City of Saskatoon to consider proposed changes to condo conversion policy
Saskatoon city council’s executive committee will consider proposed changes to our condo conversion policy at its February 25th meeting. The proposal, brought forward by city administrators recommends a number of changes which they say would be helpful in keeping a supply of rental units available in the city.
Administrators have suggested that the city refuse applications to convert apartments to condominiums when Saskatoon vacancy rates drop below 1.5%. They further suggest that investors should pay a fee of $10,000 per unit when vacancy rates are between 1.5% and 3%. Finally, administrators would like to see conversions involving more than 50 living units actually go to city council for review. Currently, only those projects involving 100 or more living units require approval of council.
“While your administration remains of the view that condominium conversions have an overall positive impact on the community during normal market conditions, the drop in vacancy rates does raise the question as to whether the City of Saskatoon should continue to approve condominium conversion applications in the foreseeable future,” the report says.
Saskatoon developer Ken Achs, president of Midwest Development Corporation argued in a letter to council opposing the proposed changes that people may be overlooking the benefits of condo conversions, which include needed upgrades, which improve safety and quality of life for residents. He also notes that typically 30% of converted units are returned to the rental pool in an improved state.
“If there were suitable tax incentives and lower-priced land, more apartments would be built and the market would self-regulate through supply and demand,” says Achs in his letter.
The city received 54 applications to convert a total of 1,544 rental units to condominiums during 2007. That’s more units than were converted over the previous ten years combined. Saskatoon rental vacancy rates plummeted from 3% in the first quarter of 2007, to .6% by the third quarter. Rents saw significant increases over a short period of time while tenants, displaced by ongoing conversions scrambled to find a new place to live.
Read the story in today’s Star Phoenix here.
I’m always happy to answer your Saskatoon real estate questions. All of my contact info is here. Please feel free to call or email.
Follow our daily updates on Twitter @SaskatoonHomes.
Norm Fisher
Royal LePage Saskatoon Real Estate
31 comments so far. We'd love to hear your thoughts.
May 20th, 2009 at 3:22 PM
About time!
It’s laughable what Mr Achs says here “….Achs also worries people are overlooking the benefits of condo conversions, including upgrades to buildings that improve safety and quality of life for residents. About 30 per cent of those will be rented out again in better condition, he argues…”
True they get upgrades…but umm he missed the part about after these people buy the condo’s and rent them out, the rent cost goes up 300-500 or more a month for same unaltered unit. I certainly hope they discuss this too…sure upgrades are nice but not at alienating half the people that could rent them. The building next to me in sutherland has done that. Some units are now up for rent, the 1 bedrooms for 900-1000 a month, whereas i’m paying 650 (up from 530) for an unaltered one next door…until i move from the conversion anyways.
May 20th, 2009 at 3:23 PM
@ Jesse G: But think of the cheap laminate flooring and neutral earthy toned paint, that’s totally worth an extra 100k or so, isn’t it?
I think the saddest example by far of this are the apartment conversions in Meadow Green, up the hill from 11th st. $100 000 for a $350/mon. appt. Wonder if they got rid of the grow ops first? or maybe they can spin it as a “herbal relaxation garden” or something?
May 20th, 2009 at 3:23 PM
Is this supposed to make things better or just bring a mad rush of more conversions before this might get passed?
May 20th, 2009 at 3:23 PM
Sounds like your area is going condo crazy also.
If you can’t afford a home and rent in our area also alot of rental are going condo and actually our prices are much higher.
It’s as if they are pushing the rental people out of the area. I live in Florida after the hurricanes in 2004 many hotels sold out and the condo craze began.
Alot of developers came in and knocked them down and some retro fit them. They are expecting the baby boomers to come to retire.
I find it interesting that they are only allowing a certain amount. In a way that seems better here they didn’t.
May 20th, 2009 at 3:27 PM
Bergo,
at least with the Meadow Green condo’s, there is always a police, fire and MD ambulance presense there everyday. So help, if a person needs it, is never far away. These conversions in MG will be trashed within a year.
May 20th, 2009 at 3:30 PM
Jesse,
There have been some buildings that were starting to fall apart and the codes for condos do call for some timely improvements in those instances, but your point is well taken, and it’s hard to see value in these things as a buyer or as a renter.
Bergo,
Have you been in one of those units? I haven’t but they do seem to be selling finally.
Jedi,
Excellent point. the apps will probably pour in before 02/25.
RE in North Georgia,
Thanks for the comment. I’ll bet that things are a little quieter now?
George,
You have a wonderful way about you in that you always manage to find the bright side.
Heather,
A long frost might be just what we need.
May 20th, 2009 at 3:30 PM
Why are we limiting landlords in this free market system, charging $10000 per unit is a bad idea. We want more rental properties to exist, so putting rules on these properties that limit landlords will probably not entice landlords to invest further in rental properties or at least not here in Saskatoon, especially if other cities are not doing the same thing. I am guessing over the long run the $10000 fee will become the cost of doing business, and added to the price of the condo, and at this point the only true winner of money would be the City of Saskatoon with all those extra dollars rolling in.
The city needs to come up with land that is specific for this purpose, and then find a way to attract developers to want to invest in this type of project. If the city gave a cheap rate on the land upfront, or gave tax incentives, I would understand the City of Saskatoon putting restrictions on the ability to convert the apartment’s into condos, and perhaps rent controls. Given that these buildings were bought at fair market value, it seems fair that the landlords can derive profits from these buildings as they see fit. There has to be incentives for the landlords not to convert apartments into condos. Instead of providing any real incentives, the City of Saskatoon is choosing to punish landlords with a fee of $10000 per unit.
I do agree we need to address our low vacancy rates, and provide more rental accommodations, I don’t see how limiting landlords will entice further investments in apartment buildings or rental properties. The same could be said for rent controls too
May 20th, 2009 at 3:30 PM
Bergo,
I saw those condos. They look nice yes. BUUUUUUUUUUUT…it’s like buying an apartment in heck…or as i refer to it as..stabsville. One issue there was the decks seem to be supported by columns that anyone could scale up and rob a person blind. I also like my car not having smashed windows. I saw FOUR cop cars on the way over the random night I went past. No thanks. Now if that building was in the north end, sutherland, the east side of the river, city park, confed, etc…It would be a steal of a deal. (pun intended.)
May 20th, 2009 at 3:32 PM
Actually I’m against limiting condo conversions. What I *am* for is some sort of incentive to create apartments. If they don’t pay off, then something is out of whack and needs to be fixed. I don’t like telling people what they can do with their own property unless it really adversely affects the surrounding neighbourhood (ie. changing residential to commercial or industrial).
Just curious.. with such a low rental rate, why is there no one interested in renting out apts? Is the risks too high and the rewards too low? Do we maybe need new rental rules to make tenants more responsible for damages to their unit? Or is it something else that is causing a low amount of apts?
May 20th, 2009 at 3:32 PM
I think it’s the greed. The turn it over, get $150g’s for it instantly, and wash your hands of it and you are able to use that capital as opposed to owning and renting it out getting 500-1000 a month which would take FOREVER to see the same quick profit…
DEFINITELY the city needs to push to build more apartments. There are NONE except for ‘low income’ which means single moms with kids..nothing against them but they aren’t the only demographic to cover.
May 20th, 2009 at 3:32 PM
my2cents & Todd,
City administrators are proposing that the $10,000 fee be earmarked for affordable housing projects so it would ultimately be put back into the community.
Generally, I tend to agree that the consequences of regulating how anyone handles their assets has the potential to cause more harm than good.
Desperate times do call for desperate measures and something needs to be done fairly quickly to bring some relief to the rental market. I am all in favour of incentives which would encourage new developments but someone at city hall needs to get their butts in gear and start working on this.
On the other hand, I don’t think that there’s anything wrong with municipality leveraging the opportunities which exist within it. Is it really wrong to say, “we need you to give something back to the community in exchange for this opportunity.”
I don’t really know, but it doesn’t sound so crazy to me.
Jesse,
I think in a lot of cases these buildings have been owned by the same people for many years. A lot of them have deteriorated and traditionally lower rents have limited the amount of money that the owner could spend on improvements, while still seeing a fair return. Suddenly, the value of their properties goes from $30,000 to $100,000 a door and they naturally see it as an ideal time to cash out. A family who is ready to retire with $2,000,000 in real estate assets is not necessarily rich and greedy if that’s all that they have. You can make about $80,000 a year in a safe guaranteed investment with that kind of balance. It sounds like a lot of cash but if you have to stretch it for 35-40 years it ain’t a big bucket of dough.
The buyers who are purchasing these properties are not in the rental business and in most cases, wouldn’t be interested in entering it. Renovating and selling is a totally different business.
May 20th, 2009 at 3:33 PM
I am not sure why you are referring to a landlord as greedy? An apartment is a business just like any other business, it’s provides a service for a profit. Like all business they want to maximize there profit, and this is not greedy, it’s considered good business. Prices of goods go up all the time.
I agree with Todd, and that the risks are high, and the reward is low. I think tougher rules to make tenants more responsible for damages to their unit, and a way to get unpaid rent from the city when a tenant doesn’t pay. Yes, I said the city, I think if the city want to punish landlords with surcharges that they should gaurantee rents to landlords as well– it will never happen.
May 20th, 2009 at 3:33 PM
Hey Norm,
Is it time to take city hall the Milroy proposal we spoke about back in January?
May 20th, 2009 at 3:34 PM
Thanks Norm,
I guess i just come at it from a person who is moving from his 650 a month place becuase i can’t afford the condo they are turning my place into…and they aren’t even fixing any of the suites. They are offering them as is for the same price as something renovated. I guess i’m just a bit burned by the whole thing.
May 20th, 2009 at 3:36 PM
Jesse,
Indeed, you are the one being burned and I do appreciate that. I can only hope that things will come around for you. Perhaps with 1500 pending conversions you’ll eventually end up with a selection of improved units at a decent rental rate. That’s not entirely impossible. Supply and demand does dictate price, at least to some extent. I hope it turns that way for you.
Larry,
I think that the Milroy is probably water under the bridge. Perhaps that’s a lazy attitude but I don’t even think that council could go back on their decision at this point. I’m sure they’d likely be facing an ugly suit. I really appreciate you coming around. You have a cool blog that I get to as well. I’ll have to be more thoughtful about leaving you a comment.
May 20th, 2009 at 3:37 PM
Kenny Achs says this is the best Mayor Saskatoon has ever had.Guess we know who is in the developers back pocket these days.Lets see who votes these proposals down when the time comes.I am going to write down the names so I remember who to vote for next time around.These hustlers and sharks who have moved into this city to make a fast buck on the backs of our pioneers and their children will not be around when the dust settles.Will you be?
May 20th, 2009 at 3:37 PM
Norm,
It might be too late for Milroy but if memory serves, the thought was to mitigate the loss of rental space by parsing out some city reserve land to the owner/developers in exchange. Push it a little out of town but make it pretty, have higher density, better parks etc. with more user services on site or near buy. I’m envisioning new neighbourhoods that bring all the right stuff into play or at least the very best we can imagine. Walkability, day cares, family run shops etc. (a few hot tubs would be good for the last few days of your weather) and of course fast direct public transport to the city core. I suspect this would be a winner for 1st timers and last timers who want a starting point for their respective life transition. Mixing young and old is a good thing that makes for a great community.
There must be a couple of hundred acres out there somewhere that the city owns.
I am sure there are some bright lights at the university who probably have an entire plan already laid out. They just haven’t been invited to the table for lunch.
PS. Thanks for the compliment.
May 20th, 2009 at 3:37 PM
Norm, is the west side undergoing a Renaissance? There are plenty of houses from area 4 in the 280-325 range. Someone had inquired about appreciation in the various areas of Saskatoon. My guess is as of now, area 4 followed by area 5 at the top. Or does this reflect more people shying away from condos and purchasing houses regardless of area?
May 20th, 2009 at 3:38 PM
Scott,
So long as it is considered an accomplishment to be a “hustler” or “shark”, they will get away with it.
The problem here is that we haven’t established that this behaviour is completely disingenuous. That’s how we get investors slinging insults and off topic distractions to defend their cash cow. They have the apathy of the masses on their side to manipulate any complaints into white noise.
Really, the people complaining are the ones who understand life beyond greed. We need to illustrate how unnecessary inflation and low wages can happen and why they aren’t keystones to a healthy society.
May 20th, 2009 at 3:38 PM
Jedi – I was the one asking about that -
The reason is that I personally feel – without all the kinds of stats, ect. That the reason the prices appreciated so much in these areas is the competition for entry level participants. I think the rise in those prices is more significant than for area two. In fact, last year, before moving to Saskatoon, I recall seeing homes in the Caswell hill area for 60 through to 120. Now, they are 220-300. You can get comparable on East side in age/characteristics of the home. I feel that if a buyer can get in over the 300 range, they get a lot more house per dollar spent, and better area. Summary – the affordability of homes has pushed people into areas they can afford. Now, I think they are struggling to afford those areas. What I meant by my comment “look out below?” – It is really the people at the bottom of the market that have been squeezed the hardest. When they start defaulting, or if there is a hit in the market – well I think it is going to be bad news bears for everyone, as the people at the top wont have anyone to sell to below them. The most competitive market is the 200 range – as that is what the average familly income can afford in Saskatoon. So, without bringing equity into Saskatoon, well, you have a market that is overtly overspent, cooked, fully baked -
Get the picture? I dont think the average familly home in Saskatoon is 250 – I think it is already 300 plus. The reason I didnt purchase, would not for awhile in Saskatoon, is I think there are some roller coasters ahead
May 20th, 2009 at 3:41 PM
Just playing the market Trauzzi, I figured it out, I’m making money, I have lots of assets now. I will never, ever apologize for that. Your hatred for us just makes me want to go out there and do even better.
May 20th, 2009 at 3:42 PM
Given that rather crude statement, I don’t think it takes a leap of thought to see you have no regard for others.
It then comes as no surprise that you are the type to contribute towards these problems we face.
Remember, hate is a word you used, not me. I see beyond money where you simply don’t. That is all.
May 20th, 2009 at 3:45 PM
Cindy and Jedi,
If you look at the week in review over the last couple of weeks you’ll see that most of the “overbid” activity is concentrated in areas 4 and 5. I think that Cindy is absolutely correct. These are the areas that young Saskatonians are looking to because of affordability issues.
We are finishing up some stats today including the January breakdown by area. I’ll also have some trend graphs that show the increase in the average for each area over 2007.
I’ll get it posted as soon as I can but I am kind of swamped.
May 20th, 2009 at 3:46 PM
Alex,
If the shoe didn’t fit on callum he wouldn’t be wearing it. He just classified himself as one of the ‘sharks’ or ‘hustlers’ you speak of. Anyone who has seen lucrative gains from the hot market wouldn’t be bragging about it if they had empathy for others not as fortunate. He’s selfish, and that’s all there is. Gloating is ignorant and just plain rude.
May 20th, 2009 at 3:46 PM
Agreed, gloating and bravado – as well as spite added to the mix just shows how bad the situation is and why we are where we are at now.
It proves the contempt of the rich and greedy towards the rest of society and how they treat the opportunities this heavily skewed market produces. This isn’t a free market in bloom, this is a train wreck.
It’s a quick buck just like any other, except in this situation it is glorified by an air of professional accomplishment and competitiveness.
May 20th, 2009 at 3:47 PM
Nice one Mike, that’s some good insight and useful information in today’s market. I was poking around on mls just to see whats out there and was thinking that if I was in the market I’d probably be thinking of a condo. It looks like there is a lot of crapola out there though and a guy would have to be cautious.
May 20th, 2009 at 3:47 PM
One of the other benefits is the new condo legislation which requires all condos to have a “reserve fund study” completed by February 1. This includes a pretty extensive review of the major components and some projections as to when certain improvements will be required, how much they’ll likely cost at the time, and some direction on building prudent reserves. In theory, it should help buyers identify whether or not the condo corporation is taking care of business, or not.
May 20th, 2009 at 3:48 PM
These reserve fund studies are law in other provinces, and they should be here, too. They should consider forcing the developers to address major building issues BEFORE they can just slap down some new laminate floors and paint and start selling the units. It’s not fair to pass future costs on to the new owners. Watch out for this if you’re shopping for a condo. Developers don’t like to spend money on major repairs, it’s all about upfront sales and lifestyle marketing. Don’t get fooled by all that.
May 20th, 2009 at 3:53 PM
Mike,
These studies are law in Saskatchewan as well. New legislation required every corporation to conduct one by February 1, 2008.
May 20th, 2009 at 3:53 PM
Does anyone else see a possible relationship between a shortage of workers, skyrocketing rent prices, and wages low in proportion to said rent prices? Or is it all just coincidence?
Me and a friend have been trying to move out into our own place together for a good few months now, the place we had our eyes on is converting into condos, with rent prices going from $580 for 2bdroom to $1000.
When the provincial government through out the bill regulating rent prices saying it’s the city’s job to do so, it probably didn’t occur to them that our mayor’s an idiot and could care less about the working class.
I was born and raised in Saskatoon, it’s my home and I love it, but I’m considering moving away. I can’t afford to live here.
R
May 20th, 2009 at 3:54 PM
Very interesting to read what is happening in Saskatoon and Regina. Now, smaller cities like Yorkton, etc..are going to get hit with the same problems. People worried by huge increases in rents and by apartments being converted to condos. You hear it all over. This boom is certainly not good for young people, the average wage earner and the independent seniors! I and all tenants in 2 apartment blocks are presently living under stress worrying for months now what will happen to the rumoured condo conversion.It is no longer a rumour as there is an application before the council over this matter. However, no one knows ANYTHING besides that. —Even if we all could find other accomodation, it certainlyy means that we will go where we have limited choices. No more can you choose what apartment building you want to live in! –We are creating a class of unhappy stressed-out people. And, the poor suckers who are going to buy these made-over apartments called condos, in problem neighbourhoods or good ones, are buying an inferior product—in most cases there will not be washers and dryers in the suites, and no sound proofing —things you normaly expect when you buy a real condo. Results–unhappy buyers. –I will continue to rent where I now live, if I can even if I need to pay a reasonable increase in rent. If the neighbourhood becomes more intolerable I am only renting—I can eventually move elsewhere. However, I would never buy this apartment.!!Watch out potential buyers!