6 replies to this topic

[sebberry]

Now that we've had depreciation reports floating about for a while, are they having much of an impact on the sale of older condos? 

 

 

[mysage]

What does a depreciation report include and why would it effect the sale of an older condominium? Do brand new buildings have similar reports? Who are they flled with and who approves/polices them?, So many questions - so little knowledge. 

[sebberry]

Our depreciation report shows a major renewal in 2030, replacing the building's stucco at 60 years age.  Stucco lifespan can be between 20-100 years, and without specific testing (which the depreciation report does not include), the real condition and lifespan is unknown. 

 

At a recent AGM, our members voted to not increase the contribution to the contingency fund and instead rely on special assessments.  Does having a big unknown like the stucco replacement have much of an impact on buyers and selling prices?

[Redd42]

Our depreciation report shows a major renewal in 2030, replacing the building's stucco at 60 years age.  Stucco lifespan can be between 20-100 years, and without specific testing (which the depreciation report does not include), the real condition and lifespan is unknown. 

 

At a recent AGM, our members voted to not increase the contribution to the contingency fund and instead rely on special assessments.  Does having a big unknown like the stucco replacement have much of an impact on buyers and selling prices?

 

I do think they are one of many things that has greatly lowered the value of older condos in the last few years.

 

I wonder how valid these reports are i.e. how much they are just conjecture since as you say no real inspections are done. It seems they are based on averages and a cursory look around a property.

 

Has your strata replaced the windows yet? Re-done the balconies? How about the elevators? Does your report not have suggested replacement dates and amounts for these? In my building they keep talking about having to replace each of the elevators (there are 2) at a cost of $100,000 each. The building was built in 1982.

[sebberry]

The depreciation reports absolutely are just based on industry expected average lifespans for the various building components. 

 

We haven't done the windows yet.  It seems like they're on a "replace when failing" schedule.  Same with the balconies. 

 

As for your elevators, our service person said that they don't replace the entire elevators, they simply replace and upgrade the components.  $100,000 is way too much. 

 

 

This kind of ties in what was being discussed in this thread:http://vibrantvictor...do-strata-fees/

 

For short term personal planning, it makes more sense for homeowners to save money themselves instead of contributing to a contingency fund.  But in the long term, excessive reliance on special assessments places a greater financial burden on just the owners present when the assessment is due and doesn't spread it out over several owners of a suite. 

[MarkoJ]

The depreciation reports absolutely are just based on industry expected average lifespans for the various building components. 

 

Here is a sample page from a depreciation report.  The windows could last 30 or 50 years, who knows but everything is based on an expected average.

 

[MarkoJ]

The depreciation reports have definitely affected non-new or non near new condo sales and put down pressure on prices.  Nothing has really changed.  Your building will need a new elevator in 2030 regardless of deprecation report or not, but the depreciation reports puts it in-front of the buyer's face and can scare them off from purchasing into the building.  

 

All the depreciation reports look bad; however, the key is to compare to buildings of similar vintage to see how it stacks up.