More information on the Bayview Promontory!

April 3, 2012

VICTORIA, BC – Single family homes sales have risen 17% since last month, while the six-month average price is up 1% to $599,551. The average price of a Greater Victoria single family home in March 2012 is $640,553 up from $579,985, but is affected by the sale of two homes over $4 million. Compared to March 2011, active listings in this category are up 5% to 1,858, while sales are down 7%.

Sales of condos and townhomes are flat, compared to February 2012, while down significantly from 12 months ago (17% and 15% respectively). Condo prices are unchanged, while townhomes are 1% lower than March 2011.

“With softer prices, buyers have been looking at houses,” says Carol Crabb, President of the Victoria Real Estate Board. “That is now being reflected by the six-month average price increase. We predicted a flat market in January, and so far that is what we are experiencing.”

She also believes sales activity was affected by poor weather and many families travelling over the two-week spring break. “REALTORS® tell me many clients took the time for family vacations,” Crabb adds.

With a total of 4,274 active listings, properties on the market have edged up from last month (3,977 active listings at February 29, 2011). Increased supply levels reflect typical spring activity as seen year over year.

What is a presale?

Presales generally refer to developments being offered for sale prior to completion of construction (Presales can be offered prior to start of construction and/or during the construction period). Examples in Victoria include the Bayview Promontory, Mondrian, Era, and Sovereign.

What are the advantages to buying a presale?

– The main advantage would be the potential increase in value prior to the completion of construction. Essentially, you put down a deposit (5% to 20% depending on the development) and hope to watch the value increase before you complete on the condo. During this waiting period you typically do not have to take on a mortgage, strata fees, or property taxes. Example, in the summer of 2009 I personally purchased a 533 sq./ft. south facing unit at the834 (Chard Development) for $198,900. On completion (end of November, 2011) the condo was worth approximately $240,000 to $250,000 with a similar BC assessed value. My deposit was only 5% or less than $10,000; therefore, you can see that the return on investment was very attractive at the834.

– Brand new home – there is an appeal to a lot of buyers to move into something that has never been lived in before.

– Latest in construction, design and technology. For example, the Bayview Promontory has a well-designed kitchen with a built in TV (yes, the TV is included), and the Sovereign has a car elevator and pretty awesome rooftop area.

– More choice of units, floor plans, floors, etc. Early on during pre-sales is also when typically the units with the best pricing/value are bought.

– The construction period can allow many first time buyers to save more money for the down payment prior to completion, and it can give retired buyers enough time to prepare for the downsize from a larger home.

What are the disadvantages to buying a presale?

– The main disadvantage would be the potential decrease in value prior to the completion of construction. For example, you enter into a contract to buy a presale for $300,000 and on completion it is only worth $270,000. Prices don’t always go up with pre-sales so buy carefully!

– Delays in construction: most presale contracts have delay clauses which allow the developer to be up to a year late (varies with contracts) on the estimated completion date. So, you might buy a pre-sale with an anticipated completion date of 2014 and it might take until 2015! Time delays can occur due to whether, labour shortages, supplier problems, inspection problems, etc.

– Your deposit is out of your pocket. Although it is protected by the Real Estate Development Marketing Act you have opportunity costs (you could potentially invest your deposit instead of having it locked up for up to 3 years while you wait for completion).

– Changes in floor plans, finishing, etc. The disclosure statements are generally very broad the developer typically reserves the right to change appliances, vary the floor plan size by a small amount, etc. For example, in the disclosure it will typically specify that every unit or certain units come with a storage locker; however, the size of the storage locker may not be specified. In this type of scenario you are at the mercy of the developer – and hopefully they have a good reputation

The Era will be located on Yates Street; whereas, the showroom is on Humboldt.  The developer behind the project is Concert and prices at this project will start from $198,900 including taxes.

Standing outside the Mondrian showroom. The Mondrian is a 10 story concrete building under construction at the 1090 Johnson (corner of Johnson and Cook). Much like the Mondrian, most new downtown developments have showrooms where you can find a sample kitchen and bathroom.

The Bayview Promontory is located at 65 Saghalie in Songhees. Contact me for more information on this development! Units starting from $199,900 with parking including.

The Sovereign by Chard Development is probably my favorite building under construction in Victoria, BC!  Has some very cool features such as a car elevator down to the parkade and a spectacular rooftop common area!  If you have more questions about this building feel free to give me a call.

Pre-sale developments in Victoria, BC…how come price sheets are not posted on their websites and why are so few units, if any, listed on MLS®?

Most developers don’t like the pre-sale price history to be public knowledge whether prices are going up or down. If prices are going up then buyers will feel like they should have bought two months ago when prices were lower. If prices are going down then buyers might not have enough confidence to buy into the development.

Bayview Promontory – 65 Saghalie
The834 – 834 Johnson Street
Mondrian – 1090 Jonhson Street
Era Condos on Yates
Jukebox Condos on View

Is the amount the buyer’s REALTOR® is offered (aka cooperating brokerage commission) – is it important?

My belief is that it is important. The offered cooperating brokerage commission is the incentive for all REALTORS® to bring their buyers to your home. You will note in Part I, that about 37% of buyers are introduced to a property via their REALTOR®.

Right now there is also a large push for REALTORS® representing buyers to obtain “Buyers Agency Agreements,” which specify compensation (for example, 3.0%100k + 1.5%balance). If the cooperating brokerage commission being offered is less than what the REALTOR® and the buyer have agreed upon it is up to the buyer to make up the difference.

Example

The buyer is looking at two $600,000 homes: In the first scenario the buyer does not have to pay their REALTOR® (high cooperating brokerage commission offered by seller) and in the second scenario they need to pay their REALTOR® $7,500 (cooperating brokerage commission does not meet amount set out in “Buyers Agency Agreement”) – the second scenario may be less desirable to the buyer especially if they have limited funds available for a down payment.

A low cooperating brokerage commission can at times have unintended consequences.

“…REALTOR®’s automated listing search service.” This is a system through which the buyer receives automated emails from his or hers buyer’s REALTOR® when a listing matches his or her criteria. The buyer can see additional information not available on REALTOR.ca such as room measurements, assessment, etc; however, the buyer cannot see the name of the listing REALTOR® or the offered cooperating brokerage commission.
“A REALTOR® (you or another) located the property and informed the buyer.” In the system REALTORS® use they can see both the listing REALTOR®/Brokerage and the offered cooperating brokerage commission. (i.e. 3.0%100k + 1.5% balance or $10,000, etc.).

If you would like more information on the Mondrian or other pre-sale condos in Victoria please feel free to contact me! Prices at the Mondrian start at $169,900 with units ranging in size from 401 sq.ft. to approximately 800 sq.ft. Great location whether you plan on living in your unit or renting it out.

It was a slow year…what more can I say?

2007 = 8,931 unit sales: 12.23%
2008 = 6,519 unit sales: (27.01%)
2009 = 8,096 unit sales: 24.19%
2010 = 6,546 unit sales: (19.15%)
2011 = 6,040 unit sales: (7.73%)

Total Volume $

2007 – $4,146,651,569
2008 – $3,111,882,746
2009 – $3,775,730,705
2010 – $3,239,493,835
2011 – $2,981,977,290

Currently there are several pre-sale condo projects in Victoria, BC.  Pre-sale condos can offer attractive investments.  For example, currently at the Bayview Promontory (http://www.bosaproperties.com/promontory/) by Bosa you can buy a 1 bedroom condo including parking, heat pump, high-end kitchen, in a 21 story concrete building for around $250,000 including builder incentives and HST.  

Two bedrooms units at the Promontory start in the $350,000 range.  Additional parking spots can be bought for $12,000. When compared with what is currently on the market, these pre-sale values represent great value in my opinion.  Please contact me for more information on developments that may not be available to the public!

Pre-sales at 834 Johnson Street started in 2009 at $198,900. Most of the units offered in this price range were 450 sq/ft to 550 sq/ft. Today, these smaller units are renting from $1,000 to $1,150. If you bought a pre-sale unit and put 20% down upon completion, your mortgage would be approximately $600 to $650 depending on your mortgage product. Now add $150 in strata fees per month and approximately $100 per month for property taxes and you are still under $900/month to own.

In this particular scenario, owning your condo can be cheaper than renting. There are many other benefits to owning; however, it is important to note that there can also be benefits to renting! It is important to examine the pros and cons of each carefully before making the big decision!