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This article was guest authored by B.B.

Here is somewhat of a prediction:
I see real estate prices in greater Vancouver come down substantially
Today’s prices are just ridiculous. $500K for a 2 bedroom condo in White Rock or Port Moody? $500K for an old house in surrey? C’mon! People can not afford that.
In the downtown core i see prices falling back to 2003-04 level. A one bedroom, basic apartment should be $200K, and that’s still stretching it. A new university grad earning $60K would have a hard time paying for  $200K condo.
So for all your buyers out there that is good news. Just wait and watch the prices fall, also you may get a “one of” good deal in situations where the seller is forced to sell.

The receiver (www.bowragroup.com) decided to drop the prices to clear out all the remaining units in the Homer + Helmcken Yaletown building.
They will be accepting offers on site this weekend (Feb 7,8 2009).
There was an open house during the last 2 weekends.
Posted prices were from $266K for a 533 sq. ft studio to $599K for a 1273 sq. ft townhouse with Homer street and hallway entrance. My favourite (value wise) was the 605 unit: 2 Bedrooms + Flex (small office), 1 Bathroom, 721 sq. ft for a listed price of $379K
Some units are nice, but i think the pricing is not that great yet.
See the Bowra Group website for full details.

I believe the developers in Vancouver area are scared and are trying to unload inventory before a bigger price drop materializes.
Realistically, 500 sq ft downtown should be about $200K

This article was guest authored by B.B.

http://news.yahoo.com/s/ap/20080605/ap_on_bi_ge/home_foreclosures

Make no mistake, this situation could easily happen here in Vancouver.
why?

1) 5 year housing boom
2) overbuilding, creating an eventual over-supply of units
3) lack of affordable housing means people get in over their heads with high mortgage payments
4) usually, economically speaking Canada is 1-2 years behind the USA
5) overall greed when it comes to real estate (classic sign of a bubble)
6) strong Canadian dollar is weakening our economy

As I wrote earlier Chandler’s group H+H Yaletown project , along with Garden City, Richmond went into receivership in November of 2007. The appointed receiver is The Bowra Group. They have submitted to the court a report about the 2 projects. Here is some interesting information from that report regarding H&H Yaletown (Homer and Helmcken in Vancouver):

1. “Construction on floors 14, 15, and 16 of the H&H project has been delayed due to development issues. While we believe that floors 1 through 13 will be completed along the budgeted timeframe, it is likely that floors 14 through 16 will not be completed until the middle of September at the earliest”
2. “The South side of the H&H property used to be a gas station. The gas station completed the appropriate environmental remediation work when it shut down and obtained a clearance certificate under commercial zoning requirements. It has been determined that the gas station was leaching hydrocarbons under Helmcken Street. There is a risk that groundwater may flow from Helmcken into the H&H property discharging hydrocarbon fumes. Preliminary approval has been obtained from the City to trap ground water that may contain hydrocarbons and drain it to the City sanitary system. To obtain final approval of this process drawings need to be prepared and submitted to the City and Ministry of Environment along with a report from an environmental engineer with water sampling test results. The city will also require quarterly water sampling until they are satisfied that the ground water standards meet environmental standardsWe estimate the cost to trap and drain the water, environmental consultants and application fees are $85K plus an additional $10K per year for water sampling until such time as the water testing samples comply with environmental standards”
3. “We estimate the additional funding requirement over and above the bcIMC construction funding total …$3.9M for H&H” The additional funding will be financed at 24% interest - WOW!
4. ” We have received several marketing proposals from various firms in connection with the sale of the condominium units. These proposals include proposals from MAC, KLM Marketing, Regent Park Real Estate and Rob Boies & Associates. In addition we contacted two other parties including Rennie & Associates and the Platinum Group. Both these parties advised that they were not prepared to submit proposals. In one case the firm was too busy, and in the other case, they were not prepared to be involved in a competitive bid process.”
5. “…4 penthouse sales: 2 to Mark Chandler, 1 to Wendy Young and 1 to Daniel Scott. All contracts are assumed to be canceled and resold at market value as these are non-arms length transactions and below market value”

There are still 9 unsold units in the H&H project, even though the sign on the street has SOLD OUT pasted over it.  The receiver states:
“There are 9 unsold units at the H&H Project. Anyone interested in purchasing a unit should contact Kimberlee Robertson at MAC Realty at 604-629-1515 ext 544. “

A prime development property in the center of Yaletown, Vancouver’s most chic neighborhood has now fallen into receivership. We are talking about H+H Yaletown, located at Homer and Helmcken. That’s right ladies and gentlemen, looks like the bubble is experiencing some discomfort.

We will have to watch this issue to see how it plays out. But this is not good for downtown ‘flippers’ and I know there are a few of you out there. Back on November 28, 2007 The Bowra Group was appointed as the receiver. Read the report to the court for some juicy tidbits. Funny thing is there are still a few assignments on craigslist for that development. Who is going to buy them now? Bowra has indicated that they would like to proceed with finishing the project, and that all pre-sale contracts that were sold at fair market value will be honoured. The estimated cost of completion will be $3.7M. They did find a company willing to finance that, so now we will have to wait for the court to approve.

There still are 9 unsold units in that development, according to Bowra.

link to the report: reciever’s manager report to the court

This article was guest authored by B.B.
Sophia development goes into receivership.

I’m sure by now everyone has head about the Sophia development at Sophia and 11th. The developer walked away citing too high constructions costs.
What will happen to all the people holding the contracts? That’s unsecured debt in the eyes of a bankruptcy court - right?

So, this is what was happening in the states about a year ago. Look at the states now, housing prices free falling with no end in sight.
I believe Canada will follow. The downtown market maybe safe, but watch out suburbia! The first sign of a price downturn is lower volume of sales, which was reported this week. More sellers are holding to their high prices and buyers are not bitting anymore. The erosion of equity in the stock markets is affecting people’s buying moods.
Perhaps BC is safer because of all the Olympics spending, but one that dries up, who knows whats going to happen.
My advice is calculate your risks twice when investing in real estate.

The entire article can be read here:
http://www2.jurock.com/articles/columnist.asp?id=7817

In the last paragraph the author states that prices of real estate in Vancouver are “VERY high”. Then in the last sentence: “We would not be surprised to see a reversal some time this year,” (2008) “but remain convinced that 10 years from now we will see prices much higher yet. ”

I do not see how the prices can go much higher. Vancouver is already not affordable by any standards. A new condo downtown is at least $400K. Average income is only $40K -$50K. I don’t see how those incomes can support the current real estate pricing. I do understand that a lot of condos are owned by foreign buyers, but I’m guessing that they are too small of a group to make a large difference in the Vancouver market as a whole.

I see a big price correction starting shortly after the 2010 Olympics.
I would bet my money on recreational propety in the interior of BC as baby boomers start to retire. However, keep in mind that health care access is important to seniors, so invest in areas with clinics and hospitals. I will soon post a list of my favourite cities to invest in. Subscribe to my RSS feed (bottom of page) for updates.

Why? Simple?

1. Average house price over $500K and average income around $45K, do the math.
2. General public feel prices are still moving up!! Can you say bubble?
3. Developers canceling sold out condo developments (Sophia in Vancouver at 11th and Sophia)
4. Credit market tightening. Commercial paper market first, wait a few months for consumer market to follow.
5. Olympics frenzy - the thinking is once people see beautiful Vancouver they will want to buy here. I say not when they see the prices.
6. Looming recession. OK, British Columbia may actually slip through the recession because of capital expenditures on large construction projects, which feed money to the economy (Golden Ears Bridge, Twinning Port Mann, Sky-Train). On the other hand due to the strong Canadian dollar the forest industry is in distress
7. do we really need a 7th reason

My advice is if you own multiple properties, sell them while the market is at the top and buy similar properties later at a discount