Tuesday, May 5, 2009

Condo Flop

About a year ago 89 condos went on the market in the Texada development in North Nanaimo. As of today, only 25 have sold which means that 64 are still left on the market. In normal times all of them would be sold by now. Being stuck with all of these condos is a real burden for the developers. Since people are living in some of these condos, a strata is formed and they must pay 64 strata payments each month. They also must pay property taxes to the city. Let's assume that the average strata fee is $200 and property taxes are $125/month. That is $325x64 which is about $21000. Over a year period (being generous cause some have sold) that equates to $250000. If they are also borrowing money from the bank to finance the projects, they are taking a hit on that. Recently they reduced prices on all the condos by ~10% so we will see if sales start to pick up.

In April only 11 condos sold out of 188 on the market (It appears the Texada ones got delisted end of month so really there are about 250+). Clearly this is a bigtime crash.

http://www.relocationbc.com/statistics-vanisland.asp