Carney defends B.C. condo purchase plan

Key Takeaways

The Prime Minister's defending a plan to turn about 2,200 unsold condos in BC into affordable housing. It's been criticized as a bailout for developers. Let's go to Oleg Galgurt. He's real estate professional at Royal Pacific Realty. Thanks for joining us today. >> Thank you for having me. >> What's your take on the idea of using these unsold condos for housing? >> I think the idea has a very good potential to work. At the end of the day, it has a potential to be a win-win situation where you have the developers winning, and you also have a way to create affordable units for BC families to live in. It will all come down to the exact details of this plan and the execution of it. >> Would this be the first time something like this has been done in BC to your knowledge? >> To my knowledge, yes. I believe this is the very first time we are seeing sort of BC government and federal government stepping in and buying units in this quantity. Of course, we have seen other affordable housing buildings, but nothing like this to my knowledge. >> Okay. As you know, the controversy controversy in part is about developers getting paid for their condos, right? Which have been sitting empty for the most part. Do you see this move as a net benefit for developers or those renting to own or perhaps both? >> Great question. I think from the announcement and from all the criticism that this program so far has received, it is pretty clear to see in what way the developers would be winning. They have from the reports 43 to 4,400 completed empty units that have carrying costs on them. So, to get rid of potentially 50% of this unsold inventory would definitely be a win for the developers. And this program, besides just the condos, is also talking about some future breaks in terms of the development fees and promoting more construction. So, on the surface, from the information that we have, it is very easy to understand how this would be a big win for the developers. >> Okay. There are, I understand, about 4,000 vacant condos in metro uh Vancouver. How long would you say some of these have been sitting? >> It's another great question. So, last year, when I was on your network, in October, we were talking about somewhere between 22 to 2600 empty completed units at that time. So, in less than a year now, we have seen an increase of, I think the reports are, 76% meaning a lot of these condos are new inventory that just appeared on the market, plus we have seen a lot of leftover inventory that just hasn't sold yet. >> Okay. So, it'd be a $1.45 billion investment for essentially conversion of the condos to rentals. Any idea of what would need to be done for that? >> This brings up a lot of interesting questions, and I think this is where the judgment whether this program will be a success or failure will all come down to. How these units will be purchased and at what price point. If they're going to be purchased in bulk, is the government going to negotiate some very aggressive deals? And on the other side, as I mentioned earlier, how this program will actually benefit the families living in BC, whether it's going to be affordable rentals or whether it's going to be rent-to-own program, or perhaps some sort of creative financing options in order to get families actually into these units and into the market. >> Okay. It sounds like it's going to be rent-to-own, but one of the questions I have is the premier I said it's not something that would work in Vancouver. Is there a great need for housing in Vancou- Vancouver? I imagine there would be. >> Of course, Vancouver constantly ranks as one of the least affordable cities. So, there is great demand for affordable housing in Vancouver, and it would be great to see some of these come to Vancouver as well. >> But, it sounds like the numbers don't work for Vancouver. So, where could you see uh this model actually operating? >> I think just outside of Metro Vancouver, so Fraser Valley is one of the areas that was suggested, as well as Vancouver Island, and perhaps areas like uh Kelowna, Penticton, uh these types of areas that maybe make the the numbers make more sense. >> Okay. So, it sounds like your approach is very much, let's wait and see what happens. Is it? >> It very much is because this has a potential to be a win-win situation. As I said, it is pretty clear to a lot of people how this would benefit the developers at the end of the day, but also this has a potential to benefit a lot of families. Now, we don't have to wait years and years for a lot of these condos to be built. They're already built, and instead of some of them going to potentially investors, now with the rent-to-own type program, they could go to uh the families directly. >> I'm going to leave it there, Oleg, but thank you so much for joining us. Appreciate you joining us on the program today.