Saskatoon condo conversion debate about to get hotter
You’ve got to know that Saskatoon community services manager, Paul Gauthier is having some long days at work. He’s one of the civic officials responsible for processing condominium conversion applications. That can’t be a real funfest right now. In fact, approving condo conversion applications has become so controversial that Gauthier has simply had enough, and he has elected to invoke a clause in the current policy which allows him to toss the political hot potato to city council for review of all existing and future applications.
If you think it’s a hot debate now, rest assured that things are about to heat up.
Council passed a motion on Monday, which essentially puts 21 existing apartment building conversion applications in limbo. Gauthier advised council that a new report would be completed for its March 17 meeting, outlining the current situation and possible policy changes which could be used to regulate condo conversions. Another report, recently brought forward by city administrators was tabled for later discussion following a court date on March 11 when tenants of Saskatoon’s Milroy Apartments will argue against the certificate of approval which was issued on that property. Mean time, no conversion certificates will be granted and those which are already in the hopper would be dealt with in accordance with any new policy council might choose to adopt.
Dealing with a steady flow of angry tenants and concerned citizens can’t be easy. I’m guessing that we’ll have some pretty vocal investors on our hands as we move forward from here. Tens of millions of dollars have been invested and those investments were made with an end goal in mind; conversion and resale.
It’s easy to see valid points on either side of the argument. Displaced tenants have few options and promising them that “the market” will eventually work its magic is of little comfort when you don’t know where you’ll be living in thirty days. Free market proponents will argue that there are major benefits to be realized through conversions. Preventing these units from reaching the resale market limits supply in an already stressed market and puts further pressure on prices. Ultimately, that hurts the rental market as well. It’s a real catch 22.
The complexity of the issue can’t be overstated. At the end of the day, the math is fairly simple. Demand exceeds supply in both the rental and the resale market. We need more property in both arenas if we’re going to see any relief. Development of new rental property is the only solution that serves everyone and it needs to happen fast. Free land anyone? I suspect the city may be open to your proposal.
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.
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Norm Fisher
Royal LePage Saskatoon Real Estate
30 comments so far. We'd love to hear your thoughts.
May 19th, 2009 at 3:19 PM
Norm,
If you can get me some of that free land, I’ll pay you whatever % commission you want
May 19th, 2009 at 3:19 PM
Norm,
Welcome to the trials of the big city. It doesn’t get prettier. I can’t think of one major center that has ever “really” solved this problem. It get’s real scary when you put your head up and look around. As long as the business model is to make a faster buck building or converting and selling will be the method for quite a while. There is little incentive to do otherwise. From the developers viewpoint get the money today and enjoy – why wait 30 years for the ROI.
Brutally stated – if you own you have conrol, if you rent you are SOL.
May 19th, 2009 at 3:20 PM
Larry,
Those are some pretty good hard reality statements. Do you feel that cities going through what you described would have fared better if they showed more concern for the people instead of the profit?
I don’t necessarily mean implementing my own views in whole, but perhaps something more “left” than what we’re seeing?
May 19th, 2009 at 3:20 PM
Actually every major city in Canada has implemented condo reform policies preventing condo conversions in times where vacancy rates are considered low… we’re like the wild west and are being massively exploited on this front.
J.
May 19th, 2009 at 3:20 PM
Northstar,
That’s very generous.
Larry,
Thanks. Someone was trying to tell me yesterday that Vancouver is not allowing any condo conversions at this time. Is that true?
Johny,
Right you are. Seems to me that conducting business in an orderly fashion serves everyone well. Hopefully they’ll be able to get this figured out.
I have heard from a fairly reliable source that someone is looking at an apartment project here consisting of about 1000 rental units.
May 19th, 2009 at 3:21 PM
It would be completely irresponsible for city council to not take condo conversion reform policies seriously… although I’m in doubt that the majority of them have accepted responsibility for anything short of a our “boom”. They’re like kids from the local community hockey team being asked up to the pros when up against these development companies. Completely out of their league.
J.
May 19th, 2009 at 3:21 PM
Something I find interesting, recently you posted an article which discussed a condo conversion project that is not economically feasible. How is a 1000 unit apartment building feasible. Is this government funded, I wonder what the rents will be?
May 19th, 2009 at 3:21 PM
Woot! Check this out, value of building permits are down, even in SK! <3
http://www.globeinvestor.com/servlet/story/RTGAM.20080306.wbuildingpermits0306/GIStory/
“…building sites should remain busy in the first part of 2008, despite the recent declines, since construction intentions were strong in 2007″ Sure, that makes sense, but what will the later half of the year bring? :’)
May 19th, 2009 at 3:23 PM
Johny,
The Milroy conversion passed by just one vote and the pressure is heating up on them. They didn’t buckle under the pressure from tenants but when your own administrators are begging for new policies, it seems like it would be tough to ignore. Perhaps I’m wrong, but I think we see something that leads to slightly more order in the future.
Carl,
Thanks for the comment. I took that story to suggest that perhaps it was more “economically feasible” to hold and rent the units, as opposed to selling them. I’ve since learned that the owner intends to sell the whole project, so clearly I’ve read too much into that. I would say there’s low odds that these “1000 units” will materialize but I suppose it’s possible. I understand this would be a private venture but I expect they’d be looking for some strong incentives.
Heather,
Not a big surprise given that building permits were up 72% in Saskatchewan through 2007.
http://tinyurl.com/yv8o7g
This strikes me as wishful thinking but here’s what RBC has to say about the second half of 2008.
“While the near-term outlook for the U.S. economy is decidedly bearish, our view that the Fed will cut rates by another 100 basis points provides one of the supports for our call that the economy will recover in the second half of the year. This recovery will also be aided by an expected $150 billion fiscal package that we are assuming will make its way through Congress shortly. The fiscal stimulus package is expected to include sizeable tax rebates that will reach U.S. households by the third quarter and provide a significant boost to growth.”
We’ll see.
May 19th, 2009 at 3:23 PM
Norm – I am pretty sure condo-coversions are either banned at the momemt in Vancouver or extremely hard to get through City Hall. I can think of only 2 in the past 5 years or so in the City of Vanocouver itself.
May 19th, 2009 at 3:24 PM
Matt,
Thank you for that.
May 19th, 2009 at 3:24 PM
Alex,
Money like rivers always finds the easiest course. Left or right the flow doesn’t matter.
Norm,
I’ll defer to Matthew’s answer for now until I get down to city hall and ask. We had a rash of them about 10 or more years ago. Like everything else it is now history. The big stuff in the last few months is the condo developers who run out of money and don’t complete the project. I don’t know which is worse. Being converted or waiting for 2 or more years to find out you have lost out on the market gain and now have no hope of buying. Neither is pretty.
May 19th, 2009 at 3:24 PM
Norm,
When people on here keep boasting how SK is the promised land and nothing can touch it, I say this 44% drop in building permits shows that SK isn’t unstoppable.
Interesting about RBC, I’m not surprised – even Bush is still in denial about the US economy and doesn’t think they’re in a recession. By the end of this month (Q1), we’ll know whether or not the “R” word is official or if the US is recovering…
Won’t somebody PLEASE think of the economic stimulus package!!! LoL
May 19th, 2009 at 3:24 PM
Heather,
Oddly, the Star Phoenix ran a story today titled, “Building boom continues in Sask.” which claimed “the overall value of building permits in Saskatchewan was up 20.4% to $119.4 million in January, compared to $99 milion in January, 2007, StatsCan said.”
http://tinyurl.com/27jrjd
May 19th, 2009 at 3:25 PM
Heather,
I don’t mean to unbuzz your unbuzz campaign but yoy Jan 08 was up 20% over Jan 07 which was very busy in itself. The 44% decline was from Jan 08 to Dec07. I believe their is always a decline in Jan.
Honestly, nobody in their right mind starts building in Saskatchewan in Jan. I curse and swear just going outside to start my vehicle. I couldn’t imagine framing a house for 8 hours a day. When I build if I can every afford it, I’ll make sure the house is locked up and there is heat inside for the winter.
May 19th, 2009 at 3:25 PM
Norm,
I’ll take 20% over 72% any day! Things still might be moving along with new construction, but I think the pace is slowing. Look at Home Depot and Rona, they’re hitting some hard times right now, what does that say?
George,
If you’re making copious amounts of money you would definitely keep building throughout the winter months, especially if you’re falling behind on construction demand. I of course realize that there would be less construction overall during the winter months.
May 19th, 2009 at 3:26 PM
Heather, I assume you are looking for a place to buy, no? If that’s the case I don’t understand your “woot!”. For the Saskatoon market to achieve some balance and affordability, as a first-time buyer I would want tons of construction, a GLUT to form to ease pressure on prices. Or am I misreading your “WOOT!”?
May 19th, 2009 at 3:26 PM
Reginian,
I’m looking to build. If construction demands lessen it means more competition for work and less gouging.
This also is dependant on the resale home situation. There continues to be more and more listings coming into spring, we’ll have to see how many buyers are out there. Did you see the link I posted on a previous blog regarding home-buying intentions of Canadians?
http://www.globeinvestor.com/servlet/story/RTGAM.20080304.wrbcpoll0304/GIStory/
May 19th, 2009 at 3:26 PM
Norm,
Atchison’s catering to what he figures “investment in our city” never ceases to amaze me. Don’t hold your breath on a decision that will actually benefit those he’s paid to represent.
J.
May 19th, 2009 at 3:26 PM
IMO We are in trouble in this city – speculation is driving price increases. Population increases in no way justify demand and price increases. Many will be left holding the bag, both in-city and out of town investors. On the bright side, the vacancy rates will soon be corrected when those who have bought condos (and houses)to flip are forced to rent them out. Most unfortunate is that we have now lost the competitive advantage we once had due to affordability issues.
IMO the condo issue will be dead next year due to overbuilding.
May 19th, 2009 at 3:27 PM
Doomer,
I think with the positive economic position Sask has in the country your problems are only starting. I wouldn’t be digging the grave just yet but I’m quite sure you will have to dig deeper into your pockets.
May 19th, 2009 at 3:27 PM
I still don’t see the positive economic situation though. What this is all striking me as is just another debt scenario.
Are people actually this much wealthier?
Then there’s the displacement of people who can’t incur the amount of debt needed to compete in this overpriced market (and yes, it is overpriced when salaries are still putt putting along 10+ years behind).
I think of all things, we should stop worrying about the people who are buying (at least they can!), and worry about all the people we are forcing these changes on.
Regarding all the sentiment about builders, I think we should be building like wild mad crazy. But we shouldn’t be making these rushed and very paper-thin suburbs like in Calgary. It would be nice to see neighborhoods developed that can compete with the older ones as well.
Does anyone build a house < 2000 square feet anymore nowadays?! Look at post war houses, how did they come to exist?!
Just some thoughts….
May 19th, 2009 at 3:27 PM
There is only one right thing to do at this point, and that is to implement a condo-conversion policy like Regina has. And soon. No more heel-dragging. It should have been done MONTHS ago. Nay–years ago.
I don’t care what any greedy investor or pro-business automaton in City Hall tells you–this is a college town, and for the city to vacillate this long (and be as blatantly greedy for this long) is absolutely irresponsible. We have a vacancy rate of 0.6 percent. This is a small city with a university!! You can’t let a low-vacancy rate happen in a college town. It’s preposterous that they created this terrible situation. Hundreds of people–many of them seniors–are being displaced unfairly due to greed and ignorance.
Quite frankly, I feel strongly that certain city councillors (and a certain Saskatoon mayor) should be tarred and feathered, then sent out of town on a rail. They have proven, time after time after time, that they are unfit to govern over this city. And I’m not just talking the housing crisis, either–I’m talking about how they are wasting our tax-dollars on ridiculous projects and pay-raises for themselves and their cronies.
Based on the past attitudes and actions of the City Hall, I have very little faith that they are actually going to wake up, and do the right thing when it comes to condo-conversions. I hope they prove me wrong.
May 19th, 2009 at 3:28 PM
Robin,
I’m behind you 100% (especially on the tar and feathering, haha!) this city needs to start taking some accountability. Fat cats scratching each other’s backs isn’t benefiting the community. Without the University, Saskatoon wouldn’t be what it is today. If students can’t find living accomodations during their post-secondary education they will most certainly go elsewhere.
May 19th, 2009 at 3:28 PM
Heather and Robin, always remember to take your message one step further.
Make sure you carry these messages everywhere you go and never be ashamed of being considerate!
Greed is the only thing to be ashamed of, and people seem to flaunt it nowadays.
This every-man-for-himself nonsense has got to stop. We are a society and we are adopting values that prevent us from observing the benefits of such.
May 19th, 2009 at 3:29 PM
Hello All,
I come on this website least 2-3 times a week and all I can see is moaning and groaning of Heather D. and Co. Give it a rest will ya compared to the national average of the price of a house I still say we are doing pretty good. Sure your new house or condo takes up a big chunk of your income but for people like me that dont have debt and dont spend wildly I can still afford to buy in Saskatoon even if the houses go up another 20%. The problem is the people that live irresponsibly without saving money or accruing a variety of debt now feels the pinch when their rent goes up. Anyone with half a brain could see the price increases coming I myself told everyone when I was 18 this place is gonna boom its paradise. Many others also still hold that view and thats why we are in this position. When you have something as beautiful as Saskatoon everyone wants to have it.
May 19th, 2009 at 3:29 PM
People like you that have no debt eh? That’s pretty detailed for us ‘moaners and groaners’ to get a handle on your situation and how you arrived there. By your (and others) logic then we could take the highest market in canada, and compare it to Los Angeles, or Britain, or somewhere else in the world and say ‘hey we don’t have it bad at all buy buy buy!’. Saskatoon IS beautiful. I think for you to assume that the people that can’t afford it are the ones that ‘live irresponibly’ is mighty assumptuous.
I mean we could assume things about you as well like, say you took schooling, and had it paid for…no student loans to pay can do wonders…or that your parents bought your first car, or that you went out and did oil rigs (which is not a bad thing) etc etc…but i’m not into assuming until i actually get to know people.
Not being able to afford is not always by wild spending habits or lack of saving habits either just like not all people that CAN afford to be in the market were brought up with a silver spoon in thier mouths.
May 19th, 2009 at 3:30 PM
Jessie,
Since I’m sure a lot of you are wondering how wealthy I am or how I started off on my journey to home ownership, I will spill the beans. I’m a high school dropout that lived with his mom,who was a single mother raising 3 kids solely on her own, in an eighth street apartment complex across from Evan Hardy. My mom was on welfare and I was 18 trying to find a job and a way in my life. Low and behold you were right about Edmonton, I did move there and took up a store manager position for $1800 a month and did well for a year. I came home and bought my mother a Lincoln and had 500 dollars of debt to my name. After 4 years and jumping from job to job all slightly above minimum wage i met my soul mate in a bar in PA while there with some buddies. We moved in together after 3 months, she being a single mother raising 3 kids on her own as well, and combined being 18000 in debt. So now i’m a 22 year old man with a wife and 3 kids and 18000 worth of debt living in a 2 bedroom apartment in lawson. After my wife and i decided that we really needed to move somewhere larger to accomodate a family of 5 and both of us having slightly above minimum wage jobs, we began to look for places to rent. Well wouldn’t you guess it? it costs just as much to rent as it does to own, so we looked into buying our first home. We sought after and gained a no money down mortgage through wells fargo financial at 8.5 percent interest, mind you we still have the debt, slightly higher than minimum wage jobs, and 3 kids. After we bought the house we refinanced through RBC at an interest rate of 5.29 percent and cleared the 18000 worth of debt that we did have. And for those of you who think that my wife has a “silver spoon” she left an abusive alcoholic home when she was 16 and left an abusive marraige to a dead beat who doesn’t even help raise the kids. So the moral of this biography is through perseverance and determination, and some smart planning and being responsible, anyone can buy a house no matter how grim things seem to look.
PS we bought just before the “boom”
The End
May 19th, 2009 at 3:30 PM
Hey Aaron,
Thanks for sharing. I want to congratulate you, and say that I appreciate it. The reasoning for my ‘silver spoon’ mentality is that majority of the time that’s what has happened in society from my own experiences, but clearly you are an exception as is your wife. I think that is fantasitc and is a great story to share. I wish there were more places where people such as yourself COULD share their situations. I think it’s something to give others hope as well.
The only part I felt that was in error was that eveyrone spends spends spends as myself I’m not one of those people that spend spend spend so i ended up being a little defensive but you clearly backed yourself up and for that again, I say thanks.
Jess
May 19th, 2009 at 3:30 PM
Np Jesse people think that there is no hope but the fancy trick I’ve shown in my story with going through a B lender like Wells Fargo then after getting your foot in the door switch to a Bank would help alot of people get a home. The only thing you need for this is decent credit my own credit score is 650 not bad but not great either. Well Im trailing off with my bad sentence structure and grammar but I hope you guys keep posting even if its doom and gloom stuff as long as its factual. I like hearing some good stories too take care and keep those fingers typing!