Condo holes across Vancouver

Much has been made about the huge number of condo towers under construction in Toronto, but here in much tinier Vancouver we’re not doing so bad.

There are currently 16 towers in progress and 67 more in the works.

With population growth and prices on the retreat will there be enough buyers for all these new units or are we over-saturating the condo market?

Cameron Muir says don’t worry:

“Prices have been pretty flat since 2009,” Muir said. “There’s ample supply in the market place, but we are seeing prices at a steady pace.”

The fact more condos than single-detached homes are being built in Greater Vancouver is nothing new, said Muir, as condo starts have consistently made up about 75 per cent of all housing starts in the last several years. “It’s a function of land supply.”

Consumer demand during the last several months is trending on a 10 to 15 year average, he added.
One indicator, says Muir, of the demand-and-supply balance in the marketplace is the sales-to-new-listings ratio.

In Vancouver last month, the ratio, at 15.3 per cent, inched closer to a buyer’s market – but sits within the balanced range of between 15 to 20 per cent.

There hasn’t been a sustained buyer’s market since the recession hit, between late 2008 to early 2009.

..And of course it’s starting to smell like 08/09 again with the Eurocrisis and global economic sluggishness, but is it different this time?

Here’s one thing that’s different: Out in Burnaby yet another condo presale had a lineup, but what a waste of time for the participants according to VMD:

re: polygon’s “MODA” presale in Burnaby that opened today, with some people camping since Monday…

sold today: 138
total units: 249
ratio: 55%

yawn.

Wow. Can you imagine waiting in line for a week for something that sells only 55% of inventory?

Fizzle.

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jesse
Member

“Can you imagine waiting in line for a week for something that sells only 55% of inventory?”

Drift by Aberdeen Centre fountain, the sales office for the new commercial development wing is still there — after several years — despite there being big lineups when first opened. I thought it was sold out, but apparently Colliers still sees fit to keep the office open.

VMD
Member

re: polygon’s “MODA” presale in Burnaby

Additional details:
1. The first 150 units are offered 2% VIP discount. I guess so far, everyone is V.I.P.
2. Anecdotal info from a realtor: some buyers who “got” the units are still hesitant and are considering opting out during the opt-out period.

– Also, re-post from late Sunday:
Someone has been busy spam-faxing the following letter to Greater Vancouver households lately (posted in Chinese RE forum):
http://s8.postimage.org/sn9o3b4h1/housing_crash_fax.jpg

methinks the communication medium is a little outdated.. a billboard might work better?

s
Guest
s

a lot of 138 units sold were months ahead of time.

so the amount sold told was far below 100 I would expect.

G
Guest
G

How many % units need to be pre-saled in order for the construction to begin?

VMD
Member

@G:
news from 3/22/12 – I guess roughly 70%?

“Some of the country’s biggest banks have “shut the door” on lending to less established real-estate developers, said Brad Lamb”
“Less well-established companies may have difficulty getting loans from the top Canadian banks, even if they have pre-sold 70% of the units, collected 20% of the total purchase price in deposits, and can offer 15% of the project’s value in equity, Lamb said.
Efforts by federal regulators to slow the condo market will prove fruitless, since smaller developers should still be able to tap “tier-two” lenders and foreign institutions for capital, he said.”
http://www.bloomberg.com/news/2012-03-23/canada-banks-tighten-condo-lending-amid-bubble-fear-mortgages.html

patriotz
Member

Efforts by federal regulators to slow the condo market will prove fruitless, since smaller developers should still be able to tap “tier-two” lenders and foreign institutions for capital, he said.

The writer of the article is apparently unaware that RE buyers need to get financing, as well as developers.

If the developers can get financing to build but buyers can’t get financing to buy, what happens?

registered
Member
registered

Muir’s economic analysis always reads like forecasting the weather by looking out a window: trends with no fundamental analysis.

market stats
Guest
market stats

Is there any way to quantify, current pending and historical inventory of new product? There seems to be some ability to do this in Toronto.

patsan
Guest
patsan

The sad part is that the units for pre sale are not added to the inventory while pre-sold units are recorded as sales. The combination of two is skewing inventory/sales statistics to make them rosier for the industry and the gullible buyer.

patriotz
Member

@patsan:
Presales don’t go through MLS in the first place, so I don’t think that’s correct.

Anonymous
Guest
Anonymous

One industry insider mentioned once that they do. Is there anybody in the room who can illuminate the issue in question? Many thanks!

Anonymous
Guest
Anonymous

@Anonymous: I believe TREB books presales in its sales figures, I don’t think REBGV does this. Tweeter @CanadianWatchdog would know

Anonymous
Guest
Anonymous

@patriotz: “If the developers can get financing to build but buyers can’t get financing to buy, what happens?”

The buyers don’t need financing for a presale contract. They will need the financing 2 to 3 years down the road when the place is built. My guess a lot of speculators will not be able to finance these places based on new mortgage rules and the fact prices have dropped significantly from what they are locked into pay. There will be lots of assignments at below cost is what will happen. Possibly some bankruptcies if the buyers can’t afford to eat the difference.

Anonymous
Guest
Anonymous

@patsan:

Pre-sold units are recorded as sales upon completion of the building. So some sales today are those presold 2 years ago.

TPFKAA
Guest
TPFKAA

In the interests of encapsulating this point in the city’s history, it might be a nice idea for someone to go and photograph all the condos under construction. It would be a photo essay with a nice mix of vacant plots with hype hoardings, holes in the ground with diggers at the bottom, skeletal concrete towers, and finished product with the grass yet to grow and hype hoardings still all around the sales office. Just driving around you see them everywhere…. it doesn’t look balanced to me. Looks quite unhinged, in fact.

I would do it myself if I had the time…. Gord, are you busy this weekend? 🙂

Anonymous
Guest
Anonymous

@TPFKAA:

“it might be a nice idea for someone to go and photograph all the condos under construction…Gord, are you busy this weekend?”

LOL!!!

Anonymous
Guest
Anonymous

@patriotz: they all pack up and move to ottawa?

NeedYouLikeaKiteNeedsTheWind
Guest
NeedYouLikeaKiteNeedsTheWind

@Anonymous: Awww. Somebodies got a crush on Patriotz. 😳

Burnaby Bear
Guest
Burnaby Bear

@fixie guy:

Muir, like his comrade-in-arms, Pastrick, are both former CMHC employees and neither seems to have the credentials (masters or PhD) to be considered a ‘real’ economist.

bullwhip29
Guest
bullwhip29
These “presale” lineups are nothing but old school marketing gimmicks done by the pros for the sole purpose of generating some MSM buzz, photo ops etc. I’m surprised they haven’t planted strategic celebrity buyers into the lineups like they do at nightclubs. Obviously, the public has smartened up somewhat…or maybe they are being deliberately lied to by industry pro’s and their MSM schills? (Remember Telus Gardens, Marine Gateway, Ora Richmond Oval and of course the Olympic Village…uh, I mean the Village on False Creek? Better ask fast before they’re all gone!) With the introduction of the new mortgage rules, I wonder how many of these so called buyers at MODA will opt out after sleeping on it for a couple of nights? Of course, anyone who just purchased units in any of the above-mentioned projects in recent months are $hit… Read more »
pricedoutfornow
Guest
pricedoutfornow

@Anonymous:

“The buyers don’t need financing for a presale contract. They will need the financing 2 to 3 years down the road when the place is built.”

Yes, I know some people who bought presales at the Olympic Village. When time came to complete on the sale, they were SCRAMBLING to get financing to actually buy the units. They’d planned on a quick flip but were then left holding the bag, and now are reluctant landlords. Underwater I think…what’s the story on the Olympic Village these days?

900kCrackHouse
Guest
900kCrackHouse

@VMD: We should “crowdfund” a series of bus station advertisements stating something like. “The Biggest Financial Mistake you could make in your life would be to buy real estate in Vancouver in 2012.” With a picture of a bubble about to pop. 🙂 A little public service announcement to help prevent people from getting screwed.

jesse
Member

@pricedoutfornow: “what’s the story on the Olympic Village these days?”

Hey I’ve been asking the same for a while now. Maybe someone needs to push the City for an update. Rennie claims sales were doing well but… the sales centre is still open.

vreaa has asked for people to comment on developments supposedly “sold out” with sales offices still open. If anyone has any insight into this, shoot a comment over on their blog, or just email them.

The Aberdeen extension was one where it was claimed it was sold out in 2010. The sales centre is still open. Hm.

watson
Guest
watson

@900kCrackHouse: Public service announcements are usually free.

gordholio
Member
VMD, I love your reports from the Chinese forum trenches. I think I really *am* too busy this weekend to grab pics of the RE war zone. But I’m not too busy right now to relay the latest update on my little on-the-border neighbourhood – the same one I photo-essayed over at VREAA. Anywho, there’s currently 90 units (townhouses, disgusting row homes, SFHs) up for sale in this little patch of land. Lots of open houses this weekend as usual, and essentially no potential customers. As usual. My GF went by some event Saturday where they were out on the street serving coffee and pastries, hitting on any likely mark in the vicinity, etc, etc. She went by at 2PM, which I assume is peak time. There were, she says, four people there – undoubtedly including a teary-eyed realtor or… Read more »
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