Empty condos and the speculative market.

A few of you have already pointed out this article, but it’s worth a read if you haven’t seen it.

It’s a problem when Vancouver condos sell but the lights stay off

There are a number of ways you could address the problems created by a speculator driven housing market, but no move to do so yet.

Here’s one point from Sandy Garossino about the kind of units we’re building downtown:

“I think we are creating a form of housing that is perfectly suited to speculation. It couldn’t be more suited to speculation.

“They are completely interchangeable, one suite is like another suite. This is the kind of thing that drives easy trading. It’s not completely liquid, but it is a lot more liquid than say a house on a lot. So, from a policy standpoint, what we should be doing is looking at the kind of housing that speculators don’t like.

“The public policy from my perspective should be to cool that market, because it’s driving market confidence. Market confidence should match market conditions.”

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Carioca Canuck
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Carioca Canuck

“We don’t have the tools to measure it,” explains Mr. Yan.

This is pure unadulterated bullshit.

I’ll fix it for him……….”We don’t have the balls to measure it”.

Head tax redux
Guest
Head tax redux

How bad is it going to get? What are your social economic predictions? No one is aloud to say anything is a bad idea because we are just making wild guesses.

Mine: Richards and seymore turn more ghetto as condo owners push for lower fees and buildings fall into disrepair, increasing the number of hookers and drug dealers that live in them.

Q
Guest
Q

Hookers on Richards and Seymour would be coming full circle. There were hookers there for years before the condos ever went up.

MarKoz
Member
Active Member
Further to Garossino’s point about not building the sort of units that attract speculators, I have always wondered why there are not more family size condos. Virtually nothing over 2 bedrooms is built unless it is in the super high end category. In the US they have larger 3 bedroom apartments for sale that are not in the luxury category. I am wondering if there is a practical reason why it isn’t done. If a 1500 sq ft house costs “x” to build (and buy the land of course) and “x” is more than people can afford, how many 1500 sq ft units do you have to stack on top of one another in a tower before the price per unit becomes affordable? Can it ever become affordable, or are the construction costs for larger units so prohibitive that such… Read more »
Anonymous
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Anonymous

Markoz the reality is that three bedrooms do not sell for as high a $/sqft. They are harder to rent and harder to sell. Builders don’t build them because the business case is poor for them and for the buyers.

VMD
Member
The Star: [Some Toronto condo sales face CRA scrutiny] Some sellers of new Toronto condos are seeing years of price gains in a booming market taxed away. Canada Revenue Agency auditors have added penalties to taxes for those who claimed their condo as a home, but soon changed their minds and sold. The CRA has yet to disclose how many sellers have been affected. But Toronto tax lawyer and text author David Sherman and other tax experts, accuse auditors of unfairly ignoring some legitimate explanations for sales. Meanwhile, Finance Minister Jim Flaherty wants the CRA to collect more than $500 million extra from suspected tax cheats this year. “The auditors have applied a rare 50 per cent penalty for ‘gross negligence,’ even on those who had never owned a condo previously,” says Sherman. Sam Papadopoulos, a CRA spokesman, said the… Read more »
RFM
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RFM

I contend that determining the number of ‘empty’ condominiums is extremely difficult. I am very familiar with one high-end building in Yaletown where not a single unit is ‘empty.’ However, on any particular day, at least 1/3 of the units are unoccupied, except during ‘high season.’ The reason: these are second or third homes for people with the resources to have them. The were bought as second and third homes, they will continue to be second and third homes. Someday, the owner may sell, not because a speculative investment goal has occurred, but because of retirement, death, divorce, ‘downsizing,’ ‘upsizing,’ financial difficulties, job transfer or another ‘life changing’ event.

Alum
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Housing starts rose 7% in March to a seasonally adjusted annual rate of 1.04 million, the highest rate since June 2008

http://www.marketwatch.com/story/highest-home-construction-rate-since-2008-2013-04-16?dist=lcountdown

southseacompany
Member
southseacompany

@ Markoz #4

“I have always wondered why there are not more family size condos. I am wondering if there is a practical reason why it isn’t done.”

The answer is in your first sentence. Its because those units don’t attract speculators.

painted turtle
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painted turtle

” It’s an easy city to live for maybe five years, but to really set up roots? I think that’s becoming increasingly difficult.” I agree with that sentence. I heard it over and over from most families who tried to settle down in Van.

@MarKoz
I once asked the question to a developer. The answer: “This society expects middle age people with children to live in a SFH, with a garden. So there is no market for 3 bedroom apt. We build them for DINKYs and boomers, and the growing market of middle age bachelors. Those people need a second bedroom for visiting family and as an office space. The boomers market explains why we build toilets at every floor in townhouses.”

AlanL
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AlanL

Housing starts rose 7% in March to a seasonally adjusted annual rate of 1.04 million, the highest rate since June 2008

For those who gives a thumb down on this article must be either a bull or didn’t read it.

People do believed that US housing recover will bring Canadian housing price.

UBC in crisis mode
Guest
UBC in crisis mode

$5 million price drop (after 200 days!)
Asking $17,800,000
Assessed: $16,076,000

3390 THE CRESCENT VANCOUVER

http://www.realtylink.org/prop_search/Detail.cfm?MLS=V973696&REBoards=All&From=MLS

@UBC in crisis mode
Guest
@UBC in crisis mode

Meaningless. The house was over priced to begin with. It’s like a real estate agent trumpeting a house that goes for over ask because it was under priced to begin with. Tits or GTFO.

Absinthe
Member
Absinthe
Markoz – I agree with the above posters that it’s because of profit motive, although I think a business case for many years could have been made (although not anymore, with prices the way they are). Only squeezing an extra Lamborghini for the developer out of the bottom line became more important. I must admit I’ve never really understood why people have so much confidence in the “free market” making the best allocation of resources. When everyone is playing their book, you end up with weird swarming patterns: it’s a heuristic algorithm. Why we look at heroin junkies as irrational and gaming profit junkies as rational? I’ve been hanging around a lot of economy blogs now for years, and it’s funny – a lot of freshwater thinkers believe people are idiots, collaborating governance groups are incompetent, and yet the sum… Read more »
patriotz
Member

I think you are missing #5’s point. Developers don’t build 3 bedroom condos because buyers don’t want them – more precisely, they are not willing to pay nearly as much per square foot as for 2 or 1 bedroom condos.

That’s just the market speaking. IMHO if the city mandated the construction of 3 bedroom condos they would just end up being shared by singles anyway.

Can't wait
Guest
Can't wait

@#2

my prediction is that COCs go ape shit. in their rage they blame everyone except for themselves. i expect to see them lashing out at their favourite scape goats.

John
Member
John

> MarKoz “I am wondering if there is a practical reason why it isn’t done. ”

When a developer gets a lot rezoned for a building, they are given a FSR Ratio – how many square feet of units they can build given the size of their lot and a building height limit. The developer now has the choice between fewer larger units or more smaller units. The pricing for units in the market seems to reward (per square foot) smaller units, so they build smaller units.

If the city said your building is allowed n square feet and k units, you would see the distribution of units change. I believe the city is ultimately driven by the number of people they can cram into the City of Vancouver so they don’t really care for larger (lower density) units.

Anon321
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Anon321

Housing starts rose 7% in March to a seasonally adjusted annual rate of 1.04 million, the highest rate since June 2008

http://www.marketwatch.com/story/highest-home-construction-rate-since-2008-2013-04-16?dist=lcountdown

The US and Canadian housing markets have been polar opposites for the last 8 years and I fully expect that to continue. In the next 5 they will probably revert back to their historical means.

An Observer
Guest

@UBC In Crisis,

That $5 million drop has come after a previous drop of $9.1 million… In September it was listed for $31.9 million and today it is listed for $17.8

mikemcgoo
Member
mikemcgoo
I think we need to be careful to distinguish local speculation from foreign speculation. What is wrong with a citizen buying up a couple of condos in addition to his/her personal residence to hold as rental properties? What is wrong if an empty nester sells his/her house, spends the winter in the desert and buys a Vancouver condo to reside in during the summer? The biggest concern we should all have is the proliferation of foreign buyers, whether they are speculating or choosing to live here while they earn their incomes elsewhere under different rules and regulations – all while enjoying (at nominal cost) the social programs the locals are paying for. It has created an uneven playing field where the locals are disadvantaged and anybody that points out the obvious is labelled as a racist. This is completely distorting… Read more »
An Observer
Guest

So you all remember the disgusting fake gold house in West Vancouver that was making the rounds in the news as the most expensive listed home in Canada at $37.9 million back in March?

It is now listed with a new realtor for $19.888 million and the fake gold house pictures have been replaced with a water view

MadAsHell
Guest
MadAsHell

@ An Observer

Don’t ya just love the amount of 8’s in the price.

Vote Down The Facts
Guest
Vote Down The Facts

“I think we need to be careful to distinguish local speculation from foreign speculation. ”

Why? The net result is the same.

mikemcgoo
Member
mikemcgoo
So by that nature your want to eliminate free market capitalism. Speculation is a normal part of all functioning markets. Even your most basic purchases involve some form of speculation, whether it conscious or not. There would be no commerce if market participants did not speculate on future events. Clearly, there is excess speculation in housing, both foreign and domestic, as a result of government policies re. interest rates, loan loss guarantees and a flawed immigration policy. The government is to blame for this…not the speculator. The speculator is doing what it is supposed to do which is allocating its capital in order to generate returns. In short, the government is to blame of all of this – not the market participants. Taxing ‘speculators’ only validates the government’s policies, when it is the government, not the speculator to blame. The… Read more »
Anonymous
Guest
Anonymous

@mikemcgoo

So by that nature your want to eliminate free market capitalism.

The real estate market in Canada is a true “free market”???

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