Lady At City Hall: “We’ve been getting a lot of calls about stalled building lots lately. In this downturn, we’re seeing a lot of people go bankrupt.”

“One of my friends who has seen everyone on his street, except one set of neighbours across the road, sell to Mainland Chinese has recently called the COV about a halt in construction on his street. The backstory is the Mainland Chinese owner bought the house two years ago, let it sit empty, tall grass, weeds, problems with garbage, rats etc. And then about a year ago knocked down the house and left the lot empty.

About eight months ago construction started. For about four months. Then it stopped. Month after month, my friend wondered just what the heck is going on. He asked another neighbour on another block who is a retired developer what he thought was up. The developer said, “Well, when you have a project stall like that it’s one of 3 things. It’s either money, money or money.”

So two days ago my friend phoned the City to see if there were any neighbour complaints or any other reason why they were all stuck with a hole in the ground, some foundation and some wet, rotting plywood for these last four months. And the Lady from City Hall said, “Hmmmm… nope. Nothing here. They’re all clear but we’ve been getting a lot of calls like this lately. In this downturn (her words not my friend’s), we’re seeing a lot of people go bankrupt.”
mac at VCI 6 Jul 2012 3:23pm

The downturn has barely commenced.
– vreaa



***** MY COMMENT :  I often travel down Sidaway Road in East Richmond. On the West Side closer to Steveston Highway is a huge home that had begun construction several months ago. The first floor was completed and the second floor framing was quite advanced. Then all the work stopped. The project is sitting there with no roof, exposed to the elements and the wood is turning to a gray- black color. My guess is if work is not commenced  soon, the City will condemn it and force it to be demolished. It has also been my suspicion these large homes are built on pure speculation trying to sell to Rich Offshore types…and it appears that has all dried up.




Spot The Speculators #86 – “My unemployed friend bought two townhouses in Langley, one for him to live in (20% down) and one as an investment (30% down). His retired father bought four townhouses in the same development, all of them bought with 20% down.”

“I had dinner with a good friend of mine last night. He got back from Korea five months ago after four years working there. We were discussing about his work situation as he can’t find a job here and is now considering moving out of Vancouver.
The trick? He bought two townhouses in Langley, one for him to live in (20% down) and one as an investment (30% down). His father bought four townhouses in the same development (“his retirement plan”), all of them bought with 20% down. He told me: “we got them under market value, the developer gave us a discount”…
I asked him the question:”if the market goes down by more than 20% in the next 5 years and the bank asks you to put more money into the houses at refinancing time, will you be able to do so?” Puzzled answer: “no”.
He and his dad have basically put all their savings into that development. These are not the type of people you would imagine being RE speculators (they don’t see themselves as such), but they just don’t have a clue of what’s going on in the RE market here. They’ve bought into what the developer told them…
So here we are: one unemployed and one retired putting all their savings into RE. How strong can the market be when people like them are so over-leveraged in real-estate? How many people like them on the market?”

Makaya at VREAA 6 Jul 2012 10:41pm

These guys are gamblers who don’t even see themselves as such. They think they’re ‘investing’. They’d be better off taking their down-payments, walking up to the roulette table, and putting everything on black. In that scenario the close to one in two chance of doubling their money is better than their current set up, where there is a close to 100% chance of losing it all. Seriously… Gambling is not raised here as metaphor nor as hyperbole… they statistically would be better off with a two to one bet. Even at this extremely late stage of the cycle, we have buyers entering who cannot imagine Vancouver prices dropping. Truly mind-boggling.
And the “got them under market value” line is just so pathetic that hearing it induces
cataplexy, a state where, overcome by emotions, your muscles lose tone and you collapse to the ground.
As Makaya says, how many like them in the market?
– vreaa

*******MY COMMENT:

How many stories like this are out there ?

I will “bet” quite a few. A disaster that will unfold soon, and all the personal and fiscal carnage that will result. The Father and Son have together bought (6) condo in this development. Worst case scenario….they have to bail…go bankrupt, thus (6) condos sit in the complex, not paying their share of strata fees. If and when they sell, likely at a deep discount, which will tick of the rest of the strata, who may wish to sell but have to compete against a number of  cheaper depreciated units.

My “non – expert” advise is to check out older buildings, with limit on rentals, and have a low sales turnover basically a good history of full live- in ownership.

My gut feel is that we will have many Ghost Hi-Rises, newer units bought by speculators,mostly vacant , and those  who actually  bought to live in these will be stuck in a looming nightmare as I have outlined above.

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