From CBC News:
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 homebuyers 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.
Good luck Onni. Onni blinks first in the 2009 showdown. This is likely the right move as they get the most free press and don't have to hang on to as much inventory through the year.
Wake up to the rest of the developers - drop your prices now and you may get to survive this cycle and live another day.
It is not known whether the big discounts are based on prices when the condos were completed or current market values.
It is known, of course, because whatever price the condos sell for is the current market value.
Gawd, you guys seen Paulb's numbers?
Sales are drying up big time, I've never seen them lower.
This whole Onni promo could fizzle as the few remaining buyers are fleeing like lemmings.
condohype is I'm sure drooling over the Omni Big Push, moving Rennie's liquor cabinet a foot closer to Berlin. Lots of whizbang I'm sure though I wonder what "deals" there really are in the scheme.
Had dinner with a buddy last night. He was all over this. He's already talking about "investing" in a rental property because, he says, rents have gone up 10% recently due to a rental shortage. He says the rental shortage has arisen because no one can afford to buy. I asked if it was a realtor that told him rents were up 10% and he said no. I pointed out that he would have to get a hell of a deal to make a property cash flow and he just smugly replied "I know".
Does anyone feel this might be a decent buy if the price is 50% below from current market values?
Juicy story. This should be on the news tonight.
He says the rental shortage has arisen because no one can afford to buy.
If no one can afford to buy a house or condo, what happens to it?
This guy obviously hasn't looked at Craigslist lately.
If you feel that you really must buy then put in your bids at rental equivalence and see what happens!
This is a huge turning point in the local market. It is a market-based admission on a large scale that the market has turned.
It is also going to really mess up previous buyers.
Onni is jumping the gun. They've been around for a while so no surprise there I guess, they are getting a head start and I'm sure other developers are scrambling to do the same.
People waiting to list their presale assignments or other investment properties will get a rude awakening this spring.
Personally I'm waiting for my subsidized Olympic village condo to get down to a reasonable price. :)
Some details from the Sun: Condos fire sale offers up to 40-per-cent discounts
Some of the Port Moody discounts: $453,900 down to $340,000 and $419,900 down to $315,000. These prices are definitely not at rent equivalence yet, but they'll still be a reality check for all the chumps that are currently trying to sell their places in Aria and Suter Brook near Newport Village (where I happen to live).
Hey, my lease is up in March--time to ask the landlord for a discount. Thanks Onni!
"but they'll still be a reality check for all the chumps that are currently trying to sell their places in Aria and Suter Brook near Newport Village"
My guess this exercise will be viewed by many as a flash in the pan for a small panicked set of sellers.
The timing is important. January and February are always slow anyways so a few sales in this latest marketing campaign won't influence many future sellers who are planning on the spring rebound.
This is why bubbles take several years to burst. Too much denial about reality. I think Omni is being the smartest of all of us in this whole thing. There is still money to be handed over in this bubble and deep discounts when you have everyone's attention (slow season just before an inrush of listings) is pretty darn good timing.
Won't change where prices are headed one iota though it may speed things up a tad. For that, Omni, the Bears thank you.
Onni executive vice-president Chris Evans sits in one of the firms’ condos that is on the block. ‘No one could never have imagined the real estate market would drop as much as this,’ he says.
Yeah OK if you say so Chris.
Omni is exhibiting one of the first indications that condo developers have at least a couple IQ points to rub together.
They should successfully clear their inventory via the STILL unbridled stupidity of real estate "investors". The mere fact of this near fire sale will pull ALL condo prices in the Lower Mainland down.
Omni has done the local real estate market a favour by accelerating the correction, and leaving their fumbduck competitors in the dust.
"Omni is exhibiting one of the first indications that condo developers have at least a couple IQ points to rub together." Omni and ONNI are different companies. Far as I know Omni is doing just fine. and has limited exposure in unsold units.
Onni complexes are terrible , as a strata consultant I refuse to work at them as the problems are irreconcilable with maintenance fees. Can't happen and no Amacon support. This company is something else.
A 655-square-foot studio [in Port Moody] originally priced at $319,900 is now $240,000
What a STEAL! BLECH
That's still a hundred too much.
Strataman, interesting comment about Onni... are there any developers out there that actually do a good job?
"Omni is exhibiting one of the first indications that condo developers have at least a couple IQ points to rub together."
The developers are leading the rush to the exits just as they did in the US two years ago. The reason of course is that they do know a few things about business and one of them is you don't hang on to an asset when the price has nowhere to go but down.
And again the flippers and FB's will be burnt toast.
What I find comical is that everyone is still claiming it's different here from the US, while in fact we're watching the same movie with the fast forward button held down.
ReductiMat "Strataman, interesting comment about Onni... are there any developers out there that actually do a good job?" The answer is no but there is a difference, some have basically good designs that have a lot of deficiencies, and some (like Onni) would require a total redesign. So I approach the strata s with this, for 15 -20% increase in maintenance fees we can make everything work like it's supposed to. For the others I basically say you have to rebuild it(building systems, which includes elevators, HVAC systems, plumbing and ALL common area systems)) that unless you're into 3 times your current maintenance fees let's not waste anybody's time.
Strataman I've heard you go off on various developments and buildings. You should really post a list of the best and worst you've dealt with. There will be a huge supply out there for myself and other buyers. Since I want to get in long term, issues like that are very important.
Agreed! I would love to hear Strataman's take on which developments are reasonably good and which should be avoided.
Warren; "You should really post a list of the best and worst you've dealt with."
It took me a few years but I will share with you a very constant factor. The condo units built close to the water (Marinaside, Beach, Coal Harbour) are better quality then identical floor plans in the deeper down town. I always assumed that the "park..water..view" surcharge if you will was always just that. I was wrong and found out that all developers made exactly the same or even more in profit on the so-called non ideal locations. Take two identical units one in a preferred location and one deep in down town lets say a $100,000 differance. The one down town will have at least that amount less in building design, custom building systems, and GREEN operating costs. The cost reduction will be magnified as the original land value was less. So to make it easy you are buying a unit with $100,000 less quality and it has NOTHING to do with location. For that matter it even extends to commute distance, a unit in New West is not half the price of a unit on Marinaside Cres. because of location, there is that much LESS physical/monetary building infrastructure.I have been thru new units in New West that should be 1/2 again based on quality alone. I think it has been a great psychological sell method actually. Lokk very very carefully at the common area this is where developeres cut to the bone. Example (Electric base board heat in lobbies with 20 ft ceilings- no circulation your strata fees will be thru the roof). Same lobbies in "prime location" Natural gas fired air handlers (and air conitioning) cost to operate monthly 1/4 that of the "Economical units". Hope this helps a few people. Heating bills are FOUR TIMES as high every month in the "reasonable" units.
Take this for what it is, but my friend knows a sub-contractor that is owed hundred of thousands of dollars for unpaid work. He said there are a lot of pending lawsuits at the moment against Omni for other sub-contractors that went unpaid.
There might be a bit more pressure on them then on other companies.
As it becomes clear that Vancouver will turn itself into the world's biggest municipal tax farm to get out of the Olympic debacle -- the ugliness of which is still largely undisclosed and unknown -- and as the Olympic Village condo supply hits the Lower Mainland market, the collapse in condo prices will accelerate and far exceed other condo wastelands like south Florida.
I predict condo prices in Vancouver will, at least for a good stretch, be cheaper than in any other major Canadian market.
Please, pretty please, seriously, do consider adding a page to the wiki at vancondoinfo. (because it'll stay there, not get buried in this thread)
Your insights, and others with specific knowledge, would be very valuable to anyone considering a buy.
I have no skin in this one, as I don't think we will be buying in a tower, but I can really see the value in that idea. Any inspections could be posted there, news stories, personal experiences, notable and relevant stuff from strata minutes, (no dog-poop complaints, please) etc, etc.
I predict condo prices in Vancouver will, at least for a good stretch, be cheaper than in any other major Canadian market.
That would imply that SFH would also be cheaper than anywhere else, because of the linkage between the market sectors. You can't have the both cheapest condos and the most expensive SFH.
And that just isn't going to happen. Vancouver RE is not going to be cheaper than Ottawa or Montreal. Historically it has always been the most expensive in Canada, except for some periods in market cycles (which used to be out of sync) when Toronto cost more.
The problem for Florida is the hurricane insurance along with higher than normal municipal taxes for the US. I understand these unavoidable costs are making many Florida homes worse than worthless.
Could it really get that bad in Vancouver, considering out inevitable special assessments for leaky condos and future Olympic tax burden? We'll see.
Realistically the biggest hit the CoV is going to take over the Olympics is about $1000 per capita, which is fairly small potatoes. That works out to about $40/year per capita in interest costs. Now that might work out to the average house paying $100/year or so more in property taxes, but that's not very many Starbucks coffees.
This would not bring CoV up to the highest taxed municipality in the region, never mind the country.
The problem for Florida is the hurricane insurance along with higher than normal municipal taxes for the US.
Florida has a hugely discriminatory property tax system under which old owners pay less, new purchasers pay more, and non-residents pay much more. This is destroying the RE market at the margins as it has driven away out-of-staters and investors.
This has been promoted to the residents on the absurd premise that out-of-state buyers are responsible for rising property taxes, when in reality it is of course the local governments which are elected by local voters.
Like Prop 13 in California, it is a Ponzi scheme in which old owners can elect local governments which increase spending but bear no increased taxes themselves, as new purchasers who buy at higher prices bear the increase, It works as long as property values keep going up. And then it doesn't.
How bad is the Onni Group?
Just ask a few sub contractors who have been involved in some of their projects.
They spend more time in court rooms, pursued by angry subs and purchasers than they do on their jobsites.
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It was posted, but it needs saying again -- Omni and Onni are two different companies. Onni is having the sale and is notorious for lousy construction and unpaid subcontractors. Omni I don't know much about.
He's already talking almost "investing" in a property dimension because, he says, rents somebody absent up 10% freshly due to a dealing deficiency. He says the belongings deficiency has arisen because no one can give to buy.
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