An anecdote posted in the comment section by Ham Solo:
Interesting anecdote from this weekend.
At a party with someone who owns one unit in a multi-unit Whistler condo.
The condo is ~30 years old, wood frame construction. Not good condition. About two years ago, the strata agreed upon a plan to renovate the property. Many of the people who owned units did not have much money. Therefore, there was a lot of debate over how much budget to authorize for the renovation and the owners voted to hire a fixed-price contractor with a set budget.
However, due to rising building costs, including wood, labour etc, the first contractor withdrew. So did a second. The strata council revised upwards the budget, and a third contractor was engaged. Because of the pending renovation, many of the unit owners served eviction notices on their tenants so that the building would be empty.
Of course the evicted tenants, who were probably service industry people in Whistler, weren’t thrilled and held an “eviction party” on their way out, thoroughly trashing the place.
Now the 3rd builder is considering walking away from the project due to concerns over profitability.
At the moment, the building is unliveable. Each owner’s share of the building budget for the renovation is now higher than the market value of similar available-for-sale condos in Whistler on the secondary market. Total mess, and yet owners are only just coming to terms with the fact that their investment is more or less worth zero at this point. They have about a 1/12th share of the rights to an as of yet unbuilt building, the cost of which would exceed the price of purchasing similar existing condo inventory in Whistler.
Lessons for “investors” – condos carry many hidden costs. You can’t control who lives in your buiding. You can’t make substantial repairs without the agreement of others. If you just owned a piece of land and a building, its value can decline, but it can’t go to zero. However a condo “investment” can go to zero. Good luck condo “vultures” snapping up heavily discounted older low rise investments.
The Globe and Mail has a ‘financial facelift‘ featuring a realtor couple from BC.
If you thought real estate was always the road to riches you might be surprised by some of the numbers in this article.
She is 52, he is 66. With commission income sagging, they are revisiting their retirement plan, which is to pay off their real estate loans and sell their two rental properties when the market recovers. The rentals are operating at a loss.
This couple has a cash flow problem, and this while the market has been flat as Dave would say.
What happens if we see a sharper correction in our high prices and how many other salespeople are in the same boat?
Read the full article here.
Some of you may recall various ‘flippers in trouble’ blogs during the US bust.
They were popular in California, Nevada and Miami.
These chronicled various sales or attempted sales of real estate that didn’t work out as a road to easy riches.
They were the Nelson laugh of the housing bear.
Well in case you missed it Vancouver now has it’s own version.
Vancouver Flippers in Trouble chronicles local sales or listing prices that work out as a loss. Here’s what they say on their ‘about’ page:
A website dedicated to following the bursting of the Vancouver Real Estate bubble by documenting real-life losses on properties purchased during the bubble.
Know of any flippers in trouble? Enter the details in the comment section or in the contact form below and we’ll try to feature them on an upcoming post.
It’s not just the flippers either, sometimes those have held for a while look to be trying to squeak out without too much of a loss.
Like this place that six years later is asking $100k less than it was bought for, or this place in Spectrum that looks like it’s up for its second sale at a loss!
If you’re looking for the antidote to ‘real estate always goes up’ you’ll find it there!
VMD has updated his Vancouver Real Estate Battle Map.
Here’s the May 2013 SFH edition:
Now that tax season and vacations are over and done with, we head back to the Battlefield!
– Fraser River turned crimson with Bovine blood as the REBGV Bulls failed to defend their Last Stand in Coquitlam. The Bear Army pressed forward and took control of North Surrey for the first time in this War.
– The Bears diverted their main attack forces in Van West & Richmond to solidify control of outskirts such as West Van, Burnaby, Ladner, Poco & Tsawwassen.
– The following Bull Territories are facing imminent defeat: Surrey.
Looks like statistics from last month are starting to show up now.
Over at the Vancouver Sun they’re leading with the headline stat that YOY sales are down almost 30%.
The REBGV Home Price Index (HPI) is now down 5.6%, which Aleksey points out means that people who bought last May with the minimum down payment are now ‘underwater’ on their mortgages.
It’s been quite a while since we’ve seen this happen, but we’re now at a point where a small number of recent Vancouver home buyers owe more for their property than their property is worth on the market.
How long till we see the term ‘underwater’ or ‘upside down’ when it comes to Vancouver mortgage holders in the news?
With sales and prices down, REBGV president Eugene Klein did find one market indicator that is up: Realtor anecdotes of visitors to open houses.
Sales in February followed recent trends and were below seasonal averages, though our members tell us they saw more traffic at open houses last month compared to the previous six to eight months.
Somebody should tell the Vancouver Observer so they can correct this article again: What does it mean when nobody shows up to an open house in Vancouver?
“Well, this is a bit odd.” The Realtor checks his phone again, but it’s not saying anything new.
It’s been an hour, and nobody has shown up to the open house. We’re standing on the ground floor of a townhouse.
The Downtown East Side, but it’s silent except for CBC Radio 3: classical music plays quietly from tiny, beautiful speakers that can probably only play classical music. Top-40 would cause them to implode.
The Realtor walks out the door, across the long, wide patio, to the front gate of the courtyard. He’s making sure his phone number is correct on the open-house announcement. It is.
A bright, sunny Saturday in Vancouver. Just after lunch, and there’s nobody here but us.