May as well sit on the sidelines, too much uncertainty till the dust settles.
November 24th, 2008 at 11:11 am
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.
November 24th, 2008 at 11:07 am
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?????
November 24th, 2008 at 11:02 am
I’m # 3
… I tink…
November 24th, 2008 at 10:47 am
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.
November 24th, 2008 at 10:46 am
So WTF ?