Our subprime problem: condo presales?

According to CBC radio news a new trend is emerging in the Vancouver real estate market: Developers are suing condo buyers who try to get out of their pre-sales contract now that their unit is worth less than they signed up for.  CBC radio reports that over the last month local developer Amacon has sued 7 buyers for their deposit plus ‘damages’ which equal the difference between what they agreed to pay and the current market value.

Before the market peaked local economist touted our lack of ‘sub-prime’ as proof our housing market was different from crashing US markets.  Our lenders didn’t hand out loans to people without a proven ability to pay.  Unfortunately what we did have while the market was booming was a mania for condo presales.  Presales were supposed to be a ticket to easy money.  Anyone could take a credit card advance for the deposit and sign up for a presales contract, planning to flip the assignment before the building was even completed.

Unfortunately for speculators this game of financial hot potato came to a rather shocking end over the last half-year as real estate prices in the lower mainland began to drop rapidly.  You can now find many listings on craigslist for people all over the lower mainland who will give up their deposit if you agree to take over their contract.

We have almost 4000 new condo units due to be completed in the downtown core alone this year, and buyers are hard to find.  So now the question is how many people are out there that either don’t want to, or are unable to get financing to complete their presales purchase.  Are condo presales the local version of the subprime problem, driving some into bankruptcy and contributing to supply in a crashing market?

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http://www.vancouversun.com/business/real-estate/… Vancouver's Wall Financial Corp. scraps False Creek condo project to build rentals By Derrick Penner, Vancouver Sun January 22, 2009 In the face of sales that have ground to a halt, Wall Financial Corp. has decided to scrap its 414-unit Wall Centre False Creek condominium project in favour of building rental apartments on the site…Wall Financial said it had sold almost 30 per cent of the Wall Centre Creek's units, 120 in all, but that sales had come “to almost a complete stop” during the quarter. … Wall Financial said the slowdown in apartment sales caused it to halt sales on another project, its redevelopment of the building at 1212 Howe St….Wall Financial sold 109 of 150 units in the strata-titled 1212 Howe St. building, but said it would retain ownership of the remaining 41 units until the market… Read more »


Just had a thought on the new 64B extra spending by the government in next two years, and probably 100B in 5 years. Where is the money from? Here is one possible means to generate some net income for the government. I heard a story a while ago, that Microsoft and IBM have big lawyer teams. Funny enough, the teams generate income, big income from the legal activities as both have a lot of patents and small companies are quite often to infringe them. The government can do similar thing – create a big tax collection team, this by itself creates a lot of jobs. Then ask them to find and fine the offenders to raise at least themselves. In fact what I heard that Canada has too few tax men that only a very small percentage of tax report… Read more »


Here is something really funny:


This is the US 2008 tax return giude. In the page 33, you'll find the following statement:

Illegal activities. Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21.


I would love to see we have a similar thing in Canada to have those grow-ops at least pretend to pay some tax.



Thanks Inventory for the stats.

A bit weird that Van West has the biggest number of JAN sales across those cities, though the number is not that big: 26. I guess some discounted condos might be counted in? There are always suckers, anytime. North Van has the deepest dip (-23% YOY), but the total number is only 8, does not count as a valid stat.



Have you people lost your heads? Vancouver is an OLYMPIC city!

1) Chinese investors want to relive the magic of Beijing

2) Vancouver condos are the best in the world by far

3) Unlike in Miami our condos are made by mostly legal workers with proper training making them highly valuable for asian investors.

4) SUVs are always good investments.


Just in case, did you miss the sarcasm at the end of your post? If yes, it is funny. 😉


JAN 2009 SFH+TH+APT (North Van)**Jan 21

Gross Sales 6,589,000

Units Listed 65

Units Sold 8

Sale Success Ratio 10%

Sales to Listings 12%

Avg Price/Unit 823,625 (-23%)

Active Listings 286 (+85%)

JAN 2008 SFH+TH+APT ()

Gross Sales 49,425,591

Units Listed 134

Units Sold 46

Sale Success Ratio 65%

Sales to Listings 34%

Avg Price/Unit 1,074,469

Active Listings 154


JAN 2009 SFH (West Van)**Jan 21

Gross Sales 11,071,000

Units Listed 62

Units Sold 7

Sale Success Ratio 8%

Sales to Listings 11%

Avg Price/Unit 1,581,571 (-6%)

Active Listings 417 (+50%)

JAN 2008 SFH (West Van)

Gross Sales 71,019,900

Units Listed 137

Units Sold 42

Sale Success Ratio 38%

Sales to Listings 30%

Avg Price/Unit 1,690,950

Active Listings 277


JAN 2009 SFH (Van West)**Jan 21

Gross Sales 34,789,800

Units Listed 128

Units Sold 26

Sale Success Ratio 12%

Sales to Listings 20%

Avg Price/Unit 1,338,069 (-15%)

Active Listings 674

JAN 2008 SFH (Van West)

Gross Sales 118,907,080

Units Listed 236

Units Sold 75

Sale Success Ratio 49%

Sales to Listings 31%

Avg Price/Unit 1,585,427

Active Listings 374


JAN 2009 SFH (Van East)**Jan 21

Gross Sales 14,875,300

Units Listed 100

Units Sold 23

Sale Success Ratio 10%

Sales to Listings 23%

Avg Price/Unit 646,752 (-7%)

Active Listings 623 (+39%

JAN 2008 SFH (Van East)

Gross Sales 61,651,488

Units Listed 217

Units Sold 88

Sale Success Ratio 39%

Sales to Listings 40%

Avg Price/Unit 700,585

Active Listings 447


JAN 2009 SFH (Richmond)**Jan 21

Gross Sales 10,025,000

Units Listed 136

Units Sold 14

Sale Success Ratio 5%

Sales to Listings 10%

Avg Price/Unit 716,071 (-8%)

Active Listings 665 (+51%)

JAN 2008 SFH (Richmond)**Jan 21

Gross Sales 62,718,835

Units Listed 253

Units Sold 80

Sale Success Ratio 37%

Sales to Listings 31%

Avg Price/Unit 783,985

Active Listings 438


markx: The condo pre-sale problem is IN ADDITION TO sub-prime crisis… Let's get straight on the cause and effect here. The sub-prime crisis in the US was a result of falling prices. Prices had been falling for over a year. Condo pre-sale defaults are also the result of falling prices. Subprime and pre-sale defaults are early indicators of market decline, because the buyers involved were taking on the most leverage and/or had the least ability to pay. Such buyers helped to enable the rise in prices in many markets, but prices rose just as much and are crashing in markets which saw little of either. The root cause of the RE bust in the US, Canada, and everywhere else is the same – the prices were too high. The media and populace in both the US and Canada are still… Read more »


JAN 2009 Re BGV SFH+TH+APT (**JAN 21)

Gross Sales $230,099,893

Units Listed 2,628

Units Sold 440

Sale Success Ratio 10%

Sales to Listings 16%

Avg Price/Unit 522,954 (-11%)

Active Listings 14,577 (+45%)


Gross Sales $1,092,256,103

Units Listed 4,881

Units Sold 1,857

Sale Success Ratio 47%

Sales to Listings 38%

Avg Price/Unit 588,183

Active Listings 9,998



Interesting case of a West Vancouver home purchase that didnt't complete because the buyer backed out. The plaintiff (seller) claimed damages for carrying costs of other debt plus lost revenue from the sale in a falling market.

Goldman Sucks

Vansanity: ""It's the last remaining piece of waterfront. It's something we would all covet. This is it."" The mood of the consumer is getting downright ugly these days and rightly so. Seeing as half the city was against the Olympics anyway it wouldn't surprise me if potential buyers boycotted this project on general principles just as retribution to the criminals who organized this Olympic Games fiasco. If I had any influence I'd organize a boycott of Millenium just so serve as a vote of non confidence in big business in this city. Anyone notice that the propaganda machine has regrouped and is now broadcasting their predictions of a V shaped recession? Sharp recovery in a few months they say. I say that if I have anything to say about it (I don't) it ain't gonna happen, no recovery until people… Read more »


Have you people lost your heads? Vancouver is an OLYMPIC city!

1) Chinese investors want to relive the magic of Beijing

2) Vancouver condos are the best in the world by far

3) Unlike in Miami our condos are made by mostly legal workers with proper training making them highly valuable for asian investors.

4) SUVs are always good investments.

Starving Artist

I thought I heard the CSOs were being upgraded as part of the Olympic Village, but I guess not. Sorry, last post, this is totally off topic =) http://www.env.gov.bc.ca/epd/regions/lower_mainla… "South East False Creek (SEFC) is the location of major redevelopment plans by the City of Vancouver, including shoreline development and an area which will house the Vancouver site for the 2010 Winter Olympic Athlete's Village. Since 1990 there have been perceived improvements to False Creek water quality due to a number of initiatives undertaken by the City of Vancouver to reduce or eliminate direct discharges. The City of Vancouver and the Greater Vancouver Regional District (GVRD) are currently committed under the Liquid Waste Management Plan to continue working towards reducing or eliminating the remaining five combined sewer outfalls (CSOs) which discharge directly into False Creek. Raw sewage may also be… Read more »

Starving Artist

That's right, raw sewage only dumps into False Creek when we get heavy rains and the sewers overflow. Good thing that doesn't happen very often.. (?)

This summer they dug up and upgraded the sewer overflow (CSO) that dumps into English Bay next to the Aquatic Center on Beach Ave along the seawall, which will hopefully reduce the closure problems in the beach area. Apparently the biggest one is at the foot of Clark Drive and dumps a LOT of overflow into Burrard Inlet (90 times the size of the English Bay CSO)


"There are currently 52 CSO outfalls in the region with some of the major outfalls having 100-150 discharge events/yr concentrated in the winter months"



Sinve you still don't get it satv here is a video of what is about to happen to you.

Right now you're excitedly waiting to catch the tree.



I thought that COV was going to borrow 500,000,000 so why is it now 800,000,000 ? It keeps getting juicier and more expensive. Anyone want to hazard a guess as to how much of a run they take at 1.5 billion. Aren’t all these government boondoggles at least 2 to 3 times over budget? If COV were sincere about leaving a positive 2010 legacy, they shouldn't have made a completion guarantee to fortress. They should have made a service guarantee to the citizens of COV. A commitment to improve the city's facilities and services and deal with its problems. 1B could have gone a very long way towards making this city world class, not just in hype but for real. There is a very real danger that they will claw back on services and people who make this city great.… Read more »



"anyone expecting a recovery in the second half of 2009 is going to be very dissapointed'

Great read from the economic side



After reading this article I expect to see a lot more tech and telecom jobs to disappear. The wave hasn't even crested yet, the news gets worse every day.



vancouver is going to catch up with the 1980's where real estate prices were in line with incomes. It seems like the uS is also heading towards this value matrix. Is the market fixing itself in the US. The affordability number is 2.9 X income, currently we are many multiples of that as they were in the US before the relentless slide.

Vancouver( and Canada) is said to be lagging the US by two years, this would appear to be a good indicator of where we're going. IMHO values will continue to fall in Vancouver until basic economics reasserts itself.



From COPE's own website. So it isn't a secret that raw sewage is discharged into False Creek. Now, exactly where are the discharge pipes, directly under the Olympic Millenium project? "Clean Up False Creek Now: Combined storm and sanitary sewer outfalls (CSOs) still pump raw sewage into False Creek with every hard rain. High levels of coliform bacteria in the sewage tainted waters are hazardous to kayakers, dragon boaters and all who use False Creek. CSOs may have been good enough in 1907, when the system was built, but thousands of people now live around the Creek. And the Olympic Village is going up on the southeast shore, as well as a centre for kayaking and other non-motorized craft in the East Basin – the most polluted part of the Creek. The City's sewage replacement program calls for upgrading approximately… Read more »


780,000,000 litres of raw sewage pumped into our 'pristine bay ' everyday. Anyone thought about what happens when the tide comes in? It's not called a flood tide for nothing.




So Vboom2 is trying a new handle, very sneaky.

Sorry pally , but the REBGV also has Surrey ( the Sewer) as part of the Fraser valley division.