So it isn't different here after all

I've been waiting with baited breath while our Vancouver siblings have been witnessing receivership sales and "once-in-a-lifetime" blowouts of pre-sale condo contracts gone sour. I've always thought that our downtown luxury condo market in particular, and the condo market in general, has been the playground of wanna-be Trumps over the past several years. In Vancouver, would be condo-flippers upon learning that the banks wouldn't lend on the agreed upon purchase price in a declining market, simply walked away from sales contracts.

Will we see this now in Victoria?

It should come as no surprise that the TC in their never-ending quest to be late to a real estate market downturn story is now reporting that we're seeing assignment of contract offerings. Here's the highlights, with my cheeky comments below:

Real estate buyers lined up in advance to snap up the best units before they sold out in a matter of hours.

Now some of yesterday's buyers with pre-sale agreements are putting units back on the market before the high-end, steel-and-concrete condominium buildings are completed.

Several units bought as pre-sales have been listed in Greater Victoria real estate advertisements recently.

The question is whether these offerings are the beginning of a trend, spurred by a worsening economy.

Good question. I believe the obvious answer is: ya think?

Let the spin begin:

In one case, a buyer wants a different unit in the same building and in another, the person is moving away from Victoria. Sometimes people are in tight financial situations...

Emphasis mine. Can we assume one buyer needs to spend less money than they originally planned and the second is maybe on the pointy end of job losses?

Bill Ethier, a real estate agent with a listing for an assignment at a downtown condominium said, "I would say there probably appears to be more now because they are not selling as quickly as they did."

Buyers now want to hold onto their property and are prepared to wait until a project is finished. Their attitude is, "I want to go inside and actually touch and feel ... that's kind of where the market is now," he said.

With over 16 months of inventory in the Victoria condo market (new condo supply is much larger, though I can't quote exact figures) and prices approaching 26% less than last year, I'm thinking that may be because buyers don't want to "touch and feel" anything except the cash stuck between mattress and boxspring--if, and this is a big if in a nation with a higher debt to income ratio than the US, it was ever there.

Hold your breathe, obligatory moment of truthiness coming:

someone may have speculated and never planned to live in a unit. A buyer may have placed a downpayment on a unit with the idea of turning it over for a profit before the building is finished. In all these cases, a buyer may wish to seek an assignment to sell their right to buy the unit.

Let's have a little fun with words to uncover the un-spun truth here shall we? Replace the emphasized words above with these ones, in this order: did, did place, plan and must. We get this:

someone did speculate and never planned to live in a unit. A buyer (or more?) did place a downpayment on a unit with the plan of turning it over for a profit before the building is finished. In all these cases, a buyer must seek an assignment to sell their right to buy the unit.

Wasn't so hard now was it? Granted, the TC does need to have interviews to establish what went on, and I'll bet it's really hard to find a presale specuvestor to "own up" publicly to their wanna-be Trumpism right now.

Tony Gioventu, executive director of the Condominium Home Owners' Association, wrote in a recent Times Colonist column. "The current credit crunch has also placed a number of small investors at serious risk as they might be struggling to qualify for financing to complete their sales agreements."

Notice how he doesn't say a "small number of investors" but rather opts to state "a number of small investors"? Will we see blow-out sales and walk away's in Victoria? Time will tell.

I've been doing some digging lately in mortgage contracts I have access to but haven't found an answer to this question yet: Can a bank, after granting financing approval to an individual mortgage holder on a presale agreement or builder mortgage, reappraise the market value and refuse to lend on the agreed upon purchase price? If they can, look out, things will get very ugly very fast in the Victoria new condo market.