South False Creek residents locked into 60-year leases find themselves saddled with 'special assessment' costs and plummeting values.Back in 1976 when people started buying the first 275 condos in South False Creek on rehabilitated industrial land owned by the city, 60 years seemed an eternity for a land lease.
Few who bought then likely imagined that they'd still be living there by 2036.
Fewer still would have known then that by 2011 - with 25 years remaining on the leases - that uncertainty about the land's future would begin to diminish, if not destroy, the equity they've built up in their homes.
Even owners who bought more recently may not have realized that with the clock ticking down to 2036, every year their homes will be worth less because even now some lenders are already refusing to approve 25-year mortgages even with prepaid land leases and that means fewer buyers.
Dorothy Amor never expected the crunch to come so soon, nor did Alison Green and Monty Wood.
Amor bought her townhouse in 1976 for $69,000. A single mother, she and her family were among the target markets that then mayor Art Phillips and his council had in mind when they envisioned a community loaded with amenities that would be shared by people with all different income levels living in condos, co-ops and non-profit rental housing purpose-built for families, disabled people and seniors. (Not all of the South False Creek condos are on leased land; some are freehold with the owners having a share of the land itself.)
When Amor later had a chance to pay out the land lease to 2036 for $50,000, she did - and is thankful she did. In 2006 when the city hiked lease rates by as much as 700 per cent on seven buildings, Amor was not one of the 118 owners affected.
But Amor could never have anticipated that at age 69 and retired, she'd be cashing RRSPs to pay for a $143,000 special assessment to fix the stratatitled building and the rot that resulted from failed flashings and flat roofs in the stratatitled townhouses.
"I can't sell and I can't stay here," she said.
No bank would give Amor a reverse mortgage to pay for the repairs. So, she has no choice but to cash in her retirement savings and pay a big income tax bill at the end of the year.
She's thinking about selling, but neighbours in her complex have had no luck finding buyers.
One real estate agent told me he advises clients to buy there only if they're looking to get waterfront homes at firesale prices and if they're not interested in it as a long-term investment. Prices, so far, are roughly comparable to freehold condos in the area - ranging from about $400,000 to more than $1 million depending on the size.
"The values will drop," Michael Flanigan, Vancouver's director of real estate services, told me bluntly. "That's the nature of leasehold. There are provisions for monetary compensation [when the lease expires] or the city can renegotiate the lease. But between now and then, it's a depreciating curve."
But if they're "priced right," Flanigan said, they'll still sell.
The uncertainty is causing Alison Green a lot of sleepless nights. Green and Monty Wood bought their condo in 1979 and, like Amor, later paid out the land lease.
"We bought as a young couple without a dime between us, in a time of optimism and change in Vancouver, and against all advice," said Green, who is now in her mid-60s.
Family and friends worried not about buying on leased land, but that it was a bad area.
"My main concern is that this is our major investment and we don't have a lot else," she said. "We've talked to real estate agents and they said it is a declining investment and they think it is just going to keep going down ...
"It's still a long time, but it's not. We didn't imagine this would be the effect."
Amor and Green are among the first group of False Creek owners to feel the squeeze. The land leases on another 160 condo units expire in 2042.
At City Hall, no one is ready to answer the what-next question.
Some residents have asked for a new community plan to be drawn up and have put together a proposal to increase density that would increase the city's lease revenue without dramatically changing the neighbourhood's character or greatly diminishing its park space.
But planners are already working on three other community plans. So they won't likely get to South False Creek for a couple of more years unless council directs them otherwise.
If the past is any guide, that seems unlikely. Residents of waterfront condos in what's been called one of the best neighbourhoods in North America don't garner much empathy.
When the Non-Partisan Association-dominated council hiked the lease rates in 2006, its current mayoral candidate Suzanne Anton told owners, "This is not a social housing situation, it's a market housing situation."
Vision Vancouver Coun. Raymond Louie was blunter.
"You are all adults, you knew it was coming," he told residents.
"You should have carried out due diligence."
Buyer beware? Of course. But it's uncertainty that's the problem, and it's up to politicians to end it.
BY DAPHNE BRAMHAM, VANCOUVER SUN
Chris Frederickson | Sutton Group West Coast Realty | 604.306.1062 | email@example.com