228 replies to this topic

[Victoria Watcher]

She stressed no firm decision has been made on what will happen, but they are in the process of making the transition from condominium to rental and the first part of that is speaking with each of the buyers first.

 

Letters confirming termination of sales agreements are also being sent to purchasers once they have been contacted by the company.

 

The letter, signed by Mike Geric Construction president Edward Geric, says rising costs have “irreparably damaged ­Tresah West’s viability as a market condominium project.”

 

Geric said the loss of nearly 30 per cent of Tresah West ­pre‑sale buyers in the spring, due to the radically different housing and mortgage environment, had a massive impact on their construction financing.

 

“The project is now operating on a very restrictive month-to-month construction loan. For the foreseeable future, there is no way to recover those presales in a market that has seen year-over-year prices plummet by almost $90,000, leaving a massive gap between buyer price expectations and actual construction costs,” he said.

 

In the letter Geric said the company explored all options and determined it can only complete construction by converting Tresah West to a purpose-built rental building.

 

“We are currently working to obtain the various approvals needed to make that happen,” he wrote. “While this was never our intention, there are no other options. We’ve exhausted every other possibility, and I am sorry that delivering your expected home is no longer possible.”

 

Planning staff at the City of Victoria have said developers changing the purpose of a project during construction are dealt with on a case-by-case basis, and the city tends to provide advice on what kind of process they would need to follow.

 

Kowalko said they are in the process of ensuring all purchasers get their deposits back.

 

She said reaction from buyers has run the gamut from understanding to frustration.

 

“But the reality is we did everything we could to try and ensure the viability of the project as a market condo would happen,” she said.

 

 

https://www.timescol...ts-rise-9556383

 

 

 

 

For the foreseeable future, there is no way to recover those presales in a market that has seen year-over-year prices plummet by almost $90,000, leaving a massive gap between buyer price expectations and actual construction costs,” he said.

 

 

 

$90,000, is that true across the board for all projects?  Surely re-sale condos have not dropped $90,000.

 

 

 

 

 

The MLS® HPI benchmark value for a condominium in the Victoria Core area in August 2023 was $575,900 while the benchmark value for the same condominium in August 2024 decreased by 2.9 per cent to $559,200, down from the July value of $567,800.

 

https://www.vreb.org...stics#gsc.tab=0

 

^ that only shows a drop of $8,600.  

Edited by Victoria Watcher, 22 September 2024 - 04:22 AM.

[Mike K.]

It shouldn’t be such a big deal to transition the project. It happens often. A 200+ unit project in Langford did that in 2023. It wasn’t selling well, so it was switched to rentals. I hope the CoV doesn’t introduce obstacles that make this situation far more complex than it has to be.

And by that, I trust they do not force the developer to remove the strata titling of the units. We shall see.

[davidN]

It shouldn’t be such a big deal to transition the project. It happens often. A 200+ unit project in Langford did that in 2023. It wasn’t selling well, so it was switched to rentals. I hope the CoV doesn’t introduce obstacles that make this situation far more complex than it has to be.

And by that, I trust they do not force the developer to remove the strata titling of the units. We shall see.

I'm no expert by my understanding is that IF a developer builds a development and designates it as a strata then rents those strata units out CRA deems that as a sale of said units. This being the case the Developer then has to pay the appropriate sales taxes (GST & Property Purchase Tax) on each unit.. So ..... if this is the case it is highly doubtful that the Developer will keep the strata in  place.

[Sparky]

We swung by yesterday to see how things were progressing. Long way from completion.

 

[Barrister]

It sounds like the developer wants BC Housing or some other government agency to fund the project and make it profitable for him.

[Victoria Watcher]

“We got to the point where we just had to look at some options, which we are doing right now,” said Shannon Kowalko, director of marketing and community relations for Mike Geric Construction. “Part of the process of looking at transitioning this to a rental project is that we would have to communicate to our ­buyers.”

 

Kowalko said the company has been working over the last week to contact all buyers with contracts to purchase in the building. She said there are about 90 of them, after 30 per cent of buyers rescinded contracts earlier this year when the company changed the terms of sale due to rising costs.

 

A combination of rising labour and material costs, delays, supply chain issues and high interest rates driving up carrying costs contributed to the need to re-evaluate the project, Kowalko said.

 

She stressed no firm decision has been made on what will happen, but they are in the process of making the transition from condominium to rental and the first part of that is speaking with each of the buyers first.

 

Letters confirming termination of sales agreements are also being sent to purchasers once they have been contacted by the company.

 

 

 

https://www.timescol...ts-rise-9556383

 

 

She stressed no firm decision has been made on what will happen

 

Edited by Victoria Watcher, 23 September 2024 - 06:33 AM.

[Barrister]

No decision, but letters of termination?

[Victoria Watcher]

No decision, but letters of termination?

 

I guess technically, they have made no firm decision on what things look like moving forward, but terminating all the contracts is a certain.

 

I suppose if interest rates go down to 1.75% by completion, they can start selling again, maybe even at higher prices.  Not sure if the original buyers would have legal recourse in that event.

Edited by Victoria Watcher, 23 September 2024 - 09:23 AM.

[Mike K.]

I'm no expert by my understanding is that IF a developer builds a development and designates it as a strata then rents those strata units out CRA deems that as a sale of said units. This being the case the Developer then has to pay the appropriate sales taxes (GST & Property Purchase Tax) on each unit.. So ..... if this is the case it is highly doubtful that the Developer will keep the strata in place.

That’s interesting info. I had never heard that before.

Langford encourages all of their rental buildings to be strata titled (or at least it did, during the Young era). I had never heard of a developer having to pay taxes on each unit at completion, but I will look into this.