The Metro Vancouver Real Estate Thread

[NewfBC]

Originally Posted by misher

Yeah I was wondering about that, it seems like hotel rooms are cheaper, safer, more convenient, and less work.

You're forgetting about the 'hipster' factor and those who like to pay more for less.. assuming they're getting 'better quality'.

Ron.

[MIPS]

Well it sure helps the AirB&B lobby (is that a thing?) say it should be allowed under city bylaw.

[Firebrand]

If there's a chance of a correction to happen, what will happen to the mega-projects like The Amazing Brentwood and the planned Oakridge Redevelopment?

[misher]

Originally Posted by Firebrand

If there's a chance of a correction to happen, what will happen to the mega-projects like The Amazing Brentwood and the planned Oakridge Redevelopment?

Recently there has been a lot of cancelled projects. However many are still soldiering on, possibly because it’s predicted the market will go back up by the time they are done. If a correction happens they will probably cancel.

[Changing City]

Originally Posted by misher

Recently there has been a lot of cancelled projects. However many are still soldiering on, possibly because it’s predicted the market will go back up by the time they are done. If a correction happens they will probably cancel.

Name five cancelled projects. I can think of one, and another where the rezoning was withdrawn to renegotiate the CAC. Neither were mega projects.

[Changing City]

Originally Posted by Firebrand

If there's a chance of a correction to happen, what will happen to the mega-projects like The Amazing Brentwood and the planned Oakridge Redevelopment?

If past mega-projects are any guide, they'll just pause and pick up again once a market returns. Citygate's first buildings started construction before 1990, and the last tower only completed in 2007. International Village was started in the early 1990s, with the first tower completed in 1995, and the final one in 2009. In the meantime Henderson, the developer, had excavated the underground parking for what was later the Firenze towers, but which became a lake for several years.

The one example I can think of that doesn't fit that model was Infinity, the Jung Development (Korea) project in Surrey, where Concord took over the project and continued it as Park Avenue, after a redesign. That was unusual, because the financing was from Lehman Brothers, which declared bankruptcy in the US financial crisis. Concord also picked up several smaller schemes from floundering developers in the last pause in the late 2000s - including a midrise they built in Mount Pleasant and townhouses on Oak Street.

Most developers involved with mega-projects have deep enough pockets, or ought to have access to enough credit, to see committed phases through to completion. Westbank, Onni and Concord shouldn't have any problems, and all of them only proceded when they've achieved a critical mass of sales. Shape are less experienced at the mega scale, and you could see a project like Lougheed taking longer to build out if there's less demand, or if selling prices drop but construction costs don't fall enough. The other scenario that could shake things up would be if a significant volume of buyers walk away from the project, leaving the developer with the deposits and any interim payments, but no final payment. There are no signs that is likely at the moment.

[Firebrand]

Originally Posted by Changing City

Most developers involved with mega-projects have deep enough pockets, or ought to have access to enough credit, to see committed phases through to completion. Westbank, Onni and Concord shouldn't have any problems, and all of them only proceded when they've achieved a critical mass of sales. Shape are less experienced at the mega scale, and you could see a project like Lougheed taking longer to build out if there's less demand, or if selling prices drop but construction costs don't fall enough. The other scenario that could shake things up would be if a significant volume of buyers walk away from the project, leaving the developer with the deposits and any interim payments, but no final payment. There are no signs that is likely at the moment.

So basically the mega-projects will continue as long as the developers have the budget to do so.

[Changing City]

Originally Posted by Firebrand

So basically the mega-projects will continue as long as the developers have the budget to do so.

That's how it seems to me at the moment. Others on here have a more intimate knowledge of the state of the market. There's a difference between the demand, and sales, of existing housing, and the much smaller market for new units, which are almost always delivered years later. Sales, and prices of existing housing have been falling recently, but if the various threads for new projects are to be believed, that hasn't shown up in new sales yet. Projects like Linea, marketed initially as Wynd, have sold enough to be built, when that wasn't true only a few years ago.

Circumstances can change quite quickly - especially as interest rates appear likely to rise in the near future, and the stress test on mortgages has made getting funding more difficult (or expensive), so nothing can be taken for granted. The significant difference with mega projects and some other developments is that they're generally owned by well funded owners, they mostly generate revenue from existing uses, and they're phased, so they can pause, and then come back to the market later. Leveraged developers, who have borrowed to buy sites, or have capital tied up and are relying on sales income to cover their costs and generate a profit are in a more precarious financial position. That's especially true if they paid a lot for a site, anticipating high value returns. In the late 2000s a number went out of business. That hasn't been true in the current period yet.

[whatnext]

Originally Posted by Changing City

If past mega-projects are any guide, they'll just pause and pick up again once a market returns. Citygate's first buildings started construction before 1990, and the last tower only completed in 2007. International Village was started in the early 1990s, with the first tower completed in 1995, and the final one in 2009. In the meantime Henderson, the developer, had excavated the underground parking for what was later the Firenze towers, but which became a lake for several years.

The one example I can think of that doesn't fit that model was Infinity, the Jung Development (Korea) project in Surrey, where Concord took over the project and continued it as Park Avenue, after a redesign. That was unusual, because the financing was from Lehman Brothers, which declared bankruptcy in the US financial crisis. Concord also picked up several smaller schemes from floundering developers in the last pause in the late 2000s - including a midrise they built in Mount Pleasant and townhouses on Oak Street.

Most developers involved with mega-projects have deep enough pockets, or ought to have access to enough credit, to see committed phases through to completion. Westbank, Onni and Concord shouldn't have any problems, and all of them only proceded when they've achieved a critical mass of sales. Shape are less experienced at the mega scale, and you could see a project like Lougheed taking longer to build out if there's less demand, or if selling prices drop but construction costs don't fall enough. The other scenario that could shake things up would be if a significant volume of buyers walk away from the project, leaving the developer with the deposits and any interim payments, but no final payment. There are no signs that is likely at the moment.

It depends on how many projects were proposed that are dependent on the two pillars of ultra-low interest rates (here since 2008, but going up) and large demand from offshore investors. Both seem to have disappeared.

Now there are a number of different factors acting as drags on that demand: the B20 credit tightening, foreign buyers tax, increased scrutiny of real estate transactions by the CRA, as well as a crackdown by China on capital flight. Those are purviews of different governments so even if the BC Liberals were to return to power and rollback the Foreign Buyers Tax (political suicide) the other factors would still apply. Given that China is now facing a trade war growth may slow there dramatically and the yuan could be devalued, there's another future threat.

Strong local economy notwithstanding, people should realize the breadth of projects that were green-lighted because of an historic property bubble.

[SpongeG]

Buying condo in Metro Vancouver may get harder in 2019

by MARCELLA BERNARDO

Posted Aug 26, 2018

VANCOUVER (NEWS 1130) – Rising prices and dropping sales have prompted more speculation about what’s in store for Greater Vancouver real estate.

The BC Real Estate Association is predicting prices will climb nearly two per cent this year, but UBC Sauder School of Business professor Tom Davidoff says that might change next year.

“Single family is quite weak, particularly at the higher end. We’ve seen actual reduction in what homes are worth,” Davidoff says.

“We haven’t seen that kind of weakness in condo yet. There’s a possibility of a significant correction there, as well. A weakening of ‘incredibly strong’ is not yet to weak, so you’re starting from a very, very strong point. I don’t think the sales-to-listing ratios for apartments have even hit buyers’ market yet.”

He says, while condo sales are still stronger than single family homes, a “significant correction” is possible.

“Apartments have gone from very hot to a sort of balanced market situation, so good time to be a buyer,” says Davidoff, adding that, conversely, it could be a frightening time for sellers because of increased financial stress tests and high apartment prices and inventory. “A lot of the people who wanted to buy already have bought, so that’ll be very interesting to watch.”

Jason Turcotte with Cressey Developments says their latest condo tower near Queen Elizabeth Park is already more than 80 per cent sold, but he agrees changes are on the horizon.

“It’s very challenging to produce housing right now. I mean, the marketplace is showing some signs of cooling, but the cost side of the equation certainly hasn’t,” Turcotte says.

He adds not all properties are created equal.

“We have to price appropriately to the market of the day and it is changing right now,” Turcotte says. “But I think, where you can demonstrate that the value is there, that the marketplace responds very well and not taking for granted that it’s just going to be this robust market that will buy it no matter what.”

He says investments are still being made where buyers see good price and quality.

...

https://www.news1130.com/2018/08/26/buying-condo-metro-vancouver-may-get-harder-next-year/

[Firebrand]

Originally Posted by SpongeG

“We have to price appropriately to the market of the day and it is changing right now,” Turcotte says. “But I think, where you can demonstrate that the value is there, that the marketplace responds very well and not taking for granted that it’s just going to be this robust market that will buy it no matter what.”

He says investments are still being made where buyers see good price and quality.

"Good quality" my foot. They're basically what the detached houses were (sold and flipped by offshore buyers) before they started depreciating.

[Firebrand]

From DailyHive

Majority of Vancouverites say region has been 'damaged' by high housing prices

"A new survey from Angus Reid found that a majority of Metro Vancouver is feeling disappointment with the continued high cost of housing in the region.

The new public opinion poll— which was conducted online among a sample of 719 Canadian adults — found that the majority of residents surveyed (83%) say the region as a whole has been “damaged” by high real estate prices.

Four-in-10 residents (43%) say that they are personally feeling the pain of the housing market.

Not surprisingly, a majority of Metro Vancouverites (62%) want to see prices in the region fall, however, residents are divided over how much of a price decrease they want to see.

One-in-four (26%) say prices should fall by 10%, while 36% would like to see a decline of closer to 30%.

The poll also found that the majority of renters (86%) want to see the market crash. Angus Reid notes that given that they have no personal stake in rising housing values, a significant number of current homeowners also feel the same way.

When it comes to the reason behind the high prices, the majority of residents (six in 10) blame foreigners investing in the real estate market, while four in 10 say it is the fault of “wealthy people” investing in the market.

As for solutions, the poll found that the majority of residents (79%) say the provincial government needs to step up and “be more involved” in the housing market to improve affordability."

Aug 27, 2018 11:30 am
DH Vancouver Staff

***

"Destroyed" would be a better description for Metro Van, and it has been like this for years. All these talks of making housing more affordable yet the BC gov't didn't do anything at all until last year.

[MIPS]

I mean, the feelings are mutual but I feel like a poll of less than 1000 people in a region like Vancouver seems awfully small.

[GlassCity]

Originally Posted by MIPS

I mean, the feelings are mutual but I feel like a poll of less than 1000 people in a region like Vancouver seems awfully small.

They do national polls with numbers that size.

[osirisboy]

Originally Posted by misher

Recently there has been a lot of cancelled projects. However many are still soldiering on, possibly because it’s predicted the market will go back up by the time they are done. If a correction happens they will probably cancel.

What are these recently cancelled projects you're talking about??!

[WarrenC12]

Originally Posted by MIPS

I mean, the feelings are mutual but I feel like a poll of less than 1000 people in a region like Vancouver seems awfully small.

I'm pretty sure Angus Reid knows how to conduct a statistically relevant poll.

[misher]

Originally Posted by osirisboy

What are these recently cancelled projects you're talking about??!

https://www.theglobeandmail.com/canada/b...m-vancouver-development-that-would-have/

http://dailyhive.com/vancouver/1640-1650...burn-properties-rental-housing-cancelled

http://www.kelownadailycourier.ca/news/article_8c30d036-5723-11e8-bd49-b3b72f80db81.html

I know there's more but I couldn't find them easily.

[osirisboy]

Originally Posted by misher

https://www.theglobeandmail.com/canada/b...m-vancouver-development-that-would-have/

http://dailyhive.com/vancouver/1640-1650...burn-properties-rental-housing-cancelled

http://www.kelownadailycourier.ca/news/article_8c30d036-5723-11e8-bd49-b3b72f80db81.html

I know there's more but I couldn't find them easily.

Oh. The Vancouver ones you listed doesn't seem to have anything to do with the market. Your post made it sound like projects were being cancelled due to a poor real estate market

[misher]

Originally Posted by osirisboy

Oh. The Vancouver ones you listed doesn't seem to have anything to do with the market. Your post made it sound like projects were being cancelled due to a poor real estate market

Ah, your right. I got confused and replied hastily. However, the weak market is behind some of this as if the market was still booming then they'd feel better about the ultra high city fees (which were based on the booming market). The taxes put in place combined with the new mortgage rules have directly killed the real estate market thus the Kelowna cancellation:

"The entire market is in retreat," Stewart said. "A lot of projects are on hold, or are going to be cancelled. We're going to see a spiral of distress that's first going to affect people in construction, with framers and drywallers finding it harder and harder to find work."

Since residential construction makes up a larger share of the economy in the Central Okanagan than in Vancouver, the effects of the speculation tax will be much more pronounced here, Stewart says.

There are some that have pulled recently due to the weak market but not a lot yet. The slowdown in sales is an indicator that developments are stopping as no one's buying property to develop it. I don't have good evidence for this yet, its just conjecture. The unfortunate thing is while sales slow down greatly prices haven't changed significantly.

https://www.theglobeandmail.com/canada/b...-in-vancouver-pulled-amid-signs-of-weak/

[osirisboy]

well I don't really know or care about the Kelowna market lol

But as mentioned in your link units under 2 million are still selling fine. So I think we might see projects switching from high end to more "affordable"