Monday, March 5, 2007

Drive by Shooting. In Victoria?

Went out to do some drive by shootings of condo developments in and around Victoria on Saturday. Picture quality may not be the best, weather sucked, but we'll do our best to articulate what we found in our explorations.
Above: Carey Hill Walk. Looks almost complete. Price per sqft is outrageous for a neighbourhood that we consider less than desirable. That said, the development makes good use of its natural advantages and the back corner suites will be very quiet and have a decent view towards Swan Lake and Christmas Hill. Bet they're all sold though.
Above: you can't tell from this photo, but Reflections hasn't had any visible work done to it recently. We go past here several times a week, never see trucks, never see cranes etc. Not surprising considering the ridiculous prices they expect people to pay to live in a glass house on the busiest street in Langford.
Above: McConnell Place. You can see the new building down the street. Not sure if people are living in the front one yet, but looks like the standard Langford condo development of the future. Units for sale at $231K for a small 2 bed (under 700 sqft). Interesting to note that these units original MLS price a year ago were $219K; $12K more or about 5% (that's barely inflation in the construction business and likely less than inflation). Another indicator that the market hasn't jumped like the MSM and Realtors would have us believe?

Above: Latoria Walk development. Not working on Saturday, but plenty of evidence to suggest that the project is well under way. Lots of golf inference in the sales information and signs around. This suggests to me that the marketing is aimed at people relocating to the island for lifestyle, not so much for the people who are already here.
Above: The Strathmore. Looks like the foundation has been semi-poured. Busy street way in front, but central location and easy to jump onto major highways. Don't know too much about this development yet.
Above: Corner of Millstream and HWY 1. The sign in the distance pronounces "Rental Flats" and gives a phone number. I didn't get it, but I assume this is a rental only development and can't find anything online anywhere to gain any info. Nice to see some rental units being built specifically. With purchase prices beyond affordable and rents quickly catching up, I am actually surprised that more real estate investors aren't building these sorts of developments. I know that most new strata's are approved only without rental restrictions as the municipalities use these restrictions to appear like they are addressing housing affordability/rental suite availability issues within a market context. Does it work? Hasn't appeared to as of yet.
Above: This is the Hatley Ridge development. It's advertised in the TC regularly, though it doesn't appear on Vibrant Victoria. Looks like groundbreaking has happened, not a lot of other evidence of work taking place.
Above: Richmond Gate. We live around the corner. We're actually interested in this development as a purchase. Work happens 6 days a week. I wonder what the effects of building in the rain will have on this long term. If you seal in moisture using the new rainscreen 'technology' doesn't this just seal in the rot? Update: went into the sales office to inquire about 1-bed suites. Sold out at $249K. Next suite up, one-bed plus closet called den for an additional $90K. Note, for $90K you get 100 square feet (the den is only about 35 square feet) so the rest of the area is distributed into other rooms.
Saved our favourite for last: Mayfair Walk. 70% sold. Just of the busiest street leading into town. No view. Across the street you have 5 of the seediest houses we have seen in this town. One driveway had a beat up old early 80s Toyota with a bumper sticker that stated: "If you're gonna ride my ass the least you could do is pull my hair." Imagine having your in laws over for dinner and that being the awkward talk of the table. Right beside the Mayfair Hotel, which we are pretty sure doesn't attract the kind of clientele that we would want to have living next to us.

So what does all this mean? We're checking out new developments to try to figure out the justification for the per sqft charges being so out of line with existing property. We can't. The condos we've looked at are all around $200-$220/sqft. These places are all above $250/sqft with the average being closer to $300/sqft. If you move to Langford, chances are you will need two vehicles (bus service sucks from there to town). Of course there are exceptions. But if you do need two cars, you don't get two parking spaces, and there is a definite lack of parking on street in these neighbourhoods.


VictoriaREBear said...

The Mayair Walk web site says, "...this ideal location directly across from the Mayfair Mall, public transit, schools and much more is the midst of a complete revitalization. Just move in and watch this entire locale blossom before your eyes." Hmm. Close your eyes, click your heels three times and you're in Kansas. If the market corrects any time in the next four years, that "blossoming" may take quite a while to unfold. In the meantime, you're gonna be looking at that bumper sticker each and every day!

hhv said...

Yah, not to mention the rusted out chevy, the RV with windshield missing and mold on the roof, the old tires, shopping carts and rotting 2 by 4's... gotta love the marketing folks.

Village said...

I understand grossly expensive houses in exclusive area's, moderately expensive places in nice area's. Even expensive, waterfront condo's with good view's etc.

What I still can't grasp is $400k places on postage stamp lots, in less then desirable or convenient area's. Places that don't even have a mortgage helper. Which should, theoretically at least put them out of range of most households in Victoria.

I suppose it could be that Victoria really only has two types of employment. Low paying tourism based incomes(retail mainly) and decent paying government jobs so there is no requirement to cater to the middle. You're either in the upper echelon with a dual income of $100k+ or you aren't.

VictoriaREBear said...

There seems to be a real explosion in "easy money" zero down, 100% interest-only financing offers around Victoria these days, from Mortgage Stupidity - ah, I mean - Mortgage Intelligence, Morgage Architects et cetera, and even local real estate agents. So, my feeling on the whole condo thing is that a VERY large percentage of these red-hot pre-construction sales are purely speculation with no skin in the game. Condos in the States have long been the poker chips in the great casino economy, and the phenomenon is now well entrenched here too. I called the statistics flunky at the Victoria Real Estate Board a few months ago and asked him whether their stats keep track of the "investment" buyers as well as legitimate owner/occupiers, even part-timers. The answer, of course, was, "Oh, there's no possible way to get that statistic." To which I call BS, but the stats are theirs to manipulate. However, the utter lack of oversight of the RE industry is just sickening.

hhv said...

My understanding of speculating on RE is that you need 25% down to get the financing. I know there are ways around this, but I don't know that the stats would be significant for the Russ Whitney type zero down, flip in a few months players in this market.

My opinion is purely subjective, but I really do believe that a lot of units are sold to owner-occupants or RE investors who plan to buy and hold. If the buy and hold types are significant, then the influence on the down side of the market will be minimal.

Rents are going up. We can tell when people bought their house/condos by their rent asking price. We're seeing huge discrepancies between similar properties: in some cases, $500/month or more. With vacancy rates being what they are, and employment numbers high (not earnings), people have to have a place to live.

Most new developments don't have rental restrictions because the city's use those stipulations to increase the availability of rental properties.

Vicguy said...

"Rents are going up. We can tell when people bought their house/condos by their rent asking price. We're seeing huge discrepancies between similar properties: in some cases, $500/month or more. "

Thats why I figure those craiglist rentals are so extreme, they need to show off pictures of how nice they are cause they can't be getting any calls listing in the paper for $1200 one bed room units.

You have to have a place to live but there's a limit til you get a negative migration to cheaper places and they will have to drop their prices or they will go broke. I really think we are at that critical junction right now and somehow I don't think the landlord is holding all the cards.

Good update on those condos HHV. On a personal note I work in the Mayfair area and the last 6 months I have seen a huge increase in the amount of crack heads and meth heads out looking for no good at all times of the day or nite. It would be the last area I would be buying in.

Village said...

I wonder when rental prices will level off. Renters, at the end of the day pay with money they earn. Not equity or heloc but actual wages.
They may be able to stretch for a while, but eventual the economy must support the rental prices.

Either way, I've a $1200/mo limit for a 3bdrm/1bth place. Which looks do able with what I've seen so far. More then that and I might as well jump on the mortgaged to the hilt bandwagon.

Victoriachick said...

I pay $858 for a 2 bed/2 bath, condo with wood burning fireplace on the Gorge (about 1000sf). I've been renting it for years, and while it seems like a waste sometimes, no way am I going to buy an overpriced piece of crap I don't even like (nor could I afford to, but that doesn't seem to be stopping others). I can't wait for this insanity to stop.