Sellers forced to aggressively drop prices to attract offers

Derrick Penner
Sun

Phones are still ringing at Tourism Whistler’s booking office, offering some hope to a waning Whistler real estate market.

“Our real estate activity does flow from our tourism activity,” Patrick Kelly, an agent at the Whistler Real Estate Co., said in an interview, “particularly where the international — American and European — market is concerned.”

“If they don’t come [to visit], we don’t sell to them.”

Tourism Whistler reported its second-busiest booking day ever on Nov. 15, according to spokesman Jeff McDonald, an indication the resort may not experience the worst of projected declines in visits.

Kelly hopes some of the visitors will be buyers with money looking for real estate bargains in Whistler, where sales are way down from 2007 levels, and prices have edged lower.

Whistler saw 463 property sales up to November, 104 of them detached homes, according to data from Landcor Data Corp. That compares with 708 sales, 167 of them detached homes, in all of 2007.

The average price of a detached home in 2008 so far, according to Landcor, was almost $1.3 million, compared with $1.37 million in 2007.

“We certainly mirror what’s going on in Vancouver and across Canada, for that matter,” Kelly said.

“Sales volumes has dropped significantly from earlier in the year, and also year over year, to levels probably more consistent with what we saw three or four years ago.”

As for prices, Kelly noted that the decline could have more to do with activity shifting from top-tier, multi-million-dollar chalets to mid-tier properties: family-oriented chalets under $2 million or townhouses.

Whistler did see a record $17.5 million paid for a home when an estate property at 6715 Crabapple Drive changed hands earlier this year.

However, of the top-10 transactions this year, according to data from Landcor, eight were homes that sold for less than $4 million. In 2007, Landcor’s top-10 list started at $4.4 million.

Buyers are “looking for value, and when they see what they want, they’re happy to pay,” Kelly added.

The psychology of the market is such that it takes longer to sell, with buyers enjoying a “significant advantage when it comes to making offers.”

John McGregor, an agent at Re/Max Sea to Sky Whistler, added that sellers do have to get aggressive about pricing their properties to draw offers in what is now a buyers’ market.

Whistler is very much a second-home community for a lot of owners, McGregor said, agreeing there may be some cases of second-home owners who have suffered losses to their net worth that will force them to bail out of their Whistler abodes.

“This would be a difficult time for [those individuals],” he added. “I don’t think it’s epidemic, but there certainly are situations like that for sure. Those are the people who have to get their prices aggressively lower to attract a buyer.”

However, McGregor said owners who do not need to sell are not listing their properties, although some may be shifting expectations for the properties they do own.

A couple of McGregor’s clients have moved properties out of short-term vacation-rental pools to sign longer-term leases of six months to a year, and that’s about the time frame when light starts to appear at the end of the tunnel.

At Tourism Whistler, McDonald said operators at the resort are bracing for a slower 2008-09 season compared with the 2007-08 season. Forecasts are for five to 12 per cent fewer visitors than the previous year.

However, they have been marketing aggressively and offering deep discounts to attract early bookings and mitigate those expected visitor reductions, and indications are that some of those efforts are paying off.

He said the United Kingdom tour operators are reporting that their winter sales to all Canadian resorts are down, but they are down the least for Whistler.

McDonald said officials believe that is because of growing awareness of Whistler’s status as co-host of the 2010 Olympics.

Whistler Blackcomb’s new peak-to-peak gondola, which will transport skiers from the top of one mountain to the other and opens Dec. 12, is another amenity the resort hopes will be an advantage in attracting visitors this season.

McGregor said that over recent years, the Whistler real estate market peaked in 2003-04, then dropped considerably in 2005 before picking up again in 2006.

As for the longer term, he said new developments such as the upgrade of the Sea to Sky highway will stand the resort in good stead.

For now though, McGregor said that if sellers “have a valid reason to sell, it’s a solid market, but most definitely a buyers’ market.”

© The Vancouver Sun 2008

Don’t crush 224 units that will displace 200 people on lengthy waiting lists for homes

Christina Montgomery
Province

Pressure is growing on the province to reopen more than 200 suites of social housing in Vancouver that B.C. Housing is busy boarding up and preparing to demolish.

Redevelopment of Little Mountain, the six-hectare site that is one of the city’s oldest social-housing developments, has been controversial since a deal was struck last year to demolish the aging homes, sell the site to a private developer, have the 224 units rebuilt as part of a 2,000-condominium project — and use the profits from the sale to fund social housing across B.C.

Residents were given the right to return to the new 224 units that will be available some time after 2010, and had other housing arranged in the meantime.

But critics and residents say more social housing should have been included on the redeveloped site, and that evictions should be delayed until construction begins.

Demands to slow down — or reverse — the development reached a crescendo this week as uncertainty grew over delays and possible financial problems plaguing Holborn Development.

Late last month, Holborn’s excavation work on the Ritz-Carlton hotel, a prestigious hotel-condo project in downtown Vancouver, stopped. A second project on Kingsway has also been delayed.

Simon Lim, president of the Holborn Group, could not be reached yesterday for comment on the Little Mountain project.

According to a timeline attached to the City of Vancouver‘s memorandum of understanding on redevelopment of the site, the Little Mountain project is more than a year behind, with construction not likely to begin until well into 2011.

NDP MLA David Chudnovsky, the party’s housing critic, pushed Housing Minister Rich Coleman in the legislature Tuesday for an answer on reopening the units.

Coleman traded barbs but didn’t answer directly.

Chudnovsky told The Province yesterday he was angry not only that residents had been moved unnecessarily, but that they had displaced 200 people on lengthy waiting lists for social housing units.

“[Coleman’s] job is to provide adequate housing for the people in the province,” Chudnovsky said. “Instead, he wanted to play real-estate developer.

“He got caught.”

Incoming Coun. Ellen Woodsworth of the Coalition of Progressive Electors said she’ll push when city council reconvenes next week for re-opening all of the empty but habitable units.

“We’ve got a serious housing crisis in Vancouver, as well as a homelessness crisis, so why leave perfectly good units empty for at least two years, or possibly longer, when we could use them to house people?” she said.

Vision Vancouver Coun. Raymond Louie, whose party will hold majority power, said they would make contact with the province and developer immediately to explore ways of using the site. But he conceded that the city has no power over what the two parties decide.

Although Vision Vancouver incoming mayor Gregor Robertson said while campaigning that he was interested in seeing if Little Mountain could be used as a shelter, Louie noted that some suites may be uninhabitable.

“All we as a city can do is ask,” Louie said.

© The Vancouver Province 2008

Lenders seek more equity in down payments

Derrick Penner
Sun

Sales of rental apartment buildings in the Lower Mainland collapsed earlier this year in the credit squeeze and they haven’t recovered as 2008 winds down, according to research from a major commercial realtor.

Avison Young Commercial Real Estate tracked 76 building sales worth $270 million up to November, down 50 per cent from 153 sales worth $519 million made in all of 2007.

There is “a disconnect between vendors and purchasers,” Avison Young principal Rob Greer said in an interview.

“Vendors, when they’re giving us a call wanting to list their properties, they’re still looking at that price we told them it was worth last year,” Greer said.

In reality, lenders are demanding buyers put down more equity now, and as a result prices are “significantly off last year’s pricing.”

Avison Young noted there were only seven building sales in downtown Vancouver in the first 11 months of this year, with prices averaging $183,534 per unit compared with 13 in all of 2007, when prices averaged $239,002 per unit.

Vancouver’s west side has seen 10 sales for the year to date with prices averaging $200,010 per unit, compared with 27 sales and per-unit prices of $206,322 a year ago.

However, Greer said areas farther from Metro Vancouver’s core have seen prices hold up better because properties there have better returns on capital.

If difficult credit conditions persist in 2009 though, Greer said re-pricing could mean a drop of as much as 20 per cent in some Metro Vancouver areas to realign capital returns with the needs of investors under their new conditions for obtaining credit.

The evaporation of debt markets in the wake of the U.S. sub-prime mortgage crisis is a key culprit in the situation, said Michael Brodie, Avison Young’s multi-family real estate advisor.

The buyers of apartment blocks could once obtain financing for 75 per cent of a building’s value. Today, however, they need bigger down payments and can leverage only 60 to 65 per cent.

© The Vancouver Sun 2008

Bill entrenches meddling in assessments

Don Cayo
Sun

“When I use a word, it means just what I choose it to mean — neither more nor less.”

— Humpty Dumpty, as quoted by Lewis Carroll

So, too, with making a law — at least one specific law that was apparently written by a panicky government scrambling to cover for its leader’s rashness in shooting from the lip.

The nub of a just-tabled bill to legalize the property assessment freeze announced weeks ago by Premier Gordon Campbell means just what the provincial cabinet chooses it to mean — neither more nor less. In one fell swoop it eviscerates the 10-year-old legislation that gives B.C. one of the world’s better property-assessment systems, it endows cabinet with jaw-dropping powers to aid or hammer any individual property owner or any class of property owners it wishes, and it opens up 2009 property tax collection to potential chaos.

And, as I see it, all this merely because the premier announced the freeze — ironically intended as an economic stabilization measure — before anybody bothered to think it through.

The bill amends several existing acts in order to accommodate the premier’s announced intention to freeze assessments at the July 1, 2007 level and to grant property owners the opportunity to defer property tax payments. When it comes to business and residential assessments, the bill — nominally, at least — entrenches what Revenue Minister Kevin Krueger told me it would do. It sets aside the usual provisions of the B.C. Assessment Act and establishes as the basis for 2009 property tax bills either the July 1, 2007 assessment level or the July 1, 2008 level, whichever is lower.

But then it goes on to give the cabinet power to ignore what the bill says and to override virtually every provision it sets out. Cabinet is specifically empowered to change the rules to:

– Add anything left out.

– Make the legislation more effective, ease transitional difficulties, or fix any errors, inconsistencies or ambiguities.

– Correct any unfairness.

– Do anything cabinet “considers to be in the public interest.”

And, you guessed it, “public interest” isn’t defined.

If all that is not scary enough, cabinet can also make its rulings retroactive, and use different methods and standards to determine the value of properties in the same class. And — despite specific provisions in the old Assessment Act — no one can appeal these cabinet decisions.

Revenue Minister Krueger called me Friday to underline his view that an option to have 2009 tax bills based on the lower of 2007 and 2008 assessment value will be advantageous to most business owners, as well as to homeowners.

I agree about homeowners, although I’m skeptical about businesses. As I’ve argued previously, “average” or “median” figures obscure the radically different way that values change within the same property class. In Metro Vancouver, for example, office towers continued to soar in value long after more modest commercial buildings stalled or began backsliding. The same is true in many smaller communities, where malls continued to escalate in value at a time when Main Street was starting to falter.

In these cases, merely allowing each property owner to pay tax based on the lower of two assessment values doesn’t make it fair. Because if some properties — the malls and/or the big office towers — get a very large break but other business properties get just a small break, the result is a shift of tax burden from big to small.

In principle, the all-inclusive power the government is trying to give itself to meddle further with assessments could provide the cabinet with a tool to help its friends and harm its enemies, and on that basis alone it should never become law.

But I honestly don’t think that’s the intent. And I don’t think that’s what would happen during the one year assessments are to be done differently.

Rather, I suspect, this bill is intended to forestall a flood of appeals to BC Assessment. And it will result, instead, in a flood of supplications to the cabinet itself.

After all, by giving itself the power to right any perceived wrong, the government implicitly invites every unhappy property owner to seek a special intervention. And, boy, if I were running any of the many businesses that’ll be shafted by this ill-considered tinkering, I’d be pounding on cabinet’s door the very day my next tax bill arrives, if not before.

© The Vancouver Sun 2008