Very occasionally we will headline the opinion of a local commentator, for the record. Hat-tip to jesse for alerting us to this recent comment on the Olympic Village and the Vancouver market by Michael Geller at francesbula.com 21 March 2011 3:39pm. Geller describes himself as “a Vancouver based architect, planner, real estate consultant and property developer with four decades’ experience in the public, private and institutional sectors.”
We’d characterize Geller’s outlook as “sunny and clear, with unexplained brief patches of drizzle”. He’s a complacent bull, he is not warning of an overheated market. He sees $700/sqft as a fair price for a condo in Vancouver. Comparisons of local pricing with “the most expensive streets in the world”, and the presence of mainland Chinese buyers, have soothed his concerns that prices may have gotten too high. At the same time he sees some westside/Richmond SFH lot prices as “outrageous”, and he notes the poor quality of construction (“the construction quality is not any worse than what one has come to expect in the Vancouver market”).
He plays the very tired and very wrong “stopped clock” card (roulette-betting version) and, in a rearview fashion, points to past price appreciation as a reason to not be bearish (“anyone who followed [Garth Turner's] advice in the past has probably missed out on some significant property appreciation”). Both of those arguments are classic bull-blinkers during bubbles. Michael Geller is not warning of a bubble; in fact, the headlined quote classifies him as a bubble-denier. -vreaa
Here’s the recent comment from Michael Geller, in full, for the record:
“I will offer a few thoughts on OV and the housing market as a whole.
I do not think anyone should attempt to generalize about the Vcr real estate market based on what happened at OV. The fact that prices were reduced by 30%in this project is not a reflection of a drop in the market. It is a reflection of the overly aggressive pricing for this development when it first went on sale, and in May 2010 when it was re-launched.
I think it is fair to say that most developers and real estate analysts in Vancouver always considered this project to be over-priced, given the location (it’s not yet Coal Harbour, or even the North Shore of False Creek); the general site and building designs which reduce the number of units with views and result in many contorted layouts, and the overall standard of finishes. I would also add that given the extent of exterior walls, which are included in the floor space calcualations, the effective interior area is often less than for a comparable unit in a more conventional building form.
That being said, I do believe that many of the units are now much more fairly priced. Indeed, I did encourage a friend of mine to purchase a penthouse unit at what I thought was a very attractive price.
As for concerns about construction quality, while there have been problems, including water pouring out of at least one light fixture, and problems with the heating system, I am told by people in the industry that the construction quality is not any worse than what one has come to expect in the Vancouver market. I understand that some of the green features have ‘bugs’ that need to be worked out, but this happens with many innovations. One day, they should offer increased livability and other benefits.
There is no doubt that some of the finishes are below the standard one might expect for a $1000 a sq.ft. plus product, but they are in line with $700 a sq.ft. product.
As for the unit layouts, there is no doubt that many of the plans are quite odd, and not always as furnishable as they should be. As to why this is, I too would like to hear from the marketing team, since this is something they usually go over with the developer and architects. (Sadly, too many architects are more concerned with the overall look and appearance of a building, than whether a bedroom is properly dimensioned to accommodate the required furniture.)
It is my view that the plans were not as good as they should have been because of the very large number of units being built at once; the many different unit types resulting from the many, non-standardized building forms; and the shortage of time due to the rush to get permits issued and construction underway.
(As an aside, I have spent weeks trying to perfect 3 unit types for a small project I am doing in W.Van, and am still fretting about certain details!)
But is the OV signaling a potential drop in the Vancouver market? No. Is the Vancouver market going to drop? Well, some of us have thought prices were too high for quite a long time. But now that many buyers are coming here from Mainland China, prices have remained high, especially in certain areas. (Personally, I find the prices being paid for West Side Vancouver and Richmond single family lots outrageous.) And to some degree, this indirectly influences the prices being asked for other properties.
While Vancouver prices are high by Canadian and North American standards, as evidenced by a recent photo essay on the most expensive streets in the world, they are still less than some European and Asian cities.
Two final thoughts. In my opinion, the adverse publicity resulting from the lawsuits from disatisfied purchasers has to be having some effect on the current sales program. How can it not? At the same time, I too find it hard to be too sympathetic towards someone who probably devoted less time purchasing a very expensive apartment than they would devote towards the purchase of a new car.
In this regard, I would urge future purchasers to review the floor layouts and unit outlooks carefully, both in the daytime, and at night.
Finally, as for Garth Turner….well, he has been predicting significant corrections in the market for a long, long, time. One day, he’ll be right, of course, just like the person who keeps betting on the same number on a roulette table. But in the meanwhile, anyone who followed his advice in the past has probably missed out on some significant property appreciation, especially in Vancouver.”