A Sign Of The Times? Vancouver Real Estate Liquidation

A condo developer in Vancouver who built a number of condominium projects all over the Lower Mainland is liquidating 375 properties at 20%-40% off of assessed value. This recent development is definitely a sign of the times. You have to ask yourself – why are they selling these units at such a discount? Why? Because maybe they see the storm on the horizon. If you owned these units would you discount them if you expected sales prices and activity to increase?

What do you think? Any opinions out there?

Here is the article by CBC…

A Vancouver real estate developer is making an unprecedented move to offer a liquidation sale of $350 million worth of its condominiums throughout the Lower Mainland.

The marketing strategy by Onni Group of Companies is aimed at selling off hundreds of condos in its inventory.

About 375 unsold condominiums in cities such as Richmond and New Westminster will be offered at 20 to 40 per cent off, a real estate insider told CBC News.

It is not known whether the big discounts are based on prices when the condos were completed or current market values. Onni was to hold a media event Thursday to announce details.

Onni’s marketing tool might nudge some reluctant home buyers off the fence, said Tim Silk, an assistant professor at the University of British Columbia’s business school.

“If you see the units being priced below comparable units, then you might see people jump in,” Silk said Wednesday. “But there’s still that hesitation of, ‘Have we reached bottom?’ ”

Home prices in the Vancouver real estate market dropped almost 11 per cent between December 2007 and the end of 2008, according to a special price index updated earlier this month by the Real Estate Board of Greater Vancouver.

And the number of homes sold in 2008 fell more than 35 per cent from 2007 sales of more than 38,000 homes.

Link to CBC Article.

B.C. Assessment Information and How It Affects Your Property.

For the 2009 Property Assessment Roll only, BC Assessment will be providing property owners with the market value of properties as of both July 1, 2007 and July 1, 2008. The lower of these two values will become the 2009 assessed value for most properties.

On November 27, 2008, the provincial government passed the Economic Incentive and Stabilization Statutes Amendment Act (Bill 45), which provides special valuation rules for the purpose of the 2009 tax year only. Part 3 of Bill 45 provides that properties valued at market value will, on the 2009 assessment roll, be valued at the actual value calculated using either a July 1, 2007 or July 1, 2008 valuation date, whichever is lower. This initiative is part of the B.C. Government’s economic strategy to provide stability and predictability to British Columbians in response to the downturn in the real estate market which began mid-2008

About 94 per cent of property owners in British Columbia will see an identical or lower assessed value on their 2009 notice compared to 2008. Eighty-two per cent of BC’s 1.85 million properties will reflect last year’s assessed value. Another 12 per cent of properties will be assessed at July 1, 2008 values because that value is lower than July 1, 2007. The remaining six percent have undergone changes that are described online.

If you were wondering if your property taxes were decreasing this is not necessarily the case. BC Assessment does not have a direct role in setting property taxes. Taxing authorities (municipalities, regional districts) set their tax rates for property taxes based on their budget requirements.

For further information or questions about your property assessment visit BC Assessment online here.

What the Analysts say about B.C. Real Estate for 2009

In Kamloops, I continually talk to clients regarding the local real estate market and the factors contributing to the recent downturn. There are many predictions and opinions about the market. Below I have compiled a series of analyst opinions on the BC and national real estate market which in turn directly apply to Kamloops real estate. Hopefully you will find this information useful to your search, whether you are a home buyer, seller or just looking for some clarification.

Scotiabank’s senior economist Adrienne Warren says Canadian real estate prices will drop 10-15% nationally, with B.C., Alberta and Saskatchewan taking the brunt of the downturn. They predict that much of the runup in prices seen this decade will remain intact.

Canadian Association of Accredited Mortgage Professionals (CAAMP) report states that despite the traumatic American mortgage fall out, Canada has managed to steer clear of deflated markets. The Canadian system is supported by low and steady interest rates, better underwriting processes, different products and normal re-sale activity levels. “Canada is a financially conservative country where consumers are able to meet the terms of their mortgages and buying decisions are based on affordability,” said Dunning. “This contributes to a solid real estate market that will not experience the same drop off we see south of the border.”

Cameron Muir of BCREA believes BC could see an upswing in housing markets as early as spring 2009. This doesn’t necessarily mean that housing prices will increase. Consumer confidence in the market is predicted to stabilize and buyers will become more active in the market place.

CMHC see a further drop of up to 9% in 2009. Home prices in Kamloops and district have fallen so far anywhere from 10% and above to date.

Ozzie Jurock sees increased activity in Spring and sales lower in 2009 and calls for us to start thinking positively.

Other points of interest:

  • Across the country, downward movement of house prices are only 3% year-over-year in the third quarter (compared with a 5 to 15% decline in the U.S.)
  • International studies conducted by agencies such as the International Monetary Fund have found that Canada is still considered to be one of the countries where the housing market is least overvalued
  • Canada’s housing market is also much less vulnerable given the very limited sub-prime mortgage activity (5% of outstanding mortgages compared to approximately 14% in the U.S.)
  • The speculative sector is relatively small
  • Housing affordability – which had deteriorated over the past two years – will improve with the recent significant rate cuts by the Bank of Canada and softer house prices.

They all agree that consumer confidence is one of the real estate market’s biggest challenge. There is a lot of uncertainty locally in Kamloops and in the world as a whole. Predictions are never certainties. There are a number of factors that affect consumer confidence and unfortunately this confidence is not only a local and national feeling but also a world wide concern.

Kamloops And District Real Estate MLS Average Price Forecast For 2008 And 2009.

According to British Columbia Real Estate Association’s Housing Forecast Table. The Multiple Listing Service (MLS) average price for Kamloops and District for 2007 was $275,690. The forecast for the MLS 2008 average price is $306,000 and $270,000 for 2009. Don’t feel too bad. It’s just a forecast after all.

Vancouver, BC – October 29, 2008. The British Columbia Real Estate Association (BCREA) released its fall 2008 Housing Forecast today.

BC Multiple Listing Service (MLS) residential sales are forecast to decline 28 per cent from 102,805 units in 2007 to 73,700 units this year. A modest 4 per cent increase to 76,500 units is forecast for 2009.

“The erosion of consumer confidence that began with rising fuel prices earlier in the year is continuing, as the global financial crisis and volatile equity marketshave BC households concerned about their own finances,” said Cameron Muir, Chief Economist.

A weaker provincial economy is expected to increasethe jobless rate from 4.4 per cent this year to 4.9 percent in 2009. “While some job losses will occur next year, BC households will remain on a relatively solid financial footing,” added Muir.

The average MLS residential price is forecast toincrease 3 per cent to $453,000 this year. However, home prices peaked in the first quarter and have been edging lower for several months. For 2009, the average price is forecast to decline 9 per cent to $413,000, with most of the decrease having already occurred by the end this year.

Downward pressure on home prices is expected to ease by the second quarter of 2009, as an increase in affordability and consumer confidence induces a modest growth in sales. The inventory of homes for sale is also expected to decline in the coming months as potential home sellers delay putting their homes on the market until conditions improve.

You can find the pdf here:

The British Columbia Real Estate Association fall 2008 Housing Forecast

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