Good News!
There’s been a lot of negativity in the news lately about the increasing cost of hosting the winter games.. people seem to be getting all upset over little things like the city having made a bad bet on real estate speculation, or the fact that Standard and Poor’s have put the city on “credit watch negative” which could make future financing costs higher.
People even seem to be all grumpy that the city won’t reveal their actual agreement details with us, but this is obviously in our best interest. Math is hard, and even the smart people at city hall seem to still be trying to figure it all out… and they’ve known about this situation since summer of 2007!
But amidst all this doom n’ gloom, we have one voice of reason: Dr. Tsur Somerville of UBC says that the city is making the situation sound worse than it actually is. We probably won’t owe one billion dollars of taxpayers money once this situation is all worked out. Once the Athletes Pillage has been completed and the units can be liquidated we’ll probably have only lost $275,000,000!
Now don’t you feel better?
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January 18th, 2009 at 8:56 pm
So if construction costs $1 billion and housing prices drop around 60-70%, that’s around $650 million. Add in the usual BS and I’m guessing $800 million.
About the same as a leg of the Coquihalla or the 3 fast ferries….
January 15th, 2009 at 4:46 am
realpaul: paul, Maybe it’s a generational thing. Studies show that older people from all cultures are more racist than the younger generation.
January 15th, 2009 at 3:58 am
realpaul: Unless the published information was racist to begin with.
January 14th, 2009 at 11:18 pm
Dutch auction
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A Dutch auction is a type of auction where the auctioneer begins with a high asking price which is lowered until some participant is willing to accept the auctioneer’s price, or a predetermined reserve price (the seller’s minimum acceptable price) is reached. The winning participant pays the last announced price. This is also known as a “clock auction” or an open-outcry descending-price auction.
This type of auction is convenient when it is important to auction goods quickly, since a sale never requires more than one bid. Theoretically, the bidding strategy and results of this auction are equivalent to those in a sealed first-price auction.
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My guess is ONNI is going on fishing expedition.
They will probably offer a few, with a RESERVE Price, and see what happens.
All their competition wil be watching this very closely.
As everyone asks,..the discount is a % of WHAT.
If it succeeds, watch the floodgates open with product from the competition.
If it fails….OUCH, fasten your seatbelts …..we are talking nasty times ahead and COV will be shite-ing bricks.
January 14th, 2009 at 11:15 pm
just posted a thread on the Onni story. Thanks A1 & Macchiato!
http://vancouvercondo.info/200.....l#comments
January 14th, 2009 at 11:07 pm
Note, poster A1 might have also been alluding to this, they actually even pointed out the time line.
January 14th, 2009 at 11:05 pm
MrBear, hey, there was never a problem, it was all good.
Look forward to the post on this from whoever can manage it.
January 14th, 2009 at 10:54 pm
macchiato: Good to hear from you again! I’m glad I didn’t scare you off completely with my poorly-aimed ‘pffft’ the other day.
Hey, if we get a good article to link to, maybe this Onni thing should be a new post tomorrow. With due credit to macchiato, who was dropping hints for us.
January 14th, 2009 at 10:44 pm
MrBear, This inventory ‘blow-out’ pertains directly to our previous discussion.
This is sort of the opposite of pre-sale line-ups on the top of the news hour.
I think I hear the floodgates opening.
January 14th, 2009 at 10:37 pm
Anonymous: There is no way I would consider 20% off to be a good discount. But if you could be looking at 80% off, I might just have to run the numbers on whether you could make a decent income property out of the thing. Nothing wrong with kicking the tires, at least.
It looks like only one of their projects is in Vancouver though, so right away I’m less interested.
January 14th, 2009 at 10:31 pm
MrBear:
“Even a leaker might be worth it if the discount is steep enough”
I can’t agree with that idea. If you pay 100K for a leaker and it costs you 100K in special assesments while having your unit designated as a leaker (with no guarantee that it won’t leak again as many have) then you’ve got a 200K leaker thats impossible to sell and it’s lost you 100K and counting. Wheres the profit in that?
BTW, the price of these units had no relation to reality when they were priced for sale at the peak. The question you have to ask is ” 20% off what?” a unit that was marked up 400% beyond anything that had been achieved before?
January 14th, 2009 at 10:23 pm
ted:
Onni with it’s 18 projects for sale is just one of many dozens of developers with half finished, crap quality condo’s for sale. Let the bloodbath begin.
-with condos that are ‘unlivable, with hallways that smell like urine, who is going to want to buy these overpriced traps?
The price of these units are so overpriced that only a fool would think that 20% off is a good deal. Better wait till they go tits up and then have good bon fire.
January 14th, 2009 at 10:17 pm
“The marketing strategy by Onni Group of Companies is aimed at selling off hundreds of condos in its inventory.
About 375 unsold condominiums in cities such as Richmond and New Westminster will be offered at 20 to 40 per cent off, a real estate insider told CBC News.”
means price go up in spring yeah nutslaps!
January 14th, 2009 at 10:11 pm
MickeyFinn: Let’s be clear here; if it is going to be a dutch auction as apparently reported on the radio, any percentage discounts are estimates, are they not? Maybe they’re planning to set a reserve percentage in the auction? Otherwise, the units might go for 80% off. Even a leaker might be worth it if the discount is steep enough.
January 14th, 2009 at 9:03 pm
Vancouver taxpayers likely won’t be directly on the hook for costs associated with the Olympic Village, a well-known urban land use consultant said today.
Bob Ransford of Counterpoint Communications told the Tyee that if the city can’t recover all the costs of the $1 billion project, the first area it will take a hit will be the money promised for the land the village sits on.
In 2006, Millennium Development blew away competing developers by offering $193 million for the prime waterfront real estate in Southeast False Creek. The builder put down a deposit of $29 million and agreed to pay the balance in 2010.
“I think there’s a potential [the city] is not going to see the $193 million that they intended getting for the land,” said Ransford, who is also a well-known Non-Partisan Association advisor. “That’s the first area they would lose.”
Because the city already holds the title to the land for the village though, such a loss likely wouldn’t have to be compensated by taxpayer dollars, Ransford said.
“If [the city] loses anywhere less than $193 million then that’s not cash out of the taxpayer’s pockets, that’s assets that have been eroded.”
This doesn’t hold water. If the losses are less than $193M, then essentially COV doesn’t get paid for the land. Assuming COV hasn’t committed the spending of this money already, it is true taxes wouldn’t need to be increased. But it would still be a loss. If COV got the money for the land, it could have used this to reduce taxes. So that’s one way to see that it is really a true loss for our city.
As has been discussed, it is also quite possible COV can lose all the money it is trying to borrow now because it seems that Fortress is the first creditor on the title. Of course, it hard to know for sure given how little is being divulged.
There has been some suggestion of a tax revolt if they do decide to amend the charter without going to referendum. I don’t know the legalities of this, but presumably they have their backs covered to ensure groups of people cannot file suit against paying increases due to the olympic pillage because they overrode the referendum process.
January 14th, 2009 at 8:44 pm
These are indeed good news. I personally do not think they will be offering prices which are worth buying into – and also, after reading this blog I know that I am not buying strata. But this will have an effect on overall prices. 20% off peak is roughly current market value. And nobody is buying at current market value.
This bubble is popping faster than we could hope for.
Regards,
arit
January 14th, 2009 at 7:35 pm
Dev:
how about letting anyone bid and the best man wins ( is saying man a bad thing Lily?)
January 14th, 2009 at 7:32 pm
MickeyFinn:
Onni was to hold a media event Thursday to announce details.
reading that as “feeding frenzy”
January 14th, 2009 at 7:25 pm
Here’s the CBC news story about the Onni price cuts. Who was the poster that was saying this was coming for the past couple of weeks?
http://www.cbc.ca/canada/briti.....-sale.html
By the way if you search the CBC news site for ‘ONNI’, the second story that comes up is “Residents say Surrey apartment complex not fit for living”
http://www.cbc.ca/canada/briti.....mplex.html
January 14th, 2009 at 7:20 pm
CBC NEWS:
A Vancouver real estate developer is making an unprecedented move to offer a liquidation sale of $350 million worth of its condominiums throughout the Lower Mainland.
The marketing strategy by Onni Group of Companies is aimed at selling off hundreds of condos in its inventory.
About 375 unsold condominiums in cities such as Richmond and New Westminster will be offered at 20 to 40 per cent off, a real estate insider told CBC News.
It is not known whether the big discounts are based on prices when the condos were completed or current market values. Onni was to hold a media event Thursday to announce details.
January 14th, 2009 at 6:33 pm
117 Lily pad Says:
January 14th, 2009 at 6:13 pm
NO -LYMPICS: As long as one part of your anatomy is wooden it’s ok, you can bid.:)
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Lily Pad..
(BTW : How’s the Squirrel hunting going? )
Wooden body parts?
Dam….I guess I am SOL.
Knew I should have become a Somali pirate !
High Reward vs. Risk ratio.
Re: Dutch Auction condo?
Who wants a future leaker anyway?
January 14th, 2009 at 6:25 pm
getting back to real estate…..maybe Millenium and the city could be talked into letting indo non-union builders finish the project, save 50% of remaining cost?
January 14th, 2009 at 6:25 pm
Dev:
restating published information is not racist, and now you’re unfairly targeting the homeless, shame on you.
January 14th, 2009 at 6:23 pm
MickeyFinn:
We had speculated on earlier strings that ‘ forced sales’ would create a new benchmark. Past experiance has shown that it was usually the marginal players and court ordered cases that led the way. This is something completley differant and will immediatley effect every like product owner in the market as new comparable prices are set.
The question is ” Is 35-40% enough”. personally I don’t think so.
It’s not going to be pretty for those individuals involved in the complexes affected.
Burden of Proof, you seem to have a handle on the topic of ‘principal residence’ status. I have dealt with this matter anecdotally for forty years and the 1 year standard was always the term. Possibly the law has changed in that time and the rest of the world hasn’t caught up?
Lily Pad …. I think political correctness is unique to Canada and is the source of the problem not the solution, so we differ on our ‘cringe meter’.
January 14th, 2009 at 6:22 pm
yeak ok…..some of those comments on the sikh community are racist.
anyways…why’s is a scam to take advantage of a tax exemption. now…if you build a series of houses and at some point the activity crosses the line from personal use to business…pay the tax as assessed by rev can, until then there’s nothing wrong with being an entrepreneur. and fyi….they don’t teach this shit at temple.
and look….i think the Sikh community can do a better job of taking on some of the extremest elements. those efforts have started. in the meantime, don’t take my comments as some sort of admission that it’s the entire community that’s the problem, as one comment earlier implied. a lot of brave people have stood up, including the relative of a friend, a reporter by the name of Haer who was shot and killed. and before anyone goes about putting all the blame on the community….what about the cops and inept csis and their inability to get any justice for the air india bombings?
why doesn’t the white community deal with the Hells Angels? and last time i checked…aint no homeless sikhs …
January 14th, 2009 at 6:13 pm
NO -LYMPICS: As long as one part of your anatomy is wooden it’s ok, you can bid.:)
January 14th, 2009 at 6:06 pm
111 MickeyFinn Says:
January 14th, 2009 at 5:49 pm
CBC Radio One just reported on their 5:30pm news show that ONNI (the Vancouver-based condo developer) has announced that it is going to basically hold a dutch auction of its unsold and completed condo units!
========================================================
Thanks MickeyFinn !!
One VCI poster mentioned they had inside info that something like this dumping of product was in the works.
And here I thought all the Developers were going to have secret group meetings like the Mafia(Oops thats profiling..apologies)and agree amongst the development Cosa Nostra(oops again..sorry)to NOT flood the Market.
Looks like every man/woman( sorry don’t mean to be sexist)for themselves re developers (More politically correct !)
BTW:
I am not Dutch so can I bid in a Dutch auction? (and don’t have a pair of wooden shoes..oops again).
Now….Put on your skis and chase the market down.
Wheeeee !
January 14th, 2009 at 5:56 pm
Campbell calls house back early over Olympic village project
http://www.theglobeandmail.com.....ional/home
January 14th, 2009 at 5:55 pm
realpaul: With all due respect you are repeating your original mistake of focusing on one group at the exclusion of others — it is akin to racial profiling and I believe that is why your posts make readers cringe.
January 14th, 2009 at 5:53 pm
Oh yeah, and the CBC Radio news reporter added that, “this could set the new level for condo prices…”
“Duh!”
CBC Radio reporters apparently don’t like to leave their listeners having to think…period.
January 14th, 2009 at 5:49 pm
Direct taxpayer exposure for Olympic Village unlikely: urban consultant
http://thetyee.ca/Blogs/TheHoo.....taxpayers/
Vancouver taxpayers likely won’t be directly on the hook for costs associated with the Olympic Village, a well-known urban land use consultant said today.
Bob Ransford of Counterpoint Communications told the Tyee that if the city can’t recover all the costs of the $1 billion project, the first area it will take a hit will be the money promised for the land the village sits on.
In 2006, Millennium Development blew away competing developers by offering $193 million for the prime waterfront real estate in Southeast False Creek. The builder put down a deposit of $29 million and agreed to pay the balance in 2010.
“I think there’s a potential [the city] is not going to see the $193 million that they intended getting for the land,” said Ransford, who is also a well-known Non-Partisan Association advisor. “That’s the first area they would lose.”
Because the city already holds the title to the land for the village though, such a loss likely wouldn’t have to be compensated by taxpayer dollars, Ransford said.
“If [the city] loses anywhere less than $193 million then that’s not cash out of the taxpayer’s pockets, that’s assets that have been eroded.”
Translation:
” A spoon full of sugar helps the medicine go down”
Call it “eroded assets” vs SOL ?
================================================
QUOTE:
Ransford said given the valuable location of the athlete’s village condos, the city likely won’t lose more than $193 million on the project. But he conceded that Vancouver’s currently depressed housing market makes predictions difficult.
Also, Ransford said in most financing agreements the lender requires a borrower to estimate when it will pay back the loan. If the loan is not paid back by that date, then the terms of the agreement can change, often resulting in accelerating interest rates while the loan remains outstanding.
Ransford said he doesn’t know the terms of the financing arrangements between financier Fortress Investment and Millennium, but he said such an accelerated interest clause – if it exists – could have a big impact on the costs of the Olympic Village.
“That’s a question that needs to be asked,” he said.
Translation:
WTF is he saying ?
How can you say they will only lose $193 Million yet admit you don’t have A-L-L the F-A-C-T-S ?
====================================================
QUOTE:
But regardless of the financial outcome of the project, the urban consultant said the most important lesson to take away from the whole fiasco is that Vancouver shouldn’t be dabbling in major real-estate ventures without industry input.
Ransford said many cities have real-estate boards comprised of industry professionals, something that Vancouver lacks.
“If the city’s going to venture into an area that it doesn’t have expertise in…then it had better reach out and seek expertise,” he said. “That’s lesson one from this whole mess.”
Translation:
Well at least he got ONE thing right.
January 14th, 2009 at 5:49 pm
CBC Radio One just reported on their 5:30pm news show that ONNI (the Vancouver-based condo developer) has announced that it is going to basically hold a dutch auction of its unsold and completed condo units!
You may think I am making this up but this is real…
In the CBC Radio news story they added that Onni said it expects to initially drop prices 35% – 40% on some 375 units which are largely located in Richmond and Vancouver…
Can you say “collapse?”
Holy crap!
I’ve been telling myself to be patient and guessing that I still had to wait at least a year or so for the market to completely collapse but now I’m thinking it’ll be a meltdown this spring.
As I’ve said before, “This is gonna be good.”
January 14th, 2009 at 5:47 pm
If you look at paulb’s daily numbers, the frequency of days with under 20 sell/list ratio is increasing. Perhaps it is weather related. Perhaps the bust is accellerating.
January 14th, 2009 at 5:38 pm
Burden of proof (BTW nice tie -in with your profession)
The subtle implication was that in boom times…they will get their pound of flesh $$$ through other means..ie GST, PST, increased Fuel taxes , numerous RE Suppliers are busy,less UI payouts , etc. etc. etc.
All this may be impacted if they hire more auditors and scare away investment.
THUS: They may find they generate far more Gov’t revenue by turning a blind eye and letting the economy so call “boom”.
Mind you …my earlier mention of the CA discussion was in the mid 1990′s and I am sure CRA has many more sophisticated flagging devices
January 14th, 2009 at 5:35 pm
Burden of Proof:
your snippety rage is cute. I love arguing.
January 14th, 2009 at 5:27 pm
Cost of the social housing at Olympic Village?
http://thetyee.ca/Blogs/TheHoo.....l-housing/
January 14th, 2009 at 5:25 pm
“Gov’ts and Developers (often in the same bed ) must know it goes on, but turn a blind eye so as not to upset the somewhat unduly skewed and perverted market forces.”
As a tax lawyer I can tell you that the CRA uses all the (albeit limited) resources it can to stop the “principle residence game” that does indeed go on. Many tax cheats have been caught and penalized with big interst and penalty bills. They cannot catch everyone. But you can all do your part to keep the system fair by reporting anyone you suspect.
January 14th, 2009 at 5:24 pm
MrBear:
I was thinking that if a group , community or individual decides to make a major footprint in an industry such as real estate construction that they are asking to be scrutinized in the full glare of public observation. Yes, I am keeping this a real estate topic.
So the questions start to arise, who are they, where is the money coming from, what are the qualifications these buiusnessmen bring, experiance, what of the adherance to standard warranty etc etc etc.
I was once considerd to be an expert and people payed me for my opinion. Today I look at the issues with building trades and the quality of construction and I can tell you it isn’t good. Naming names is what this blog is all about.
Restating published facts may be uncomfortable for some individuals. It doesn’t make the problem go away. If there is a cluster of data in any sample it does require further scrutiny.
If you were going to understate any individuals particapation then why mention any individual or organization, branch of government or industry for that matter. Specificity is VERY important, it helps contexualize the actual truth.
January 14th, 2009 at 5:22 pm
Now say you are sorry…
January 14th, 2009 at 5:22 pm
VCI posters…
Please….Let’s drop the racism insinuations.
I don’t think , nor consider anyone on this blog is a racist(a few Trolls maybe).
Some interesting anomalies were simply discussed and explored.
However, if some groups play the system and take advantage of it..even if it is a barely legal loophole….it cost YOU and ME. I don’t care if they are polka – dotted Martians or an animated Rock, its’ the same end result.
In boom times ,in my view , a lot of this playing of “Principal Residence” game goes on …people scrape off the gravy “tax free”…and it ultimately drives UP the RE prices …..and prices many O-U-T of the market, which is a major concern many VCI poster have duly noted.
Gov’ts and Developers (often in the same bed ) must know it goes on, but turn a blind eye so as not to upset the somewhat unduly skewed and perverted market forces.
January 14th, 2009 at 5:21 pm
“Eat facts dude.”
This is funny beyond belief. Your credibility has sunk even lower. Try spending more than 15 seconds on research next time.
You did not even read (or did not undestand) your own quote. The 12 month requirement is only with respect to the statutory definiition of spouse. To be a spouse you have to co-habit in a conjugal relationship for 12 months.
FYI, and to to give you much needed research and reading assistance, it took me 15 seconds to determine that “Principle Residence” is defined in section 54 of the Income Tax Act. Read it yourself. There is no 12 requirement. The test is “ordinarliy inhabited in the year” As I said, the courts look at all the circumstnaces of the case. You could live there for 1 month and qualify depending on the cirsumstnaces. Likewise, you could live there for one year and not qualify, depending on the circumstances.
BTW I’m a tax lawyer. I’ve litigated cases on this issue. You will not win this argument.
January 14th, 2009 at 4:24 pm
Burden of Proof:
“wreck my credibilty” you say? In the 15 seconds it took to prove my statement by researching the topic I thought of the courtesy that others may show by doing the same due diligence by making sure that they have thier own facts straight before making such salacious accusation Haaaarrrummp!
“To designate a property as principal residence, an individual must own the property, either solely or jointly with one or more other individuals. In addition, the owner, his or her spouse, former spouse, or children must also ordinarily inhabit the residence during some part of the year. The definition of spouse under the Income Tax Act includes a common law spouse which includes a same or opposite sex partner who cohabited with the owner in a conjugal relationship for a continuous period of no less than 12 months.”
It is the definition of ‘principal residence which determines the tax exempt nature of the property in question, not as you have posted
“This is plain false. There is no fixed time period for ownership contained in the income tax act. The courts look at all the circumstances of the case to determine if a house sale is an adventure or concern in the nature of trade or a genuine disposition of a capital asset.”
Eat facts dude.