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.

Bear Market at Bear Mountain

Bear Mountain is calling it a bear market and slashing prices at Finlayson Reach and St. Andrews Walk. This was mentioned over at Vibrant Victoria a couple days ago, just haven't had the time to post it yet. H/T to anonymous for mentioning it in the comments of the last post.

Also, H/T to anonymous regarding the auction at Reflections - Chek6 reported that 15 of the 40 units sold. So, 25 condos left. When's the no reserve auction?

Apparently, a local realtor sent out the following email recently. I thought it was good for a laugh.

"You may already know, but I wanted to ensure that you were aware of two significant developments that occurred last week in the Victoria Real Estate Market.

Firstly, Bank of Canada interest rates dropped by another half point followed by most Chartered Banks. Prime Rate now stands at 2.5% which is unprecedented in a generation.

Secondly, the Victoria Real Estate Board announced that the number of sales in the Greater Victoria Region had risen substantially during the month of January over the previous two months.

The reaction in the marketplace to these two events was immediate and dramatic. Buyers sensed that the market was turning and that prices would now begin to stabilize after months of decline and uncertainty. This combined with record low mortgage rates resulted in an amazing number of accepted offers over the weekend on listings that in many cases enjoyed multiple offers. It has been a while since this kind of market activity has been evident in the Greater Victoria Region.

It is a great time to buy and more and more people are recognizing the opportunities that are available."

P.S. Just saw the money printing video, thanks HHV for the link. These are scary times. Thanks Obama.

It's Auction Time!

Reflections in Langford is having an auction! Who's bidding? And who's next?

March Condo Sales Graphs

Deception Part 2

Remember June last year? I ranted over the deceptive scheme being used to sell the Reflections development in Langford. Advertised was a purchase plan for a $335k condo with zero down for $995 per month. Not even in the small print did the ad say that your payments would double after one year.

Well, correct me if I'm wrong, but it looks like Peter Gaby is up to his deceptive ways again this year. This time the development is The Aspen in View Royal. He's advertising a 3 bedroom condo (also 1 bedroom and 2 bedrooms for less) for $1034 per month, with 10% down, 40 year amortization, and a discounted variable rate of 5.25%. At least, the ad does mention that the scheme is "cash back to offset payments over 12 months".

The least expensive 3 bedroom condo in that development has an asking price of $409900. After putting 10% down, your mortgage would be $368910. 40 year amortization, 5.25% rate, gives you a monthly payment of $1826.40.

This year, I'm not as floored over this scheme as I was last year. Truthfully, I'm not surprised. I guess I'm getting jaded.

January 19

Inventory of homes in Greater Victoria is increasing quite rapidly this year. In the past two weeks, there's been an increase of 119 SFH listed on MLS. Since January 7, there's been an increase of 423 active listings in the region. Homes are still selling, but new listings are certainly outpacing the sales (also see what's happening in Vancouver!)

A couple things of note:
- It's nice to see that Canada has their own version of Lawrence Yun and David Lehreah - Gregory Klump! Check this guy out and what he has to say!

- Our favourite condo development gone bad, Tuscany Village, had a couple of interesting sales last year. According to BC Assessments, unit 418 - 1620 McKenzie Ave is assessed at $476000 and sold for $339900 on October 5. Unit 419 - 1620 McKenzie is assessed at $461000 and sold for $346625 on October 9. How would you like to be the person who bought unit 411 - 1620 McKenzie Ave, assessed for $449000, but you paid $500000 (June 27)!!!

- Another Tuscany note, unit 413 - 1620 McKenzie had an asking price of $510195 in May. Today, it is $419900 (MLS#237359). I thought real estate always went up! If you're in the market for a condo, this is the place to make a low ball offer.

- Is the Radius condo / commercial development the next Tuscany Village??? This link from the TC used to work. No longer for me. Anyways, here was the beginning...

Costs stall Radius project
Carolyn Heiman, Times Colonist
Published: Saturday, January 12, 2008
Skyrocketing construction costs, which some experts say are rising 1.5 per cent a month, have temporarily stalled work on the $160-million Radius project, says the developer.
But John Schucht of Waywell Development said the project -- kitty-corner to the Save-on-Foods Memorial Centre -- will resume after a reassessment of construction costs in the region, which he described as "runaway."
Schucht said a construction hiatus was planned for the Christmas holiday but instead of resuming on Jan. 7, the break will be longer. He declined to say how much longer.

You Know the Local RE Market is HOT when...

Kinetic Construction Ltd. is suing Tuscany Village Holding Ltd. for $2,245,982. (Business Examiner Vancouver Island Edition, Dec.3 - Dec16, Who's Suing Whom)

Want a cheap condo? It might be a good time to go and low-ball Tuscany Village!

There's always next year...

It's tough watching your team lose the big game. But hey, they were big-time underdogs, and did better than I expected. Thanks Bombers, for the run this year, and better luck next year!

Back to real estate. Tell me, if the market is so hot, as according to the VREB, are there ads in the TC like the following for developments that are complete or nearly complete. Shouldn't they be sold out?!?

Vancouver Condo Prices

I've been working in Vancouver this week. Reading the article in today's Vancouver Sun about Vancouver condo prices and how high they can go, got me thinking.

My first thought was that the gentleman from Genworth Financial is delusional. He claims that supply and (non-quantitative) demand will keep the average condo price in Vancouver rising for the next 5 years. VHB went off on the logic behind his argument.

My second thought was "Of course!" Vukanovich is going to say that prices will keep rising due to his vested interest in the rising prices of condos. If I were selling widgets, I would say that my widgets were the best widgets in the world, that they will always go up in value, and that there will always be very high demand for my widgets. I profit from the sale of my widgets. This guy, directly or indirectly, will profit from the sale of high-priced condos.

My third thought was, hmmm, maybe I've been reading too many bear real estate blogs. Have I become delusional? Or am I now seeing the light? I believe that I am seeing the light, but only the future will confirm this. If prices keep rising forever, I guess I just jumped on another bandwagon, like Y2K and the Calgary Flames.

If Vancouver condo prices were to keep prices for the next 5 years, will Victoria's also? Do Victoria's prices follow Vancouver's prices? Or vice versa? What, if any, is the relation or correlation between Victoria and Vancouver?

Being relatively new to Victoria and BC, it appears to me that Victoria lives in Vancouver's shadow. Vancouver is the big brother, Victoria is the little sister. I may be entirely wrong. If not, how does this get reflected in real estate prices?