522 replies to this topic

[Glen]

Has project financing in general become tighter given the unknown of how far the markets may adjust? When the last market down turn occurred, did new projects require a greater pre-sales than 50% for project financing?

[Glen]

Walked past the site recently.  Any word on ground meaningful ground breaking?

[Torrontes]

All show, no go.

 

Makes one wonder if the "ground-breaking" was simply a means to address Disclosure Statement requirements. Seems like they are 'ragging the puck', hoping to make a few more sales before having to spend real dollars on construction. The building permit has yet to be issued, i.e. paid for.

 

For a relatively small company, they have a lot of projects on the go. Perhaps they are struggling to keep all their balls in the air.

[Mike K.]

Is the excavation permit in place? That’s all they’ll need for quite a while.

[Torrontes]

Is the excavation permit in place? That’s all they’ll need for quite a while.

 

Excavation (many months ago) and blasting (more recently), but has there been any activity in that regard? Apparently not.

[Mike K.]

It's no biggie, there can be gaps between the ground breaking date where the site is cleared and the arrival of excavation crews. 

[Glen]

if the recent activity was to address the requirements of the disclosure statement requirements, would this only be a stop gap? I believe most disclosures have a 12 month period where the builder either commits to a building permit application or purchasers then have cancellation rights in regards to purchase agreements?

Looking back on the thread and project, 12 months would be coming up in early May

[Jackerbie]

Usually you'd be able to check VicMap to see the issued and in process Building Permits, but 1201 Fort Street no longer exists as a valid address and you can't select the parcel. Huh.

[Torrontes]

Usually you'd be able to check VicMap to see the issued and in process Building Permits, but 1201 Fort Street no longer exists as a valid address and you can't select the parcel. Huh.

 

Perhaps as a result of the Building Permit that has been approved for the two lots but not yet issued? You can check out building permits on Victoria's Open Data page, although you need to do some searching.

 

http://opendata.vict...-active-permits

[Glen]

Had no luck finding any active permit

[Torrontes]

The data portal is not easy to navigate, but the info is there. Try using gislink 03291044 for 1201 Fort St.. You can click on the gislink column heading and insert search info.

 

Most relevant:

 

EP06610 Electrical permit for temporary service  2019/03/11

BP055293 Below grade blasting permit  2019/01/31

BP054742 Excavation permit  2018/08/14

 

Apparently BP054921, which is the permit to construct, was approved February 19th, 2019 and is awaiting issuance, i.e. payment and pick-up. That info is not shown on the open data site, but was on VicMap before the site info was deleted. I assume that is some how related to the pending status of the permit.

[Glen]

With property values correcting and some experts say these corrections could see values drop by 20-30%.... or even more!  At what point do developers of NEW projects start to become concerned?

 

A purchaser having put down a 25% down payment even less than a year ago will likely have seen part if not all of their equity wiped out by the time of completion.

If values fall even further you will owe more than the current value of the property.  Equity = ZERO

 

Given the banks new stress tests, will purchasers qualify for mortgages of greater than 75-100% of the value they committed to in their contract if their down payment equity has been wiped away.?  I'm sure not every purchaser will be paying cash and not require a substantial mortgage. 

 

Banks will be assessing the property values just prior to the time of occupancy, not the purchase price paid in 2018.  Should values continue to slide, purchasers may not be able to acquire the mortgages they once thought they could obtain or afford.

Where will this leave builders if in two to three years a high percentage of purchasers can't close? 

 

It will be an interesting year or two for the new builds in particular.   I think pricing, just as an example at the Pearl already shows a decline in price per sq/ft. compared to projects released less than a year ago and ahead of the Speculation Tax. 

 

I'll wait to purchase for a few years. Buy low, sell high!!!

[Victoria Watcher]

I'll wait to purchase for a few years. Buy low, sell high!!!

 

for some the sky has been falling for 40 years i guess.

 

good luck on your wait. if you can figure the market out you are sharper than 95% of the experts.

 

Edited by Victoria Watcher, 06 April 2019 - 01:51 PM.

[Mike K.]

With property values correcting and some experts say these corrections could see values drop by 20-30%.... or even more! At what point do developers of NEW projects start to become concerned?

A purchaser having put down a 25% down payment even less than a year ago will likely have seen part if not all of their equity wiped out by the time of completion.
If values fall even further you will owe more than the current value of the property. Equity = ZERO

Given the banks new stress tests, will purchasers qualify for mortgages of greater than 75-100% of the value they committed to in their contract if their down payment equity has been wiped away.? I'm sure not every purchaser will be paying cash and not require a substantial mortgage.

Banks will be assessing the property values just prior to the time of occupancy, not the purchase price paid in 2018. Should values continue to slide, purchasers may not be able to acquire the mortgages they once thought they could obtain or afford.
Where will this leave builders if in two to three years a high percentage of purchasers can't close?

It will be an interesting year or two for the new builds in particular. I think pricing, just as an example at the Pearl already shows a decline in price per sq/ft. compared to projects released less than a year ago and ahead of the Speculation Tax.

I'll wait to purchase for a few years. Buy low, sell high!!!

You might want to reassess who you view as experts and reflect on whether you yourself are a speculator or someone who just wants to buy a home. You’re approaching the equation as a speculator, if timing the market is your priority.

Now that being said, the benchmark value of a Victoria condominium in March of 2018 was $501,500. In March of 2019 it was $506,500, a roughly 1% increase while the “experts” said values would plummet by double digits. Yikes, were they ever wrong, hey? Meanwhile wealthy newcomers keep coming to the Island with cash in hand and indifference towards the affordability concerns of the local population.

This scenario won’t end well for those who wait. It never has in Victoria’s 150-year history and considering the pressures from
baby boomers now is not the time for the market to suddenly reverse and buck a century-long trend.

[Victoria Watcher]

well over 150 years there have been dips for sure. 

 

but never anything significant or prolonged.  and a whole lot of factors like mike says the cash transfer boomers and retirement and newcomers right now not sure why now of all times would be the start of the biggest dip in 150 years.

 

it's never been easier to live in the best weather in the country and still have work/family ties that are easy to maintain via easy travel and internet.

Edited by Victoria Watcher, 07 April 2019 - 08:10 AM.

[Mike K.]

There have been dips and they’ve been correlated with market turmoil when banks didn’t want to lend, interest rates were extremely high or the economy was so shaky that people feared buying a home in the event the market would slide or their financial situation would be in jeopardy. The early 80’s come to mind.

Looking at a graph it’s all so simple, but to have been in someone’s shoes back then the reality was anything but.

Today our local economy is roaring. Joblessness is non existent. Interest rates are ultra low. Lenders are happy to lend. And we’ve officially turned the corner on the boomer influx, and they’re flooding in. Anyone who thinks the above recipe will produce a 20-30% drop in prices should reasses the situation and look at it from a common sense perspective, and not one based on theories that can’t see the forest for the trees.

[Victoria Watcher]

and 70% of the 300,000 yearly newcomers are landing in bc and ontario (alberta and quebec are both lower since this 2016 graph).  it's all upside.

 

Edited by Victoria Watcher, 07 April 2019 - 08:37 AM.

[Torrontes]

I suspect buyers are a bit more cautious these days. Gone are the days when any idiot could buy a presale and expect to make a profit in a rapidly rising market. However, over the mid to longer term land prices, construction labour costs and material costs are certainly not expected to decrease, so prices generally rise over time.

 

Presales are inherently risky from a pricing perspective simply because you are making a commitment to purchase now when occupancy will not be for 30-36 months. Has the developer built in enough contingency? Hopefully yes.

 

A project like Bellewood Park is targeted principally at retirees and prospective retirees. They want to be able to plan ahead and provide for a transfer to accommodation where they don't need to cut the grass, fix the fence and bring the garbage cans in, and they don't want to immediately embark upon a renovation project for an older resale condo. They want something fresh and new and are willing to pay a premium for that. Hopefully the cost gets spread out over many retirement years! The purchase dynamics are much different from the situation where someone is buying a condo simply as an investment.

[Mike K.]

^nah, the people with money could care less.

I was talking to a fellow from up-Island today who is retiring down here. He was more concerned about the completion date than the price he was paying, and that’s only because he’s renting a home while his new home is built and the landlord has long-term booking enquiries non-stop.

I don’t think people realize how much wealth there is vying for south Island real-estate. And the wealthy retirees especially could care less whether the home goes up or down in value. They just want the best they can afford for the last 20-30 years of their life. The best. No holds barred.

[RFS]

^nah, the people with money could care less.

I was talking to a fellow from up-Island today who is retiring down here. He was more concerned about the completion date than the price he was paying, and that’s only because he’s renting a home while his new home is built and the landlord has long-term booking enquiries non-stop.

I don’t think people realize how much wealth there is vying for south Island real-estate. And the wealthy retirees especially could care less whether the home goes up or down in value. They just want the best they can afford for the last 20-30 years of their life. The best. No holds barred.

This is why everyone hates boomers