Deal... or No Deal?

Due to the underwhelming success of the auction at Reflections in Langford, they have again lowered prices. This time, they are following the cues of Finlayson Reach and St. Andrew's Walk by chopping their prices by up to 40%. Good discount, but are they now good prices? What is the fair market value?

Some feel that fair market value is equal rent to ownership costs. I'll go with that. What would a 1 bedroom and den unit at Reflections rent for? Maybe $1100 / month? Strata fees and taxes for that unit would be maybe $250 / month. Subtract those from the rent = $850 / month mortgage payment. Today, you can get a 5 year fixed for 4.09%. With a 35 year amortization, you'd have a $180000 mortgage. Of course, you'd still need to cover a down payment and other associated fees (CMHC, property transfer tax, etc). The cheapest unit advertised is still $199000. That price is close, but still too high.

Deception!

I'm outraged! The latest ad for Reflections in Langford is absolute and total deception! The ad states that you can now buy a 2 bedroom condo valued at $334900 for zero money down, thus giving you a $995 monthly payment for the first twelve months (whatever that means!). First of all, zero money down is a poor financial decision (we are now NO different than what went on in the U.S.). Secondly, $995 a month, yeah right. Put into a mortgage calculator the $334900 purchase price, 40 year amortization, 5.99% interest rate, what do you get - $1823.23 a month! What the...!!! I wonder, is it Peter Gaby or the developers sensing a serious downturn that are willing to pay for half your mortgage for the first year!

People, don't do it! It's all lies!

Sorry, I've gotta take some deep breaths here. If Gaby and/or the developer wanted to maintain a stitch of integrity, they'd simply lower the prices and present the real purchase numbers. However, they know that to present that same monthly mortgage payment, even with the 40 year amortization, the price of that particular condo would have to be $183000. Wow, that's almost reasonable!

The Banks Want Your Money... And Your House!

The City of Langford has an affordable housing program where developers are required to put 10 percent of the houses they build into an affordable housing pool. These homes are sold to families residing in Langford, who do not own real estate, have less that $50000 in assets, and have a family income of less than $60000 / year. The homes are sold at a set value, currently $160000.

It turns out that the big banks will not approve mortgages for these homes, as they do not control the home in the event of a foreclosure. In such a case, the home is returned to the affordable housing pool, and resold at the original selling price. However, there are other lenders willing to take on those mortgages.

I'd assume that those same banks would approve a mortgage of that size to the same family if it was for a home not in the affordable housing pool. Like a beast waiting to devour, the bank would take possession of that foreclosed house. I must be a little naive, because it doesn't quite make sense to me. I guess that in a rising real estate market, the banks believe that they would profit from controlling a foreclosed home. As is happening in the U.S., in a falling market, lending standards are getting tighter, and perhaps that same family would not get mortgage approval regardless of whether the home is an affordable housing pool home or not.

The related news article can be found here.

Info on the affordable housing program can be found here.

Your Ideal Neighbourhood

A unique opportunity has presented itself. A representative from the developer who is designing the West Hills community in Langford is seeking the input of the readers of this blog. They are interested in knowing what your ideal community / neighbourhood would look like. They don't want West Hills to necessarily be like every other new development. They are thinking outside the box, and for this they are asking the public what they want. My hat's off to the developer for this. Regardless of whether you agree or disagree with this development, or any other new development, I think it is commendable for a developer to be willing to try something new.

This post's purpose is to stimulate a conversation on what an environmentally friendly, ecologically sound, affordable, family oriented neighbourhood should look like. Please post your thoughts on what a developer can do to do it right and what developers are doing wrong these days. Topics to think about and comment on include the following:

- How important is your car to you? With adequate public transportation, would you be willing to give it up?

- Would you like to see a car-free neighbourhood?

- If you couldn't live without your car, could you live without a garage? Would you be willing to park in a community parking lot and walk half a block to your home?

- Do you like lots of big, wide streets? What should the street grid look like?

- How would you make homes more affordable?

- Would you mind living with less square footage?

- How about a house with a 2nd floor that is not finished when you acquire ownership of it? Is sweat equity something you have time for and be willing to provide?

- How would you create a neighbourhood with people from all incomes?

- What existing neighbourhood / development is, in your opinion, close to ideal? What is the poorest neighbourhood design that you have seen?

Any other suggestions on how to make a community greener, more livable, more environmentally friendly are welcome. What would you want to see that would make you say "That's where I want to live!"

The developer is appreciative of all comments, thoughts, and ideas, both positive and negative. Another thing that the developer would be interested in knowing, if you are willing, is to have an idea of what your demographic situation is. But only if you are willing. No pressure. Thanks for your help, and for the great conversation as of lately.

I'll be working out of town for the next week, so I'm taking a little break from the blog. Hopefully, conversation on today's post will carry on until I'm back. Next post will be Saturday, March 24.

Construction craziness

I went for a drive today through Langford and Colwood. It was specifically to see the development around Bear Mountain and the Latoria area of Colwood. Despite being socked in by fog on Bear Mountain, I was blown away by the amount of construction and development that is taking place in those cities. When the amount of construction taking place in Victoria is added to this, the construction statistics for our quaint little region must be quite impressive. Does anyone out there have numbers on housing starts and completions for the CRD? Another interesting stat would be what the size of the construction labourforce is today, and perhaps, what the historical norm is. Anyone know where to find these tidbits of info???

As I drove home, I was left wondering "Where in the world are the people who need to buy these homes gonna come from?"

I know, Alberta, Vancouver, Asia, Europe, etc. But really? That many to Victoria?

Another thing is that there continues to be a lot of homes in Langford and Colwood that languish on MLS for what seems to be an enternity. Condos even more so. Citiwalk condos in Langford has had "Only 5 2-bed, 2-bath Units Left!" for months and months already. I think they better up the antee from their last promotion of a $1500 gift card for Mayfair Mall. Based on the number of condo sales in December and the number of condo listings currently in Langford, there is 11 months of supply. To sell a condo today, you'd really have to raise the bar.

I've been compiling numbers for Victoria from MLS for a little over 6 months. I'll be revealing them tomorrow. Stay tuned!