Lady At City Hall: “We’ve been getting a lot of calls about stalled building lots lately. In this downturn, we’re seeing a lot of people go bankrupt.”

“One of my friends who has seen everyone on his street, except one set of neighbours across the road, sell to Mainland Chinese has recently called the COV about a halt in construction on his street. The backstory is the Mainland Chinese owner bought the house two years ago, let it sit empty, tall grass, weeds, problems with garbage, rats etc. And then about a year ago knocked down the house and left the lot empty.
About eight months ago construction started. For about four months. Then it stopped. Month after month, my friend wondered just what the heck is going on. He asked another neighbour on another block who is a retired developer what he thought was up. The developer said, “Well, when you have a project stall like that it’s one of 3 things. It’s either money, money or money.”
So two days ago my friend phoned the City to see if there were any neighbour complaints or any other reason why they were all stuck with a hole in the ground, some foundation and some wet, rotting plywood for these last four months. And the Lady from City Hall said, “Hmmmm… nope. Nothing here. They’re all clear but we’ve been getting a lot of calls like this lately. In this downturn (her words not my friend’s), we’re seeing a lot of people go bankrupt.”

mac at VCI 6 Jul 2012 3:23pm

The downturn has barely commenced.
– vreaa

23 responses to “Lady At City Hall: “We’ve been getting a lot of calls about stalled building lots lately. In this downturn, we’re seeing a lot of people go bankrupt.”

  1. And then there is this comment that I just read from Phil Soper.

    “Confidence in Canada’s real estate market is sound, but home prices cannot grow faster than salaries and the underlying economy indefinitely. Some regions have reached or perhaps even exceeded the current upper level of price resistance as buyers have embraced an era of historically low mortgage rates. The cumulative impact of these new regulations has created a significantly higher hurdle for young buyers seeking their first home and comes at a time when the market was slowing of its own accord. The timing of this intervention was unfortunate”

    …….and I was surprised. It seemed rather candid if not slightly grim. No spin or blather about “balanced” market conditions. Seems the message is finally reaching the inner halls of the big realtors and being reflected in their public comments. What a nice change of pace. The article I picked it from was one by the Canadian Press that came out today. Here it is:

    http://money.ca.msn.com/investing/news/business-news/home-real-estate-at-tipping-point-lepage

    • Like I said, suddenly this blog (and the handful of others like it) is becoming almost mainstream.

      The National devoted half of its hour last night to “bubble” stories. Some of them were reruns from previously, including one showing the travails of real estate in Cleveland… with the implied message that “it could happen here too.”

      And then I find this on the CBC site this morning – “Housing market reaching ‘tipping point'”: http://www.cbc.ca/news/business/story/2012/07/10/royal-lepage-housing.html

  2. one of the best examples around, the Vancouver HAM story, traced back to Bernanke’s Quantitative Easing’s post 2008 crash.

  3. Been out of town for a couple days and missed the post about “one of Canada’s leading real estate experts”, Mr. Don Campbell. I posted this comment under that entry but thought I should add this here too since evidently so many missed the huge error Don made in his analysis:

    I am SHOCKED that no one caught the unbelievable error in Don’s discussion of the new mortgage rule changes. Apparently, according to this “real estate expert” you used to be able to avoid CMHC insurance by putting 15% down and now that has changed to 20%. What an unbelievable oversight!!!!! How is that excusable for someone who claims to be an expert? +80% LTV mortgages have required CMHC insurance for years!

    • Oh and as a kicker, after I pointed the mistake out to Don via twitter, he removed the blog entry on his site that contained this video and then messaged me asking me to be more discreet when I correct him in the future by direct messaging him instead. I guess he can’t afford to have the REIN flock lose faith in their infallible leader.

    • Well, at least now we now why Don removed his video. I thought it was because he was tired of being a punching-bag for celebratory bears….

      😉

  4. From the article that I liked above:

    (http://www.cbc.ca/news/business/story/2012/07/10/royal-lepage-housing.html)

    “Urban starts for June rose 7.7 per cent in Atlantic Canada, 17.3 per cent in Quebec and by 31.2 per cent in British Columbia. They slipped by 6.9 per cent in the Prairies and by nine per cent in Ontario, where the falling trend continued.”

    Amazing! Look at the momentum in BC. It’s like a runaway freight train. The engineer knows that there’s a bridge out just ahead. The brakes are being pulled, hard. The wheels are screeching against the track. Iron on iron. But the Mass * Velocity is just too much and there’s no stopping.

  5. Hope the contractors got paid for the work done so far. That’s how this spreads through the general economy. Contractor gets shafted, can’t pay his crew for work already done, can’t pay subcontractors and other bills.

    I wouldn’t want to try to chase down payment from someone in China, most likely with a 100% language barrier between us.

    • “Forget it Jake, it’s Chinatown.”

      • That’s my favourite, RP1…!

        And ya wanna know something… Robert Towne wrote that while he was living in his car.

      • However, more’s the point, viz. TheThread… The Okanagan is, regrettably, quite literally littered with the abandoned carcasses of partially completed SpecBuilds gone bust… An accelerating trend. Or so it would anecdotally appear.

        [NoteToEd: e.g. Fortress At MonteCasino]

      • Keep us posted on the Okanagan. Will definitely be moving that way once sanity begins to prevail again among the natives.

  6. Speaking of a downturn…and now they will try and make us feel guilty for acting (slightly) responsible…
    http://business.financialpost.com/2012/07/10/dodging-housing-bubble-could-cost-canadian-economy-its-dominance/

  7. I commented in one of your earlier posts that we will see a rapid rise in the rate of bankruptcy and divorces, far greater than in any previous downturn. Laws of gravity; The greater to height to which an object rises, the faster and harder it crashes; sometimes forming a canyon from the force of the fall. In the case of BC RE, the canyon will be the size of The Grand Canyon if not bigger! There may also be a new show on Global: The Real housewife hookers of Vancouver as people scramble to pay their mortgages!

    • Actually, divorce has dropped in California. You can’t divorce if you can’t divvy up the house.

      • I agree that bankruptcy rates will likely rise…but tough times make good marriages stronger and bad marriages reach their natural outcome a bit sooner. Either way, all good.

  8. anonymous guy

    There is a house like this across the street from my parents in Dunbar. Construction came to a deal halt a few months ago. Big ugly box house, with a fence off construciton yard, wire mesh exposed on the unfinished walls, I’m no construction expert, but that can’t be good seeing as how much it’s rained in June.
    I bet the owner ran out of cash or the PRC caught up some dirty tricks back home and threw him in the slammer. Either way, a perfectly nice home got demolished for a permanent construction site just sitting there.

    • Hey blame City Hall and the Province and the Feds; they may as well have taken the sledgehammer and demolished the whole city of Vancouver. It will look like a bad post apocalyptic movie in another ten years. Maybe then it will really live up to its moniker of Hollywood North! X-Files may return as more of these monstrosities get axed and rodents rule the place where manicured gardens once flourished!

    • There are about a dozen half-finished and seemingly abandoned houses in Point Grey as well

  9. I noticed a fair amount of building in Point Grey, but that’s probably because the builds there are much more noticeable.

    I felt a bit sorry for one of the residents there. Not only is the neighbourhood a perpetual construction site but also the summertime is choc a bloc with cars of Spanish Banks beachgoers. One guy I saw was camped out on his lawn telling people not to park in his driveway. What a horrible way to spend a sunny afternoon.

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