Leaky condo loans dry up
From the boom/bust irony department: It appears that the slow down in hectic condo construction means less money to fund the leaky condo repair loan program from the Homeowner Protection Office. It’s apparently gotten so bad that the HPO is no longer funding leaky condo repair loans.
RSS 2.0 comments feed. Both comments and pings are currently closed.…Soloshy added that some residents are having extra problems because the HPO has not officially turned them down, but instead is keeping their applications in limbo.
She said this makes it difficult to re-approach other lenders, who will generally consider helping only after someone has been officially turned down by the HPO.
“I had a lot of difficulty proving to the military that HPO wasn’t returning my calls,” Barnes said of getting his military distress loan.
“All I needed was something saying they had run out of funding,” he said. “They wouldn’t even get back to me regarding that.”
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pricedoutfornow Says:
June 22nd, 2009 at 10:11 am
Yup, another reason not to buy a condo in the lower mainland.
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realpaul Says:
June 22nd, 2009 at 11:30 am
I’ll never understand why the architects and engineers insurers were never forced to accept liability. It is a stinky mess. After all it was a design problem from the very outset. At the time everyone knew it. Buildings that were under construction were already starting to fail and the answer from the architects and the engineers was ‘patches’. The City waived blameless all the ‘officials’ who were involved in the process and instead focused on the builders, who were all limited liability entities and had vanished as always. When the provincial government made it impossible to sue the government or any of the fiduciary particapants the unit holders got royally screwed.
It was not shoddy building or materials, it was a really fucking bad design and the architects and city engineers dropped the ball and successfully got the COV and Provincial government to shut down the legal process. The whole thing could have been pushed into an insurance filing and then the insurance industry would have said no to anymore of those types of ready to fail structures. Without an insurer none of those designs which began failing in 1984 would have ever been built again. The blame has always been with the COV and architectural community and they got off scott free.
Trust your government…oh yeah baby.
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oneangryslav Says:
June 22nd, 2009 at 11:42 am
realpaul:
Absolutely agree! My father, who is now a retired construction worker, worked on a few of the early buildings in Coal Harbour (this would have been mid-1990s), and I remember him telling me about him getting into arguments with architects, engineers, and city planners on site regarding the design flaws. One that I remember in particular was the balconies in some of the buildings being higher than the inside. When my father asked them about the effect of gravity on flowing water (where will it flow) they told him to be quiet. You see they were the “professionals” and he was just a lowly immigrant construction worker.
So much of the stuff that is built up here has been copied from much drier climates, with predictable results.
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Denialisrampant Says:
June 22nd, 2009 at 11:44 am
The ‘don’t worry be happy’ crowd really should get out more often.
The welfare rolls are swelling dramatically.That means huge numbers of people have fallen off the EI train and can’t get up.
http://www.vancouversun.com/Go.....story.html
The ’summer of love’ may be coming to an abrupt end says World Bank. Governments have borrowed too much money and the economy looks like it’s headed back into the ‘BIG DOUBLE DIP’. If you bought a house two weeks ago because you thought capitulating into the euphoria was the right thing to do, oh oh spagetti-o. The cost of borrowing is going up again to pay for some of the wreckless ‘finger in the dyke’ spending.
http://www.globeinvestor.com/s.....2/GIStory/
Check out the global equity markets today. Bye bye ’spring bounce’ and hello ’summer swoon’. Timberrrrrrrrrrr !
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M- Says:
June 22nd, 2009 at 12:34 pm
realpaul: “It was not shoddy building or materials”
I lived in a previously-leaky condo for a couple of years (a gold Georgie award winner!). There were three major problems that led to its leakiness.
1) Shoddy construction – throughout the building, flashings were reversed above windows, leading water into the building rather than away from it.
2) Shoddy construction – throughout the building, trims were reversed at the bottom of the vinyl siding, leading water into the building rather than away from it.
3) Shoddy design & construction – throughout the building, just under the eaves there was a panel that angled from the eave down to where it met the walls. The panel was absorbent, bringing moisture through the panel into the building. The panel also had no drip edge, so any water rolling down the panel would seep into the building at the poorly-assembled seam with the walls.
Who’s to blame? I blame:
1) The builder and the city inspectors.
2) The builder and the city inspectors.
3) The architect, the builder, and the city inspectors.
Where the the courts place the responsibility?
-The architect, since they were the only surviving entity, and they were covered by some insurance; they paid 10% of the costs of the repairs.
-The builder (a big, “reputable” builder) had built the building with a subsidiary, which had since folded, so they were off the hook.
-The city was a last-line-of-defense but they apparently don’t really carry any liability.
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NO -LYMPICS Says:
June 22nd, 2009 at 1:14 pm
QUOTE:
” Coleman was not available for comment, but his office sent an e-mail with general information about the situation.
The e-mail said the HPO gets its funds through a $750 levy charged on all new residential construction units in B.C.”
======
What gets me is that NEW units pay a $750 levy to fund this
leaky condo repair fund. So, somehwere in the sales agreement there is disclosure of this? Thus, people are making higher mortgage payments to fund this levy ?
From what I can see there are plenty of buildings that are prime candidates for being leakers, have had no work done, …are their owners in denial ?, but now no money in the fund to fix ‘em ?
If you don’t fix them it will only get worse. I guess this has hit a critical mass…more and more leakers were identified from past booms, reliant on funds from recent booms….the lack of funds is a rather ominous sign re: economy and future SOL leaky condo owners.
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cashisking Says:
June 22nd, 2009 at 1:30 pm
Sold my HED today … took my 20% and ran b4 trading gods thought I was greedy!
I’m still short the S&P and long some corp debt – mostly cash – money mkt funds.
What me worry
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Dave. Says:
June 22nd, 2009 at 1:52 pm
M-:
Similar to your experience, my understanding is that most (but not all) leaky condo problems can be traced to construction not meeting design.
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BBY Says:
June 22nd, 2009 at 2:22 pm
So all those getting into leaky condos as a way to leaverage into a future SFH, are getting negative equity, depleting their cash reserves (savings), and pushing their credit rating to the brink. This will lead to less money available to buy an SFH, as the traditional (last 10 years) way to buy an SFH was to catapult your capital through the appreciation of a condo. Well that worked just fine for the last 10 years. 2 years ago a good friend sold his condo for $525K. He had paid $340K for it 3 years earlier. With his savings that helped him put over 50% down on a $725K SFH, leaving a mortgage of less than $300K.
MOST of that down payment came from the appreciation of the condo.
Now that condo appreciation is gone. Where’s the new down payment coming from for SFH? And when owners of overpriced condos have lost equity, depleted their savings, and decimated their credit scores, who will take their place?
hehehehe. I could. At a significant discount to today’s prices. Just need a little bit of patience, that’s all.
Good grief, there are people out there in this recession who have 30 year mortgages on their newly acquired overpriced condos. They are relying on their condos to appreciate. A condo should never have more than a 15 year mortgage. Of course we will not see evidence of this tragedy now. This plays out over years. But just like a receding tide, this will happen and nothing can stop it. We’re gonna see that a lot people have been swimming naked.
2+2=4. Even for large values of 2.
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pricedoutfornow Says:
June 22nd, 2009 at 3:21 pm
BBY:
I agree, I can’t tell you how many times over the last 5 years I heard “we would have never been able to save up $10,000/$15,000/$20,000 if we had never bought our condo and had it go up do much in value” and I thought to myself…what happens when this appreciation stops? Are so many people living so close to the edge that they can’t even save up a few thousand for a down payment? I suppose this recession may turn out to be quite difficult for many people, if they don’t have any savings and they were counting on that never-ending appreciation to move up.
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Chilled Says:
June 22nd, 2009 at 5:29 pm
Couldn’t we keep this Ponzi scheme going a bit longer if leaky condo owners contributed to a fund for the construction of new leaky condos?????
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realpaul Says:
June 22nd, 2009 at 5:55 pm
NO -LYMPICS:
#6 NO, welcome back
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realpaul Says:
June 22nd, 2009 at 6:01 pm
oneangryslav:
#3, Apparently theres a place where it never rains, never snows, never freezes, gravity doesn’t exist and the wind doesn’t blow. Thats what sold the city engineers and architects on plaster siding and goofy-sided articulated boxes. Somehow the brochure got left in the COV engineers lunch room.
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patriotzed Says:
June 22nd, 2009 at 10:37 pm
NO -LYMPICS:
What gets me is that NEW units pay a $750 levy to fund this leaky condo repair fund. So, somehwere in the sales agreement there is disclosure of this?
If the levy is paid directly by the builder there is nothing to disclose. It it not the business of the buyer what the builder’s expenses are. It’s the business of the buyer what they pay for the property. Take it or leave it.
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Crumblestiltskin Says:
June 22nd, 2009 at 10:41 pm
Just as a thought experiment: wouldn’t an increased level of leaky condos increase the value of SFH and older condo buildings, due to scarcity of living spaces? I have a feeling taxpayers are gonna eat this one again and again..
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Moody Blues Says:
June 23rd, 2009 at 3:24 am
Chinese Drywall Update:
Several of you replied to my post a couple weeks ago regarding my neighbor who believes he has contaminated Chinese drywall venting toxic sulphur compounds. Someone from Environment Canada is coming by this month to check it out–I will keep you posted. Meanwhile, saw this item on the drywall issue on a Toronto-area real estate blog:
http://www.movesmartly.com/200.....risis.html
Again, would be interested in hearing from anyone else with first-hand experience.
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patriotzed Says:
June 23rd, 2009 at 8:04 am
Crumblestiltskin:
Just as a thought experiment: wouldn’t an increased level of leaky condos increase the value of SFH and older condo buildings, due to scarcity of living spaces?
No the opposite, because it decreases the market price and equity of existing condo owners (both the leakers, and other condos by association), and thus their purchasing power for other properties.
This is exactly what happened in the RE bear market of the late 90’s.
Also, there is no scarcity of individually titled living space (SFH, condos, etc) in Vancouver, period. There is more living space per capita then there was a generation ago.
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M- Says:
June 23rd, 2009 at 8:27 am
Moody Blues: Good luck! Let us know how it turns out!
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Londonernow Says:
June 23rd, 2009 at 9:38 am
This obviously has nothing whatsoever to do with Vancouver:
Carney Says Canada’s Slump Has Become as Deep as U.S.
http://www.bloomberg.com/apps/.....4sm4GBMVxQ
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The Pope Says:
June 23rd, 2009 at 9:59 am
Moody Blues: Thanks for the update. If you want to write a topic post on this when you hear the results of the testing, I’d be happy to publish it here.
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NO -LYMPICS Says:
June 23rd, 2009 at 11:47 am
#14:
Agreed re the disclosure:
However, somehow the powers that be have felt that owners of new units should play banker for past wrongs and fix old problems.
I wasn’t aware of the funding source, I think many assume the Gov’t funded it from general revenue( ya, I know its still OUR Tax $$$/ money, but not an extra $750 levy ).
Gov’t pulled a fast one and washed its hands again?
My understanding is these loans are zero interest and I presume that as they get paid back they re-enter a pool of funds for future leaky condos.
Now that this fund has dried up, and many condos still need to get fixed…what next ? Lots of lawsuits bankruptcies and foreclosures ? Those in stratas may feel “Im all right, Jack ” as individual owners, but what about their neighbours?
This latest development could cause quite a few sleepless nights for those in stratas.
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Crash Says:
June 23rd, 2009 at 12:15 pm
City inspectors are next to useless. My folks lived in a condo in Langley where one of the ground floor units in their building had the bathtub draining into the crawlspace because the bathtub drain was not connected to the sewer line during construction. It took the strata a long time to determine where all the water was coming from. By the time it was figured out, the unit’s floor support beams were rotting and had to be replaced. But the place passed city inspection after construction.
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Moody Blues Says:
June 24th, 2009 at 9:22 am
Thanks Pope. If I learn anything of real substance I will be happy to post it here.
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Vancouverite Says:
June 24th, 2009 at 11:41 am
DO NOT BUY A CONDO!
DO NOT BUY A CONDO!
DO NOT BUY A CONDO!
DO NOT BUY A CONDO!
DO NOT BUY A CONDO!
12 years ago you could not give away your Condo Here!
WELCOME HOME!