Sophia goes down

Sophia

When the Eden Group of Companies said “time is running out” for their Sophia condos in Mount Pleasant, they sure weren’t kidding. If you bought pre-sale, East Van’s hottest concrete blondie just went down on you … and I don’t mean in a good way. With 85% of the building built, developer Eden pulled the plug citing cost overruns and labour shortages. At last count, 78 pre-sale buyers are now in limbo and will likely see their condos lost.

Sophia’s “Sorry, I’ll see ya”-routine isn’t the first for Eden; it wasn’t long ago that sophisticated sister Elyse pulled the same act, much to the dismay of feminists. It’s bad enough the condos failed but it really sucks that they failed and happen to be named after girls. I’m a feminist and I can tell you this doesn’t help the cause.

Whenever I’m feeling down, I look to Bob Rennie for inspiration. Turns out Bob’s got an opinion on Eden’s crush and his line of thinking might surprise you. In an interview with CTV News, Rennie tells us the “smart money” supports government intervention:

Anything the government wants to put in place to protect the [pre-sale] consumer doesn’t worry those top 15, 20 developers. If you’re getting creative with your financing, or your profit margin is too low, that developer may worry. But then again we’re protecting the consumer so let’s do it.

He may be a master of hype, but with this comment Rennie offers us a refreshing cold shower.  Cheers to you, Bob. The next latte’s on me. I am impressed.

11 Responses to “Sophia goes down”

  1. condohype Says:

    Hat tip to Vancouver Condo for the CTV News link.

  2. s.p. Says:

    isnt this just a really great ploy to get out of the presale deal?
    i figure by a company saying, ‘we cant afford it’ they get out of all the contractual obligations and then get a ‘friends’ co. to buy it – then sell at market value…am i wrong here?

  3. jesse Says:

    I’m cynical that Rennie wants more regulation because it provides a significant barrier to entry for smaller startups, some of which deserve the chance to prosper: not all are fly-by-night and/or incompetent. Bob’s companies would in general do quite well with such legislation.

    It seems many need a wakeup call as to what a presale agreement really is. Sure it sucks now one has to pay (gasp!) market rate for this condo instead of the heavily discounted price the presale contract awarded these people. But let’s not forget investors, err I mean buyers, get their money back, with a bit of interest to boot, as the payments were held in escrow.

    What’s the REAL problem? The presale buyers took a risk and were seemingly handsomely rewarded for their prescience. Now all those paper gains have evaporated. Sounds like a mixture of greed, in a few instances the fear of being priced out forever, and a sense of unfairness. Caveat emptor and sorry about your luck.

    I say the next building project they name “Gilbert” or “Clarence”. I’d love to live in Clarence. Gilbert sounds a bit too chique for my tastes.

  4. paulmct Says:

    Did someone say cynical? Check this out:
    http://paulmct.wordpress.com/2008/02/27/never-pay-the-dealer-up-front/

  5. condohype Says:

    More regulation doesn’t necessarily mean a barrier to entry for smaller developers; it could be as simple as a statement at time of signing that explicitly outlines the risks to the buyer. I haven’t reviewed a pre-sale agreement but my guess is that the important stuff is buried in the fine print.

    Rennie’s remarks, self-serving or not, advocate a shift of power from the industry to the government. It is not common for an industry spokesperson to make this kind of comment.

  6. gah Says:

    So Condohype, are you still proud of Rennie’s response now that the Rennie marketed H&H is also in receivership?

  7. condohype Says:

    Pity poor H&H. Looks like the developer’s gonna have to pick up some shifts at H&M to make up the difference.

    As for Rennie, well, considering I compared his remarks to a refreshing cold shower, I don’t see how “pride” factors into this. My point is that Bob is a major industry figure and he’s publicly admitting that he doesn’t have a problem with the government getting involved to protect consumers. I invite the rest of the condo clowns to give us as much.

  8. doug r Says:

    So the thinking is they’re trying to hike prices-they’re trying to squeeze more money out of people who have already “bought”. As to whether they’ll sell the rest, I think we’re about to see some market “softness”
    http://calculatedrisk.blogspot.com/2008/02/s-case-shiller-prices-fall-sharply-in.html

  9. scullboy Says:

    More then ever, I’m confused.

    I was just out at a caesar party of some friends. They live in a place that frankly is marginally nice than my place in the West End. Not to sound like a dick but it wasn’t nearly as nice as my old place in TO.

    It was *REALLY plain. the colours were stark and kind of depressing. From what I can tell the devolper put not thought at all into how to light the place. Their furniture wasn’t as good as mine.

    They’re nice guys but I was talking to one and he was plainly as confused as I was about how things had played out. He told me they’d moved about every six months from one condo to another. Their agent would call them every couple of months and say “Do you know how much I can get for your place?”

    Sure enough, each time they flipped they made a substantial amount of money. My friend mentioned several times it was American buyers who were lured into bidding wars by the difference in the dollar.

    I look at all of this and I have to come to the following conclusions:

    1) The homes here aren’t nearly as nice as the ones in TO, and that’s not saying much since those sucked.

    2) People here have been bamboozled by really greedy real estate agents.

    3) American buyers may have had a fairly distorting influence on the local market.

    4) All the bull arguments are bullsh-t (oh, the smelly irony). The market here has been driven by greed, fear and gullibility, and nothing else.

  10. Peter Simpson Says:

    Hey, condohype, don’t slag me with your “we sure don’t hear Peter Simpson putting up a suggestion like this.” My well-documented position has always been crystal clear regarding situations such as the Sophia: Purchasers — whether they are first-time buyers, move-up buyers, empty nesters or investors — should receive their condos for the price they paid, period! I have met many of the Sophia purchasers. They are nice folks of all ages and backgrounds who were looking forward to moving into their new homes, and I hope the court makes it happen for them. By the way, we wouldn’t even be discussing this if the real-estate market suddenly tanked and the value of the condos dived well below the purchase price and mortgage commitment, as is currently the situation in many American regions. That said, I am glad there are forums such as condohype where people can express their opinions. Thank you for allowing me to express mine.

  11. condohype Says:

    Hi Peter,

    Thank you for taking the time to offer your comments.

    In my post, I was attempting to highlight Bob Rennie’s views — specifically his openness to government regulation of pre-sales — as a unique viewpoint within the Vancouver condo industry. In my review of media coverage, I have found no comment from any other major industry official suggesting similar openness to government regulation. If you can direct me to any material that shows otherwise, I would be very interested in seeing it.

    Condohype is first and foremost a comedy site that aims to satirize the Vancouver condo marketing machine. I am not interested in personal attacks or intentionally mischaracterizing the views of others. I do not believe I have done so in this case. But as an act of good faith, I’ve voluntarily amended my post to remove the specific reference to you and the GVHBA.

    With respect to your comment that buyers should receive their condos for the price they paid, I do not dispute this in any way. I believe you are sincere.

    I appreciate your willingness to share your thoughts and to challenge what I’ve put forward. Should you ever want to be a guest contributor to this blog, I would be glad to give you the opportunity.

    Best,

    condohype

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