Canceled condo project in Calgary.

[PaulPoulsen]

When I was in Calgary for the Western Conference, I remember hearing something about a downtown condo project that was canceled or postponed. Being from Edmonton, I didn`t really pay attention to the story but now I`ve got a buddy from Cowtown that`s emailed me asking what, if anything, this means for the condo market in Calgary.

He`s currently renting and although he doesn`t have any interest in owning revenue property, he`d very much like to buy a personal residence.

Any insite from down south would be greatly appreciated.

 

[DonCampbell]

We have seen this unfortunate situation occur in most cities over the last 15 years.

It is a sign that the market is waking up to reality. There were over 10,000 units proposed to come onto the market between now and 2011... way more than the market could absorb.

Combine this with the skyrocketing costs of building and you have the perfect storm. This won`t be the last announcement of its kind, sadly

The real losers in the deal are those who were buying as homeowners and the builder has held their deposit for a long time while the market has one up. Now these potential homeowners have missed the big jump we experienced and must `start again.` Hopefully they learned their lesson and are buying something that exists.

The other group who pretended they were investors, (but were actually speculators) who bought with the idea to flip the unit out at closing are the ones who create these artificial demand curves -sure they are hurting as well. However, if they had done their investor homework they would never have lined-up and bought in the first place.

Let`s hope the potential Homeowners come out OK.

Let`s doubly hope that those who pretended to be investors (and who are now standing naked in the storm) learned their lesson and will sit back and complete their due diligence, ask the tough questions and remove the emotion from their next purchase.

Another reason we have clearly stated that buying a pre-built condo is inherently a much higher risk proposition than buying an existing property.

 

[PaulPoulsen]

Great insight (as always).

Thanks Don!

 

[GarthChapman]

I think we are talking about the project at 10th Ave and 4th St SW. I knew this Developer in a past life. He is an honourable man who just didn`t get this project up fast enough. They must have spent 3 years getting the hole dug. I understand from a mutual friend that they will cap the project at the parking lot stage and wait for the time to be right to complete. Remember the building on 11th St and about 6th Ave SW that remained a partially complete skeleton from 1981 for over a decade, and is now the Separate School Board building?

If that is what happens then we have 500 Buyers back in the market and the absorbtion rate will improve a bit. I hear a similar story for the Penny Lane project. The market will re-balance as it always does, and then we`ll move forward again.

The unfortunate part of this process is that so many consumers (read Home Buyers) get caught up in things and end up getting hurt financially. Let`s hope this round is relatively kind to them.