BC, Budget, data, debt, economy, prices, renting, supply, west side

Olympic Village Sold!

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159 Comments

The city just took one big step towards getting out of their Olympic Village obligations with smaller losses.

Dozens of market rental units have been sold in one bulk sale to an investors group at an average of $350k a piece.

“This is our first multifamily rental investment,” said Malcolm Leitch, chief operating officer for investment management at Bentall. Mr. Leitch is listed as the only director of the limited company that was formed in July by Bentall to take ownership of the property, BK Prime False Creek Residences Holdings Ltd. “This is in our view one of the top rental projects in the city. And we’re very happy with [the price].”

That sale of the 119 units will reduce the City of Vancouver’s leftover debt from the Olympic Village financial mess by $41.5-million in one swoop and get it out of at least one part of its landlord business in the development.

The city still owns the 252 social-housing units in the 1,100-unit project.

We’ve seen some pessimism about the losses faced by taxpayers on this project, so it’s nice to see that number reduced by $41.5 million.

So where does that leave us now for those keeping score?  The city isn’t saying, but here’s an estimate:

It’s estimated by those close to the project that the city will lose between $240-million and $290-million in total – including the $170-million that was anticipated for the land, which it will never get.

There are still 90 unsold condos on the market and 26 more being rented.

Read the full article in the Globe and Mail.

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crabman

My grandparents lived in Santa Monica, California. Doing some genealogy, I noticed that the 1930 census had property values and addresses, so I tried to look for some homes in the area that haven’t been torn down yet. I found these two:

725 Navy Street – worth $3,500 in 1930, sold for $690k in 2011.
729 Navy Street – worth $3,000 in 1930, latest “Zestimate” is $1.035M.

Adjusted for inflation, the first one should have only sold for $46,573. You’re theory is off by a factor of 15.

The second one should be worth $40,758 if RE only goes up with inflation. You’re off by a factor of 25 on that one.

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YVR

Crabman:

And here is the inflation-adjusted Case-Shiller index. Also with an upward slope.

That is over a 15 year period where mortgage rates were cut in half. Wait to see what it looks like once interest rates go back to normal levels in the next 5 years. If you are invested there I wish you luck now they are talking about getting rid of Fannie and Freddy which provide the 30 year mortgages. The US has not bottomed yet.

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fixie guy

@154: Please do look at it. Vancouver was flat until the exceptional population boom caused by Hong Kong’s repatriation. The instant that stopped prices fell, though I understand locals love to blame the provincial government for that. In the 2000’s prices started rising again in concert with the rest of Canada and the feds pumping dollars into the market through the CMHC.

“And here is the inflation-adjusted Case-Shiller index. Also with an upward slope.”

Get serious. Shiller’s curve earned him global acclaim for demonstrating the exact opposite. It shows no upward trend going back to the 1800’s. It’s posted on these sites time and time again. Editing out the first 120 years isn’t cricket my good man.

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YVR

Crabman:

There have been countless redevelopments on the Westside over the last 30 years. Look at what’s happening along the Cambie corridor right now. Arbutus Walk in Kitsilano was industrial land in 1985. Today there are over 1,000 homes there. Look at all the new condos along 4th or Broadway.,

You consider building condos in a neighborhood as an improvement? Yikes. Anyway, in the areas there were no ‘improvements’ prices still went up the same amount. That proves prices didn’t go up due to so called improvements. The prime areas on the Westside don’t have condos. It is a bubble.

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crabman

Fixie – Look at your own link from comment #81. The upward slope in real prices is pretty obvious.

And here is the inflation-adjusted Case-Shiller index. Also with an upward slope.

http://1.bp.blogspot.com/-CaN_wK0nNos/Ucnufq8GXmI/AAAAAAAAa04/zfJaKB5QXqU/s1600/RealHPIApr2013.jpg

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fixie guy

crabman Says: “The reason desirable RE can appreciate faster than inflation is because incomes increase faster than inflation.”

Contrary to statistics for the past two generations.

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patriotz

“ – I would still like to see a source if you know of one”

If you don’t want to believe me go down to UBC or VPL and read the want ads for 1985 or thereabouts.

The fact is that house prices have increased massively more than rents since that time.

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patriotz

“@Anonymous1 “The people (several dozen) I have personally seen buy $600,000+ dollar homes DO so with “multi-hundred thousand dollar down-payments’.”

What does that mean? ”

Um, I think it means they have sold one property that they bought years ago and bought another.

And a lot of them are probably starting with a higher mortgage on the new property than the outstanding balance on the old one.

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Burnabonian

@kabloona article “Well, for one – many experts have been predicating a condo crash, but they have been doing so for the last 15 years! Suppose there is a crash, as a homeowner who intends to reside in the condo versus an investor who is looking at it solely from an economic perspective, you wouldn’t be too adversely affected. This is because most people will live in a home about 4 to 5 years, and assuming their monthly costs are fixed, they should be able to weather a dip in the market. Historically the housing market has been cyclical and it bounces back within that timeframe.” I love it. This guy is proposing putting out $25k plus $2k/month just for the privilege of living in a condo that you could rent for $1730/month. Risk? What risk! When the crash comes,… Read more »

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N

http://www.vancouversun.com/business/affordability/Mortgage+rate+hikes+squeeze+Canadian+homebuyers/8822907/story.html

On an unrelated note, if you cannot speak a language, don’t pretend you can. It makes you look like a goof, Son of Ponzi.

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kabloona

Wow, real estate broker recommends condo purchase…who’d a thunk it? 😉 http://www.theglobeandmail.com/life/home-and-garden/real-estate/with-toronto-rents-spiking-condo-ownership-looks-appealing/article13912770/?service=print “With Toronto rents spiking, condo ownership looks appealing Ricky Chadha Published Thursday, Aug. 22, 2013 12:46PM EDT Last updated Thursday, Aug. 22, 2013 01:01PM EDT Question: My boyfriend and I are hoping to move from renting to buying a condo. We don’t mind renting, but prices are getting kind of crazy in Downtown Toronto and we figure now is the time to take the plunge for a condo. Do you think condo prices have bottomed out? Answer: While I can’t see into the future, nor would I try to speculate on whether condo prices have bottomed out (I’ll leave that to the expert economists) – I do believe there may be a compelling case to buy if you can afford to do so. It is very true that… Read more »

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Son of Ponzi

Meth,
Reality Check.
We just met my son’s soccer team for the next season.
13 players, 6 Asians who don’t speak English.
And the they are 12 years old.

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Best place on meth

“White Devils, better learn Mandarin if you want to order your favorite burger a few years from now.”

This round-eye doesn’t give a fuck about McDonalds or mandarin.

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jesse

143 “Bears of future past”

Condos have no meaningful future density premium. Cap rates are very low. SFH have density premium. Cap rates are very very low.

I’m a self-declared idiot, and even to me it’s obvious you guys can’t get it right, even when you go to the effort of finding week-old comments from a self-declared idiot.

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calvin

You read jesse and then do the oposite. Its kind like george constanca way.

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Bears of future past

then:

jesse Says:
August 18th, 2013 at 11:21 pm 118
When was it ever about what residents want? Density is coming, the prices have been signalling that for decades.

and now:

jesse Says:
August 22nd, 2013 at 7:21 pm 140
“future density is priced in”
wrong.

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Ouch

A comment on this blog:

I have never seen so much confidence from so many people who have been so wrong about so much for so long.

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Clockbike

“future dense-ity is priced in”
right.

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jesse

“future density is priced in”
wrong.

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Bull! Bull! Bull!

current prices for vancouver are totally rational, because future density is priced in.

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jesse

135: I’d rephrase the trophy as: “price drops correspond to higher rates so affordability doesn’t improve”

It is true that if prices drop and rates rise that mortgage payment drops will be less. There is however one slight (ahem) hiccup. Anyone care to guess what that might be?

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Son of Ponzi

It’s rather simple.
If there is general anticipation that the price of a product will go up, people will go out and buy before the price goes up.
As we know quite well, most RE buyers do not care about the cost/price of the property.
If they can afford the monthly payments (and qualify) they will buy.
So the cost of the property is mostly irrelevant in most cases, and the price of the monthly payments is the price of the product.
Therefore, if there is a general anticipation that the rates will go up and the product will cost more, people will rush out to buy.
This is just “herd mentality” in action.

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UBC in Crisis Mode

Owner bought this condo in 2005 for $280,000, now rented for $1,700 a month (non-furnished), listed for $459,000 (reduced $20,000) for the current listing.

http://www.realtor.ca/PropertyDetails.aspx?PropertyID=13343123&PidKey=-103844103

When being asked if the owner would sell it at assessed value of $426,000, the realtor said no, he thinks market value is way higher. The condo has been on the market for 67 days.

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Burnabonian

@Anonymous1 “The people (several dozen) I have personally seen buy $600,000+ dollar homes DO so with “multi-hundred thousand dollar down-payments’.” What does that mean? First, (if you are not just making this up,) it means that you have tipped your hand and self-identified as a Realtor (r) or other industry “professional”. Nobody else would know the financial details of “several dozen” home purchases. Second, it means that you have not been reading. Sure, dedicated flippers right now will have a few hundred k in equity. Hell, a homeowner who has been in a coma for three years or even just one who stays home and drinks by himself will have that. Rising tides float all boats. But you did not read the part about actual INCOME now being required as well. Statistics Canada knows exactly how much declared income (and… Read more »

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