Vancouver Condo Info

Its the weekly news round-up and open topic post for the weekend. Here’s a few stories to get us started:

-Thinner profits predicted for housing developers
-The fine line between journalism and advertising
-Ozzie: Don’t listen to the gloomers
-Buy a condo, get a free flat-screen TV!
-Pre-sale buyers of failed condo will come out ahead
-Developers say its still safe to buy pre-sales
-CBC: Construction receivership stories sought

And last but not least, a new blog to find and share anecdotes about the Vancouver real estate market:
-The Vancouver Real Estate Anecdote Archive!

So what are you seeing out there in the real estate and economics universe? Post your news, links and theories here and have an excellent weekend!

 Loading …

The CBC is reporting that two Chandler Development Group condo projects have run into financial difficulty (yes that Chandler Development Group). A lawsuit didn’t stop construction of these projects, but H&H Yaletown and Garden City Richmond have gone into recievership. This just one week after the same problem with the Eden group Sophia development.

H&H is a 192-unit building, while Garden City is comprised of 108 units, according to a receiver manager’s report to the B.C. Supreme Court.

Both projects were scheduled to be completed by the end of June 2008.

“The company was running into cost overruns, they were running out of cash and I think the lenders wanted to complete the project,” said Bowra Group President David Bowra.

“But they weren’t convinced it could be completed without the assistance of a third party. So they decided to apply for a receiver to be appointed.”

The receiver has discovered that 23 condos in the Chandler Development Group projects were allegedly sold to insiders at prices well below market value, Bowra said.

They may get to keep their condos, but will likely have to pay today’s prices, he said.

For the pre-sale buyers that paid full market price there is a silver lining:

It appears that the other buyers will get their condos for the price paid as there is enough money available to finish the job.

Thanks to BBY and exvancouverite for the link.

 Loading …

This is an easy one, I’ll just link to the top 4 headline stories on MSNBC:

Record drop in house price index

U.S. home prices dropped 8.9 percent in the final quarter of 2007 compared with a year ago, Standard & Poor’s said Tuesday, the steepest decline in the 20-year history of its housing index.

Foreclosures up 57 percent in 2007

The worsening situation came despite ongoing efforts by lenders to help borrowers manage their payments by modifying loan terms, working out long-term repayment plans and other actions

Wholesale inflation rate jumps up in January

The January inflation surge left wholesale prices rising by 7.5 percent over the past 12 months, the fastest pace in more than 26 years.

Consumer Confidence weakens significantly

The index measures how consumers feel about the economy. It has been weakening since July, suggesting that wary consumers may retrench financially, which could fatigue the economy further.

Does any of this matter to us in Canada? The IMF seems to think so.

More vital than Canada’s massive trade ties, financial markets have become the primary conduit for the faltering U.S. economy to infect its northern neighbour. And that’s why Canada can’t easily escape the economic headwinds now buffeting the United States, the report concluded.

Canada-U.S. trade represents 49 per cent of GDP, up from 37 per cent in 1988. But the value of cross-border financial holdings, meanwhile has shot up to 90 per cent of GDP from 53 per cent before the trade pact.

Meanwhile Bank of Canada Senior Deputy Governor Paul Jenkins has come out as skeptical about ‘decoupling’ - the theory that our economy can detach itself from the US economy, our largest trading partner.

“Decoupling doesn’t really do it for me,” Jenkins told the House of Commons’ Industry Committee today in Ottawa while taking questions about the strength of the Canadian dollar. The word “suggests that there’s only one force out there or two and we really need to look at all of those,” he said.

If all this gloom and doom has you feeling down just remember: its always darkest before the dawn, every cloud has a silver lining and you can re-arrange the letters in ‘Stagflation’ to spell ‘A Tango Lifts’!

 Loading …

Old news to some, but The Sophia on east 11th and Sophia street in Mount Pleasant has gone into recievership. The Bowra group (the reciever) has 21 days to submit a plan to the courts. The thing that makes this really surprising is that the Sophia is 85% complete. When the Eden group canceled two other Vancouver developments in November of 2007 Bill Eden assured reporters that the Sophia would be completed.

The problems with completing all of these developments is reportedly related to cost over-runs and difficulty finding construction crews, but with condos selling for record high prices in Vancouver how is this going to play out in the long run? Limited availability of crews sounds to me like a temporary bottle-neck based on a large number of projects currently under construction, has the cost of labour really risen that much in the last few years?

The Sophia will very likely be finished given that it’s 85% complete, but this news probably makes those pre-sales contracts worthless. This issue is brought up in this CTV article:

NDP housing critic Diane Thorne said unless our laws change, presales could be the next leaky condo crisis.

“I think it should be a guaranteed price,” she said. “Prices will go up in the beginning, but I think there’s more security for homeowners. They won’t buy something they’ll lose or not be able to afford.”

Bob Rennie, who makes his living marketing presales, says reputable developers welcome new laws.

“Anything the government wants to put in place to protect the consumer doesn’t worry those top 15, 20 developers,” he said. “If you’re getting creative with your financing, or your profit margin is too low, that developer may worry. But then again we’re protecting the consumer so let’s do it.”

Thorne is drafting a private member’s bill about pre-sale law and she hopes the government will take it seriously.

 Loading …

Its Friday and that means free-for-all time here on Vancouvercondo.info. This is when we do our weekly roundup of news stories on real estate and economics. Here are a few stories to get you started:

- US Housing market woes bad for BC
- BC Credit union predicts strongest growth since 1985
- Fewer tourists coming to BC
- Video: Dan Rather on the Downtown Eastside
- Canadian home prices almost double in last decade
- Immigrants struggle in wealthy countries
- Gas prices predicted to hit record highs by summer
- Some expect oil to fall on growing supply
- The tell-tale signs of a recession
- Stagflation?

And last but not least:
- Coco News, an economic news blog!

 Loading …

Scullboy sent in a link to this CBC editorial on housing affordability in Vancouver. Its written by a boomer who grew up here and is essentially a lament about the loss of affordability that the current generation is facing. Here’s a few select excerpts:

No one that I grew up with could afford to buy a house in that neighbourhood now and move back in. In my parents’ day, there was typically only one wage earner per family, and now there are two, and still, middle income, middle-class couples cannot afford to buy a house in the city. It is obvious that wages have not kept pace with the inflated price of housing.

Actually, I don’t know anyone who can afford to buy a house in the Lower Mainland (B.C.) anymore, unless they lock themselves into 30- to 50-year mortgages, and do nothing but work overtime for the duration.

This situation has to bottom out sometime. But right now, there is a whole generation of young Canadians who have no hope of owning their own place in a major city. Young doctors are turning down job offers in Vancouver because they can’t afford the housing.

…

The thing is, everyone buys property with the idea it will increase in value, and they will get more out of it in the end than they put in. This equation has been more or less manageable for generations. But there must be a breaking point, and I think we’re almost there.

Banks, which have been making hefty fortunes on all the mortgages on any given house, new owner after new owner, may start to worry about this soon. The bottom-out factor has already started in the USA, and will arrive here too.

 Loading …

Does the looney at par have you looking at homes in the USA? “America’s Builder” DR Horton is holding an ‘UnAuction Sale‘ in 23 southern California neighborhoods offering new homes for up to 50% off their peak value. In fact you can likely find deals like this in a lot of sunbelt states right now due to the current state of the US housing market.

The exchange rate and crashing house prices is making US property more appealing to many Canadians, but you’ll want to check into tax issues before you buy, even if you’re not planning on renting it out for cash-flow. Some states like Arizona charge the same property tax whether you’re a resident or not, while other states like California charge a much higher property tax to non-residents.

 Loading …