This is a cooperative blog: a co/blog. We've really just started this experiment, so give a few months to get some momentum. Each of the five charter authors involved are responsible for a different set of topics, and each will post on their own schedule. We hope you enjoy the content provided here, and find it useful. The information provided is meant as opinion and editorial purposes only, and should never be taken as professional advice.

Condominium Bust?

Archived in Construction, Real Estate | No Comments

I couldn’t help noticing that as I’ve been driving around the city lately there are a lot of condominiums on the market. Lots. I counted one medium-sized building with eleven properties for sale. I’ve been thinking about this — and talking about it with friends and colleagues — and have usually claimed that this is “STEP ONE” in a down-turn in the housing market, in general. Why, you ask?

1) Simple Investment Properties

Condos tend to make “good” investment properties. At least that tends to be the perception in this kind of bubble-market. People who are on the fringe of true house-flipping tend not to dive in with both feet in a condo investment. After all, it’s just an “apartment.” No yard to tend, no roof to fix, to exterior to wash. The “condo” looks after this, right?

Barring the RISK of something going completely wrong in that equation, condos are the “simple investment properties” for low-key investors. This is not a problem until one realizes two things:

a) In this kind of market there are LOTS of condos owned simply as investments — and thus those are going to be the first to go up for sale at a hint of trouble in the market.

b) The less seasoned investors hold lots of these properties, and stand to lose the most from a bursting bubble.

2) CONSTRUCTION Rush

The work currently being done to satiate this desire for condo investments has resulted in a lot — A LOT — of new development. Never mind the fact that so many new condos has meant a drop in the availability of rental space for people unable to buy, but the demand for these properties means that owners (who are actually buying the condo as a home versus an investment) are moving into half-built complexes, buildings that have been under CONSTRUCTION for (in some cases) more than a year or two and look as if they may continue to be under CONSTRUCTION for much longer.

But, if demand is dipping (which seems that case from the current inventory of condos to be seen simply by taking a short drive around any neighborhood) three questions come to mind:

a) Will the new condominiums ever fill up with tenants?
b) And if they do, are people just moving into new spaces to leave the older buildings vacant? In other words, can they even sell those properties?
c) AND this is all assuming those new buildings — dozens of them — don’t get left hanging by either (still) increasing CONSTRUCTION costs or an all out bust in the market. Will they?

Of course, if the condo market cools I predict that the housing market is not far behind. Inventory in houses in already increasing: for sale sign sightings have increased markedly and they tend to linger for weeks or a month (rather than days). Just the other day an article was published about the state of CONSTRUCTION in this province, overall:

“A senior REAL ESTATE analyst says Alberta’s residential CONSTRUCTION industry faces a “precarious” future due to high labour costs and ballooning prices.”

To me, it all sounds like the music is about to stop: “Hot potato, hot potato…”

Popularity: 9% [?]

Read more posts by Gary W (About the Author)

del.icio.us Digg it Earthlink Furl iFeedReaders ma.gnolia Maple.nu Netvouz Netscape RawSugar reddit Scuttle Shadows Simpy Spurl StumbleUpon Wink Yahoo MyWeb

Posts that might have similar content:

FEATURE: Games Reviewed - (G001) >> I'd like to take some space to talk about, that's right, FREE games. My (soon to be) regularly occuring feature will highlight sites that provide great games for FREE, online. Review #001: CBC Kids LINK: www.cbc.ca/kids What's that you say? Who'd think of

Trophy Homes and Status Symbols >> I can't help but wonder if some of the noise in that undeniable boom in the housing market is fueled by the modern notion of homes as the new middle class status symbol. New notion, you ask? Don't get me wrong.

Trophy Homes and Status Symbols

Archived in Construction, Real Estate | No Comments

I can’t help but wonder if some of the noise in that undeniable boom in the housing market is fueled by the modern notion of homes as the new middle class status symbol. New notion, you ask? Don’t get me wrong. The average person’s house has long been the trophy of high society — nearly as long as human beings have been living indoors, in fact. I imagine that the first homo sapien to have a larger cave than the guy next door neighbor was already, long ago, evoking the envy of the Jones.

But I think the push has likely become more evident, especially in recent years. With a booming housing market there is much more of a race to move away from the house as a “practical living space” towards house as an “OH MY GOD look at that place” possession, especially among the middle class of society who, traditionally, have spent their TIME and money on smaller toys to satisfy that status drive. In an effort to perpetually “trade up” to bigger and better homes we have created a new kind of status for a part of society that has long been content (or simply practically able) to live well and stay settled. After all, my grandparents live in the same house for fifty years. My parents haven’t moved in thirty-two years. Is that kind of accommodation longevity a thing of the past? And will the trophy home mentality continue past the inevitable bust?

Some consequences, anecdotal and opinion/editorial style, follows:

1) The Fragmentation of Community

As we “shuffle” more and more, the sub-urban environment, already encapsulated and insular, will become transient. Fewer and fewer people get to know their neighbors. We move more. We isolate ourselves from the people around us. We fail, utterly and completely, to build caring communities that care and protect each other. When community ultimately collapses what happens? Crime increases. Isolation increases. Property values decrease. Happiness falls drastically.

2) The Disintegration of True Pride in Home

When you live somewhere for a long TIME — and now I’m thinking in terms of decades, not months or years — you begin to feel a very strong attachment to that place. It becomes a part of you. And I emphasize the word “begin” as until you have lived somewhere for a very significant portion of your own life, you cannot even begin to understand that kind of connection to a place. When you feel that depth of pride in some where, some place, some thing there is an equal and opposite effort to preserve and enhance it in a positive way. The movement towards the “trophy home” lifestyle is one where we are never satisfied of where we are at NOW, and never content to have pride — true, deep pride — in that.

Even five years ago status symbols came in the form of cell phones, stereo equipment, lawn mowers, boats, ATVs or vehicles. Today, the drive towards bigger and better homes, the gush of the housing bubble in Alberta and across Western Canada, is creating lasting, long term effects on how we will live in the near future.

Perhaps, I can hope, this is a temporary trend. Folks are trading up while the getting is good. Folks are flipping with opportunity, more than status. And perhaps someday we’ll look back at this decade as a “moving TIME” in our personal histories.

Popularity: 9% [?]

Read more posts by Gary W (About the Author)

del.icio.us Digg it Earthlink Furl iFeedReaders ma.gnolia Maple.nu Netvouz Netscape RawSugar reddit Scuttle Shadows Simpy Spurl StumbleUpon Wink Yahoo MyWeb

Posts that might have similar content:

Fallout from a Housing Bubble >> Brad posted the following comment in response to one of my earlier posts: Worry? As a homeOWNER, you’re right, maybe not so much. Hope you can keep your job, just don’t move, remember to pay your bills, and weather out the storm. But

Housing Bubble Risks - Part 2 >> Aside from the self-centred, personal weath factors, there seem to be a number of associated risks to an economy as a whole when housing prices suddenly rise very quickly. I’ve been watching a few of these trends and I’m going to take

Powered by WordPress with Pool theme design by Borja Fernandez.
Entries and comments feeds. Valid XHTML and CSS. ^Top^