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The condominium experience in British Columbia 1977

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THE CONDOMINIUM EXPERIENCE IN BRITISH COLUMBIA by GRAEME MCALLISTER EADIE B. Comm., U n i v e r s i t y of B r i t i s h Columbia, 19 76 A T h e s i s Submitted i n P a r t i a l F u l f i l l m e n t o f The Requirements f o r the Degree of Master of Science i n Business A d m i n i s t r a t i o n i n The F a c u l t y of Graduate S t u d i e s (Commerce and Business A d m i n i s t r a t i o n ) We accept t h i s t h e s i s as conforming to the r e q u i r e d standard THE UNIVERSITY OF BRITISH COLUMBIA February, 19 7 8 © Graeme M c A l l i s t e r E a d i e , 19 7 8 In presenting t h i s thesis i n p a r t i a l f u l f i l m e n t of the requirements for an advanced degree at the University of B r i t i s h Columbia, I agree that the Library s h a l l make i t f r e e l y a v a i l a b l e for reference and study. I further agree that permission for extensive copying of t h i s thesis for scholarly purposes may be granted by "the Head of my depart- ment or his representative. I t i s understood that copying or p u b l i c a t i o n of t h i s thesis f o r f i n a n c i a l gain s h a l l not be allowed without my written permission. A b s t r a c t The o v e r a l l o b j e c t i v e of t h i s study was t o i n v e s t i g a t e the condominium market i n B r i t i s h Columbia w i t h s p e c i a l emphasis on the m e t r o p o l i t a n Vancouver and V i c t o r i a a r e a s . S p e c i f i c a l l y t h e r e were f o u r main .goals: 1) to q u a n t i f y the amounts, type, and t i m i n g of condominium developments, 2) t o e s t a b l i s h a p r o - f i l e o f condominium occupants i n c l u d i n g t h e i r socio-demographic c h a r a c t e r i s t i c s , m o t i v a t i o n s f o r purchase, and t h e i r l e v e l o f s a t i s f a c t i o n w i t h the concepts, 3) t o i n v e s t i g a t e the d e v e l o p e r s o f condominiums f o r the purpose of d e f i n i n g c h a r a c t e r i s t i c s o f t h i s s e c t o r o f the market and i t s p a r t i c i p a n t s , f i n a l l y 4) t o examine the a d m i n i s t r a t i o n and management o f completed condo- minium p r o j e c t s . S e v e r a l unique s i t u a t i o n s and unusual problems p e r t a i n i n g to condominiums were a l s o examined. A l l of the data necessary t o q u a n t i f y the condominium market was a v a i l a b l e i n the Land R e g i s t r y O f f i c e s , I n c l u d e d i n the r e c o r d s were the number o f s t r a t a p r o j e c t s , number o f s t r a t a u n i t s , date o f r e g i s t r a t i o n , l o c a t i o n , use, s t r u c t u r e type, and the name o f the d e v e l o p e r . T r a n s a c t i o n data c o n c e r n i n g condo- miniums was a l s o c o l l e c t e d at the Land R e g i s t r y O f f i c e s ; t h i s formed p a r t of the data needed t o c o n s t r u c t the r e s a l e p r i c e index. The q u a n t i t a t i v e d a t a , d e s c r i b e d above, a l s o served as the b a s i s f o r the occupants and the d e v e l o p e r s sur v e y s . The condominium market was found t o have grown r a p i d l y s i n c e i t s i n c e p t i o n i n 1968. As of November 30, 1977 a t o t a l of 2340 condominium p r o j e c t s i n v o l v i n g 46,411 u n i t s had been r e g i s t e r e d i n the province. Of these 94.8% of the projects and 94.0% of the units were s t r i c t l y r e s i d e n t i a l . This represents a s i g n i f i - cant force i n the housing market as condominiums i n 1976 accoun- ted f o r 26.2% of a l l housing s t a r t s and 57.9% of a l l multi-unit housing s t a r t s i n the province. Geographically the condominiums were concentrated i n metropolitan Vancouver (65.6% of a l l units) and metropolitan V i c t o r i a (11.9% of a l l u n i t s ) . The largest single s t r u c t u r a l category was duplex projects (42.3% of a l l projects and 4.2% of a l l units) followed by lowrise apartments (under 4 stories) which accounted for 21.7% of a l l projects (36.0% of a l l u n i t s ) . Overall r e s i d e n t i a l condominium prices have r i s e n by approxi- mately 150% between 1969 and 1977 i n metropolitan Vancouver and V i c t o r i a although those units purchased from 197 4 on have shown l i t t l e or no gain on resale. Condominium units have kept pace with rate of increase of single family detached house p r i c e s . One hundred and f i f t y - s e v e n projects of 10 units and greater were randomly selected i n metropolitan Vancouver and V i c t o r i a . Every eighth unit within these projects was d i s t r i b u t e d ; an owners and a tenants survey - 895 units were thus canvased r e s u l t i n g i n 234 completed and returned questionnaires. From these, three submarkets within the condominium market were i d e n t i f i e d : a) young, apartment condominium purchasers, generally without c h i l d r e n . They purchased a unit p r i m a r i l y to e s t a b l i s h an equity p o s i t i o n i n the housing market; b) townhouse purchasers who were predominantly i n the 30-3 year o l d age categor y and had the h i g h e s t average numbe of c h i l d r e n ; c) the o l d e r (over 40 years old) apartment purchasers who moved from . s i n g l e f a m i l y detached d w e l l i n g s t o escape the r e q u i r e d upkeep. The owners survey a l s o r e v e a l e d t h a t the two most f r e q u e n t l y mentioned reasons f o r p u r c h a s i n g a condominium r a t h e r than a s i n g l e f a m i l y house were f i r s t , the economic advantage (46%) and second, the freedom o f e x t e r i o r upkeep (28%). F u r t h e r i t was found t h a t o v e r a l l t h e r e was a hig h l e v e l o f s a t i s f a c t i o n , w i t h condominium l i v i n g . E i g h t y - e i g h t p e r c e n t o f the respond- ents r e p o r t e d t o be moderately o r very w e l l s a t i s f i e d . The condominium development i n d u s t r y was found t o be made up of a l a r g e number of p a r t i c i p a n t s (1261). The m a j o r i t y o f these (90%) produced o n l y one o r two p r o j e c t s each, however t h e r e were a l s o a s m a l l number o f f i r m s t h a t were l a r g e p r o - ducers both i n terms o f u n i t s and p r o j e c t s . The l a r g e s t twenty producers i n terms of p r o d u c t i o n o f u n i t s concentrated, t h e i r a c t i v i t y i n m e t r o p o l i t a n Vancouver, these f i r m s c o n t r i - buted one h a l f o f the u n i t s i n t h i s r e g i o n . The management o f s t r a t a c o u n c i l budgets, i n terms of both o p e r a t i n g and r e s e r v e accounts, has improved g r e a t l y i n the re c e n t p a s t . Less than 9 p e r c e n t of surveyed p r o j e c t s had o p e r a t i n g budget d e f i c i e n c i e s , compared t o approximately one h a l f o f the p r o j e c t s surveyed i n 1973. V The condominium market i s currently experiencing very s o f t market conditions. This i s evidenced by the minimal price appreciation displayed recently, large vacant stocks of unoc- cupied units (1638 i n June of 1977 i n metropolitan Vancouver) and the reduction i n the l e v e l of new condominium construction r e l a t i v e to 1976. Despite these negative aspects the broaden- ing of the consumer market to include a l l age groups and the high l e v e l of s a t i s f a c t i o n displayed i n the owners survey indicates the condominium market w i l l remain viable i n the long-run. The short-run outlook must remain cloudy however u n t i l the present unsold inventory i s reduced. v i Table of Contents • PAGE L i s t of Tables L i s t of Diagrams L i s t of Exhi b i t s Acknowledgements Chapter One - Introduction 2. Chapter Two - S t a t i s t i c a l P r o f i l e of Condominium Developments i n B r i t i s h Columbia. 5. 2 .1 History of Condominiums 5. 2 .2 Sources of Data and Methodology 6. 2 .3 Condominium Developments 8. 2 .3.1 Condominium Development - Type of Project 12. 2 .3.2 Condominium Development - Size of Project I 7 - 2 .4 Condominium Development as a Proportion of the Housing Market 25. 2 .5 Condominium Sale Prices •38. 2 .6 Current Si t u a t i o n Footnotes Chapter Three - B r i t i s h Columbia Strata T i t l e s Act 46. 48. 49. 3 .1 Introduction 49. 3 .2 General Concept 49. 3 .3 De f i n i t i o n s 51. 3 .4 Creation of a Strata Plan 52. 3 .5 Owner-Developer 55. 3 • 6 Strata Corporation (Operation and Management) 58. 3 .7 Owner-Purchaser Footnotes 63. 69. PAGE Chapter Four - Owners' and Tenants' P r o f i l e ' 71. 4.1 Introduction 71. 4.2 Previous Studies of Condominium Owners 72. 4.3 Sampling Process 76. 4.4 Condominium Owners' P r o f i l e 78. 4.4(a) General C h a r a c t e r i s t i c s of Survey Respondents 78. 4.4(b) Socio-Economic Variables of Respondents 81. 4.4 (c) Age 81. 4.4(d) Number of Children 81. 4.4(e) Education and Occupation 86. 4.4(f) Income D i s t r i b u t i o n s 86. 4.4(g) Two Wage Earner Households 92. 4.4(h) Structure Type 95. 4.4 (i) Previous Tenure 96. 4.4 (j) Loan-To-Value Ratios and Total Monthly Payments 103. 4.4 (k) Future Intentions 103. 4.4(1) Summary P r o f i l e 107. 4.5 Discriminant Analysis 113. 4.6 Conclusion: Discriminant Analysis 120. 4.7 Motivation for Purchasing a Condominium 120. 4.8 Condominium Verses Single Detached House 121. 4.9 Important Features of the Unit Purchased 123. 4.10 Level of S a t i s f a c t i o n for Condominium Owners 136. 4.11 General Level of S a t i s f a c t i o n of Owners 139. 4.12 S p e c i f i c Problem Areas i n Condominiums 142. 4.13 Reaction of Condominium Owners to Tenants 144. 4.14 S p e c i f i c C r i t i c i s m s Concerning Condominiums 145. v i i i • PAGE 4 .15 Tenants' P r o f i l e 148. 4 .16 C o n c l u s i o n 149. Footnotes 150. Chapter F i v e - Condominium Development and Management 152. 5 .1 I n t r o d u c t i o n 152. 5 .2 Data C o l l e c t i o n and Sample S i z e - D e v e l o p e r s 152. 5 .3. 1 Developers' A c t i v i t i e s 154. 5 .3. 2 The Top Twenty 157. 5 .3. 3 Small Development Firms 163. 5 .3. 4 Developers* A c t i v i t y Over Time 166. 5 .3. 5 Developers of Unique P r o j e c t s 166. 5 .4. 1 Developers' C h a r a c t e r i s t i c s : The Survey 171. 5 .4. 2 Developers' Involvement i n the Condominium Market 172. 5 .4. 3 P r o j e c t F i n a n c i n g 175. 5 .5. 4 Development Process 177. 5 .4. 5 Condominium Management by Developers 183. 5 .4. 6 The P r e s e n t S i t u a t i o n and Future E x p e c t a t i o n s 185. 5 .5. 1 Condominium Management 187. 5 .5. 2 Data C o l l e c t i o n and Sample S i z e 189. 5 .5. 3 Management Firms 191. 5 .5. 4 Management of P r o j e c t s 193. a) Budgets b) Major Problems c) By-law Enforcement Footnotes 202. PAGE Chapter Six - Condominiums: Unique Features and Special Considerations 204. 6 .1 Taxation of Condominiums a) Real Property Taxation b) Income Tax-Owners c) Income Tax-Investors d) Income Tax-Developers 204. 6 .2 Conversion of Rental Apartments to Condominiums 212. 6 .3 Support Structures 213. 6 .4 Non-Residential Condominiums 217. 6 .5 Common Area Charges 224. 6 .6 Government Involvement i n Condominium Financing Footnotes Chapter Seven - Conclusions Bibliography Appendixes 228. 233. 235. 240. 1. Synopsis of Previous Studies 242. 2. Owner's Questionnaire 245. 3. Tenant's Questionnaire 259. 4. Developer's Questionnaire 264. 5. Manager's Questionnaire 273. 6. Strata Council Questionnaire 279. X L i s t of Tables PAGE 1. Condominium Projects By Year and Location: 9 # Province of B r i t i s h Columbia 2. Summary of Condominium Projects 11. 3. P r o v i n c i a l Condominium Projects by Year and Type 2.3. 4. Condominiums by Type and Major Location, 1967-1977 16. 5. Condominium Projects by Project Size and Year i g . 6. Percent of Condominium Projects by Size 20. 7. Condominium Development by Type of Development and 22. Size of Project 8. Average Project Size by Year and Location 24. 9. Housing Starts - Province of B r i t i s h Columbia 27. 10. Housing Starts - Vancouver Metropolitan Area' 28. 11. Housing Starts - V i c t o r i a Metropolitan Area 29. 12. Housing Starts - Non-Metropolitan Areas 31. 13. Change i n B r i t i s h Columbia Population by Age Group 33. 14. B r i t i s h Columbia Population By Age Group 34. 15. Condominium Average S e l l i n g Prices 40. 16. Percentage Increases i n Resale Prices 4 5 M 17. D i s t r i b u t i o n of Ages of Household Heads 7 5 . (Hamilton and Roberts) 18- Basic S t r u c t u r a l and Occupancy Data of 80. Surveyed Units 19. Cor r e l a t i o n Between Household Size and 82. Number of Bedrooms 20. P r o f i l e of Condominium Purchasers by 83. Age Groups 21. Basic Demographic and Economic Data- 85. By Structure Type 22. Comparative Age D i s t r i b u t i o n s - 88. Hamilton and Roberts VS. 1977 Study x i 23. Comparative Total Family Incomes - Hamilton and Roberts, CMHC, and 1977 Study 24. D i s t r i b u t i o n of Working Spouses (At time of purchase) 25. D i s t r i b u t i o n of Previous Tenure Type by Present Structural Type 26. D i s t r i b u t i o n of Previous Tenure Type by Age Group 27. D i s t r i b u t i o n of Previous Tenure Type by Price of Unit 28. D i s t r i b u t i o n of Previous Tenure by Loan-to-Value Ratio 29. Reason for Moving by Previous Tenure Type - F i r s t reason only 30. Reason for Moving by Age Group - Tota l Number of Reasons 31. Reasons f o r Moving by Structure Type - Total Responses 32. D i s t r i b u t i o n of Loan-to-Value Ratio by Age Group 33. D i s t r i b u t i o n of Loan-to-Value Ratio by Structure Type 34. D i s t r i b u t i o n of Tot a l Monthly Payments by Age Group 35. Future Housing Intentions 36. Choice of Next Str u c t u r a l Type by Age Group - For those who Intend to Move 37. P r o f i l e of Condominium Purchasers/ Discriminate Analysis Variables 38. Number of Cases C l a s s i f i e d i n t o Each Group 39. Those who considered Single Detached House P r i o r to Purchase of Condominium by Present Structure Type x i i PAGE 40. Those who considered Single Detached House 124. P r i o r to Purchase of a Condominium - by Previous Structure type 41. Reason for Purchasing a Condominium 125. over a Single Detached House - by Structure Type (Total Reasons) 42. Important Locational Features of the 129. Unit by Structure Type (Total Choices) 43. Important Features of the Unit by 130. Structure Type (Total Choices) 44. Frequency of Desired Changes i n the 132. Unit by Structure Type 45. Important Features of the Project by 13 3. Structure Type (Total Choices) 46. Frequency of Desired Changes i n the 135. Project by Structure Type 47. Most Important Reason for the 137. Selection of the Units 48. Frequency of Unused Sales A t t r a c t i o n s 138. by Structure Type 49. Extent of Purchaser's Knowledge by 140. Method of Purchase 50. Extent of Purchaser's Knowledge by 143. the Level of S a t i s f a c t i o n 51. Most important C r i t i c i s m s of Condominiums 146, 52. Most Important C r i t i c i s m by Structure 147. Type - F i r s t Mentioned 53. Developer's A c t i v i t y - Province 155. 54. Developer A c t i v i t y by Region 15 8. 55. Percentage of Development - Top 20 Developers 159. i n Terms of Units 56. Percentage of Development - Top 20 Developers 161. i n Terms of Projects 57. Top Twenty Developers i n Terms of Average Project 162. Size x i i i PAGE 58. Percentage of Development A c t i v i t y by Area - 164. Top Twenty Firms i n Terms of Units 59. Developer's A c t i v i t y by Year and Size 167. 60. Size D i s t r i b u t i o n of Developer's A c t i v i t y by Year 169. 61. Percentage of Income Derived from Condominium 17 3. Development 62. Most Important Areas of Revenue for Condominium 174. Developers 63. Source of Financing by Type and Developer's Size 176. 64. Average Development Period (Months) 178. 65. Method of Development 181. 66. Developers' Perception of Consumer Preference 182. 67. Developer Involvement i n Condominium Management 184. 68. Developers Having Unsold Units Which are Vacant 186. or Rented 69. Development Firms with Projects i n the Planning 188. Stages 70. Ranking Most S i g n i f i c a n t Management Problems by 196. Management Firms 71. Ranking of Most S i g n i f i c a n t Management Problems 197. by Strata Councils 72. Ranking of Methods Used to Enforce By-laws 200. - Strata Councils - Management Firms 73. Conversions to Condominium: B r i t i s h Columbia 214. 74. Support Structure Condominiums i n B r i t i s h 216. Columbia 75. Completely Non-Residential Condominium Projects 218. i n B r i t i s h Columbia 76. Percentage D i s t r i b u t i o n of 1977 Common Area Charges 226. by Structure Type (Metropolitan Vancouver and V i c t o r i a ) 77. N.H.A. and CM.H.C. Involvement i n Condominium 229. Financing (1967 to 1976). xiv L i s t of Diagrams PAGE 1. D i s t r i b u t i o n of Number of Children i n Households 2. D i s t r i b u t i o n of Previous Tenure 3. Reason for Purchasing a Condominium Rather : 126. Than a Single Detached House 4. Manager's P r i o r Experience 192. 87. 99. XV L i s t of Exhibits PAGE 1. Results of Discriminant Analysis 119. 2. Comparison of the Leasing and Purchasing 222. Cost of a Warehouse Condominium. v. xvi Acknowledgements This study i s dependant on an extensive amount of primary data of which there were many contributors. The author would l i k e to thank a l l those who responded to the occupants, managers, st r a t a c ouncils, and developers questionnaires without which much of t h i s study would not have been possibl e . Further data was c o l l e c t e d with the generous assistance from the Minister of Municipal A f f a i r s and Housing, province of B r i t i s h Columbia, Registrars i n each Land Registry O f f i c e throughout the Province and the B r i t i s h Columbia o f f i c e of Central Mortgage and Housing Corporation. Thanks i s extended to Mrs. A. Wicks, Mr. J.N. Brampton and Mr. K. Johnson for t h e i r assistance i n administer- ing the questionnaires, the c o l l e c t i o n of the data from the Land Registry O f f i c e s and the preparation of the data. I would also l i k e to express my appreciation and gratitude to the B r i t i s h Columbia Real Estate Association and t h e i r s p e c i a l Strata T i t l e s Committee (A.L. Andrews, R.J. Burns, P. Watkinson, J.G. Dennis, D. 0'Brian and L.K. Sully) f o r t h e i r f i n a n c i a l support and for t h e i r assistance i n arranging appointments throughout the province. F i n a l l y , very s p e c i a l thanks i s extended to Mr. D. Baxter for his s i g n i f i c a n t c o n t r i b u t i o n to the preparation of the primary data and to Dr. S.W. Hamilton for his guidance throughout t h i s study. I n t r o d u c t i o n S t r a t a t i t l e p r o j e c t s , or condominiums as they are more commonly r e f e r r e d t o , are a r e l a t i v e l y new form of p r o p e r t y ownership i n B r i t i s h Columbia; the f i r s t p r o j e c t b e i n g b u i l t i n 1968. The d e f i n i t i o n of the condominium concept i s "one o v e r a l l area having w i t h i n i t s boundaries c e r t a i n p a r t s owned i n fee simple by i n d i v i d u a l owners and o t h e r areas owned by a l l the i n d i v i d u a l owners as tenants i n common."* T h i s form o f tenure may be a p p l i e d t o any use from r e s i d e n t i a l t o mixed r e s i d e n t i a l , commercial, i n d u s t r i a l , or r e c r e a t i o n a l . S i m i l a r l y the form the p r o j e c t s take may range from lan d sub- d i v i s i o n s t o m u l t i - s t o r y h i g h r i s e b u i l d i n g s . The e n a b l i n g l e g i s l a t i o n s p r o v i d i n g f o r the development o f condominiums has been i n e f f e c t i n B r i t i s h Columbia s i n c e 2 September, 1, 1966. I n i t i a l l y the, r a t e of. development was slow as the concept was not f u l l y understood by the p u b l i c . No s t r a t a p r o j e c t s were c o n s t r u c t e d u n t i l 1968 when 7 p r o j e c t s i n v o l v i n g 312 u n i t s were produced. The r a t e o f p r o d u c t i o n has i n c r e a s e d g r e a t l y s i n c e then c u l m i n a t i n g i n 667 p r o j e c t s i n v o l - v i n g 11,052 u n i t s b e i n g b u i l t i n 1976. Over the p e r i o d 1968 to November 31, 1977, a t o t a l o f 46,411 condominium u n i t s have been c r e a t e d i n v o l v i n g 2340 p r o j e c t s . With t h e i r i n c r e a s i n g number, condominiums have become a s i g n i f i c a n t f o r c e i n the housing market. As a p r o p o r t i o n of new housing s t a r t s i n the p r o v i n c e they have i n c r e a s e d from 1.2% i n 1968 to 26.2% i n 1976. As a share of the new s t a r t s intended f o r owner-occupiers they have i n c r e a s e d from 2.2% t o 32.0% over the same p e r i o d . This study divides the examination of the condominium market into f i v e basic components represented by the following chapters. Chapter Two presents a s t a t i s t i c a l p r o f i l e of the market including the quantity, type, l o c a t i o n , and size of condominium developments and information on t h e i r s e l l i n g p r i c e s . C h a p t e r T h r e e r e v i e w s t h e S t r a t a T i t l e s A c t a s i t presently applies, some of the major amendments that have been made since i t s introduction, and some of the proposed changes i n the Act. The Fourth Chapter represents a major portion of th i s study. It discusses the r e s u l t s of a survey of condo- minium owners and tenants which establishes a p r o f i l e of the occupants including socio-demographic c h a r a c t e r i s t i c s , motiva- tions for purchase, and the owner's s a t i s f a c t i o n with condo- miniums. The next chapter i s concerned with the developers o f condominiums and" those charged" with t h e i r administration and management on completion - the professional property mana- gers and the str a t a councils. Chapter Six examines some s p e c i a l considerations and unique projects. F i n a l l y , Chapter Seven provides some concluding remarks. It should be noted before proceeding further that the term "condominium" i s not contained i n the B r i t i s h Columbia l e g i s l a - t i o n . Rather, the term " s t r a t a " has been adopted from the New South Wales Strata T i t l e s Act from which the B.C. Act was modeled. Throughout t h i s report however, the terms "condominium and " s t r a t a " are used interchangeably to r e f l e c t the general usage of the pub l i c . The following general d e f i n i t i o n s are provided to a s s i s t the readers who are unfamiliar with the terminology associated with condominiums. For greater d e t a i l and more s p e c i f i c d e f i - n i t i o n s the readers are referred to Chapter Three. Strata Plan or Condominium Plan: This r e f e r s to the document that i s registered at the l o c a l Land Registry O f f i c e to create the l e g a l i n t e r e s t i n r e a l property that are known as s t r a t a units or condominium units. U n t i l t h i s plan i s accepted for r e g i s t r a t i o n i n the Land Registry O f f i c e , no s t r a t a or condominium units e x i s t . Strata Project or Condominium Project: This i s a rather loose d e f i n i t i o n used i n the industry to describe the project developed under the Strata T i t l e s Act. Generally t h i s i s i d e n t i c a l to the project described i n the s t r a t a plan except i n the case of phased condominiums where each phase i s c a l l e d a project but one s t r a t a plan covers a l l phases. Strata Unit (lot) or Condominium Unit ( l o t ) : This refers to the i n d i v i d u a l units which are created by the r e g i s t r a - t i o n of the s t r a t a plan. The size and boundaries of these i n d i v i d u a l units are s p e c i f i e d in. the s t r a t a plan and at the time the s t r a t a plan i s f i l e d , i n d i v i d u a l c e r t i f i c a t e s of t i t l e are created for each s t r a t a unit. The s t r a t a units represent the portion of the s t r a t a plan which may be owned i n fee simple. Strata Corporation of Condominium Corporation: At the time the s t r a t a plan i s f i l e d , there i s an automatic creation of a Strata Corporation. Each owner of the s t r a t a units constitute the members of the Strata Cor- poration and t h e i r voting r i g h t s are prescribed i n the s t r a t a plan. The Strata Corporation i s charged with the r e s p o n s i b i l i t y of operating and administering the common areas and by-laws and t h i s i s done through an elected s t r a t a council comprising members of the Strata Corporation. 4. Footnotes - Chapter 1 1. S.W. Hamilton, I. Davis, and J . Lowden, "Condominium Development i n Metropolitan Vancouver", The Real Estate Council of Greater Vancouver, December 1971, p. 2. 2- Strata T i t l e s Act, S.B.C. 1966 ch. 46, Nov. S.B.C. 1974 ch. 89. 5. Chapter 2 S t a t i s t i c a l P r o f i l e of Condominiums i n B r i t i s h Columbia 2.1 History of Condominiums The condominium concept was f i r s t used by the ancient Hebrews, 2,500 years ago and was subsequently used by the Greeks, Phoenicians, Moslems and Egyptians. In 1804 the f i r s t modern c o d i f i c a t i o n of condominium law was enacted i n the Code Napoleon of France ( A r t i c l e 664) and by 1884 there was reported to be 4,190 condominium structures i n France. Condominium development also appeared i n a major fashion af t e r World War I i n Europe. In North America, condominiums f i r s t became popular i n Puerto Rico and Hawaii. Presently, v i r t u a l l y a l l the countries of Europe, a l l the American states, a l l the Australian states, and a l l the Canadian, provinces have comprehensive condominium, legislation.''" The B r i t i s h Columbia Strata T i t l e s Act was introduced i n 1966 and was modelled a f t e r the Strata T i t l e s Act of New South Wales, A u s t r a l i a . The Alberta and Saskatchewan Acts were also patterned a f t e r the New South Wales Act while the remaining Canadian provinces adopted an American sty l e d act. The main difference between the two sty l e s of l e g i s l a t i o n i s that the American-based law does not require a b u i l d i n g or physical structure before the r e g i s t r a t i o n of a st r a t a plan, the Australian law does. This i s modified now i n the B.C. Act which permits bareland and support structure s t r a t a l o t s . . Examining the h i s t o r y of condominiums reveals that the use of the condominium concept i s stimulated i n periods of housing shortages (such as i n Europe a f t e r world War I) or i n places of r e s t r i c t e d b u i lding areas (within the walled confines of the ancient c i t i e s or the limited land areas of Puerto Rico and Hawaii). The development of condominiums i n B r i t i s h Columbia also accelerated during a period of high demand for housing evidenced by r a p i d l y increasing prices of single-family homes. The l e v e l of housing demand i s only one reason for the acceptance of condominiums however, changes i n l i f e s t y l e , consumer prefer- ences, and economic c a p a b i l i t y also have an e f f e c t . The objective of t h i s chapter i s to quantify the develop- ment of condominiums i n B r i t i s h Columbia. The examination of the owners o£ condominiums and t h e i r motivations for purchase i s l e f t to Chapter Four - The Owners Survey. 2.2 Sources of Data and Methodology There are several sources of data used i n t h i s chapter. I n i t i a l l y data were c o l l e c t e d from the seven Land Registry Offices i n B r i t i s h Columbia. The data included the s t r a t a plan number, number of units i n the project, data of r e g i s t r a t i o n , municipality or area the project was located i n , the use of the units ( r e s i d e n t i a l or non-residential), data on phased projects and those constructed on leased land. The structure type of the project could also be determined by examining the s t r a t a plans registered i n the Land Registry Offices (L.R.O.). As part of t h i s set of data, the name of the developer was also c o l l e c t e d to be used i n Chapter Five. Data on c o n v e r s i o n s , the changing of an e x i s t i n g b u i l d i n g w i t h a s i n g l e t i t l e t o a s t r a t a t i t l e p r o j e c t w i t h m u l t i p l e t i t l e s w i t h i n the same area, was not a v a i l a b l e from the r e c o r d s of the L.R.O.'s. T h i s i n f o r m a t i o n was c o l l e c t e d from the m u n i c i p a l governments i n M e t r o p o l i t a n V i c t o r i a and Vancouver. The f i g u r e s p r e s e n t e d i n t h i s c a t e g o r y should be used w i t h c a u t i o n f o r two reasons: f i r s t , b e f o r e l e g i s l a t i v e changes were made i n 1973 r e q u i r i n g the a p p r o v a l of the m u n i c i p a l i t y b e f o r e c o n v e r s i o n c o u l d take p l a c e no r e c o r d s were kept on the number or l o c a t i o n of any c o n v e r s i o n s . Secondly, even a f t e r 1973 some of the m u n i c i p a l i t i e s d i d not have complete r e c o r d s of the con- v e r s i o n s . The number of c o n v e r s i o n s p r e s e n t e d should t h e r e f o r e be c o n s i d e r e d a minimum number r a t h e r than a complete l i s t . The s t r u c t u r e type, was c l a s s i f i e d , i n t o a v a r i e t y o f c a t e - g o r i e s : townhouses or rowhouses (those u n i t s t h a t are a t t a c h e d to one another h o r i z o n t a l l y but not v e r t i c a l l y ) , low r i s e a p a r t - ments (those u n i t s t h a t are a t t a c h e d v e r t i c a l l y and may be but not n e c e s s a r i l y h o r i z o n t a l l y and of l e s s than f o u r s t o r i e s ) h i g h r i s e apartment ( v e r t i c a l attachment of f o u r or more s t o r i e s ) , duplex p r o j e c t s (two u n i t s a t t a c h e d v e r t i c a l l y or h o r i z o n t a l l y ) , duplexes (more than one duplex i n a s t r a t a p l a n ) , s i n g l e detached, support s t r u c t u r e s , b a r e l a n d , warehouse, commercial and mixed uses The next step i n the primary data c o l l e c t i o n was t o s e l e c t a random sample of p r o j e c t s of more than 10 u n i t s i n the m e t r o p o l i - tan areas of V i c t o r i a and Vancouver. From these p r o j e c t s , every e i g h t h u n i t was then s e l e c t e d and the t i t l e searched to o b t a i n sales p r i c e information. These data were then supplemented by other sources to provide some i n d i c a t i o n of the changes i n p r i c e s for condominium units. 3 Condominium Developments The B r i t i s h Columbia Strata T i t l e s Act became e f f e c t i v e on September 1, 1966 but the f i r s t s t r a t a plan was not registered u n t i l February 29, 1968. The reason f o r the slow rate of develop- ment i n i t i a l l y was p a r t i a l l y due to caution on the part of devel- opers to enter into an e n t i r e l y new area and p a r t i a l l y due to the problems of financing. Financing was d i f f i c u l t to obtain because mortgagees ranked condominiums very low i n order of t h e i r prefer- 2 ence and 1967 and 1968 were periods of shortages of mortgage 3 money. This resulted i n mortgagaes placing a l l a v a i l a b l e funds i n more, t r a d i t i o n a l forms, of. housing. Table 1 displays the aggregate of a l l condominium develop- ments i n B r i t i s h Columbia since 1968 - there were no s t r a t a t i t l e projects developed p r i o r to t h i s time. From the rather modest beginning i n 1968 the rate of condominium development increased rapi d l y to the point where, as of November 30, 1977, there are 46,411 s t r a t a units i n 2340 s t r a t a plans i n B r i t i s h Columbia. Of these, 30,502 (65.7%) of the s t r a t a units and 1262 (53.9%) of the s t r a t a plans are located i n Metropolitan Vancouver. Metropolitan V i c t o r i a comprises the second largest group of s t r a t a units and plans with 5528 (11.9%) units i n 432 (18.4%) plans. Combined these areas represent 77.6% of a l l units and 72.3% of a l l projects i n the province. The next largest urban area i n terms of condominium development i s • TABLE 1 CONDOMINIUM PROJECTS BY YEAR AND LOCATION: PROVINCE OP-BRITISH COLUMBIA Land Registry Areas 1968 1969 1970 1971 1972 1973 1S74 1975 1976 1977 Total Pro- . .Unit ject Pro- . ..Unit ject Pro- . .Unit. ject Pro- . ..Unit ject Pro- . .Unit ]ect Pro- . .Unit ject Pro- j e c t U n i t Pro- ject Unit Pro jec bUnit Pro- j e c t U n i t Pro- ject Unit Pro- ject Unit 1. Metropolitan Vancouv LRO 2. Balance Vancouver LR T o t a l Vancouver LRO er 0 0 2 2 0 46 46 3 1 4 78 12 90 5 3 8 220 ' 16 236 18 1 19 494 10 504 37 5 42 1243 71 1314 50 1 51 1654 12 1666 72 10 82 2424 274 2698 75 . 12 87 2363 195' 2558 94 16 no 2686 205 2891 . 77 17 94 2044 260 2304 431 • 68 499 13206 1101 14307 18.4 2.9 21.3 28.4. 2.3 30. 8 4. Metropolitan New West- minster LRO 5. Balance New Westmin- ster LRO : 6. Total New Westminster LRO 3 0 3 102 0 102 10 4 .14 520 68 588 16 3 •19 674 98 772 31 3 34 1409 70 1479 35 0 35 1010 0 1010 82 5 87 2028 171 2199 83 9 92 2028 130 2158 L56 30 L86 2857 468 3295 213 65 278 4126 904 5030 202 29 231 2542 473 3015 831 148 979 17296 2352 19648 35.5 6.3 41.8 37.2. 4.9 42.3. j 7. Total Metropolitan Van- ! couver Area (1+4) 3 102 13 598 21 894 49 1903 72 ' 2253 132 3682 L55 4452 231 5220 307 6812 279 4586 1262 305C2 53.9 65 7 • ! 8. Metropolitan V i c t o r i a 1 LRO I 9, Balance V i c t o r i a LRO ;10. Total V i c t o r i a LRO 0 z ? • 0 164 2 1 3 42 . 22 64 13 . 0 13 239 0 239 21 4 25 494 72 566 25 7 32 ' 640 141 781 34 6 40 553 160 713 42 10 52 602 210 812 52 23 75 900 567 1467 L09 80 1073 821 1894 134 48 -182 985 460 1441 432 181 £31- 1694 5528 2617 8145 35030 18 .4 7.7. 75 ,1 72.3 n.s'; .' 5.6 17. f, 77.6. j l l . A l l Metropolitan Areas : (1+4+8) 3 102 15 640 34 1133 70 2397 97 2893 166 4235 L97 5054 28 3 6120 416 7885 413 5571 '12. Kamloops City 13. Kclov/na 14. Vernon 15. Penticton 16. Balance Kamloops LRO 17. Total Kamloops LRO 0 • 0 0 3 0 2 5 0 0 6 0 27 33 4 4 1 0 1 10 249 9 21 0 19 298 3 1 2 0 4 10 115 2 4 0 • 74 195 1 1 0 0 1 3 - 2 14 0 0 64 80 4 1 0 0 2 7 172 72 0 0 51 295 4 13 3 G 6 32 164 89 60 130 84 527 8 29 3 4 30 74 312 124 56 185 288 965 5 24 6 2 • 27 •64 97 177 <35 48 494 851 2S 73 18 •12 73 205 mi 487 182 363 1101 . 3244. 12 3.1 0.8 0.5 3.1 87 2.3; 1.0 0.4 0.8' 2.1 6.9' 18. Nelson LRO 19. Prince Georgo LRO 20. Prince Rupert LRO 0 0 1 0 0 10 0 0 1 0 0 27 I 0 o 87 0 0 0 0 0 0 0 0 2 2 0 22 50 0 6 6 2 62 176 .,..93 6 € 4 117 88 4 2 A, 51 107 ,i on 19 16 339 431 297 0.9 0.8 0*1 ' 0.8' ' 1,0'r „D._Z- 21, Grdnd Total) B.C, 7 315 21 742 46 1290 89 2874 120 3387 181 4658 237 6045 394 .817£ .667 11052 578 . 7873 234C 46411 100,1 'iml 10. Kamloops C i t y with 29 projects (1.2%) and 1111 units (2.3%). The data i n Table 1 requires some further explanation. The t o t a l s include amalgamations or consolidations of e x i s t i n g condominiums, cancelled plans which were registered and subse- quently cancelled, demolitions, and each phase i n a multi-phase project. For example, a s t r a t a plan with three phases i s counted as three separate projects to r e f l e c t the timing differences of construction. These adjustments are minor i n aggregate but should be kept i n mind. Table 2 indicates the extent of these adjustments. After allowing for adjustments, one finds a t o t a l of 2302 s t r a t a plans i n existence involving 45,597 un i t s . Not a l l of these represent new units as 1188 e x i s t i n g units i n 48 projects were converted to condominiums from another use. These are examined i n more d e t a i l i n Chapter Six. TABLE 2 Summary of Condominium Projects Projects Units 1. Provincial Totals 2340 46,411 2. Less Cancelled or Destroyed Plans* 14 245 ' Subtotal 232 46JL66 3. Less Consolidations 4 569 Subtotal 2322 45,597 4. Less Duplicate Count Phased Plans** 20 0 Existing Totals 2302 Plans 45,597 Units ••Projects include each phase i n a phased strata plan. The t o t a l project included 14 phased strata plans with a t o t a l of 34 projects or phases. Each phase was recorded as a separate project in order to allocate the units to the correct year in which they were constructed. *In most cases the records at the Land Registry Office did not indicate the reason for cancellation of the plan. Therefore i t is not possible to determine i f the building was destroyed or converted to a non-condominium use. Examining the data chronologically one can see the number of condominium r e g i s t r a t i o n s i n terms of both units and projects has ri s e n s t e a d i l y from 1968 to 1976 i n the province. While the infor- mation pertaining to 1977 i s complete only to November 30, there i s l i t t l e doubt that the production of condominiums w i l l be down approximately 20% from the 1976 l e v e l . This i s a r e f l e c t i o n of current poor market conditions being experienced. (This i s d i s - cussed i n more d e t a i l i n section 2.6, Current S i t u a t i o n ) . While the early periods showed the greatest r a t e of increase of develop- ment, the greatest increase i n absolute terms i n B r i t i s h Columbia took place between 1975 and 1976 where 273 projects and 2874 units more than the previous year's production was recorded. 1976 also represented the largest single year i n terms of production accoun- tin g for 28.5% of a l l projects and 23.8% of a l l units (Table 3). Similar increases occurred i n Metropolitan Vancouver during the 1975-76 period (an increase of 76 projects and 1592 u n i t s ) , however Metropolitan V i c t o r i a displayed i t s largest increase over the previous year i n terms of units from 1974 to 1975 (298) although the largest increase i n projects (57) took place between 1975 and 1976. 2.3.1 Condominium Developments - Type of Projects The d i s t r i b u t i o n of condominium projects and units by type of project and by year i s shown i n Table 3. The majority of the c l a s s i f i c a t i o n s are self-explanatory, however some c l a r i f i c a t i o n may be required. Lines 1 to 11 are s t r i c t l y r e s i d e n t i a l projects. Support structures (line 12) and bareland subdivisions (li n e 14) 13. •. TABLE 3 PROVINCIAL CONDOMINIUM PROJECTS BY TYPE BY YEAR Type o f Project 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977* Total '% Project Units Project Units Project Units Project Units Project Units Project Units Project Units Project Units 1 Project Units Project Units Project Units Project • Units SINGLE TYPE: Residential . 1. Single Detached 2. Duplex (2 Units) . 3. Duplexes 4. Townhouses 5. Low-Rise 6. High-Rise 3 147 • 4 165 15 656 4 . 86 15 30 2 96 18 824 8 274 3 66 1 7 18 36 3 24 30 1606 18 610 13 377 2 • 24 25 50 1 4 43 1611 40 1409 6 239 4 44 53 106 1 35 35 1100 61 2225 20 862 1 11 67 134 1 6 42 1309 97 3343 21 1042 5' 132 .47 294 1 32 77 2085 104 2930 46 2313 6 '.74 353 706 6 134 102 2362 110 3373' 45 2430 18 161 311 622 - 5 '54 92 1721 61 2321 27 1763 37 453 )89 1978 20 385 .58 13421 507 16735 181 9092 1 .5 0.9 42.3 4.2 0.7 /l.O 19.7 29.3 21.7 36.0 7.7 19.5 MIXED TYPE: Residential 7. Duplex/Townhouse 8. Low-Rise/Townhouse 9. Townhouse/High-Rise 10. Single/Duplex 11. Duplex/Lowrise 1 58 1 63 1 72 1 14 0 0 1 264 1 52 1 103 0 0 0 . 0 0 3 626 1 122 1 19 1 7 0 0 0 0 0 0 2 18 0 0 2 n o 6 953 3 297 4 51 1 7 /l.O £1.0 71.0 2.0 71.0 £1.0 /l.O /l.O /l.O £1.0 M I A K U TYPE: Non-Residential J 12. *. Support Structure 13. Lot Subdivision 14. Bareland Subdivision 15. Residential & Commercial 16. Warehouse 17. Commercial 18. Church/Hlghrlse 19. Cancelled 20. Consolidated 21. Lease • 2 0 • i .* 2 7 1 H 1 1 0 0 0 0 0 • 0 0 0 1 35 2 11 2 . 11 u • l : 12 Z 8 1 4 1 0 1 21 2 24 1 7 0 5 63 0 . 0 5 161 1 137 20 678 0 0 0 0 2 7 3 15 1 4 1 2 3 17 1 411 8 65 30 807 0 0 1 51 2 30 17 156 " 7 43 0 0 1 18 1 0 3 108 52 1509 2 8 1 51 5 49 31 260 11 62 1 2 14 245 4 569 11 173 2.2 3.5 /l.O /l.O 71.0 71.0 /l.O /l.O "1.3 71.0 /l.O £1.0 /l.O £1.0 71.0 71.0 71.0 1.23 £1.0 £1.0 22. Total: A l l Types .7 312 21 742 46 1290 89 2874 120 3387 181 4658 237 • 6045 $94 8178 66711052 578 7873 0 340 4641" loos; 100% 23. Percentage By Year 0.2 0.6 0.8 1.5 1.9 2.7 3.8 6.1 5.1 7.2 7,7 10.0 10.1 13.0 1 3.8 17.6 28.5 23.8 24.7 16.9 100 100 *To November 30i 1977t represent condominium projects with no buildings. Line 13, l o t subdivision, refers to the creation of two or more s t r a t a l o t s out of a single s t r a t a unit. To avoid the double counting of units only the newly created s t r a t a units are indicated. Line 18 represents a novel use of the condominium concept to combine a church and a highrise r e s i d e n t i a l building. Line 21 contains s t r a t a projects that are constructed on leased land - a more complete account of these i s presented i n Chapter Six. C l a s s i f y i n g the development into r e s i d e n t i a l and non- r e s i d e n t i a l one can see that the vast majority of the units and projects are r e s i d e n t i a l i n nature. Lines 1 to 11 and 21, which are a l l e x c l u s i v e l y r e s i d e n t i a l , aggregate to represent 95% of a l l units registered and 94% of a l l projects. This does not include the r e s i d e n t i a l units contained i n the mixed r e s i d e n t i a l / commercial projects or those support structures and bareland strata units used for r e s i d e n t i a l purposes. The numbers involved i n these categories are very small and w i l l not a f f e c t the o v e r a l l picture. While the r e g i s t r a t i o n s of non-residential projects i s very small, the numbers have been increasing i n recent years. As the market gains experience i n these areas even more developments w i l l l i k e l y be forthcoming i n the future. Duplex (2 unit) condominium projects represent 42.3% of a l l projects but only 4.2% of a l l uni t s . Lowrise apartment condo- miniums represent the largest category i n terms of the number of units (36.0% of units, 2l.9% of projects) followed by townhouses (29.3% of units, 19.7% of projects) and highrise apartments (19.5% and 7.7% for units and projects r e s p e c t i v e l y ) . A l l other 15. uses are i n s i g n i f i c a n t i n r e l a t i o n to these categories. I t i s i n t e r e s t i n g to note however, that support structures are approxi- mately double the number of any other non-residential use yet they have only been developed since 1975. Table 4 presents the d i s t r i b u t i o n of condominiums by type and major locations. The l o c a t i o n a l d i s t r i b u t i o n of structure types w i l l depend on several factors including the r e l a t i v e p r i c e of land, l e v e l of demand for various structure types, municipal zoning, and on the a v a i l a b i l i t y of land i n each area. Excluding the factor of municipal zoning i t would be expected that the structures with the highest densities (high-rise apartments) would be c l o s e s t to the inner c i t y followed by the less dense low-rise apartments and f i n a l l y by townhouses and lower density types i n the suburban areas. This pattern i s generally observable for condominium units. Line 1 of Table 4, Metropolitan Vancouver LRO represents the City of Vancouver, West Vancouver, North Vancouver C i t y and North Vancouver D i s t r i c t , a l l of which are r e l a t i v e l y close to the c e n t r a l business d i s t r i c t . Over one h a l f (51.6%) of the condo- minium projects i n Metropolitan Vancouver are of low-rise design. These are followed i n order of importance by high-rise apartments (18.2%) and townhouses (12.1%). Metropolitan New Westminster LRO, l i n e 4, consists of the outlying m u n i c i p a l i t i e s of New Westminster, Burnaby, Port Coquitlam, Surrey, Port Moody, Delta, Richmond, Langley, and White Rock. As expected there i s a lower percentage of apartment styled condo- miniums i n t h i s area than in Metropolitan Vancouver, 20.7% versus 1 6 . TABLE 4 CONDOMINIUMS BY TYPE AND MAJOR LOCATIONS 1»67-1977* Mixed i Single Town Low High , Res i - Support Land Registry Areas Detached Duplex Duplexes House Rise Rise d e n t i a l Structure Others 1 1. Metropol itan Vancouver LRO 1 5 43 86 6 105 52 1536 221 6697 78 4378 1 103 5 40 21 238 ; 2. Balance Vancouver LRO 4 33 16 32 2 36 30 498 4 189 0 0 0 0 9 312 1 1 , 3. Total Vancouver LRO 5 38 59 118 8 141 82 2034 225 6886 . 78 4378 1 103 14 352 22 239 4. Metropol itan New Westminster 12 199 495 990 0 0 119 5896 148 6318 23 2107 6 953 0 0 26 285 ' 5. Balance New Westminster LRO 1 8 66 132 4 106 41 902 32 1025 0 0 0 0 1 157 1 22 • 6. Total New Westminster LRO 13 207 561 1122 4 106 160 6798 180 7343 23 2107 6 953 1 157 27 307 i ' 7. Total Metro lo l i tan Vancouver ' Area (1 + 4) 13 204 538 1076 6 105 171 7432 369/13015 101 6485 7 1056 5 40 47 523 i 8. Metropol itan V i c t o r i a LRO 1 2 212 424 2 24 73 1129 51 1210 74 2430 3 201 2 8 11 49 \ 9. Balance V i c t o r i a LRO 10 152 76 152 4 50 49 1150 20 479 4 130 4 51 11 271 0 0 1 0 . Tota l V i c t o r i a LRO 11 154 289 578 6 74 122 2279 71 1689 78 2560 7 252 12 279 11 49 11. A l l Metropol itan Areas (1 + 4 + 8) 14 209 750 1500 8 129 244 8561 420 14225 175 8915 10 1257 7 48 58 572 12. Kamloops C i t y 1 . 40 1 2 1 60 21 810 4 141 0 0 1 58 0 0 0 0 13. Kelowna 0 0 54 108 0 0 8 99 6 228 1 36 0 0 2 6 2 10 14. Vernon 0 0 5 10 1 4 7 125 4 28 0 0 0 0 1 15 0 0 15. Penticton 0 0 1 2 0 0 5 244 4 102 1 11 0 0 1 4 0 0 16. Balance Kamloops LRO 7 14 20 40 0 0 19 367 8 148 0 0 0 0 18 517 0 0 17. Total Kamloops LRO 8 54 81 162 2 64 60 1645 26 647 2 47 1 58 22 542 2 10 18. Nelson LRO 0 0 0 0 14 267 3 72 0 0 0 0 0 0 0 0 19. Pr ince George LRO 0 0 0 0 12 201 2 99 0 0 1 52 1 79 0 0 20. Prince Rupert LRO 0 0 0 0 8 197 0 0 0 0 0 0 1 100 0 0 21. GRAND TOTAL B.C. 37 453 989 1978 20 385 458 13421 507 16736 181 9092 16 1418 52 1509 62 605 ^Excludes consol idat ions and cancel lat ions 17. 69.8%. Also t h i s area has a larger percentage (14.4% versus 12.1%) and i n absolute terms, twice as many townhouse units as Metropolitan Vancouver. The most i n t e r e s t i n g feature of the Metropolitan New Westminster area i s the large number of duplex projects, 495. These represent 59.7% of a l l projects i n the area and 50% of a l l duplex projects i n the province. Examining the Metropolitan V i c t o r i a area, l i n e 8, a note of caution must be added. A large though undetermined number of the condominium projects i n t h i s area that are c l a s s i f i e d as high-rise contain only 3h or 4 s t o r i e s . Hence by d e f i n i t i o n they are c l a s s i f i e d as high-rise but l o c a l l y they are considered low r i s e . This f a c t makes i t d i f f i c u l t to comment on the Metro- p o l i t a n V i c t o r i a area r e l a t i v e to other areas. Excluding the major metropolitan areas, townhouses are the most popular condominium design. This also follows the pattern suggested above. Land costs are generally lower i n the outlying areas which allows lower density developments to be constructed p r o f i t a b l y . F i n a l l y i t should be noted that support structures are most often located i n the non-urban areas. Only 13% of the support structure projects involving 3% of the units are located i n Metropolitan Vancouver, New Westminster, or V i c t o r i a . 2.3.2 Condominium Development - Size of Projects The d i s t r i b u t i o n of a l l condominium projects by year and size i s shown i n Table 5. I t should be noted that i n t h i s table, each phase i n a multi-phased condominium development i s counted as a single project. Hence the range i n project s i z e i s from a one unit project (of which there are two, one, a commercial phase LEAF 18 OMITTED IN PAGE NUMBERING. 18a. TABLE 5 CCMOMINIUM PROJECTS BY ' PROJECT SIZE BY YEAR: P R O V I N C I A L T O T A L S Size of Project 1 9 6 8 1 9 6 9 1 9 7 0 1 9 7 1 1 9 7 2 1 9 7 3 1 9 7 4 1 9 7 5 1 9 7 6 1 9 7 7 T 0 T A L PERCENTAGE Provincial Totals Pro- ject Unit Pro- ject Unit Pro- ject Unit Pro- ject Unit Pro- ject Ui.it Pro- ject Unit Pro- ject Unit Pro- ject Unit Pro- ject Unit Pro- ject Unit S ^ t ject Pro- ject Unit 1- 2 Units 0 0 0 0 15 30 18 36 26 51 54 108 67 134 148 296 358 716 331 661 1017 2032 43.6% 4.4% 3- 9 0 0 0 0 2 12 12 76 11 62 18 101 18 105 33 189 75 395 83 453 252 1393 10.8 3.0 10- 19 1 12 6 86 8 103 17 243 20 288 25 321 42 616 62 941 57 787 45 666 283 4063 12.1 8.7 20- 39 3 94 8 182 9 253 22 667 39 1152 47 1353 56 1620 90 2505 96 2664 60 1660 430 12150 18.4 26.2 40- 59 1 42 1 51 6 304 5 259 6 288 16 715 27 1260 29 1422 39 1821 36 1735 166 7897 7.1 17.0 60- 99 1 63 2 164 4 326 7 540 13 1025 12 805 18 1319 15 1044 23 1646 '12 812 107 7744 4.6 16.7 100-499 1 101 2 259 2 262 8 1053 4 521 9 1255 8 991 14 1781 18 3023 9 1379 75 10625 3.2 22.9 500 plus 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 , 1 507 1 507 <1.0 1.1 Non-Me tropolitan Areas 1- 2 0 0 0 0 5 10 4 8 5 10 2 4 6 - 12 26 52 133 266 73 145 254 507 39.7 4.7 3- 9 0 0 0 0 1 4 1 3 1 4 1 . 8 5 38 15 89 36 195 27 150 87 491 13.6 4.7 : 10- 19 1 12 3 • 40 4 47 '4 53 4 57 2 26 9; 111 26 363" 24 ,341 • 20 292 97 1342 15.1 12.9 20- 39 1 34 3 62 0. 0 8 236 10 282 6 184 10 245 27 695 38 1044 29 806 132 3588 20.6 34.5 40- 59 ' , o 0 0 0 2 96 1 58 . 1 54 3 137 5 253 9 439 8 394 9 403 38 1834 5.9 17.7 60- 99 1 . "63 0 0 0 0 0 0 1 87 1 64 3 192 4 283 9 638 4 305 23 1632 3.6 15.7 100-499 1 101 0 0 0 0 1 119 0 0 0 0 1 140 1 137 2 289 2 201 8 987 1.2 9.5 £ ;500 plus 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 .0 0 0 0 0 0 0 . 0 ? 18b . (a) Subdivision of existing strata l o t , only new l o t counted. (b) One commercial unit i n a two-phase project. TABLE 5 (continued) , CONDOMINIUM PROJECTS BY PROJECT SIZE BY YEAR; , Size of I Project 1 9 6 8 1 9 6 9 3 Oi. 1 9 7 0 1 9 7 1 1 9 7 2 1 9 7 3 1 9 7 4 1 9 7 5 1 9 7 6 To Nov.30 1 9 7 7 T O T A L PERCENTAGE . i • Pro- ject Unit Pro- ject Unit Pro- ject Unit Pro- ject Unit Pro- ject Unit Pro- ject Unit Pro- ject Unit Pro- ject Unit Pro- ject Unit Pro- ject Unit Pro- ject Unit i | Metropolitan i Vancouver i 1- 2 Units 0 0 0 0 4 8 12 24 18 36 38 76 37 74 103 206 162 324 170 340 544 1088 43.1% 3.6% ' 3- 9 0 0 0 0 0 .0 8 58 5 27 12 70 11 56 10 52 22 100 33 170 101 533 8.0 1.7 \ 10- 19 0 0 2 28 3 43 5 66 12 179 20 246 26 405 31 .499 23 314 13 195 135 1975 10.7 6.5 20- 39 2 60 4 96 5 126 10 309 18 534 33 943 41 1221 47 1389 44 1247 25 693 229 6618 18.2 21.7 40- 59 1 42 1 51 4 208 1 44 5 234 '11 485 21 965 18 376 28 1273 25 1227 115 5405 9.1 • 17.7 60- 99 0 0 2 164 3 247 6 468 11 842 9 607 12 880 10 595 13 942 6 382 72 5227 5.7 17.1 100-499 0 0 2 259 2 262 7 934 3 401 9 1255 7 851 12 1503 15 2612 6 1072 63 9149 5.0 29,9 500 plus 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 507 1 507 <1.0 1.6 Metropolitan Victoria . . • 1- 2 • 0 0 0 0 6 12 2 4 3 5- 14 .28 24 48 19 38 63 126 88 176 219 437 50.7 7.9 3 - 9 0 0 0 0 1 8 3 15 5 31 5 23 2 11 8 48 17 100 23 133 64 369 14.8 6.7 • 10- 19 0 0 1 18 1 13 8 124 4 52 3 . 49 7 100 5 79 10 132 12 179 51 746 11.8 13.5 20- 39 0 0 1 24 4 127 4 122 11 336 8 226 5 154 16 421 14 373 6 161 69 1944 15.9 35.2 40- 59 0 0 0 0 0 0 3 157 0 .0 2 93 1 42 2 107 3 154 2 105 13 658 3.0 11.9 H CO cr .60- 99 0 0 0 0 1 79 1 72 1 96 2 134 3 247 1 66 1 66 2 125 12 885 2.8 16.0 100-499 0 0 0 0 0 0' 0 0 1 120 0' 0 0 0 1 141 1 122 1 106 4 489 <1.0 8.8 500 plus 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 SOURCE; Land Registry Data excluding cana »d or amalgamated projects with no units reports Includes cancelled or amalgamated projects where units were recorded i n the Land Registry Office. Each phase i n a strata plan i s counted as a separate project. i n a mixed residential/commercial development and the other being the newly created s t r a t a l o t r e s u l t i n g from a l o t subdivision) to a project of 507 units developed as a single phase. The projects developed i n the 1-2 unit s i z e category (essen- t i a l l y duplexes) account for 43.6% of the projects but only 4.4% of the units i n the province. Conversely, the 100-499 unit category accounts for only 3.2% of the projects but 22.9% of the units p r o v i n c i a l l y . The la r g e s t group i n terms of units i s the 20-39 group representing 26.2% of units and 18.4% of projects. The non-metropolitan areas follow a s i m i l a r pattern with a large percentage of duplex projects (but few units) and the largest category being the 20-39 unit group. Comparing the metropolitan Vancouver and V i c t o r i a areas one can see that there are more larger projects i n Metropolitan Van- couver. Twenty-one percent of the projects involving 66% of the units i n Metropolitan Vancouver are i n projects of 40 units or more. The same category i n Vi c t o r i a represents 7% of the projects and 37% of the u n i t s . I t i s also of i n t e r e s t to note that of the 76 projects containing 100 or more units i n the province, 64 (84%) are i n Metropolitan Vancouver. There are only four such projects i n Metropolitan V i c t o r i a . Table 6 i s provided to allow some quick comparisons to be made between the areas; i t i s compiled from Table 5. i ..s . - i 20. TABLE 6 - SUMMARY Percent of Condominium Projects by S i z e S i z e o f P r o j e c t P r o v i n c i a l T o t a l P r o j e c t Unit Non-Metropolitan Areas P r o j e c t U n i t M e t r o p o l i t a n Vancouver P r o j e c t U n i t M e t r o p o l i t a n V i c t o r i a P r o j e c t U n i t 1-2 43.6% 4.4% 39.7% 4.9% 43.1% 3.6% 50.7% 7.9% 3-9 10.8 3.0 13.6 4.7 8.0 1.7 14.8 6.7 10-19 12.1 8.7 15.1 12.9 10.7 6.5 11.8 13.5 20-39 18.4 26.2 20.6 34.5 18.2 21.7 15.9 35.2 40-59 17.0 5.9 17.7 9.1 17.7 3.0 11.9 60-99 4.6 16.7 3.6 15.7 5.7 17.1 2.8 16.0 100-499 3.2 22.9 1.2 9.5 5.0 29.9 <1.0 8.8 500 p l u s <1.0 1.1 0 0 <1.0 1.6 0 0 Source: Table 5 R e f e r r i n g again to Table 5 and the p r o v i n c i a l t o t a l s , i t i s p o s s i b l e t o i d e n t i f y some modest t r e n d i n the s i z e of p r o j e c t s over time. The p r o j e c t s i z e s appear to i n c r e a s e up u n t i l 1974 w i t h p r o j e c t s of 40 or more u n i t s r e p r e s e n t i n g an i n c r e a s i n g p r o p o r t i o n of the t o t a l sample. In 1975 t h e r e was a s h i f t back to s m a l l e r s c a l e p r o j e c t s (under 40 u n i t s ) which again r e v e r s e d i n 1976 and again i n 1977. During 1977, p r o j e c t s o f 40 o r more u n i t s accounted f o r 49.8 p e r c e n t of the t o t a l u n i t s as compared w i t h the 10 year average of 57.7 p e r c e n t . T h i s suggests a c u r r e n t t r e n d towards s m a l l e r s c a l e p r o j e c t s r e f l e c t i v e no doubt o f the s l a c k market f o r condominium p r o j e c t s . Condominium p r o j e c t s by type, s i z e and major l o c a t i o n are d i s p l a y e d i n T a b l e 7. C o n s i d e r i n g the p r o v i n c i a l t o t a l s the l a r g e s t average s i z e d p r o j e c t type i s the mixed r e s i d e n t i a l (58.92 u n i t s per p r o j e c t ) due l a r g e l y t o the seven p r o j e c t s i n the 100- 499 u n i t c a t e g o r y . The next l a r g e s t average s i z e d group i s h i g h - r i s e (50.23 u n i t s per p r o j e c t ) f o l l o w e d by l o w - r i s e s (33.01 u n i t s per p r o j e c t ) and townhouses (29.37 u n i t s per p r o j e c t ) . The non- r e s i d e n t i a l p r o j e c t s , warehouse, commercial, and o t h e r , a l l tended t o be s m a l l a v e r a g i n g 8.39, 5.64, and 8.50 u n i t s per p r o j e c t r e s p e c t i v e l y and none of the p r o j e c t s exceeded 39 u n i t s i n s i z e . The l a n d and support s t r u c t u r e p r o j e c t s were f a i r l y e v e n l y d i v i d e d amongst the s i z e c a t e g o r i e s . Making r e g i o n a l comparisions one can see the developments i n the non-metropolitan areas are s m a l l e r than those i n the p r o v i n c e and i n M e t r o p o l i t a n Vancouver a c r o s s a l l types of p r o j e c t s except l a n d and support s t r u c t u r e s . T h i s i s g e n e r a l l y t r u e f o r compari- sons w i t h M e t r o p o l i t a n V i c t o r i a a l s o , but the duplexes and 22 . TABLE 7 .Size of Project Single Family Duplex Duplexes Town House Low Rise High Rise Mixed Residen- ti a l Land and Support 1 o o - Warehouse i 3 / /: Corrmer- • cial Other • Provincial Totals Pro- ject Unit Pro- ject Unit Pro- ject Unit Pro- .. ject U n i t Pro- ject ^ Pro- ject Unit Pro- ject Unit Pro- ject Unit Pro- ject Unit i j 1- 2 Units 13 26 989 1978 0 0 0 0 0 0 1 2 1 2 11 4 8 1 1 1 2 ! 3- 9 7 43 0 0 12 64 126 716 51 294 3 24 10 47 15 75 16 80 • 9 39 3 11 ' 10- 19 1 9 ' 108 0 0 0 0 97 1297 127 1900 30 462 2 33 5 96 8 108 0 0 1 12 , 20- 39 4 86 0 0 4 123 123 3384 201 5789 73 2120 0 0 17 456 3 64 1 22 1 26 ; 40- 59 4 190 0 0 3 138 42 2003 75 3530 34 1632 5 259 3 145 0 0 0 0 0 0 60- 99 0 0 0 0 1 60 51 3745 32 2277 T17 1232 2 , 135 4 295 0 0 0 0 0 0 100-499 0 0 0 0 0 0 18 2276 21 2946 22 3113 7 1115 4 490 0 0 0 0 0 0 500 plus 0 0 0 0 0 0 0 0 0 0 1 507 0 0 0 0 0 0 0 0 0 0 Average Size 12.24 2.0 19.25 29.37 33.01 50.23 58.92 28.51 8.39 5. 64 8.50 Non-Metropolitan Areas 1- 2 11 22 239 478 0 0 0 0 0 0 0 0 0 0 3 6 0 0 1 1 0 0 3- 9 3 19 0 0 7 32 47 272 16 95 0 0 2 18 10 45 2 10 0 0 0 0 10- 19 3 40 0 0 0 0 65 852 19 295 1 11 2 33 6 96 0 0 0 0 0 0 20- 39 4 86 0 0 2 68 70'1893 33 915 4 124 0 0 16 435 0 0 1 22 0 0 40- 59 2 80 0 0 2 96 20 986 9 426 1 42 2 11C 2 94 0 0 0 0 0 0 60- 99 0 o 0 0 1 60 9 637 9 640 0 0 0 0 4 295 0 . 0 0 0 0 0 100-499 0 0 0 0 0 0 2 220 1 140 0 0 0 0 4 490 0 0 0 0 0 0 to to 500 plus 0 0 0 0 0 0 0 0 0 0 0 0 0 C 0 0 0 0 0 0 0 0 Average 10.74 2.0 21.33 22.82 28.86 29.50 26.83 32.47 5. 0 11.50 0.0 townhouses must also be added to the l i s t of exceptions. The average project sizes i n Metropolitan Vancouver also tend to be greater than i n Metropolitan V i c t o r i a . I n terestingly, the average size of townhouses i n Metropolitan Vancouver i s greater than the average size low-rise while i n Metropolitan V i c t o r i a the reverse i s true. High-rises have a greater average size than e i t h e r low-rises or townhouses i n each area. Referring again to Table 4 there i s exhibited a s i g n i f i c a n t v a r i a t i o n i n the average sized project within Metropolitan Van- couver. In the Metropolitan Vancouver LRO area the average project s i z e for townhouses, low-rises, and high-rises was 29.5, 30.3, and 56.1 units per project respectively. In the Metropoli- tan New Westminster LRO area the averages increased to 49.5, 42.7, and 98.6 units per project for each group resp e c t i v e l y . In order to determine any trends i n the s i z e of projects, the average si z e of project for each year was calculated. Table 8 provides a summary for the three main types of r e s i d e n t i a l projects. The other types of projects are not reported since they reveal no apparent trend. Looking f i r s t at the townhouse type of project, the only noticeable trend i s for Metropolitan Vancouver where the trend i s towards smaller p r o j e c t s . The same trend i s not evident e i t h e r i n the non-metropolitan areas or i n Metropolitan V i c t o r i a ; however, i n each of these areas the aver- age size townhouse project i s considerably smaller than i n Metropolitan Vancouver. In the category of low-rise projects Metropolitan V i c t o r i a shows a trend towards smaller projects T a b l e 3 Average P r o j e c t S i z e by Year and L o c a t i o n (Major R e s i d e n t i a l C a t e g o r i e s ) ' " YEAR METROPOLITAN VANCOUVER METROPOLITAN VICTORIA REST OF PROVINCE 1968 T 0 L 34 H 0 T 0 L 0 H 0 T 49 L 63 H 0 1969 67 21 0 21 0 0 16 22 0 1970 64 28 19 8 38 28 10 0 0 1971 75 38 32 15 36 . 28 36 ,14 0 1972 53 38 24 26 20 48 31 0 0 1973 36 37 56 14 35 33 29 35 41 1974 39 33 77 38 37 25 25 51 20 1975 43 30 59 21 14 36 23 25 11 1976 35 34 66 12 21 26 21 27 33 1977 25 50 85 9 14 41 19 '24 0 A l l Y e ars 43 35 64 15 24 33 23 29 29 Source: Land R e g i s t r y Data. A l l averages a r e rounded t o n e a r e s t whole u n i t . T = townhouse; L = l o w r i s e ; H = h i g h r i s e ; 25. while Metropolitan Vancouver and the r e s t of the province are f a i r l y uniform over the 10 years period. The f i n a l noticeable trend i s i n the category of high-rise projects i n Metropolitan Vancouver where the trend has d e f i n i t e l y been towards larger scale projects. 2.4 Condominium Development as a Proportion of the Housing Market In section 2.3.1 the size and scope of the condominium market was discussed, however, the si g n i f i c a n c e of condominium development i s most c l e a r l y evident when i t i s r e l a t e d to other sectors of the housing market. Previous work examined t h i s r e l a t i o n s h i p on the basis of the type of tenure... " I t i s the d i s t r i b u t i o n between r e n t a l units and home ownership units rather than the t o t a l number of units started which i s of primary i n t e r - 4 est." This method of comparison i s v a l i d and i n fact necessary, however, the r e l a t i o n s h i p based on structure type should not be ignored. The marked difference between the l i f e s t y l e s congruent with townhouse and apartment l i v i n g and those of sing l e family dwelling indicates the existence of a d i f f e r e n t market which should be examined. Tables 9, 10, and 11 give the number and percentage of housing s t a r t s by tenure and structure types for B r i t i s h Columbia, Metropolitan Vancouver and V i c t o r i a respectively. The " s t a r t " date of the condominiums i s a c t u a l l y the date of r e g i s t r a t i o n which, due to the requirement that the building be constructed before r e g i s t r a t i o n , i s not s t r i c t l y comparable with other s t a r t - ing dates. The time required to r e g i s t e r i s not usually excessive and therefore these figures w i l l provide a reasonable estimate of the production each year. I t should also be noted that the number of re n t a l units w i l l be understated each year by the number of condominiums that are rented. No accurate information i s a v a i l a b l e on the extent that t h i s occurs and therefore no adjustment has been made. Rental s t a r t s are defined as the number of rowhousing and apartment st a r t s (column 2) minus the number of condominium registrations (which exclude a l l condominium duplexes and single detached units (column 4)) i n each year. Ownership s t a r t s are the number of single family detached, semi-detached, and duplex units (column 1) plus the number of condominium r e g i s t r a t i o n (column 4). Multiple family dwelling units are the number of rowhousing and apartment s t a r t s l i s t e d i n column 2. The propor- t i o n of multiple family units r e l a t i v e to the t o t a l i s calculated by adding the percentage of ren t a l r e l a t i v e to the t o t a l (column 8) and the percentage of condominiums r e l a t i v e to the t o t a l (column 9). From 1968 to 1976 the percentage of multiple family units to the t o t a l ranged from approximately 40 to 6 0% i n a l l areas. While the proportion of multiple dwelling units remained r e l a t i v e l y constant over t h i s period the proportion of r e n t a l units declined s t e a d i l y i n B r i t i s h Columbia and Metropolitan Vancouver. This was o f f - s e t by a si m i l a r though opposite increase in the percentage of condominiums. In 1976 re n t a l units only accounted for 17.5% and 13.9% of t o t a l housing s t a r t s while condominiums increased to represent 26.2% and 37.9% of the TABLE 9 HOUSING STARTS - PROVINCE OF BRITISH COLUMBIA (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) Year S ing le Family Detached, Semi- Detached, Duplex Row and A p a r t - ment ( M u l t i - p le ) T o t a l Housing S t a r t s Condo- minium (Exclud- ing Duplex and S ing le Detached T o t a l Residen- t i a l Con- dominiums Planned Rental (2)-(4) Planned Owner (l)+'(4) Rental as % of T o t a l (6)r(3) Condo- minium as % of T o t a l (5)*(3) Condo- minium as % of m u l t i p l e .(4)*(2) Condo- minium as % of owned (5) + (7) 1967 14,027 10,073 24,100 0 0 10,073 14,027 41.8 0 0 0 1968 13,613 12,583 26,196 312 312 12,271 13,925 46.8 1.2 2.5. 2.2 1969 14,411 17,409 31,820 742 742 16,667 15,153 52.4 2.3 4.3 4.9 1970 14,860 12,456 27,316 1,260 1,290 11,166 16,120 40.9 4.7 10.1 8.0 1971 18,927 15,838 34,765 2,810 2,853 12,985 21,737 37.4 8.2 17.7 13.1 1972 19,708 15,609 35,317 3,277 3,351 12,258 22,985 34.7 ' 9.5 21.0 14.6 1973 22,214 15,413 37,627 4,486 4,636 10,927 26,700 29.0 12.3 29.1 17.4 1974 19,304 12,116 31,420 5,855 6,000 6,261 25,159 19.9 19.1 48.3 23.8 1975 20,181 13,971 34,152 7,360 7,786 6,611 27,541 19.3 22.8 52.6 28.3 1976 21,970 15,757 37,727 9,138 9,918 6,619 31,108 17.5 26.2 57.9 32.0 'otals 179,215 141,225 320,440 35,240 36,888 105,838 214,455 33.0 11.5 24.9 17.2 TABLE 10 HOUSING STARTS - VANCOUVER METROPOLITAN AREA (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) Residen- Single t i a l Con- Family Row and dominium Condo- Condomin- Condo- Detached, Apart- (Exclud- T o t a l Rental minium ium as % minium Semi- ment . T o t a l ing Duplex Residen- Planned Planned as % of as % of of as % of Detached, (Mul- Housing and Single t i a l Con- Rental Owned To t a l Total M u l t i p l e 2 Owned Year Duplex t i p l e ) S t a r t s Detached) dominiums* (2)-(4) ' (D + (4) (6) + (3) (5)T(3) (4)-r(2) (5) + (7) 1967 6,328 7,568 13,896 0 0 7,568 6,328 54.4 0 0 0 1968 5,658 10,032 15,690 102 102 9,930 5,760 63.3 0.6 1.0 1.8 1969 5,165 12,525 17,690 598 598 11,927 5,763 67.4 3.4 4.8 10.4 1970 4,832 8,605 13,437 886 894 7,719 5,718 57.4 6.6 10.3 15.6 1971 5,674 9,879 15,553 1,872 1,903 8,007 7,546 51.4 12.2 18.9 25.2 1972 7,679 8,531 16,210 . 2,193 2,253* 6,338 9,872 39.0 13.8 25.7 22.8 1973 9,090 8,235 17,325 3,551 3,671* 4,684 12,641 27.0 21.2 43.1 29.0 1974 7,194 7,258 14,452 4,354 4,428 2,904 11,548 20.0 30.6 59.9 38.3 1975 7,051 6,264 13,315 4,704 5,020 1,560 11,755 11.7 37.7 75.0 42.7 1976 8,342 8,360 16,702 6,023 6,345 2,337 14,365 13.9 37.9 72.0 44.1 Total 67,013 87,275 154,270 24,283 25,214 62,974 91,296 40.8 16.3 27.8 27.6 *Includes a l l condominiums on leased land since they are a l l r e s i d e n t i a l . i I I TABLE 11 i I HOUSING STARTS - VICTORIA METROPOLITAN AREA (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) Residen- Single t i a l Con- Family Row and dominium Condo- Condomin- Condo-Detached, Apart- (Exclud- Total Rental minium ium as % minium Semi- ment Total ing Duplex Residen- Planned Planned as % of as % of o f as % of Detached, (Mul- Housing and Single t i a l Con- Rental Owned Total Total 2 Multiple Owned Year Duplex tiple) Starts Detached) dominiums (2)4(4) (l) + (4) (6)^(3) (5)4(3) (4)4(2) (5)4(7) 1967 889 575 1,464 0 0 575 889 39.3 0 . 0 0 1968 1,150 1,366 2,516 0 0 1,366 1,150 54.3 0 0 0 1969 1,287 2,457 3,744 42 42 2,415 1,329 64.5 1.1 1.7 3.1 1970 811 1,748 2,559 227 239 1,521 1,050 59.4 9.3 13.0 23.0 1971 1,034 2,068 3,102 472 476 1,596 1,506 51.4 15.3 - 22.8 31.6 1972 1,293 2,899 4,192 600 604 2,299 1,893 54.8 14.4 20.7 31.9 1973 1,473 2,540 4,013 516 542 2,024 1,989 50.4 13.5 20.3 27.2 1974 1,324 1,306 2,630 554 602 752 1,878 28.6 22.9 42.4 32.0 1975 1,573 2,407 3,980 855 893 1,552 2,428 38.9 22.4 35.5 36.7 1976 1,338 3,101 4,439 947 1,069 2,154 2,285 48.5 24.1 30.5 46.8 Totals 12,172 20,467 32,639 4,213 4,467 16,254 16,397 49.8 13.7 20.6 27.2 Sources:- Column (1) and (2) - Central Mortgage and Housing Corporation, Canadian Housing Statistics, 1976 and 1972, Ottawa. Column (4) - Table 2.2, Row 7 excluding duplex units; Column (5) - Table 2.2, Row 7 Notes;- Duplex units excluded to permit comparison of data. CMHC Data in Column 1 includes duplex units, independent of whether or not they are strata plans. Condominium duplex units excluded to permit comparison of building types. t o t a l i n the province and Metropolitan Vancouver respectively. Condominiums also represented 57.9% and 72.0% of multiple s t a r t s i n 1976 i n the two areas. I t can therefore be concluded that condominiums have been a s i g n i f i c a n t factor i n the housing market. The Metropolitan V i c t o r i a market did not follow exactly the same trend as i n the province or Metropolitan Vancouver but the conclusion regarding the si g n i f i c a n c e of t h i s sector of the hous- ing market i s unchanged. Rental units as a percentage of t o t a l housing s t a r t s declined from 1969 to 1974 then increased to 1976. Condominiums as a percentage of the t o t a l remained stable at approximately 14% from 1971 to 197 3 then increased to approximately 23% from 1974 to 1975. Condominiums as a proportion of the m u l t i p l family market peaked i n 1974 at 42.4% and has declined since then. Condominiums as a share of the ownership market have experienced f a i r l y steady growth through the en t i r e period. In 1976 condo- miniums represented 24.1% of a l l housing s t a r t s , 30.5% of multiple s t a r t s and 46.8% of s t a r t s intended for owner-occupiers. Using Tables 9, 10, and 11 s i m i l a r tabulations were construc- ted for the non-metropolitan areas of the province; these are presented i n Table 12. Condominiums are a much less s i g n i f i c a n t factor i n the housing market i n the outlying areas than i n the metropolitan l o c a l i t i e s . Condominiums as a percentage of t o t a l s t a r t s d i d not exceed 10% u n t i l 1975. Over the entir e period of 1967 to 1976 condominiums only accounted for 5.4% of a l l new housing s t a r t s i n t h i s area i n comparison to 27.6% i n metropoli- tan Vancouver and 27.2% in Metropolitan V i c t o r i a . 31. TABLE 12 Housing Starts; Non-Metropolitan Areas 1967-1976 Condominium As Year Total Starts Residential Condominiums % Total 1967 8740 0 0 1968 7990 210 2.6 1969 10386 102 0.9 1970 11320 157 1.3 1971 16110 474 2.9 1972 14915 494 3.3 1973 16289 423 2.6 1974 14338 970 6.7 1975 16857 1873 11.1 1976 16586 2504 15. 1 TOTAL 133,531 7207 5.4 32 . The success of the condominium concept i n terms of the number of units created and the s i g n i f i c a n t share of the housing market those units represent i s undeniable. There have been numerous factors that have contributed to t h i s success both i n terms of demand and supply. While i t i s beyond the scope of t h i s study to quantify the extent to which each factor i s i n f l u e n c i a l i t i s worthwhile to discuss them i n a q u a l i t a t i v e manner. F i r s t , the factors a f f e c t i n g demand. The two major factors influencing the demand for housing i n the 1960's and 1970's were the "baby boom" a f t e r World War II and the steady increases i n r e a l income (Tables 13 and 14 r e s p e c t i v e l y ) . From 1965 to 1971, the 20-24 age group increased by approximately 55,400 persons while at the same time the 65+ age group increased by 26,400 persons i n B r i t i s h Columbia. These groups greatly increased the apartment demand and resulted i n the number of multiple unit s t a r t s increasing to one-half of a l l s t a r t s i n the province from t h e i r previous l e v e l of 35% p r i o r to 1962. The 20-24 year old group had moved into the p o t e n t i a l home-ownership population by the 1971-1976 period. "Supported by steady increases i n r e a l incomes, both at the personal and household l e v e l and l i b e r a l c r e d i t conditions, the baby-boom moved into home ownership with a v e n g e a n c e . T h i s resulted i n r a p i d l y r i s i n g house pri c e s (evidenced i n the following section). By t h i s time the condo- minium concept was becoming generally accepted as a viable form of tenure and hence also experienced an increase i n demand. Some of t h i s demand was l i k e l y due to single detached p r i c e s increasing to the l e v e l that excluded many purchasers' f i n a n c i a l c a p a b i l i t i e s . ex c < t «/-ec/ TABLE 13 CHANGE IN BRITISH COLUMBIA POPULATION BY AGE GROUP CHANGE IN NUMBER OF PERSONS IN EACH AGE GROUP (in Thousands) (Relative change i n parentheses) TOTAL 0-4 5-9 10- 14 15- 19 20-24 25-29 30- 34 35- 39 40- 64 65 + 1951- 56 2 33. 3 30.9 40.7 30. 0 16. 1 6.6 9.9 15. 4 12. 2 47. 7 24.7 (20.0) (24.6) (40.7) (38. 2) (22. 9) (8.3) (9.8) (17. 0) (13. 4) (15. 3) (19.6) 1956- 61 230.4 30 31.1 42. 1 26. 2 8.8 1.5 6. 0 12. 8 57. 1 14. 8 (16.7) (19) (22.1) (38. 8) (30. 3) (10.2) (1.5) (5. 6) (12. 4) (15. 9) (9.8) 1961- 66 222. 8 2.0 31.4 31. 7 45. 8 34.6 11.8 1. 7 5. 3 67. 4 13. 0 (13.7) (1.1) (18.3) (21) (40. 7) (36.3) (11.6) (1. 5) (4. 6) (16. 2) (7.9) 1966- 71 332. 8 -13.4 9.1 39. 9 42. 7 55.4 46.2 19. 1 5. 7 79. 8 26.4 (18.0) (-7.1) (4.5) (21. 9) (27. 0) (42.7) (40.1) (16. 8) 4. 7 (16'. 5) (14.8) 1971- 76 282 -2.1 -18. 2 5. 6 36. 8 36.3 58.8 43. 9 17. 5 66. 6 37.0 (12,9) (-1.2) (-8.6) (2. 5) (18. 3) (19.6) (36.7) (33, 0) (13. 8) (11. 8) (18.0) Apart- Family Apart- ment j ment SOURCE: DAVID BAXTER, THE BRITISH COLUMBIA AND VANCOUVER HOUSING MARKETS, OP, CIT. CO CO Year Total TABLE 14 BRITISH COLUMBIA POPULATION BY AGE GROUP* (THOUSANDS) Denotes the post war baby boom AGE GROUP 0 - 4 5 - 9 10-14 15-19 20-24 25-29 30-34 35-59 40-64 65+ 1951 1165.3 100% 125. 9 10. 8 99.9 8.6 1956 1398.6 156. 8 140. 6 100% 11. 2 10. 0 78.6 6.8 108.6 7.8 70, 6, 86, 6, 3 0 4 2 79.8 6.8 86.4 6.2 91.6 7.9 100.6 7.2 90. 8 7.8 106.2 7.6 91.2 7.8 103.4 7.4 311.1 26.7 358. 8 25.7 126.1 10. 8 150. 8 10. 8 1961 1629.0 186. 8 171. 7 150 .7 112. 6 95. 2 102. 1 112.2 116. 2 415. 9 165. 6 100% 11. 5 10. 5 9 .2 6. 9 5. 8 6. 3 6.9 7. 1 25. 5 10. 2 1966 1873.7 188. 8 203. 1 182. 4 158. 4 129. 8 113. 9 113. 9 121. 5 483. 3 178. 6 100% 10. 1 10. 8 9. 7 8. 5 6. 9 6. 1 6. 1 6. 5 25. 8 9. 5 1971 2184.6 175. 4 212 .2 222. 3 201. 1 : 185. 2 160. 1 133. 0 127. 2 563. 1 205. 0 100% 8. 0 9 .7 10. 2 9. 2 8. 5 7. 3 6. 1 5. 8 25. 8 9. 4 1976 2466.6 173. 3 194. 0 227. 9 237. 9 221. 5 218.9 176. 9 144. 7 629. 7 242. 0 100% 7. 0 7. 9 9. 2 9. 6 9. 0 8.9 7. 2 5. 9 25. 5 9. 8 * Source: B.C. V i t a l S t a t i s t i c s ( V i c t o r i a : P r o v i n c i a l P r i n t e r , 1976) David Baxter, The B r i t i s h Columbia And Vancouver Housing Markets, Op. C i t , 1976 figures from 1976 Census of Canada, supplied by Data Enquiries - Regional O f f i c e 35. pagination only 36 T h i s s e c t o r turned t o condominiums t o e s t a b l i s h themselves i n the housing market and to s a t i s f y t h e i r demand f o r home ownership. Again supplementing t h i s was the over 65 age group t h a t no l o n g e r needed a s i n g l e detached house as t h e i r c h i l d r e n had e s t a b l i s h e d t h e i r own households. Hence, they were t r a d i n g down i n s i z e t o condominiums.^ The demand f o r condominiums was f u r t h e r s t i m u l a t e d by two l e g i s l a t i v e changes. F i r s t the 1971 f e d e r a l Income Tax A c t was amended t o i n c o r p o r a t e a tax on c a p i t a l g a i n s except those r e s u l t - i n g from the s a l e o f a p r i n c i p a l r e s i d e n c e , hence home ownership was an a t t r a c t i v e investment from t h i s p o i n t o f view. The second l e g i s l a t i v e change was the i n t r o d u c t i o n o f r e n t c o n t r o l s by the p r o v i n c i a l government i n 1972. The r e n t a l market was. e x p e r i e n c i n g r i s i n g r e n t s and ve r y low v a c a n c i e s a t t h i s time and these c o n t r o l s a c t e d as a d e t e r e n t t o new r e n t a l p r o d u c t i o n . The low vacancy r a t e c o n t i n u e d e f f e c t i v e l y c h a n n e l i n g those d e s i r i n g apartment accommoda- t i o n i n t o the expanding condominium market, e i t h e r as owner- o c c u p i e r s or as tenants r e n t i n g from i n v e s t o r s . The p r o v i n c i a l government f u r t h e r c o n t r i b u t e d t o the demand f o r home ownership by o f f e r i n g low i n t e r e s t r a t e second mortgages or cash g r a n t s t o f i r s t time home buyers. The f e d e r a l government a l s o o f f e r e d a s s i s t a n c e t o lower and moderate income f a m i l i e s i n - the form o f the A s s i s t e d Home Ownership Program (AHOP). As t h i s program was l i m i t e d to d w e l l i n g s o f under $47,000 (1976) i n p r i c e the m a j o r i t y o f u n i t s f i n a n c e d under t h i s program were condominiums. N i n e t y - f i v e p e r c e n t (657) of the AHOP u n i t s c o n s t r u c t e d i n M e t r o p o l i t a n Vancouver and V i c t o r i a d u r i n g 19 76 were condominiums. The supply of condominiums responded to the increased demand and the r e s u l t i n g r i s i n g p r i c e s . Further factors a f f e c t i n g production were: a) the removal of "tax shelters" on multiple unit r e n t a l buildings i n the 1970 federal Income Tax Act, b) the imposition of r e n t a l controls p r o v i n c i a l l y i n 19 72 which when combined with (a) resulted i n a s h i f t away 7 from the production of r e n t a l dwellings, c) high mortgage rates were experienced from 1974 to 1976 peaking at 12.5% which r e s t r i c t e d both the purchasing and constructing of new u n i t s , d) by mid-1975 the number of unsold and vacant condominiums 8 had peaked at an estimated:, 1700 units ->. the production had begun to o u t s t r i p the demand, e) i n 1977 a reduction i n the number of new condominiums produced was noted. This was the r e s u l t of a continuing large unsold inventory (approximately 1600 u n i t s ) . The s i t u a t i o n was further compounded by the i n i t i a t i n g of the federal Assisted Rental Program (ARP) which s h i f t e d pro- duction back to the r e n t a l sector. In 1976 there were 1,797 units constructed under t h i s program and within the f i r s t f i v e months of 1977, applications for 1,568 units had been processed. Further applications had been received for an a d d i t i o n a l 4,400 units as of August 1977. The development of condominiums as a portion of the housing market can now be described i n general terms- Condominiums were introduced just as the demand fo r home ownership was beginning to increase. This demand was stimulated by several government programs while others reduced the p r o f i t a b i l i t y ( o f the r e n t a l sector of the housing market. Unfortunately the production of condominiums continued at a high l e v e l even as much of the large "leading edge" of the baby-boom had been accommodated. Further, the migration i n t o B r i t i s h Columbia and p a r t i c u l a r l y Metropolitan Vancouver has declined from i t s previous l e v e l s and the rate of increase of r e a l incomes has also declined, both of which reduce the demand for housing. These factors have now resulted i n the present oversupply of condominium units. The extent of t h i s oversupply w i l l be discussed i n greater d e t a i l i n Section 2.6. 2.5 Condominium Sale Prices S e l l i n g prices are of great importance to purchasers, mortgagees and developers. The purchasers and mortgagees are primarily interested i n the protection and growth i n value of t h e i r investment while developers need such information for the planning and marketing of t h e i r projects. Due to the numerous factors a f f e c t i n g the p r i c e including l o c a t i o n , s i z e of u n i t s , features included, date of sale, method of financing, l e v e l of taxes and common areas charges and the common features offered, a comprehensive analysis of s e l l i n g prices i s beyond the scope of t h i s study. Instead some information w i l l be presented that w i l l provide insights into the trend of condominium p r i c e s . Two sources of data were used to reveal the l e v e l of condominium prices through time. F i r s t , the consumers question- naire that i s discussed in Chapter 4 asked the respondents to state the date of sale and the purchase price of t h e i r u n i t . This provided 2 02 random responses i n Metropolitan Vancouver and V i c t o r i a . The second data source was the Land Registry O f f i c e s ' records from which the transaction h i s t o r i e s of 895 units were c o l l e c t e d . These were again confined to Metropolitan Vancouver and V i c t o r i a . While the Land Registry O f f i c e data has proven to be accurate in the past"^ caution should be used when r e l y i n g on t h i s i n f o r - mation. As the data were c o l l e c t e d during a period of extensive condominium development there i s a large representation of i n i t i a l sales from developers much more, so than, would... generally be., the. case for housing market sales data. Seventy-four percent of pur- chases l i s t e d i n the consumers survey were from the developer. S i m i l a r l y , seventy-eight percent of the units examined i n the L.R.O. records had transacted only once since t h e i r creation and hence must have been purchased from the developer. The two condominium price series are presented i n Table 15 in conjunction with a price index of single detached dwellings i n Metropolitan Vancouver and secondly with sales information from the Multiple L i s t i n g Service, also i n Metropolitan Vancouver. Some discussion of the two non-condominium p r i c e series i s necessary before any comparisons are ca r r i e d out. The single detached price index was compiled from the Land TABLE 15 CONDOMINIUM AVERAGE SELLING PRICES METROPOLITAN VANCOUVER AND VICTORIA 1969-77 LAND REGISTRY OFFICE DATA CONDOMINIUMS ONLY AVERAGE PRICE SINGLE DETACHED PRICE INDEX CONDOMINIUM OWNERS SURVEY AVERAGE PRICE M.L.S. DATA SINGLE DETACHED AND CONDOMINIUM AVERAGE PRICE YRAR METRO VANCnnVRR METRO VICTORIA WEIGHTED AVERAGE METRO VANCOUVER METRO VICTORIA AND VANCOUVER METRO VANCOUVER 1969 18,512 (100) N/A 18,512 (100) 100 17,900 .(100) 23,939 (100) 1970 21,452 (116) N/A 21,452 (116) 104 22,900 (128) 24,239 (101) 1971 21,197 (115) N/A 21,197 (115) 106 21,233 (119) 26,471 (111) 1972 23,345 (126) 23,128 23,319 (126) 126 25,970 (145) 31,465 (131) 1973 27,8i'0 (150) 32,077 28,074 (152) 148 32,468 (181) 41,505 (173) 1974 39,237 (212) 33,376 37,887 (205) 207 40,665 (227) 57,861 (242) 1975 42,773 (231) 43,467 42,856 (232) 212 49,081 (274) 63,169 (264) 1976 44,764 (242) 51,343 46,549 (251) 245 (JULY) 49,494 (276) 68,693 (287) 1977 45,851 (248) 58,874 50,091 (271) N/A 49,937 (279) 70,500 (295) Registry O f f i c e records i n the same manner as was done for the condominiums ( L.R.O.)."1"'1' The comparability of the two i s l i m i t e d by the q u a l i t y differences i n the two products caused by the condo- miniums being mainly new units (discussed above) while the single detached units were mainly resales of e x i s t i n g units. Despite t h i s l i m i t a t i o n the single detached index provides the best com- parison i n terms of the choice offered to consumers between the two markets. The Multiple L i s t i n g Service (MLS) data contains three major problems: one, i t does not include the White Rock or Surrey areas of Metropolitan Vancouver, two, i t includes a l l sales made through MLS including condominiums, cooperative hous- ing , single detached dwellings, and revenue property (both r e s i d e n t i a l and commercial) (the majority however are.single detached or condominium u n i t s ) , f i n a l l y , i t has been shown that the percentage of the t o t a l market sales conducted through the 12 MLS varies with the conditions of the market. O v e r a l l , ... "the multiple l i s t i n g service data are not c o n s i s t e n t l y represen- t a t i v e . . . " ^ Despite these l i m i t a t i o n s the MLS data i s widely used and therefore i t has been presented. The f i r s t point to note on Table 15 i s the rapid increase i n p r i c e of condominiums i n Metropolitan Vancouver and V i c t o r i a over the 1969 to 1977 period. Combining both areas, prices increased from an average of $18,512 to $50,091 according to the L.R.O. data and from $17,900 to $49,9 37 according to the Owner's Survey data. The greatest increases took place from 1969 to 1974 and have since then moderated, p a r t i c u l a r l y i n Metropolitan Vancouver. 42 . The rate of price increases did not decline as much i n Metropoli- tan V i c t o r i a from 1974 to 1977. This coincides with proportion- ate reduction i n the share of new housing s t a r t s held by condo- miniums i n t h i s area that was noted i n Section 2.3. The average s e l l i n g p r i c e i n Metropolitan V i c t o r i a i n 1977 was considerably greater than that i n Metropolitan Vancouver ($58,814 versus $45,851). One of the more common reasons c i t e d for purchasing a condominium i s to e s t a b l i s h an equity p o s i t i o n i n the housing market that can l a t e r be used to trade up to a single family detached dwelling (See Chapter 4). The success of t h i s strategy w i l l be based on the r e l a t i v e rates of change of the condominium and single detached p r i c e s . Comparing the condominium L.R.O. data for Metropolitan Vancouver with the M.L.S. series one can see that on the average, condominium pri c e s have not increased at the same rate as the M.L.S. average, by inference single detached prices must have increased more than the M.L.S. average. Hence condominium prices have not kept pace with single detached pr i c e s . Such a conclusion i s suspect however having r e a l i z e d the li m i t a t i o n s of the M.L.S. data and the contradictory evidence presented by the single detached price index. O v e r a l l , from 1969 to 1976, single detached and condominium prices have moved in a p a r a l l e l fashion, with condominiums i n fact showing greater increases i n several years. Such a finding leads one to conclude that condominium prices have maintained t h e i r r e l a t i v e p o s i t i o n 43. i n the housing market v i s a v i s the single detached prices. A more comprehensive study would be required however, before such a statement could be made without some reservations. The sample size from both the owners' survey and the Land Registry o f f i c e s are not of a s u f f i c i e n t s i z e to permit accurate cross-tabulations by type of structure. Once the sample i s separated by type of structure, the frequency of sales i n any given year for any single type of construction becomes too small to form accurate indices. However the data are at l e a s t sugges- t i v e of some differences between the p r i c e l e v e l and p r i c e trend for d i f f e r e n t types of structures. During the period 1972 - 1977, where the frequency of sales i n the sample are the largest, one can observe a marginally higher rate of increase in. the value of townhouse units r e l a t i v e to low-rise and high-rise units. The difference i s not substantial but based on the l i m i t e d e v i - dence one can conclude that townhouse units are becoming more expensive r e l a t i v e to other types of development. This conclusion i s based on s i m i l a r evidence from the two p r i c e data samples. The two series of price data also indicate that units located i n high-rise projects had a higher value than units i n e i t h e r townhouse or low-rise units for the three years 1972 - 1974 but that townhouse units had the highest average value for the most recent three years, 1975 - 1977. In each year, 1972 - 1977, units located i n low-rise units had the lowest average value and the lowest rate of increase over the six years. In orde r t o o b t a i n a f u r t h e r i n d i c a t i o n o f the change i n condominium v a l u e s , a l l p r o p e r t i e s i n the Land R e g i s t r y o f f i c e s a l e s p r i c e data which s o l d more than once was used t o measure percentage changes i n val u e . T h i s p r o v i d e d a t o t a l of 201 r e p e a t s a l e s o f i n d i v i d u a l condominium u n i t s i n the Metro- p o l i t a n Vancouver and V i c t o r i a a r e a s . The percentage i n c r e a s e f o r these p r o p e r t i e s i s i n d i c a t e d i n Table 16. Because of the l i m i t e d number of t r a n s a c t i o n s , no breakdown c o u l d r e a s o n a b l y be undertaken f o r the two m e t r o p o l i t a n a r e a s . T a b l e 16 i s i n t e r p r e t e d as f o l l o w s : the row i n d i c a t e s the year the s t r a t a u n i t was purchased and the column g i v e s the year of r e s a l e . The f i g u r e s i n b r a c k e t s are the number o f p r o p e r t i e s i n each category w h i l e the f i g u r e s under the "%" s i g n i n d i c a t e the average r a t e o f i n c r e a s e (or decrease) f o r those p r o p e r t i e s over the p e r i o d i n q u e s t i o n . While t h e r e i s not enough data t o pr o v i d e s t a t i s t i c a l l y v a l i d r e s u l t s the t r e n d i s s u p p o r t i v e o f the o v e r a l l p r i c e t r e n d noted p r e v i o u s l y . i Those purchases made p r i o r t o 1974 enjoyed s u b s t a n t i a l i n c r e a s e s i n v a l u e upon r e s a l e . T h i s corresponds t o the r a p i d p r i c e i n c r e a s e over t h i s p e r i o d . Those u n i t s purchased i n 1974 s t i l l enjoyed some, though moderated, i n c r e a s e d p r i c e s . The same can not be s a i d f o r the purchases made i n 1975 or 1976. The i n c r e a s e s were under 4% i n a l l cases and f o r those u n i t s bought i n 1975 and s o l d i n 1977 there was a 1% l o s s i n v a l u e . E i g h t e e n p e r c e n t o f the r e s a l e t r a n s a c t i o n s s i n c e 1974 o c c u r r e d a t a l o s s i n v a l u e and 80% of a l l t r a n s a c t i o n s t h a t i n v o l v e d a l o s s i n c a p i t a l v a l u e o c c u r r e d d u r i n g t h i s p e r i o d . T h i s a g a i n T A B L E 16 4 5 . PERCENTAGE I N C R E A S E I N RESALE P R I C E S METROPOLITAN VANCOUVER AND METROPOLITAN V I C T O R I A Y e a r o f P u r c h a s e 1973 Y e a r o f R e s a l e 1974 1975 1976 1977 1968 % 32 (1) %_ %_ 1969 112 .(1) 159 (1) 163 (1) 1970 12 (2) 118 (2) 132 (1) 1971 30 (6) 67 (6) 91 ( 3 > 115 (3) 1972 8 (3) 51 (6) 87 (7) 85 (6) 186 (1) 1973 37 (19) 39 (16) 58 (12) 74 CD 1974 16 (43) 16 (24) 27 (2) 1975 3 (31) -1 CG) 1976 2 (7) : I n c l u d e s a l l p r o p e r t i e s s o l d more t h a n o n c e i n t h e r a n d o m s e l e c t i o n o f 895 c o n d o m i n i u m u n i t s i n t h e L a n d R e g i s t r y o f f i c e s f o r V i c t o r i a , V a n c o u v e r a n d New W e s t m i n s t e r . F i g u r e s i n b r a c k e t s i n d i c a t e number o f s a l e s i n c l u d e d i n t h e s e a v e r a g e r a t e s o f i n c r e a s e . r e f l e c t s the reduced rate of price appreciation that has occurred i n the l a s t few years. It i s also r e f l e c t i v e of the current large e x i s t i n g vacant stock of condominiums that w i l l be discussed i n the next section. 2.6 Current Situation The current market s i t u a t i o n for condominiums i s very poor. This i s evidenced by numerous factors, many of which have already been mentioned: a) for the f i r s t time since the introduction of the concept, the production of condominiums w i l l decline i n absolute terms i n 1977, b) the rate of price increase has reduced s u b s t a n t i a l l y from the pre-1974 l e v e l and some units are being traded at a loss i n c a p i t a l value, c) CMHC has estimated there are 1638 newly completed and unoccupied condominiums i n Metropolitan Vancouver and a further 311 units i n Metropolitan V i c t o r i a as of June, 1977, t h i s includes only the units that have been on the market for six months or less. Further, the number of newly completed and unoccupied units i n Metropolitan Vancouver have been approximately 1600 since mid-1975, d) the area of c l a s s i f i e d newspaper advertising for new condominium projects i n the Vancouver Sun newspaper as of A p r i l , 1977 i s double that of A p r i l , 1975, i t now comprises 9h patjfes, 47. e) an undetermined number of condominium units are being rented and the evidence would indicate i t i s subs t a n t i a l . 14.4% of the occupants surveyed (Chapter 4) were tenants. The developers' survey (Chapter 5) revealed that 1544 units or 23% of the respondent firms production of the previous 2h years was being rented. (as of July, 1977) (A further 30% of the developer's production was vacant and unsold.) f i n a l l y f) two of the top f i v e firms, i n terms of production of units, i n the province have indicated they are leaving the condominium development business. These depressing s t a t i s t i c s should not be taken as i n d i c a - tions of an upcoming demise of the condominium market. Rather the condominium market i s experiencing a low l e v e l of a c t i v i t y as are other sectors of the housing market but i t i s further complicated by a large e x i s t i n g stock. Once the large inventory i s reduced the condominium market should behave as the other sectors of the market. 48. Footnotes 1. Rosenberg, A l v i n B., Condominiums i n Canada, Canada Law Book Ltd., Toronto, 1969, P. 1-6. 2. Condominium Research Associates, National Survey of Condominium Lenders, Central Mortgage and Housing Corporation, Toronto, 1970, P. 47. 3. Rosenberg, P.G. 4. Roberts, R.A., "Condominium Housing i n Metropolitan Vancouver", M.Sc. Thesis, University of B r i t i s h Columbia, 1973, P. 19-25. 5. Baxter, David, "The B r i t i s h Columbia and Vancouver Housing Markets: Short Run R e a l i t i e s and Long Run Trends," a paper presented at The Economic Outlook for the Real Estate Industry i n B r i t i s h Columbia forum, presented by Executive Programmes, Faculty of Commerce and Business Administration, University of B r i t i s h Columbia, Vancouver, December 14, 1977, P. 13. 6. Ibid, PP. 12-14. 7. Goldberg, M.A. and Ulinder, D.D., "Residential Developer Behaviour: 1975", Housing: It's Your Move, Volume I I , Technical Reports, The Urban Land Economic D i v i s i o n , Faculty of Commerce and Business Administration, University of B r i t i s h Columbia, 1976, P. 295. 8. Central Mortgaae and Housing Corporation 9. Baxter, op. c i t . , P. 14. 10. Hamilton, Stanley W., "House Price Indices: Theory and Pra c t i c e " , Housing: I t ' s Your Move, Volume I I , Technical Reports, The Urban Land Economics D i v i s i o n , Faculty of Commerce and Business Administration, University of B r i t i s h Columbia, 1976. 11. Subocz, Irene, "House Price Indices", M.Sc. Thesis, University of B r i t i s h Columbia, 1976. 12. Hamilton, "House Price Indices: Theory and Pr a c t i c e " , P. 415. 13. Ibid. CHAPTER 3 BRITISH COLUMBIA STRATA TITLES ACT 3 . 1 Introduction The B r i t i s h Columbia Strata T i t l e s A c t 1 has been i n e f f e c t f or eleven years yet there i s s t i l l some confusion regarding the con- cept involved. It i s therefore necessary to provide a discussion of the Act and i t s terminology before examining the empirical data which comprises the bulk of t h i s study. The following w i l l o utline the basic terminology of the Act and the right s and r e s p o n s i b i l i t i e s of those involved i n the strata t i t l e projects. This i s not meant to be a detailed examination of the Act and a l l i t s implications but rather a general overview to provide the reader with a basic understanding of the l e g i s l a t i o n . 3.2 General Concept The strata t i t l e or condominium (as i t i s more commonly known) concept i s a form of ownership i n r e a l property. I t consists of the combination of a fee simple ownership of i n d i v i d u a l areas with- i n the larger area with the remaining portion owned by a l l the in d i v i d u a l owners as tenants i n common. The Strata T i t l e s Act pro- vides the leg a l foundation for t h i s arrangement plus a means of e f f e c t i v e l y managing and operating the project. 50. One of the most common mistakes i s believing that a condomin- ium ref e r s only to a s p e c i f i c type of structure or use (e.g., r e s i - d e n t i a l townhouse). This i s not the case as the Act allows f o r any sty l e of building or simply bare-land to be used as a condominium. Further, the type of use i s unrestricted and may be applied to such types as r e s i d e n t i a l , commercial, r e t a i l , i n d u s t r i a l , r e c r e a t i o n a l , or a mixture of uses. While the Strata T i t l e s Act provides f o r a v i r t u a l l y unlimited array of project s t y l e s , they remain under l o c a l regulation (e.g., zoning) as to how and where they are imple- mented . The areas that are owned i n fee simple are termed "strata l o t s " or "strata u n i t s " . They are issued i n d i v i d u a l c e r t i f i c a t e s of t i t l e which enables them to be mortgaged, charged, conveyed or dealt with i n the same manner as any fee simple i n t e r e s t . (There are some exceptions to t h i s which w i l l be dealt with l a t e r . ) The Act also provides for the units to be assessed and taxed i n an i n d i v i d u a l manner-^. Herein l i e s the basic difference between a cooperative form of ownership and a condominium. A l l the property i n a co- operative i s under a single t i t l e with the residents purchasing a ri g h t to occupy a unit. Each unit cannot therefore be dealt with i n d i v i d u a l l y as i t does not have a separate t i t l e . Any area that i s not s p e c i f i c a l l y included i n a strata l o t i s owned by a l l the unit owners as tenants i n common and i s termed the common property, common areas, or common f a c i l i t i e s ^ - The common property i s governed by the strata corporation which i s made up of a l l the strata l o t owners. It i s "responsible for the enforcement 51. of the by-laws, and the control, management, and administration of the common property, common f a c i l i t i e s , and the assets of the 5 strata corporation." The common property may be mortgaged, con- veyed or otherwise dealt with separately from the in d i v i d u a l units under the d i r e c t i o n of the corporation. 3.3 De f i n i t i o n s Before proceeding further, some b r i e f d e f i n i t i o n s w i l l be supplied which w i l l f a c i l i t a t e the discussion of the Act l a t e r . (1) Bare-land Strata Plan: means a str a t a plan on which the boundaries of the strata l o t s are defined by reference to survey markers; no b u i l d - ing or structure i s supplied. (2) Support Strature Strata Plan: means a str a t a plan i n which the owner-developer intends to pro- vide only support structures, upon which improve- ments may be constructed. These may be i n the form of concrete slabs or wood planks.set i n the ground. (3) Phased Strata Plan: means a strata plan which i s intended to be developed i n successive stages. See Part II of the Strata T i t l e s Act. (4) Leasehold Strata Plan: means a st r a t a plan i n which the land contained therein i s leased from the Crown, Federal Crown, or a municipality, regional d i s t r i c t or other public authority f o r a term of at least 50 years. Upon the deposit of a leasehold strata plan the registered ground lease i s converted to i n d i v i d u a l ground leases applicable to each unit . See Part III of the Strata T i t l e s Act. (5) Unit Entitlement: means that figure which i s stipulated i n the strata plan for each unit and i s generally based on the r e l a t i v e square footage of the unit to the t o t a l square footage of a l l s t r a t a l o t s i n the strata plan. The re l a t i o n s h i p of the lo t ' s unit entitlement to the t o t a l unit e n t i t l e - ment give the l o t ' s share of the common expenses, shares of the common property and assets of the s t r a t a corporation, and share of any debt or l i a b i l i t y of the str a t a corporation. (6) Common expenses: means those expenses which apply to the operation and management of the common areas, common f a c i l i t i e s and common assets of the strata corporation. (7) Contingency Reserve Fund: means a fund for the non-annual expenditures of the str a t a corpora- t i o n for r e p a i r , maintenance, and replacement of the common property, common f a c i l i t i e s , and other assets of the str a t a corporation. It i s c o l l e c t e d from the owners on the basis of the str a t a l o t ' s unit entitlement. 3.4 Creation of a Strata Plan A condominium or st r a t a project i s created by the f i l i n g of a strata plan i n the Land Registry O f f i c e ^ . Before the plan w i l l be accepted by the Registrar, c e r t a i n conditions s t i p u l a t e d i n the Strata T i t l e s Act must be met. These conditions provide the basis for i d e n t i f y i n g the project, the units, the voting r i g h t s of each unit, and the proportionate share of expenses r e l a t i n g to the common property for each unit. The requirements for f i l i n g a strata plan are contained i n Sections 2 and 3 of the Act and are as follows. Subsection 2 (2) states that the land included i n the str a t a plan must be a single parcel or i f there are several parcels, they must be part of a strata plan. T i t l e to the land must be registered i n the name of the owner-developer except for a leasehold s t r a t a plan where the owner-developer must be the registered lessee. The major requirements under Section 3 s t i p u l a t e the following must be included in the plan:- (a) the plan must delineate the plane boundaries of the land included i n the strata plan and the location of the building i n r e l a t i o n thereto, (b) include a drawing i l l u s t r a t i n g the str a t a l o t s and disti n g u i s h i n g the strata l o t s by numbers or l e t t e r s i n consecutive order, (c) subject to Subsections 3 (3) and 3 (4), define the boundaries of each s t r a t a l o t , (d) have endorsed upon i t a schedule specifying the unit entitlement of each s t r a t a l o t , and (e) have endorsed upon i t a schedule... specifying ... the share of each owner as a tenant i n common of the property and assets of the strata corporation upon the destruction of the buildings...calculated i n the proportion that the value of each s t r a t a l o t bears to the t o t a l value of a l l strata l o t s i n that strata plan. The d e f i n i t i o n of the boundaries referred to i n (c) (above) are the centre of the f l o o r , wall, or c e i l i n g of the unit or "where the owner-developer intends to provide only support structures, on a horizontal plane by reference to the support structure, and for th i s purpose, unless otherwise defined i n the str a t a plan, the boundaries s h a l l be deemed to extend v e r t i c a l l y upwards and down- 7 wards without l i m i t " . Areas such as balconies, private yard areas, storage spaces, garages and the l i k e may be included as part of a strata unit or part of the common property but they cannot form separate s t r a t a l o t s unless they are related to non-residential use. The boundaries of these parts may be defined i n the same manner as the strata units or " . . . i n any manner approved by the Re g i s t r a r . " 0 In addition to the requirements of the plan i t s e l f , further approvals are necessary which w i l l vary with the type of develop- ments . 54. (a) New Building: a land surveyor must c e r t i f y the building i s a new development that has not been previously occupied. (b) Conversion of an E x i s t i n g Building to a Strata Project: approval by an approving authority i s required. This was included to provide a means of c o n t r o l l i n g the conversion of r e n t a l b u i l d - ings during a period of very low r e n t a l vacancies. The authority i s allowed great d i s c r e t i o n i n approving or r e j e c t i n g the conversion but i s charged with cer t a i n duties:- (i) that the building "substantially comply with the applicable by-laws of the municipality ..." (Subsection 5 (2)) or the National Building Code i f the project i s located outside a municipality, ( i i ) the approving authority s h a l l consider (a) the p r i o r i t y of rental accommodation over p r i v a t e l y owned housing i n the area, (b) the proposals of the owner-developer for the relocation of persons occupy- ing the buildings, (c) the l i f e expectancy of the b u i l d i n g . ( i i i ) the approving authority may consider any other matters which i n i t s opinion are relevant. These provisions have resulted i n the elimin- ation of conversion i n some m u n i c i p a l i t i e s and the severe curtailment i n others. (c) Phase Strata Plan: i n f i l i n g a phased s t r a t a plan, the owner-developer must f i l e a "Declaration of Intention to Create a Strata Plan by Phased Devel- opment" (Fourth Schedule, Form E). The declaration must specify the number and the d e t a i l s of each phase, an estimated schedule of development, the unit e n t i t l e - ment of each phase and the t o t a l unit entitlement of the completed development. The approving o f f i c e r must approve each phase separately and ensure that they each comply with the d e t a i l s of Form E. (d) Support Structures: p r i o r to the Strata T i t l e s Amend- ment Act, 1977 ( B i l l 75), s t r a t a projects supplying only support structures did not require approval. This allowed owner-developers to avoid municipal or regional subdivision by-laws by creating a strata t i t l e "subdivision." The amendments require the approval of such plans and i s r e t r o - active to June 24, 1977. (e) Bare-land Strata Plan: the amendments provide for the s t r a t a f i c a t i o n of raw-land which had previously : been accomplished under the guise of support struc- tures - only wood planks or small concrete slabs would be provided with the majority of the l o t un- developed. Bare-land s t r a t a plans w i l l also require the approval of the approving authority before f i l i n g i n the Land Registry O f f i c e . 3.5 Owner-Developer The features of the Act r e l a t i n g to the owner-developer are not lim i t e d to those required for the f i l i n g of the plan. They must also f i l e a prospectus, develop an i n i t i a l operating budget f o r the project, and face very special requirements when creating a phased development. These aspects w i l l be discussed in t h i s section. Where the strata project i s a new development or a conversion being offered for sale for the f i r s t time and f i v e or more units have been created, a prospectus must be f i l e d under the Real Estate Act^- A copy of the prospectus must be provided to each purchaser and s h a l l include, among others, the following f a c t s : - (a) name, address, and past dealings of the promoter, (b) a general description of the subdivision, (c) a l l encumbrances of the t i t l e ( s ) , (d) p a r t i c u l a r s of the developer's warranties or financing, i f any, (e) a proposed operating budget, Cf) a summary of the condominium management contract, and (g) the proposed by-laws. The prospectus i s s i m i l a r to that required for a normal sub- d i v i s i o n and should not be a s i g n i f i c a n t obstacle to development. It w i l l also serve to inform the purchasers of the project and the rules which w i l l govern t h e i r behaviour should they decide to pur- chase. This can only increase the general l e v e l of s a t i s f a c t i o n they w i l l experience i n the future. (See the r e s u l t s of the Owners' Survey - S a t i s f a c t i o n , Chapter 4 . ) A f t e r the construction of the project i s completed and the units are ready for sale, the owner-developer manages and operates the common areas i n place of the strata c o u n c i l . Under the present Act he i s required to r e l i n q u i s h these duties to the interim s t r a t a council which i s elected at the general meeting of the purchasers. The meeting must be c a l l e d within three months of the f i r s t convey- ance of a l o t . After 85% of the l o t s are sold, or a f t e r twelve months from the date of r e g i s t r a t i o n of the plan, the interim coun- c i l i s replaced by an elected permanent c o u n c i l . The new amend- ments streamline t h i s procedure by eliminating the d i s t i n c t i o n be- tween interim and permanent councils and requiring the f i r s t general meeting of the owners to be held once 60% of the l o t s have been con- veyed or a f t e r nine months from the date of r e g i s t r a t i o n of the plan 1 0 . The Act also requires the developer to prepare an operating budget for the project for a nine-month period and to revise i t every three months. If the actual expenses, u n t i l the strata council assumes the management duties, exceed those estimated i n the budget, the developer i s responsible for any excess. If the estimated expenses exceed the actual, a l l the owners, including the owner-developer, receive a rebate i n proportion to t h e i r unit entitlement and t h e i r period of tenure. Naturally the developer i s responsible for the common expenses att r i b u t e d to any unsold units. The development of a phased st r a t a plan places extra require- ments on the owner-developer. They are intended to protect the purchasers of the i n i t i a l stages, however, they also reduce much of the f l e x i b i l i t y of a phased development. Previously the requirement of f i l i n g a Form E of the Fourth Schedule i n creating a phased plan was noted. If the owner-devel- oper does not wish to proceed with phases subsequent to the f i r s t one according to the timetable outlined i n the Form E, he may apply to the approving o f f i c e r for an extension. This may be granted at the o f f i c e r ' s d i s c r e t i o n for up to one year. I f the owner-devel- oper el e c t s not to go ahead with the subsequent phases, the st r a t a corporation created i n the i n i t i a l stages may apply to the Court for an order to ensure the proposed common f a c i l i t i e s not yet con- structed w i l l be p r o v i d e d 1 1 . The strata corporation may also apply 12 for the following stages to be completed i n a "reasonable time" 58. or that the developer e l e c t not to proceed. To ensure the common f a c i l i t i e s can be provided by the owner-developer he i s required to post a bond, l e t t e r of c r e d i t , or other security to cover the cost of the common f a c i l i t i e s . The security i s held by the municipality or regional d i s t r i c t (whichever applicable) and may be released only a f t e r the f a c i l i t y i s completed or the str a t a corporation grants i t s release. The owner-developer i s further responsible for the common expenses applicable to the common f a c i l i t i e s developed i n the i n i t i a l stages i n proportion to the unit entitlement of the phases not yet b u i l t . The amendments also requires that where the common f a c i l i t i e s are provided i n the i n i t i a l stages and the owner-devel- oper e l e c t s not to proceed with the subsequent phases, "he s h a l l contribute to the common expenses i n proportion to the unit entitlement of the strata l o t s of the phases that are not b u i l t , " 1 3 . Presumably, though not e x p l i c i t l y stated, t h i s w i l l be for the l i f e of the project. 3.6 Strata Corporation (Operation Management) The strata corporation i s established on the deposit of the strata plan and i s comprised of a l l the owners of the strata l o t s . It i s not regulated under the Companies Act but does have perpetual succession, may sue and be sued, and may sue on the behalf of an 14 i n d i v i d u a l l o t owner even when i t i s not involved i n the action The corporation i s charged with two basic duties:- 59. (1) the con t r o l , management and administration of the common property, and (2) the enforcement of the by-laws. Each of these functional areas w i l l be discussed i n turn but i t should f i r s t be pointed out that the d a i l y business of the corpora- t i o n i s conducted by the strata c o u n c i l . The s t r a t a council i s elected from the purchasers of the s t r a t a l o t s ; t h i s excludes by d e f i n i t i o n , the owner-developer from being elected to the body. The council may see to the "exercise and per- 15 formance of the powers and the duties of the s t r a t a corporation" but i t i s not empowered to act where the by-laws or Act requires the consent of the corporation by a vote. For example, only the corporation i s e n t i t l e d to amend the by-laws of the corporation. In respect to the management of the common areas, the strata corporation i s required to:- (1) maintain insurance on the buildings, common f a c i l i t i e s and any insurable improvements owned by the st r a t a corporation to the f u l l replace- ment value (Subsection 19 (a)), (2) properly maintain the common property (Subsection 19 (d)), (3) e s t a b l i s h a fund for administrative expenses (Subsection 20 (a)), (4) e s t a b l i s h a contingency reserve fund (Subsection 20 (b)), and (5) r a i s e the amounts necessary for (3) and (4) by levying contributions on the owners i n proportion to t h e i r unit entitlement (Subsection 20 (d)) . Further, the strata corporation may acquire, t r a n s f e r , charge, or 60. grant easements or r e s t r i c t i v e covenants on the common property and amend the by-laws, rules and regulations by a spe c i a l resolution of the owners . The strata corporation i s also e n t i t l e d to enter into contracts " . . . a f f e c t i n g the security and.maintenance of the common property II 17 •«• . This allows them the option of managing the project them- selves or h i r i n g a professional management company. I f a management company i s employed i t usually i s responsible for the d a i l y functions such as bookkeeping, supervision of maintenance, and the handling of any complaints or disputes. The f i n a l c o n t r o l , however, remains with the council or corporation regarding the enforcement of the by-laws and the setting of p o l i c i e s . The blame for any i n e f f i c i e n t management must, therefore, be shared by the professional firm and the corporation. The contracts entered into between the management company and the s t r a t a corporation may be cancelled by either party on three months' notice without incurring any l i a b i l i t y for breach of con- 18 t r a c t . This clause was o r i g i n a l l y intended to allow the corpora- t i o n out of "sweetheart" contracts made between the developer and the management company but i t i s also used to get r i d of management companies that prove to be unsatisfactory. Interestingly, several management companies revealed they have also used t h i s section to break contracts with strata corporations which they found to be incompatible with t h e i r management s t y l e . One aspect regarding condominium management firms which has caused some comment i s the lack of regulation over t h e i r e s t a b l i s h - ment or behaviour. Presently there i s no control under eith e r the Strata T i t l e s Act or the Real Estate Act over the q u a l i f i c a t i o n s needed to e s t a b l i s h such a firm or the handling of the considerable amount of funds represented by the budgets of t h e i r c l i e n t s . This could be the source of considerable abuse which should be corrected by the appropriate l e g i s l a t i o n . The by-laws of the s t r a t a corporation are established for "... the c o n t r o l , management, administration, use, and enjoyment of the 19 s t r a t a l o t s and common property..." . The s t r a t a corporation i s charged with the duty of enforcing the by-laws, rules and regula- tions by any means necessary, including the removing of p r i v i l e g e s i n the use of c e r t a i n f a c i l i t i e s or the f i x i n g and c o l l e c t i n g of 20 fines . Generally, the council acting on the behalf of the cor- poration, provides the offending owner a chance to correct the pro- blem and only i f the problem reoccurs are fines imposed. Removing the use of c e r t a i n f a c i l i t i e s i s usually too d i f f i c u l t to p o l i c e and i s therefore not often used. Where an owner defaults i n the payment of his share of the common expenses the s t r a t a corporation has two options under Section 21. F i r s t l y , upon a resolution passed by a majority and a f t e r seven days' notice to the owner, the strata corporation may auth- orize the termination of the u t i l i t y services to the defaulting owner. Such action has been seldom used and w i l l be removed i n the new amendments. The second method i s more commonly used and more e f f e c t i v e . On default of payment of the common expense charges or of fines l e v i e d , the corporation may f i l e a c e r t i f i c a t e i n Form B of the Fourth Schedule which i s a l i e n against the t i t l e of the s t r a t a l o t . The l i e n can be the amount unpaid plus "...the land r e g i s t r y fee and 21 the l e g a l and administrative costs of f i l i n g the c e r t i f i c a t e s " and i t s h a l l have p r i o r i t y to every other l i e n except those i n favour 22 of the Crown (except mortgages i n favour of the Crown ) and those created under the Mechanics Lien Act (Subsection 21 (3)). The point that makes t h i s a t r u l y e f f e c t i v e enforcement method i s that the l i e n i s enforceable by a Court ordered sale of the s t r a t a l o t a f t e r one month's notice to the owner. The s t r a t a corporation i s v i r t u a l l y guaranteed that they w i l l receive t h e i r money i f they act under t h i s section. I f the number of delinquencies are s i g n i f i c a n t , however, the inherent time lags i n the process may cause some cash flow problems. The corporation must, therefore, act expediently i n the performance of t h e i r duties to ensure the s i t u a t i o n does not become chronic. S i m i l a r l y , the enforcement of the by-laws, rules and regulations must be c a r r i e d out e f f i c i e n t l y but tempered with the knowledge that overly s t r i n - gent regulations w i l l cause as much d i s s a t i s f a c t i o n as too lax enforcement. The power of the strata corporation i s not l i m i t e d to the matters involving the common areas and property but also to within the strata l o t s themselves as w i l l be seen i n the discussion of the owner-purchaser. 3.7 Owner-Purchaser The duties of the owners are contained i n the by-laws and include:- (1) a duty to maintain the str a t a l o t , (2) receive the written permission of the str a t a council before undertaking any a l t e r a t i o n to his s t r a t a l o t , (3) he s h a l l not make undue noise i n or about any str a t a l o t or common property, (4) keep any animals on his st r a t a l o t or the common property a f t e r notice on that behalf from the counc i l , (5) i f he wishes to rent h i s strata l o t for more than one month, he s h a l l submit a Form D of the Fourth Schedule n o t i f y i n g the strata corporation of h is intent, and (6) comply s t r i c t l y with these by-laws, including the payment of the common area charges and con- tingency reserve fund levy. The owner i s subject to a considerable amount of regulation, however, in doing so, a reasonable l i f e s t y l e i s ensured for the majority. The owner also has the r i g h t that the strata corporation perform i t s duties and obligations which i s enforceable by a Court ordered man- . . 23 datory injunction . The amendments w i l l also provide protection to the owner i n cases of oppressive acts by the strata corporation, c o u n c i l , or class of owners on one or more owners including himself. 24 In such an instance, the matter may be referred to a r b i t r a t i o n or to the Court with a view to preventing or remedying the matter. The owner w i l l be further protected by the amendments i n instances where, subsequent to the conveyancing from the owner- developer, a charge i s f i l e d against the strata l o t under the Mechanics Lien Act. The new Section 41 A w i l l provide for a 15% holdback of the f u l l purchase price for 31 days. Payment into court of t h i s holdback discharges a l l l i e n s (even i f the amount of the l i e n s exceed the amount of the holdback) against the l o t and i t s share of the common property. Further, no Mechanics Liens can be f i l e d l a t e r than 31 days a f t e r the conveyancing date to the pur- chaser. This section provides ample protection to the purchaser but may cause the subcontractors and suppliers to be more s t r i c t on t h e i r extension of c r e d i t , p a r t i c u l a r l y to small developers. Section 18 i s concerned with the r e s t r i c t i o n s on the dealings with the strata l o t . Subsection 18 (1) states:- "No by-law...operates to p r o h i b i t or r e s t r i c t a de- valuation of a s t r a t a l o t or any transfer, lease, mortgage, or other dealing with a strata l o t or to destroy or modify an easement implied or created by t h i s Act." While t h i s section protects the r i g h t of an owner i n the a l i e n a t i o n of the l o t , i t does not eliminate the power of the corporation to r e s t r i c t the use of the l o t The most contentious issue over t h i s point i s the development and continuation of "adult only" projects. On the one hand a by- law r e s t r i c t i n g children from inhabiting the units can be viewed as a r e s t r i c t i o n of usage. From the vendor's viewpoint, however, i t i s a r e s t r i c t i o n on his r i g h t to s e l l to whomever he wishes, i n c l u d - 65. ing families with children. The Human Rights Code does not i n t e r - cede as i t "...permits, t a c i t l y , discrimination i n the purchase (and l e t t i n g ) of property on the basis of age." Arguments can be advanced for both sides but as yet the issue does not seem to be resolved. C l a r i f i c a t i o n of the Act i s therefore recommended. The major exception to Subsection 18 (1) i s that a by-law may be enacted by a corporation that i s wholly or p a r t i a l l y r e s i d e n t i a l 27 that r e s t r i c t s the number of strata l o t s which may be leased This clause was included because many owners f e l t that tenants did not t r e a t the common areas properly, have the proper respect for other residents' r i g h t s , or the owner-landlords would not be w i l l i n g to maintain the common areas i n the same manner as i f they were r e s i - dents. This protection may or may not be j u s t i f i e d but i t can create hardships where the market i s "soft" and the developer or an owner i s unable to s e l l his u n i t ( s ) . The present l e g i s l a t i o n allows the strata council to make an exception or the strata corporation may amend the by-law to allow an additional number of units to be leased i n such a s i t u a t i o n . S i g n i f i c a n t changes to Section 18 are contained i n the amend- ments. A new section, Section 18 A, i s proposed which attempts to allow the strata corporation to continue to control the number of units to be rented but also allows the owner-developer to s t i p u l a t e a number of l o t s that may be leased for a s p e c i f i e d period irregard- less of the by-laws. The intention of t h i s amendment i s to protect the developer i n instances where the units are not being r e a d i l y 66. absorbed into the market; however, i t i s l i k e l y to cause a good deal of confusion and may not protect the developer or the owners. The d e t a i l s of the new section (Section 18 A) are as follows:- (1) the by-laws of the strata corporation may r e s t r i c t the number of r e s i d e n t i a l strata l o t s leased by the owners (as before), (2) an owner-developer must disclose the number of st r a t a l o t s he has leased or intends to lease and the dura- t i o n of the leases to every purchaser or prospective purchaser i n a "rental disclosure statement," (3) where a ren t a l disclosure statement i s f i l e d , the strata corporation cannot r e s t r i c t the conditions therein, even i f the l o t s are l a t e r sold to another, (4) modification of the re n t a l disclosure statement requires 75% approval of the owners, excluding the owner-developer and owners who are leasing ( i . e . , 75% of the owner-occupiers), (5) i f the owner-developer i s su f f e r i n g "undue hardship" because he i s r e s t r i c t e d by a by-law from leasing and he cannot get approval of an amendment of the . rental disclosure statement by the owner-occupiers, he may appeal to the strata council for permission to lease the l o t or l o t s and the council s h a l l not "unreasonably refuse", (6) the council, i f i t so decides, may permit the leasing of one or more strata l o t s i n contravention with the by-laws or may a l t e r the re n t a l disclosure statement without the owners' consent, (7) f a i l u r e of the owner-developer to meet the require- ments of t h i s section i s an offense and any agreement 1 to purchase between the owner-developer or owner and purchaser or tenant i s unenforceable. The greatest shortcoming of t h i s section i s the lack of d e f i n i - t i o n of "undue hardship" and "unreasonably refuse". Such ambiguity increases the uncertainty in the purchase and developments of condo- miniums and w i l l l i k e l y be the source of s i g n i f i c a n t l e g a l d i s - agreements. The developer i s faced with a further dilemma i n specifying the number of l o t s to be leased and the duration of the leases. If he s t i p u l a t e s too few a number, he may end up with units he can neither s e l l nor rent. Also, he w i l l alienate those purchasers looking for an investment or are unsure of t h e i r future plans and want the a b i l i t y to rent the unit i f necessary. Conversely, i f he selects too large a number of units or too lengthy a duration he may alienate those looking for a project that contains s t r i c t l y owner-occupiers. This may r e s u l t i n f r a c t i o n a l i z i n g the market into an owner-occupier segment and an investor oriented segment. Much of the outcome w i l l depend on eventual d e f i n i t i o n of "undue hard- ship" and "unreasonably refuse". The Strata T i t l e s Act provides guidelines on the purchase price and renewal rent on the expiry of the ground lease pertaining to a leasehold strata plan. Each s t r a t a l o t may or may not have i t s lease renewed; i f i t i s not renewed the lease i s subject to the r i g h t to purchase by the lessor (under the new amendments the lessor must purchase the l o t ) . The purchase p r i c e i s to be s t i p u l a t e d as:- (a) "the price calculated on the basis set out i n a schedule f i l e d with the leasehold s t r a t a plan; or (b) i f clause (a) does not apply, i t s f a i r market value, and, for the purpose of assessing i t s f a i r market value, the i n t e r e s t i n the s t r a t a l o t s h a l l be evaluated as i f the lease d i d not terminate..." . 68. In other words, i f clause (b) applies, the lessor must pay the f a i r market value of the strata l o t as i f i t were a fee simple i n t e r e s t . This i s despite the fact that without such l e g i s l a t i o n the owner would have no l e g a l i n t e r e s t i n the s t r a t a l o t on expiry of the lease. The amendments provide a basis to c a l c u l a t e the rent under a renewed lease which did not e x i s t previously. The lease s h a l l be on. the same terms and conditions as the o r i g i n a l lease and the rent s h a l l be determined by agreement between the lessor and lessee by the date of commencement of the renewal period. F a i l i n g t h i s , i t s h a l l be determined by a r b i t r a t i o n and i s s t i p u l a t e d as:- "...(the rent) s h a l l be the share of the current market r e n t a l value of the land included i n the s t r a t a plan, excluding a l l buildings and improvements, apportioned to the strata l o t i n accordance with the schedule f i l e d under section 3 (1) (g)." (The s t r a t a l o t ' s share on destruction.) The lessee w i l l only be required to pay a maximum rent i n accordance with the land value i f the lease i s renewed. The lessor, however, must pay for the land which i t already owns plus a l l the improvements i f the lease i s not renewed. The balance i s therefore greatly i n favour of the lessee. FOOTNOTES Statutes of B r i t i s h Columbia, 1966, Chapter 46, Now S.B.C. 1974, C. 89. Section 2. Section 33. Section 1. Section 9 (4). Section 2 ( 1 ) . Sections 3 (3) and 4 (b) . Section 4 (c). Statutes of B r i t i s h Columbia, 1974, Chapter 77, Real Estate Amendment Act, Section 51 (6). Strata T i t l e s Amendment Act, 1977, B i l l 75, F i r s t Schedule, Section 22. Section 43 (5). Section 43 (8). Section 45 (5) (d). Section 9 (5) . F i r s t Schedule, Section 18 (b). S e c t i o n s 12, 13, 14, and 17. S e c t i o n 10. S e c t i o n 10. S e c t i o n 17 . S e c t i o n 3 ( i) and F i r s t Schedule, S e c t i o n 19 (2) (d). S e c t i o n 21 (6). S t r a t a T i t l e s /Amendment A c t , 1977 , B i l l 75, Clause 18. S e c t i o n 23. S e c t i o n 24. The S t r a t a T i t l e s A c t , P a v l i c h , D-J.., U n i v e r s i t y of B r i t i s h Columbia, Unpublished, p. 40. I b i d . , p. 40. S e c t i o n 18 (2). 71. CHAPTER 4 OWNERS' AND TENANTS' PROFILE 4.1 Introduction Condominiums, while r e l a t i v e l y new i n comparison to other types of housing tenure are an increasingly common and accepted form of housing i n North America. Several studies have been done i n Canada and the United States to i d e n t i f y such items as the socio-economic p r o f i l e s of the owners, t h e i r reasons for purchase, and t h e i r s a t i s f a c t i o n with the units. One may therefore question the relevance of yet another study. The p o s i t i o n i s taken that s i g n i f i c a n t changes have occurred i n the housing market which necessitates further investigations. The enabling l e g i s l a t i o n f or condominiums i n B r i t i s h Columbia was f i r s t introduced i n late 196 7. At that time, condominiums were thought to provide a major breakthrough i n housing: an opportunity for new forms of housing structure; lower housing costs for various purchasers; and lower operating costs. The market was understandably hesitant i n accepting this new form of housing tenure but by 1970 condominiums represented a s i g n i f i - cant force i n the housing market. The d r a s t i c increase i n condo- miniums which has occurred i n the past ten years gives r i s e to some important s o c i a l and economic issues. What type of people are buying condominiums? Who i s l i v i n g i n the condominium units? What i s the reason for purchase? Have they proven to be a good investment? The most recent and d i r e c t l y comparable study i s the 1973 study by Hamilton and Roberts"1" which examined the condominium 72. market i n Metropolitan Vancouver. During that year 4486 units existed i n the area which represented 29.0% of the new home ownership units produced during the year. By 1977, over 46,000 condominium units existed i n B r i t i s h Columbia of which 25,214 were located i n Metropolitan Vancouver. The proportionate share of the new home completions i n 1976 increased to 32.0% for the province and 44.1% i n Metropolitan Vancouver. In sp i t e of these impressive s t a t i s t i c s the condominium market i s presently experi- encing some d i f f i c u l t y with a substantial oversupply and corres- ponding sof t p r i c e s , conditions which did not e x i s t i n 1973. This chapter w i l l provide a socio-economic p r o f i l e from a sample of ex i s t i n g owners, t h e i r motivations for purchase, and t h e i r l e v e l of s a t i s f a c t i o n . Insights w i l l also be supplied as to the owners' l i k e s and d i s l i k e s of the units and the projects which should provide developers with information needed to meet the desires of the consumers i n the future. 4.2 Previous Studies Several recent studies have dealt with the condominium 2 market i n Metropolitan Vancouver; notably, Eger (1976) , 3 Hamilton and Roberts (197 3) , and Hamilton, Davis, and Lowden 4 (1971) . The Condominium Research Association published a 5 study i n 1970 on condominiums i n Canada while Norcross i n v e s t i - gated townhouse condominiums i n Washington D.C. and C a l i f o r n i a i n 1973 . A synopsis of t h e i r findings i s presented i n Appendix 1. The r e s u l t s of the e a r l i e r studies (1970 and 1971) indicated that the condominium market was dominated by young families i n the early stages of t h e i r l i f e cycle. Their incomes were i n the mid-range for a l l households although there was a predominance of professional and managerial household heads. The majority were f i r s t time purchasers who selected condominiums over single family homes due to the economic advantages and secondly f o r maintenance- free l i v i n g . The l a t e r studies (Norcross, Hamilton and Roberts, Eger) showed that the condominium market was gradually appealing to a wider age d i s t r i b u t i o n of purchasers, although the dominance of average incomes and professional occupations remained. The Hamilton and Roberts study i d e n t i f i e d two submarkets; young, f i r s t time purchasers i n the early stages of t h e i r l i f e cycle and secondly an older group with higher incomes moving from t h e i r single detached home and purchasing apartment units. Again the two primary reasons given for purchasing a condominium rather than a.single family, house were the economic advantages and the freedom of upkeep and maintenance. T h i r t y percent of the owners reported by Hamilton and Roberts were over 49 years old. This i s a substantial increase from the study by Hamilton, Davis, and Lowden (1971) that revealed only 10% in t h i s age group. Table 17 shows that the older people were located mainly i n apartment-styled condominiums while the younger groups were found mainly i n townhouses. With the increase of older purchasers the number of purchasers that had previously owned a home increased from 14% i n 1971 to 36.4% i n 1973. A change i n the d i s t r i b u t i o n of incomes between the 1971 and 1973 study i s also noted. In 1971, 68% of the family incomes were i n excess of $10,000 per year while 65% of those i n the 1973 study were less than $12,000. Hamilton and Roberts also evidenced a much higher percentage of lower income households i n apartments than i n townhouses r e f l e c t i n g the age d i s t r i b u t i o n and the number of single occupants i n t h i s structure type. There was a low incidence of family units i n condominiums (50%) revealed by Hamilton and Roberts. Of these, there was an average of 0.86 children per unit. The largest average number of c h i l d r e n (excluding low cost developments) were found i n town- houses (1.05 children per u n i t ) . I t was expected that the family size i n townhouses would increase over time while the apartment households would be f a i r l y stable based on the r e l a t i v e age d i s t r i b u t i o n of the two structure types and the greater s t a b i l i t y of townhouses for c h i l d r e a r i n g . D i f f e r e n t data sources were used i n each of the previous studies that concerned condominiums i n Metropolitan Vancouver. Hamilton, Davis, and Lowden assembled t h e i r data from CMHC and NHA loan ap p l i c a t i o n forms. This was an acceptable method as v i r t u a l l y a l l the condominiums at that time were financed or the financing insured through these two sources. The major draw- backs were the exclusion of those that paid a l l cash f o r t h e i r unit and the motivations and the attitudes of the purchasers were not a v a i l a b l e . Hamilton and Roberts corrected these d e f i c i e n c i e s by u t i l i z i n g questionnaire surveys. Both of these studies analysed the data by cross-tabulating the various factors. The data f o r Eger's study was c o l l e c t e d from loan a p p l i c a t i o n forms of i n s t i t u t i o n a l lenders and included s i n g l e family detached houses as well as condominiums. The purchasers of both dwelling types were p r o f i l e d using discriminant analysis. None of these studies included an examination of tenants r e s i d i n g i n the TABLE 17 75'. D i s t r i b u t i o n of Ages of Household Heads (Hamilton and Roberts) Under 3 0 30 - 39 40 - 49 Over 49 Average No. % No. % No. % No. % Age NHA Town House 69 34.8 72 36.4 30 15.2 27 13.6 35.7 NHA Apartment 10 26.3 2 5.3 5 13.1 21 55.3 47 .2 NHA Mixed Town House & Apartment 8 28.6 8 28.6 3 10.7 9 32.1 39.8 Conventional Town House 13 38 .2 6 17.6 3 8.8 12 35.3 39.5 Conventional Apartment 19 15.6 18 14.7 8 6.6 77 63.1 50.1 Total Town Housed) 82 35.3 78 33.6 33 14.2 39 16.8 36.3 Total Apartment(1) 29 18.2 20 12.5 13 8.1 98 61.2 49.4 Total 119 28.3 106 25.2 49 11.7 146 34.8 41.5 NHA Low-Cost( 2 ) 38 49.3 25 32.5 10 13.0 4 5.2 32.5 Grand Total 157 20.5 131 26.4 59 11.9 150 30.2 •40.1 Notes: (1) These fi g u r e s exclude the mixed town house and apartment projects. (2) A l l data above t h i s row exclude the low-cost housing data. T i condominium units. 4.3 Sampling Process In order to provide current data concerning condominiums i n B r i t i s h Columbia which could provide useful insights into the current market and permit comparisions with e a r l i e r studies, two questionnaire surveys were conducted during the summer of 1977. The surveys of condominium occupiers were l i m i t e d to the Metropolitan Vancouver and V i c t o r i a areas. Questionnaires were d i s t r i b u t e d to occupiers i n a t o t a l of 15 7 randomly selected condominium projects, a sample representing 25% of the projects of ten or more units. The sample was then s t r a t i f i e d to represent f i v e areas as follows:- 1. Vancouver C i t y 40 Projects 2. Metropolitan Vancouver: North Shore 25 Projects 3. Metropolitan Vancouver: Low Growth Area 30 Projects 4. Metropolitan Vancouver: High Growth Area 30 Projects 5. V i c t o r i a 32 Projects Total 157 Projects The Low Growth Area of Metropolitan Vancouver included the m u n i c i p a l i t i e s of Burnaby, Surrey, New Westminster, and Coquitlam and the High Growth Area represented the m u n i c i p a l i t i e s of Richmond, Delta, Tsawwassen, Port Coquitlam, Port Moody, Langley, and White Rock. In each case, growth was measured i n terms of population, not condominium developments. The next step i n the sampling process was to d i s t r i b u t e questionnaires to every eighth unit i n the projects. This resulted i n a t o t a l sample of 895 units or 3% of a l l units i n plans of ten units or more. Due to the length of the question- naires, they were l e f t , along with an explanatory l e t t e r , at each unit selected i n the sample. As i t was not possible to i d e n t i f y which occupants were tenants and which were owners p r i o r to the survey, copies of both the tenant and owners questionnaires were enclosed with instructions to complete the appropriate one and return i t by mail i n the envelope provided. In order to provide maximum c o n f i d e n t i a l i t y , these questionnaires were not coded for area. Hence the sample res u l t s can only be interpreted for the combined areas. Given the p r i o r response rate obtained by Hamilton and Roberts of 50% using a s i m i l a r technique and the public's greater f a m i l i a r i t y with condominiums, a 30% response rate was expected. In t o t a l , 202 owners questionnaires and 34 tenants questionnaires were returned providing a 26.4% response rate, very close to the expected. The number of responses represent 26.4% of a l l e x i s t - ing units i n the sample but a somewhat higher proportion of occupied units since some projects were new and only p a r t i a l l y occupied. The 236 occupant responses represent approximately 1% of a l l units contained i n projects of 10 units or more. The sample was o r i g i n a l l y designed for s t a t i s t i c a l v a l i d i t y and the sample determined to r e f l e c t the expected response rate. The s t a t i s t i c a l v a l i d i t y of the r e s u l t s however, are impossible to ascertain i n a quantitative f a s h i o n due to the survey technique. 78. The requirement of leaving the questionnaire and not having a 100% response may provide some, though unknown, bias. On a p o s i t i v e note, the general s i m i l a r i t i e s between these findings and those of previous studies indicates they are highly r e l i a b l e . 4.4 Owners' P r o f i l e There was a t o t a l of 202 usable responses from the Owners' Survey. As the data was often categorized into several groups and the t o t a l number of responses were l i m i t e d , a l l the question- naires were used even i f some were p a r t i a l l y incomplete. This resulted i n the t o t a l number of responses varying s l i g h t l y over d i f f e r e n t factors but does not a f f e c t the o v e r a l l findings. The majority (80%) of the units i n the sample were purchased a f t e r 1973. This ensures that any s i m i l a r i t i e s between the findings i n t h i s study and those of Hamilton and Roberts are not due to the same population being sampled but rather there are a c t u a l l y s i m i l a r i t i e s between the two separate populations. 4.4 (a) General C h a r a c t e r i s t i c s of Survey Respondents Thirty-three percent of the responses were from townhouses, 35% from low-rise apartments, 26% from high-rise apartments and 7% from mixed townhouse and apartment developments (mixed). No attempt was made to i d e n t i f y which units i n the l a t t e r group were townhouses and which were apartments and due to t h e i r small number they w i l l be excluded from the majority of the discussion but have been included i n the tables separately for c l a r i t y . Of the townhouses, the majority were three bedroom units and o v e r a l l they average 2.89 bedrooms per unit (Table 18). The low-rise 79. and high-rise apartments were more evenly divided between one and two bedroom units, averaging 1.67 and 1.63 r e s p e c t i v e l y . The majority of households (77%) contained 2 adults while 20% were single adult households and 3% contained more than two adults. Furthermore, most households were c h i l d l e s s (69%) while 15% had one c h i l d and 16% had two or more chi l d r e n . Of the single adults, 68% were women and 32% were men. As would be expected, given t h e i r larger size and greater s u i t a b i l i t y for f a m i l i e s , the townhouses contained the highest average number of occupants (2.85) and average number of c h i l d r e n per house- hold (0.91). Apartments contained mainly singles and couples and had a low percentage of units with c h i l d r e n , averaging 0.31 and 0.21 children for low-rise and high-rise u n i t s . Table 19 correlates the number of bedrooms with the number of occupants. I f one were to assume that one bedroom i s required for each couple or single adult and one for each c h i l d , the majority of purchasers (60.5%) have excess space. Only 9% are overcrowded and the balance of 30.5% have the "correct" number of bedrooms for the number of occupants. Comparing the average number of bedrooms with the average number of occupants by structure type (Table 18), indicates the greatest excess capacity exists i n townhouses which average one bedroom per person. It i s l i k e l y these people intend to expand t h e i r household si z e i n the future. The r a t i o of persons to bedrooms i s not as low i n apartments where there i s 1.33 persons per bedroom. TABLE 18 BASIC STRUCTURAL DATA Structure Type Town- Low- High- T o t a l House Rise Rise Mixed Responses % % •. % % Number of Responses 32.7 34.7 25.7 6.9, 100.0 Number of Bedrooms 1 0.0 38.6 40.4 14.3 24.8 2 18.2 55.7 55.8 21.4 41.1 3 74.2 5.7 3.8 64.3 31.7 4 7.6 0.0 0.0 0.0 2.5 T o t a l 100.0 100.0 100.0 100.0 100.0 Average 2.894 1.671 1.635 2.500 Number of Occupants Per Unit 1 7.6 18.6 23.1 14.3 15.8 2 33.3 64.3 65.4 57.1 54.0 3 30.3 8.6 3.8 14.3 14.9 4 24.2 8.6 7.7 14.3 13.9 5 or more 4.5 0.0 0.0 0.0 1.5 T o t a l 100.0 100.0 100.0 100.0 Average 2.848 2.071 1.962 2.286 Number of C h i l d r e n 0 45.4 77.1 86.5 71.4 68.8 1 24.2 14.3 5.8 14.3 . 15.3 2 25.8 8.6 7.7 14.3 14.4 3 3.0 0.0 0.0 0.0 1.0 4 1.5 0.0 0.0 0.0 0.5 T o t a l 100.0 100.0 100.0 100.0 100.0 Average 0.91 0.31 ' 0.21 0.43 4.4 (b) Socio-Economic Variables The socio-economic factors of the respondents are displayed i n Tables 20 and 21 by age groups and by structure type. The data v / i l l f i r s t be analysed by the age d i s t r i b u t i o n s to compile a general p r o f i l e and then related to the structure types. 4.4 (c) Age The b i - p o l a r i z a t i o n of the age groups as was found by Hamilton and Roberts and Eger was again evidenced here. Forty- two percent of the respondents were over 49 years old while 48% were below 40 years old. Only 9.4% of the respondents indicated the head of the household was between 40 and 49 years old. There i s a s i g n i f i c a n t l y greater representation of those over 49 i n t h i s study than was previously reported (Table 22). This change may be explained i n part by the i n c l u s i o n of V i c t o r i a into the sample for the current study. F o r t y - f i v e percent of V i c t o r i a ' s adult population (over 14 years old) i s over 49 years old while 7 t h i s group represents only 3 3% of those i n Vancouver. 4.4 (d) Number of Children The majority of households (69.3%) were c h i l d l e s s followed by those with one or two children. The highest average number of children were found i n the 30-39 age group (0.71 children per household) and the 40-49 age group (0.63 childr e n per household). The lowest average was that of the group over 49 years of age. The youngest age group had an average of 0.49 childr e n which indicated the majority had not yet started t h e i r f a m i l i e s . TABLE 19 C o r r e l a t i o n Between Household S i z e and Number o f Bedrooms Number o f Number of Bedrooms Occupants 1 2 3 4 1 15 12 3 0 2 26 56 27 0 3 2 1 7 I 18 3 4 5 8 M 2 5 0 0 T 2 r o i 6 0 0 1 i i 0 NOTE: = " C o r r e c t " Occupancy Below the r e c t a n g l e s are overcrowded Above the r e c t a n g l e s have excess space TABLE 20 83. P r o f i l e of Condominium Purchasers by Age Groups Under 30 . 30-•39 40--49 Over 49 Income Group No. % No. % No. % No. % Under $8000 1 2 0 0 1 5 13 15 8001-16000 7 16 14 27 5 26 32 38 16001-24000 19 42 17 33 10 53 23 27 Over 24000 18 40 20 39 3 16 17 20 T o t a l 45 100 51 100 19 100 85 100 Occupation P r o f e s s i o n a l 18 40 26 50 8 42 26 30 S e m i - S k i l l e d and s k i l l e d 20 44 18 35 8 42 14 16 U n s k i l l e d 4 9 3 6 2 11 2 2 R e t i r e d 0 0 0 0 0 0 42 49 Other 3 7 5 10 1 5 2 2 T o t a l 45 100 52 100 ' 19 100 86 100 Education Post Graduate 7 16 9 18 2 11 11 13 1-4 years Post Secondary 14 31 17 35 3 17 26 31 V o c a t i o n a l or T e c h n i c a l 11 24 11 22 4 22 10 12 High School o r l e s s 13 29 12 24 9 50 38 45 T o t a l 45 100 49 100 18 100 85 100 Use o f 2nd . Mortgage 22 49 19 37 9 47 12 14 Use of B.C. Govt. 2nd Mortgage 21 47 19 37 9 47 12 14 TABLE 20 P r o f i l e of Condominium Purchasers by Age Group Cont. Under 30 30 - 39 40 - 49 Over 4 9 Total" No. % No. ' % No. % No. % No. % Number of C h i l d r e n 0 30 66.0 29 56.9 13 68.4 68 79.1 140 69.3 1 9 20.0 11 21.6 3 15.8 8 9.3 31 15.4 2 5 11.1 11 21.6 2 10.5 10 11.6 28 13.9 3 1 2.2 0 0 1 5.3 0 0 2 1 .0 4 0 0 1 2.0 0 0 0 0 1 0.5 Average 0.49 0 .71 0 .63 0. 33 0.48 TABLE 21 85. Basic Demographic and Economic Data - By Structure Type S t r u c t u r e Type Townhouse Low- Rise High -Rise . Mixed Tot a l Age o f Household Head No. % No. % No. % No. % No. Under 30 15 23 16 23 7 13 7 50 45 3 0 - 3 9 27 41 12 17 8 15 5 36 52 4 0 - 4 9 7 11 7 10 5 10 0 19 Over 49 17 26 34 49 32 62 2 14 . 85 Average 39.9 47.8 52.1 32. 9 45. T o t a l 66 100 69 100 52 100 14 100 201 Education of Household Head Post Graduate 8 13 8 12 9 17 4 29 29 1-4 Years Post 20 31 20 30 16 31 4 29 60 Secondary V o c a t i o n a l or Technical 12 17 12 18 10 19 2 .14 36 High School or Less 24 33 27 40 17 33 . '" 4 29 72 T o t a l 64 100 67 100 52 100 14 100 197 Occupation of Household Head P r o f e s s i o n a l or Managerial' 26 39 21 30 22 41 9 64 78 S e m i - S k i l l e d 24 36 20 29 11 21 36 60 U n s k i l l e d 6 9 3 5 2 4 0 0 11 R e t i r e d 4 7 21 • 30 17 32 0 0 42 Other 6 9 4 6 1 2 0 0 11 T o t a l 66 100 69 53 100 14 100 202 T o t a l Family Income 0 - $8,000 2 3 15- 21 7 13 0 0 24 $8,001-$16,000 31 48 27 39 17 33 2 14 77 $16,001-$24 ,000 20 31 15 21 14 27 5 36 54 Over $24,000 12 18 13 19 14 27 7 50 46 T o t a l 65 100 70 100 52 100 14 100 201 . 86. 4.4 (e) Education and Occupation The largest groups by educational l e v e l were those with high school or less (36.5%) and those with one to four years of u n i v e r s i t y education (30.5%). The majority of those with high school or l e s s were i n the over 49 age group which r e f l e c t s the lesser emphasis on formal post secondary education in the past. Those with some un i v e r s i t y education represented approxi- mately 30% of the respondents under 30, 30-39, and over 49 years old. The 4 0-49 age group had the lowest proportion i n t h i s category with 17%. 8 The occupations of the household heads correspond to the educational l e v e l s discussed above. The largest s i n g l e group were c l a s s i f i e d as professional or managerial with 38.6%. Exclud- ing those that had r e t i r e d , the professional/managerial groups represented 40% of those under 30 and betv/een 40 and 49 years old, 50% of those between 30 and 39, and 59% of those over 49. These 9 findings correspond with previous studies, p a r t i c u l a r l y Eger where he noted the largest proportion of professionals i n the oldest age group. The second largest occupation class was the s k i l l e d and semi-skilled representing 30% of the respondents. They were evenly d i s t r i b u t e d across the age groups i f those r e t i r e d are excluded. Naturally those who were r e t i r e d were exclusive to the over 4 9 age group. 4.4 (f) Income Groups The questionnaire asked the respondents to c l a s s i f y t h e i r t o t a l gross family income into one of four categories, under 87. DISTRIBUTION OF NUMBER OF CHILDREN IN HOUSEHOLDS 1 i I TABLE 2 2 Comparative Age D i s t r i b u t i o n s Roberts 1973 Survey 1977 No. % No. % Under 30 125 36.7 45 22.3 3 0 - 3 9 107 31.4 52 25.7 40 - 49 48 14.1 19 9.4 Over 49 61 17.9 86 , 42.6 Average 36 .55 45 .32 89. $8,000; $8,000-$16,000; $16 ,001-$24,000; and over $24 ,000. The groups were purposely made broad as i t was f e l t narrower c l a s s i f i - cations may cause some to be reluctant to respond. In t o t a l the responses were evenly divided between those having over $16,000 income and those below $16,000. F i f t y percent of those with over $16,000 income also had over $24,000. Given the average family income i n B.C. at the time of the survey was approximately $18,000 per year"*"^, i t i s concluded that condominiums appeal largely to the moderate to average income groups as was noted i n the previous . , 11 study. Table 23 compares the d i s t r i b u t i o n of family incomes for the Hamilton and Roberts study, t h i s study, and the corresponding income d i s t r i b u t i o n s for the population as a whole i n each year. Several points should be noted. F i r s t , there i s a considerably greater proportion of households i n the lower income groups i n the Hamilton and Roberts study (81.4% under $15,000) than i s evidenced here (50.2% under $16,000). This i s due i n part to the general increase i n incomes over the period (increasing from an average of $11,225 i n 1973 to-$16,915 i n 1976). Secondly, the. increase i n condominium prices since 1973 necessitates that the purchasers have a larger income to support a mortgage of a simi- 12 l a r loan-to-value r a t i o . The second point of i n t e r e s t i n the comparisons i s that both surveys show larger proportions of household incomes i n the $8,000 to $16,000 income bracket than does the general public. This confirms the e a r l i e r conclusion (above) that condominiums appeal to moderate income groups. L a s t l y , t h i s study reveals a larger proportion of condominium purchasers i n the highest income TABLE 23 COMPARATIVE TOTAL FAMILY INCOMES 90. Hamilton & Roberts Survey B r i t i s h Columbia 1973 1 Survey 1977 B r i t i s h Columbia 1976 2 Income Group % Income - Group % Income Group % 0-$8,000 8,001-15,000 15,001-20,000 Over 20,000 19.3 62.1 12.0 6.6 38.7 35.2 15.1 11.1 0-$8,000 8,000-16,000 16,001-24,000 Over 24,000 11.9 38.3 26.9 22.9 -$7,999 8,000-14,999 15,000-24,999 Over 25,000 28.9 21.9 29.2 19.9 Average Income 11,225 16,915 SOURCE 1: S t a t i s t i c s Canada, Income D i s t r i b u t i o n s By Siz e In Canada, Catalogue 13-206, 1973 SOURCE 2: I b i d , 1976 : CMHC CMHC 1976 3 Survey 1977 Survey D i s b r i b u t i o n Vancouver and V i c t o r i a D i s t r i b u t i o n No. % ' No. No. Under $10,000 11 1.9 24 11.9 $8,000 10,000-17,500 195 33.0 77 38.3 8,001-16,000 17,501-25,000 241 40.8 54 26.9 16,001-24,000 Over 25,000 144 2 4 . 4 - 46 22.9 Over 24,000 SOURCE 3: Canadian Housing S t a t i s t i c s , 1977, C e n t r a l Mortgage and Housing Corporation, Ottawa, P. 82. group (22.9%) than the general public (19.9%) which i s also s i g n i f i c a n t l y greater than that evidenced by Hamilton and Roberts (6.6%). The s i g n i f i c a n t upward s h i f t in the proportion of t h i s income group r e f l e c t s the broadening of the condominium market. The second portion of Table 2 3 compares the CMHC data f o r new condominium purchasers, which i s c o l l e c t e d from the loan app l i c a t i o n forms, and the survey data. There i s a much larger portion of purchasers i n the sample i n the lowest income group than i n the CMHC data. This may be explained i n part by the in c l u s i o n of those purchasers on pensions who paid a l l cash for t h e i r u n i t and appeared i n the survey but which would not appear i n the CMHC loan ap p l i c a t i o n f i l e s . The second i n t e r e s t i n g feature i s that the largest proportion of households (40.8%) i n the CMHC data are i n the second highest income bracket ($17,501 to $25,000) while the largest proportion i n the survey (38%) are i n the second lowest bracket ($8,000 to $16,000). Removing the lowest income group from the analysis does not change the r e l a t i v e d i s t r i b u t i o n s . Part of t h i s i s due to the differences i n the date of sale of the purchases, the CMHC data refers only to condominiums sold i n 1976. Secondly, Hamilton and Roberts noted a s i m i l a r pattern and hypothesized that people may have exaggerated t h e i r incomes on the loan a p p l i - cation i n order to q u a l i f y . The d i s t r i b u t i o n was thereby s h i f t e d upwards which may have also occurred here. Neither the differences noted between the income d i s t r i b u t i o n s of the previous study or the 1976 CMHC data contradicts the conclu- sion that condominiums primarily appeal to moderate to average income purchasers. However, the recent r i s e i n pr i c e s of the condominium units may have eliminated some of the lower income groups which appeared i n the previous study. I t should also be noted that a segment of the condominium market has been directed 13 at the wealthy and has met with some success i n Vancouver Examining the d i s t r i b u t i o n of incomes by age group (Table 20) reveals a s h i f t i n g downward i n the proportion of upper income purchasers as you move from the youngest group to the oldest. This i s s u r p r i s i n g given the f a i r l y even d i s t r i b u t i o n of occupa- tions noted e a r l i e r and i n the fact the young group i s not l i k e l y to have reached t h e i r f u l l earning p o t e n t i a l yet. The d i s t r i b u t i o n i s explained by the number of r e t i r e d purchasers i n the oldest group, s h i f t i n g t h e i r income d i s t r i b u t i o n downward and, as revealed i n the next section, the number of working wives i s greatest i n the younger groups, thereby providing two s a l a r i e s and s h i f t i n g t h e i r income d i s t r i b u t i o n upwards. 4.4 (g) Two Wage Earner Households Table 24 displays the d i s t r i b u t i o n of working spouses. The f i r s t point of i n t e r e s t i s that the proportion of working spouses in t h i s study (41.2%) i s v i r t u a l l y i d e n t i c a l to that found by Hamilton and Roberts (40.2%). Secondly, comparing the proportion that worked f u l l or part time at the time of purchase and at the time of the survey reveals a s l i g h t drop (47.3% to 41.2%), the majority of the change occurring i n the townhouse residents. This i s to be expected as t h i s group i s the most l i k e l y to be entering into or are i n the c h i l d rearing stage which would necessitate one spouse leaving the work force. TABLE 24 '.: DISTRIBUTION OF WORKING SPOUSES (AT TIME OF PURCHASE).' Working F u l l Time Working Part Time Not Working No. % No. No. % Wife's Age Under 30 35 67.3 3 5.8 14 26.9 3 0 - 3 9 12 57.1 2 9.5 7 33.3 4 0 - 4 9 1 16.7 1 16.7 4 66.7 Over 49 6 11.5 2 3.8 44 84.6 T o t a l 54 41.2 8 6.1 69 52.7 Husband's Age Under 30 22 64.7 2 • 5.9 10 29.4 30 - 39 22 68.8 3 9.4 7 21.9 4 0 - 4 9 4 57.1 0 0.0 3 42.9 Over 49 6 10.3 3 5.2 49 84.5 Household Income Under $8,000 1 20.0 0 0.0 4 80.0 $8,000-$16,000 15 29.4 6 11.8 30 38.8 $16,000-$24,000 18 45.0 2 5.0 20 50.0 Over $24,000 20 58.8 0 0.0 14 41.2 Number of Dependent C h i l d r e n 0 39 45.9 • 5 5.9 41 48.2 1 9 47.4 1 5.3 9 47.4 2 6 25.0 ' 1 4.2 17 70.8 3 0 0.0 1 50.0 1 50.0 4 0 0.0 0 0.0 1 ,\ 100.0 94. TABLE 24(Contd.) ..; Working Working Not F u l l Time Part Time Working No. % No. % No. % S t r u c t u r e Type (a) At Time of Purchase Townhouse 21 40.4 5 9.6 26 50.0 Low-Rise 19 51.4 3 8.1 15 40.5 High-Rise 9 28.1 0 0.0 23 71.9 Mixed 5 50.0 0 0.0 5 50.0 (b) At Time of Survey Townhouse 16 30.8 4 7.7 32 61.5 Low-Rise 18 47.4 2 5.3 : 18 47.4 High-Rise 10 31.2 0 0.0 22 68.8 Mixed 4 44.4 0 0.0 5 55.6 The most noticeable d i s t i n c t i o n between those households with a spouse working or not working i s displayed i n the d i s t r i - bution by age. The majority (71%) of the spouses below 40 years old are working f u l l or part time while only a very small percen- tage over 40 are employed. The d i s t r i b u t i o n i s much more, even when the family income i s examined with only a s l i g h t l y higher proportion of working spouses i n the upper income groups. The res u l t s of the cross-tabulation by age are confirmed by Hamilton and Roberts. However, they found more pronounced trends over the income' groups and by the number of c h i l d r e n 1 ^ . They found that the number of non-working spouses v/as greatest i n the lower income groups and i n families that had dependent ch i l d r e n . 4.4 (h) Structure Type The, structure types- are c l a s s i f i e d , as. townhouse, low-rise apartment or high-rise apartment. Townhouses are thought to be the most suitable s t y l e for families with childr e n as the units are larger and have greater surrounding open areas and amenities than do apartments. In contrast, apartments are thought to be more suited to singles or couples without children and are generally designed with t h i s i n mind. These c h a r a c t e r i s t i c s of the structure types are r e f l e c t e d i n the p r o f i l e s of the respec- t i v e purchasers. In support of t h i s perception, i t i s noted that those i n the 30-39 year old group, which had the highest average number of c h i l d r e n , are found p r i m a r i l y i n townhouses (Table 21). The majority of the oldest group can be c l a s s i f i e d as "empty-nesters" i n d i c a t i n g t h e i r f amilies have grown up and l e f t ; they are correspondingly located in apartments. The d i s t r i b u t i o n by occupation, education, income, and the incident of working spouses across structure types i s commensurate with the findings to date and need not be elaborated on. 4.4 (i) Previous Tenure Knowledge of the previous tenancy of condominium owners i s important both for the d i r e c t i n g of marketing and advertising and to provide further information on t h e i r p r o f i l e s . The majority of owners (62.4%) had rented p r i o r to the purchase of t h e i r unit; of these 72% had l i v e d i n low-rise (45.6%) or high-rise (26.4%) apartments. Of those that had owned previously, 73.3% had a single family detached house and 18.7% had condominiums. While the number of previous condominium owners i s not large, they do r e f l e c t a mobility between units and a l e v e l of s a t i s f a c t i o n with the concept, s u f f i c i e n t , for the people to repurchase. Tables 25, 26, 27, and 28 display the previous tenure c l a s s i f i cation by present structure type, age group, p r i c e of the condo- minium unit, and the loan-to-value r a t i o respectively. The data combines to show that the majority of renters are young, most frequently had high loan-to-value r a t i o s and purchased lower than average priced townhouse and low-rise apartment units. Conversely, previous owners were older, had larger down payments, and purchased the more expensive apartment units. The previous tenure type cross-tabulated with the reasons given for moving are presented i n Table 29; the r e s u l t s are as anticipated given the above findings. By far the most frequently mentioned reason given by previous renters was to e s t a b l i s h an TABLE 25 97. D i s t r i b u t i o n o f P r e v i o u s T e n u r e Type by P r e s e n t S t r u c t u r a l Type T e n u r e Type Owned Rented O t h e r T o t a l P r e s e n t S t r u c t u r a l Type No. % No. % No. % No. % Townhouse 17 25.8 49 74.2 0 0.0 66 100.0 L o w - R i s e 23 32.9 45 64.3 2 2.9 70 100.0 H i g h - R i s e 28 53.9 22 42.3 2 3.8 52 100.0 M i x e d 4 28.6 10 71.4 0 0.0 14 100.0 T o t a l 72 35.6 126 62.4 4 2.0 202 100.0 TABLE -26 ... DISTRIBUTION OF PREVIOUS TENURE TYPE BY AGE GROUP Tenur e Type Owned Rented O t h e r Age Group No. % No. % No. % Under 30 5 6.9 36 28.8 4 80.0 30 - 39 8 11.1 42 33.6 1 20.0 4 0 - 4 9 2 2.8 17 13.6 0 0.0 Over 49 57 79.2 30 24.0 0 0.0 T o t a l 72 100.0 125 100.0 5 100.0 DISTRIBUTION OF PREVIOUS TENURE UNDER 50 YEARSOLD 50 YEARS OLD OR GREATER 100. TABLE 27 DISTRIBUTION OF PREVIOUS TENURE TYPE BY PRICE OF UNIT Previous Tenure Type Owned Rented Other No. % No. % No. % Under Average P r i c e (By Year and Structure Type) 24 37.5 70 58.8 3 75 Over Average P r i c e (By Year and Structure Type) 40 62.5 49 41.2 1 25 T o t a l 64 100.0 119 100.0 4 100.0 101. TABLE 28 DISTRIBUTION OF PREVIOUS TENURE BY LOAN-TO-VALUE RATIO Previous Tenure Owned Rented Other % % % Over 95% 0 9 0 80-95 9 47 25 70-79 6 16 25 50-69 11 12 25 25-49 6 3 25 Under 25 68 12 0 102. equity followed d i s t a n t l y by those desiring more space. The demand fo r home ownership was the major motivation for t h e i r move. I t i s l i k e l y the lack of a sizeable down payment may have been a r e s t r i c t i n g factor i n t h e i r purchase decision given the higher incomes of the young (predominantly renters) combined with t h e i r high loan-to-value r a t i o s . Some developers have observed t h i s factor and have used i t to market the units by o f f e r i n g appealing! low down payments^. The reasons for moving expressed by the previous owners were dominated by those wanting less space and less upkeep. The single family house, of which the majority had owned, was probably becoming burdensome and no longer necessary as the owners' require ments changed. The low loan-to-value r a t i o s indicates they are using the equity from t h e i r house to purchase the units. Further, the tendency for t h i s group to buy the more expensive units com- bined with t h e i r substantial equity shows they are looking for more amenities and have the money to act on t h e i r wishes. Design- ing of projects s p e c i f i c a l l y for t h i s group to include features they would demand would l i k e l y meet with success even i f they had to be marketed at higher than average price s . The reasons for moving are displayed by age group and by present structure type i n Tables 30 and 31. The r e s u l t s confirm those found when the previous tenure type was cross-tabulated with the reasons given for moving. The younger owners wanted to e s t a b l i s h an equity while those over 49 years old wanted less space and upkeep. 103. One of the in t e r e s t i n g outcomes of t h i s survey was the number of older people desiring a less expensive unit. It was expected that the older home owners would have traded down from t h e i r home i n order to free some of t h e i r c a p i t a l to provide an additi o n a l income stream or for current consumption. The low response to thi s question and the substantial down payments d i s - played e a r l i e r indicate the freedom from mortgage payments i s more highly valued. 4.4 (j) Loan-To-Value Ratios and Total Monthly Payments Tables 32 to 34 contain the d i s t r i b u t i o n s of loan-to-value r a t i o s and t o t a l monthly payments. Their r e s u l t s confirm the findings discussed above. The over 49 age group, which were largely previous owners of single family dwellings purchased t h e i r unit with large down payments and hence have low loan-to- value r a t i o s and monthly payments. The younger age groups, that were predominantly renters previously, had higher loan-to-value r a t i o s and correspondingly higher monthly payments. 4.4 (k) Future Intentions The questionnaire asked the respondents i f they intended to stay i n th e i r present unit for the foreseeable future. Those that were intending to move were asked to state the type of tenure and structure they intended to move to and that which they would most prefer. There was very l i t t l e difference between that which they preferred and that which they were expecting to move to and therefore the preferred d i s t r i b u t i o n i s not presented. There was a problem encountered as some people stated they d i d 1 0 4 . TABLE 29 REASON FOR MOVING BY PREVIOUS TENURE TYPE - FIRST REASON ONLY Previous Tenure Type Owned Ren ted other Reason No. % No. % No. % Change i n household membership 16 2 3 . 4 1 1 9. 0 2 4 0 . 0 Desired l e s s space 10 14 . 7 4 3. 3 0 0 . 0 Desired l e s s upkeep 25 36 . 8 3 2 . 5 0 0 . 0 Desired more l i v i n g space 3 4 . 4 17 1 3 . 9 0 0. 0 Desired better neighbourhood conditions 1 1 . 5 1 0 . 8 0 0 . 0 Desired less expensive unit 1 1 . 5 5 4 . 1 o 0 . 0 To e s t a b l i s h an equity 1 1 . 5 56 4 5 . 9 2 4 0 . 0 Closer to transportation, job, etc. 4 .5 . 9 2 1 . 6 1 2 0 . 0 Job transfer or change 2 2 . 9 12 9 . 8 0 0 . 0 Other 5 7 . 4 1 1 9 . 0 1 o 0 . 0 105. TABLE 30 REASON FOR MOVING BY AGE GROUP - TOTAL NUMBER OF REASONS Age Group Under 30 30-39 40-49 Over 49 T o t a l NO No % No. % No. % Reason Change i n Household Membership 7 8.3 10 10.3 5 17.2 18 12.2 40 11.2 Desired l e s s space 1 1.2 3 3.1 1 3-4 21 14.2 26 7.3 Desired l e s s upkeep 3 3.6 ' 2 2.1 2 6.9 49 33.1 56 37.8 Desired more l i v i n g space 20 23.8 16 16.5 6 20.7 7 4.7 49 33.1 Desired b e t t e r neigh- bourhood c o n d i t i o n s 4 4.8 8 8.2 0 0.0 4 2.7 16 4.5 Desired l e s s expen- s i v e u n i t 1 1.2 4 4.1 0 0.0 9 6.1 14 3.S To e s t a b l i s h an eq u i t y 35 41.7 26 26.8 11 37.9 17 11.5 89 24.9 Cl o s e r t o t r a n s p o r t a - t i o n , job, e t c . 3 3.6 9 9.3 1 3.4 6 4.1 19 5.3 Job t r a n s f e r or change 2 2.4 9 9.3 1 3.4 8 5.4 20 5.6 Other 8 9.5 10 10.3' 2 6.9 9 6.1 29 8.1 T o t a l 84 100.0 97 100.0 29 100.0 ] L48 100.1 358 100.C 106. TABLE 31 < Reasons f o r Moving by S t r u c t u r e Type - T o t a l Responses Str u c t u r e Type Townhouse Low-Rise High-Rise Mixed Reason Change i n household membership D e s i r e d l e s s space D e s i r e d l e s s upkeep De s i r e d more l i v i n g space Des i r e d b e t t e r neighbourhood c o n d i t i o n s D e s i r e d l e s s expensive u n i t To e s t a b l i s h an e q u i t y C l o s e r to t r a n s p o r t a t i o n , job, e t c . Job t r a n s f e r or change Other T o t a l No. % No. % No. % No. % 16 13.6 6 5 .1 11 9.3 22 18.6' 7 5.9 2 1.7 31 26.3 4 3.4 8 6.8 11 9.3 14 11.2 11 8.8 18 14.4 14 11.2 5 4 .0 7 5 .6 34 27.2 6 4,8 6. 4 .8 10 8 .0 10 14.9 9 13.4 24 35.8 6 9.0 4 6.0 5 7.5 16 23.9 7 10.5 5 7.5 3 4.5 0 0.0 0 0.0 3 11.5 7 10.5 0 0.0 0 0.0 8 30.8 2 7.7 1 3. 5 -..,19'=-. 118 100.0 125 100.0 67 100.0 26 100. 107. not intend to move indicated where they would move to. As the intention of the question was to i d e n t i f y the occupants' desires these responses were included. Table 35 displays the future intentions by age group and structure type. Overall the majority (63.7%) plan to stay while only 36.3% plan to move. As would be expected higher proportions (53.3% of those under 40 years old) of those i n the younger groups plan to move while the majority (74.6% of those over 39 years old) of the older groups plan to stay. Of those planning to move, the overwhelming majority (77.4%) intend to own a single family home (Table 36). Only 13% of the respondents expressed an i n t e r e s t i n renting. I t i s quite evident by these results that many of the younger households view condominiums only as temporary accommoda- tion before moving to a single family unit. 4.4 (1) Summary P r o f i l e The analysis of the data by age group and structure type indicate there are three submarkets represented by the condominium purchasers:- (a) young (below 40 years old) apartment condominium dwellers, generally without c h i l d r e n , having above average family incomes as a r e s u l t of both adults (where applicable) working. They purchased a condominium primarily to e s t a b l i s h an equity and w i l l l i k e l y attempt to move to a single detached dwelling as t h e i r incomes and family s i z e increases. (b) townhouse dwellers are predominantly 30 to 39 years- old and have the highest average number of children. Approximately hal f of these respondents intend to move to a single detached dwelling i n the future, 108. TABLE 32 DISTRIBUTION OF LOAN-TO-VALUE RATIO BY AGE GROUP Age Group Under 30 30- 39 40-49 Over 49 1st Mtge 1st & 2nd Mtge 1st Mtge 1st & 2nd Mtge 1st Mtge 1st & 2nd Mtge Lst Mtge l s t & 2nd Mtge % % % % % % % % Over 95% 2.3 7.0 4.1 8.2 10.5 21.1 0.0 0.0 80 - 95 44.2 58.1 44.2 51.0 15.8 31.6 2.6 11.1 70 - 79 18.6 9.3 32.6 18.4 36.8 36.8 9.2 5.6 50 - 69. 16.3 9.3 . 20.9 12.2 26.3 5.2 15.3 15.3 2 5 - 4 9 7.0 4.7 0.0 0.0 10.5 5.2 12.5 8.3 Under 25 11.6 11.6 10.2 10.2 0.0 0.0 65.3 65.3 Average 44.45 46.36 50.84 55.35 60.86 66.76 43.06 47.58 109. TABLE 33 DISTRIBUTION OF LOAN-TO-VALUE BY STRUCTURE TYPE Structure Type Townhouse 1st Mtge. 1st & 2nd Mtge. Lowrise 1st Mtge. 1st & 2nd Mtge. Highrise 1st Mtge. 1st & 2nd Mtge. Loan-to- Value % % % % % % Over 95% 3.2 12.9 0 0 6.0 6.0 80 - 95 40.3 40.3 11.3 32.3 12.0 22.0 70 - 79 12.7 16.1 24.2 12.9 16.0 8.0 50 - 69 19.4 12.9 16.1 11.3 10.0 10.0 25 - 49 6.5 4.8 9.7 4.8 8.0 6.0 Under 25 12.9 12.9 38.7 38.7 48.0 48.0 Average 65.9 71.4 42.1 47.0 37.7 40.5 1 1 0 . T A B L E 34 DISTRIBUTION OF TOTAL MONTHLY PAYMENTS BY' AGE GROUP Monthly AGE GROUP Payment Under 3 0 30 - 3 9 4 0 - 4 9 Over 4 9 No. % No. % No. % No. % 0 - $ 1 0 0 1 2 . 3 3 5 . 9 0 0 . 0 2 1 2 8 . 4 1 0 1 - 2 0 0 1 2 . 3 1 2 . 0 1 5 . 3 2 9 3 9 . 2 2 0 1 - 2 5 0 0 0 . 0 4 7 . 8 3 1 5 . 8 5 6 . 8 2 5 1 - 3 0 0 3 6 . 8 8 1 5 . 7 1 5 . 3 7 9 . 5 3 0 1 - 3 5 0 6 1 3 . 6 6 1 1 . 7 5 2 6 . 3 3 4 . 1 3 5 1 - 4 0 0 9 2 0 . 5 1 1 2 1 . 6 3 1 5 . 8 1 1 . 4 4 0 1 - 5 0 0 9 2 0 . 5 8 1 5 . 7 5 2 6 . 3 5 6 . 8 5 0 1 - 7 0 0 1 5 3 4 . 1 8 1 5 . 7 0 0 . 0 1 1 . 4 Over 7 0 0 0 0 . 0 2 3 . 9 1 5 . 3 2 2 . 7 TABLE 35 Future Housing Intentions 111. Pla n to Stay Plan to Move T o t a l No. .% No. % . No. % Age Group Under 30 19 43.2 25 56.8 44 100.0 30 - 39 23 44.2 29 55.8 52 100.0 . 4 0 - 4 9 12 63.2 7 36.8 19 100.0 Over 49 74 86.1 12 13.9 86 100.0 To t a l . 128 63.7 73 36.3 201 100.0 S t r u c t u r e Type Townhouse 33 50.0 33 50.0 66 100.0 Low-Rise 47 68.1 22 31.9 69 100.0 High-Rise 40 76.9 12 23.1 52 100.0 Mixed 8 57.1 6 42.9 I 4 100.0 T o t a l 128 63.7 73 36.3 201 100.0 TABLE 36 Choice o f Next S t r u c t u r a l Type by Age Group - For Those Who Intend to Move Age Group Under 30 30 -• 39 : 4 0 - 49 Over 49 T o t a l No. a o No. p. No. % No. % No. % Next S t r u c t u r a l Type Owned Si n g l e Family 24 77.4 28 82.4 6 75.0 7 50.0 65 74.7 Duplex 1 3.2 2 5.9 1 12.5 0 0.0 4 4.6 Townhouse 4 12.9 2 5.9 0 0.0 3 21.4 9 10.3 Apartment 2 6.5 2 5.9 1 12.7 2 14.3 7 8.1 Mobile Home 0 0.0 0 0.0 0 0.0 2 14.3 2 2.3 T o t a l 31 100.0 34 100.0 8 100.0 14 100.0 87 100.0 Rental S i n g l e Family 2 50.0 0 0.0 0 . 0.0 2 28.6 4 . 30.8 Duplex 1 25.0 0 0.0 0 o.o 0 0.0 1 7.7 Townhouse 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0 Apartment 1 25.0 1 100.0 1 100.0 5 71.4 8 61.5 Mobile Home • 0 0.0 . 0 0.0 0 0.0 0 0.0 0 • 0.0 T o t a l 4 100.0 1 100.0 1 100.0 7 100.0 13 100.0 T o t a l Intending to move 35 ; 35 9 21 1 00 Percentage o f t o t a l age group 77.8% 67.3% 47.4% 24.7% 49.8% 113 . (c) the older (over 40 years o l d ) , empty nest group that purchased primarily apartments. They are moving from th e i r single family houses to escape the required up- keep and are using the equity from t h e i r p r i o r r e s i - dence to make substantial down payments. The major- i t y of t h i s group do not intend to move from t h e i r present accommodation. 4.5 Discriminant Analysis In the previous section a multitude of demographic, economic and motivational factors were examined by the condominium structure type and the owners' age groups. The analysis revealed three sub- markets within the condominium market, young apartment purchasers, old apartment purchasers, and townhouse purchasers. Further analysis was then used to v e r i f y that these groups did e x i s t and to i d e n t i f y the s i g n i f i c a n t variables. Discriminant analysis was used for t h i s purpose. I t i s a mathematical technique that, i d e n t i f i e s the variables which, d i s c r i - minate between two or more groups by c a p i t a l i z i n g on the d i f f e r - ences i n the respective c h a r a c t e r i s t i c s . Once a set of discrimina- tor variables i s found for a known c l a s s i f i c a t i o n group they can be used to predict the c l a s s i f i c a t i o n of an unknown group. Simply, the sample i s i n i t i a l l y c l a s s i f i e d into known groups, say townhouse purchasers and apartment purchasers. The character- i s t i c s of each set of purchasers are then examined to fi n d those c h a r a c t e r i s t i c s that are most d i f f e r e n t between the groups, say the number of children and household incomes are found to be s i g n i f i c a n t discriminators. It can then be said the major d i f f e r - ences between the two populations are the differences i n the respective number of children and incomes. Further, having 114 . i d e n t i f i e d the discriminating variables, the l i k e l y purchase decision of another group of people can be predicted. Conversely, i f a townhouse development i s b u i l t , the type of purchasers can be predicted and hence the design and marketing of the project directed to the people with the corresponding c h a r a c t e r i s t i c s . Discriminant analysis i s a s p e c i a l type of factor analysis that separates two or more groups by forming one or more l i n e a r combinations of the variables each with a score of the di s c r i m i n - ant functions. "The maxiumum possible number of functions which can be derived i s one less than the number of groups, i f there are more variables than groups. In the case of having more groups than variables, then the number of discriminating functions 17 can be equal to the discriminating variables." If the scores within each group are quite s i m i l a r while the scores between groups d i f f e r , i d e n t i f i c a t i o n of the groups can occur. The analysis takes place i n a step-wise procedure selecting the best discriminating factor then the second best and so on u n t i l none of the remaining variables discriminate beyond the stated confidence i n t e r v a l . The three groups were i n i t i a l l y separated by age and/or present structure type as reported i n the questionnaire. The young apartment group was defined as those who had the head of the household below 40 years old and had purchased an apartment unit. The old apartment group consisted of those over 39 that had an apartment unit while the townhouse group were a l l townhouse purchases regardless of age. The responses from those i n mixed , apartment and townhouse developments were not used as they would 115. i n t e r f e r e with the treatment of the other groups and were too 18 few to be analyzed alone. There were 13 variables used which are displayed i n Table 37 along with t h e i r respective means and standard deviation by group. In analyzing the three groups together, four s i g n i f i c a n t variables (at the 95% confidence interval) were i d e n t i f i e d : the use of second mortgages; the percentage of working spouses; the age of the household head; and the number of ch i l d r e n . Townhouse purchasers had the highest incidence of usage of sec- ond mortgages with 52% i n comparison to the young apartment group (38%) and the old apartment group (22%). S i m i l a r l y , they had the highest percentage of working spouses (79% versus 65% for the young apartment group and 55% for the old apartment group) and the largest average number of childre n (.919 versus .231 and .284 for young and old apartment purchasers r e s p e c t i v e l y ) . The young apartment group had the youngest average age of the house- hold heads (29.3 years old) followed by the townhouse purchasers (39.5 years old) and the old apartment group (59.6 years o l d ) . The program then predicted the c l a s s i f i c a t i o n of the purch- asers using these variables as discriminators. The predicted versus observed r e s u l t s are displayed i n Table 38, 73.4% of a l l the cases could be c o r r e c t l y c l a s s i f i e d . While the model per- formed reasonably well i n c l a s s i f y i n g the young and the old apartment groups, 82.7% and 85.1% respectively, the r e s u l t s were much poorer for the townhouses (51.6% c o r r e c t l y c l a s s i f i e d ) . Referring again to Table 37, there i s evidenced a problem since the mean of several of the variables are s i m i l a r between the young apartment and townhouse groups though d i f f e r e n t from the old apartment group. The notable variables being the loan-to-value TABLE 37 116 . P r o f i l e of Condominium Purchasers D i s c r i m i n a t e A n a l y s i s V a r i a b l e s * Young Apartment Townhouse Old Apartment Mean St. Dev. Mean St. Dev. Mean St . Dev. F i n a n c i a l V a r i a b l e s U n i t Purchase P r i c e ($) 40908 11224 42933 16762 46315 20734 Gross Family Income 2.904 0.955 2.613 0.894 2.432 1.021 Loan/Value Ratio (%) 68.5 33.0 71.0 31.4 31.5 36.4 Monthly Payment ($) 382.58 143.67 345.50 153.56 197.14 163.30 Use o f 2nd Mtge. (%) 38.5 49.1 51.6 : 50.4 21.6 41.4 Pre-Ownership (%) 17.3 38.2 22.6 42.2 56.8 49.9 Demographic Variables Age o f Household Head 29.3 4.9 39.5 12.9 59.6 12.3 Occupation 2.346 0.764 2.129 0.914 1.784 0.955 Education 2.558 1.127 2.742 1.187 2.743 1.250 Married (%) 65.4 48.0 83.9 37.1 66.2 47.6 No. o f C h i l d r e n 0.231 0.509 .919 0.997 .284 0.652 Working Wife (%) 65.4 48.0 79.0 ; 41.0 55.4 50.0 Reason f o r Moving 0.327 0.550 0.258 0.571 -0.122 0.548 117. r a t i o , monthly payments, percentage of pre-ownership and the reason for moving. Such s i m i l a r i t y excludes the variables from the equation and hence reduces the p r e d i c t i v e c a p a b i l i t y of the technique. Tb adjust for t h i s problem the analysis was repeated using only two groups at one time. A summary of the r e s u l t s i s present- ed i n Exhibit 1. In a l l cases the method was able to c l a s s i f y approximately 80% of the respondents c o r r e c t l y . The discrimina- t i n g variables between the townhouse group and each apartment group were the age of the household head and the number of children. Townhouses had the greatest number of children per unit (0.919 versus 0.231 for the young apartment group and 0.284 for the old apartment group) (Table 4.21) and they had a medium age of the household heads (39.5 years old versus 29.3 for young apartments and 59.6 for old apartments). The comparison of the young and old apartment groups was performed excluding the age of the household head as t h i s was the primary means of i n i t i a l c l a s s i f i c a t i o n . The s i g n i f i c a n t discrimin- ating variables that were i d e n t i f i e d were income, monthly payment, unit value, and the reason for moving. The young apartment group had higher average incomes, larger monthly payments but purchased less expensive units than the older group. This r e f l e c t s the use of the equity of t h e i r p r i o r home by the older group as discussed previously. The older people moved because they desired less space and upkeep (hence the minus sign, -0.122) while the young group was looking for more space (hence the p o s i t i v e sign, 0.327). TABLE 38 '  ' ' ' r l l 8 Number o f Cases C l a s s i f i e d i n t o Each Group P r e d i c t e d Young Apartment Townhouse Old Apartment T o t a l Observed No. % No. % No. % No. % Young Apartment 43 82.7 9.'. 17.3 • ° ; 0 52 100.0 Townhouse 17 27.4 32 51.6 13 21.0 62 100.0 Old Apartment 4 5.4 7 9.5 63 85.1 74 100.0 EXHIBIT 1 R e s u l t s o f D i s c r i m i n a n t A n a l y s i s C l a s s i f i c a t i o n s % C o r r e c t l y C l a s s i f i e d 77.19% P r e d i c t e d vs. Observed P r e d i c t e d Observed Ynqaot. Twnhsp. Yngapt. 82.69 17.31 Twnhse. 27.42 72.58 S i g n i f i c a n t V a r i a b l e s - Use of 2nd Mtge. - Age of Hsehold head - Number of C h i l d r e n Young Apartment vs. Townhouse Old Apartment vs. Townhouse 85.29% P r e d i c t e d Observed Oldapt. TwnhsR. Oldapt. 90.54 9.46 Twnhse. 20.97 79.03 - Percentage o f working wives - Aye of household head - Number of C h i l d r e n Young Apartment vs. Old Apartment (Excluding Age o f Household Head) 78.57% P r e d i c t e d Observed Ynqaot. OldApf-.. Yngapt. 84.62 15.38 Oldapt. 25.68 74.32 - Family income - T o t a l Monthly payment - Unit value - Reason f o r Moving - 120. 4.6 Conclusion The evidence presented here supports the conclusion that three submarkets do e x i s t within the condominium market: young apartment dwellers; townhouse dwellers; and older apartment dwellers. The d i f f e r e n t i a t i o n of the townhouse market from that of apartments i s dependent mainly on the age of the household head and the number of children. The average age of the townhouse purchaser was midway between the average ages of the young and o l d apartment purchasers. Townhouse purchasers had a higher average number of children than either apartment group. Excluding the age var i a b l e , the apartment groups are d i f f e r e n t i a t e d primarily by t h e i r f i n a n c i a l s i t u a t i o n and t h e i r motivations. The younger group had higher average incomes but lower down payments than the. older, group.. The younger group also wanted more space while the older group wanted less space and upkeep. These conclusions confirm not only the existence of the three sub-markets but also the c h a r a c t e r i s t i c s of the purchasers indicated e a r l i e r . 4.7 Motivation For Purchasing a Condominium The previous section examined the motivations of purchasers b r i e f l y i n compiling t h e i r p r o f i l e s . I t was found the younger residents bought most of the townhouses and a portion of the apartments with the desire to e s t a b l i s h an equity. The older groups purchased predominately apartments because they wanted to reduce t h e i r upkeep and space. This section w i l l examine the factors of the purchase decisions i n greater d e t a i l . 121. 4.8 Condominium Versus Single Detached House It was expected the apartment dwellers being predominantly c h i l d l e s s and concerned with less space and upkeep would not have looked for a house p r i o r to purchasing t h e i r condominium. Convers l y , townhouse residents, being l a r g e l y f a m i l i e s with children or i the c h i l d bearing age group, would consider a single detached house and therefore would be expected to shop for one p r i o r to purchasing th e i r unit. These expectations were large l y confirmed by an analysis of cross-tabulations presented i n Table 39 as only one-quarter of a l l apartment owners and one-half of a l l townhouse owners looked for a house p r i o r to buying a condominium. Table 40 presents the d i s t r i b u t i o n of those who d i d and d i d not consider a house f i r s t cross-tabulated by the tenure and structure type of the owner's p r i o r accommodation. The frequen- c i e s displayed i n t h i s table are very close to those found by 19 Hamxlton and Roberts . Of those which had owned previously, 78.6% did not look for a single family house p r i o r to purchasing t h e i r unit. This was expected as the majority already owned single family houses. Interestingly, only 8% of p r i o r condominium owners looked for a house i n d i c a t i n g a l e v e l of s a t i s f a c t i o n with the concept and a mobility between units. F i f t y - e i g h t percent of the former renters did not consider a house f i r s t ; there was no discernable pattern displayed by the r e n t a l structure types. The reasons given i n previous studies for purchasing a condominium unit rather than a single detached house have been overwhelmingly the price or economic advantage and the freedom TABLE 39 1 2 2 . T h o s e Who C o n s i d e r e d S i n g l e D e t a c h e d H o u s e P r i o r . t o P u r c h a s e o f a C o n d o m i n i u m — b y P r e s e n t S t r u c t u r e T y p e P r e s e n t S t r u c t u r e L o o k e d f o r I N o . l o u s e F i r s t % D i d N o t H o u s e N o . L o o k f o r F i r s t % Townhouse A p a r t m e n t 34 2 9 5 2 2 4 3 1 9 3 4 8 7 6 T o t a l 6 9 3 4 1 3 2 6 6 123. 20 from maintenance and upkeep . Locational factors and the provision of r e c r e a t i o n a l f a c i l i t i e s are also mentioned but are much less important. An i d e n t i c a l pattern was found i n t h i s study. The respondents were allowed to indicate up to three reasons for t h e i r purchase of a condominium over a house; the frequencies of the t o t a l number of times each reason was mentioned i s d i s - played i n Table 41. The price or economic advantage was segmented into three components: a lower price for an equal or better un i t (20.3%); lower monthly payments (15.6%); and lower down payment (10.0%). Combined they represent 45.9% of the t o t a l responses making price the most important factor. This was followed by the freedom of upkeep with 2 8% of the t o t a l . The reasons of location and the provision of r e c r e a t i o n a l f a c i l i t i e s were much, less s i g n i - f i c a n t being 13.4% and 7.7% of the t o t a l choices respectively. Examining the data by structure type reveals that freedom from upkeep i s more important to apartment purchasers than town- house purchasers as expected. High-rise residents showed a greater preference for the location factor and less for the f i n a n c i a l ones than did the other structure types. Again t h i s i s expected as high-rise buildings tend to be b u i l t closer to the central areas, therefore having s i g n i f i c a n t l o c a t i o n a l advantages and they also tend to be more expensive, thereby a t t r a c t i n g wealthier people who are less concerned with p r i c e . 4.9 Important Features of the Unit Purchase The features of the unit purchased were examined on the basis of three categories; l o c a t i o n a l factors, features within the unit, and features of the project ( i . e . , common f a c i l i t i e s and areas). TABLE 40 Those Who Considered Single Detached House P r i o r to Purchase of a Condominium - by Previous Structure Type Former Owners Previous Structure Looked for House F i r s t Did Not Hous Look f o r e F i r s t No. % No. % Single Detached 13 25 39 75 Semi-Detached 1 33 2 66 Townhouse 1 12.5 7 87.5 Low-Rise 0 0 2 100 High-Rise 0 0 2 100 Mobile Home 0 0 3 100 T o t a l Owners 15 21.4 55 78.6 Former Renters -Previous Structure Single Detached 7 39 11 61 Semi-Detached 8 53 7 47 Townhouse 0 0 0 0 Low-Rise 21 \ 39 33 61 High-Rise 14 42 19 58 Mobile Home 0 0 0 0 T o t a l Renters 50 42 70 58 T o t a l Owners and Renters 65 34 i 125 66 TA3LE 41 Reason f o r Purchasing a Condominium over a Sing l e Detached House - by Structure Type ( T o t a l Reasons) Townhouse Low-•Rise High -Rise T o t a l No. % No. % No. % No. % B e t t e r Location 19 10.8 19 11.6 24 18.6 68 13 .4 Lower F u l l P r i c e f o r Equal or Better Unit 45 25.6 34 20.7 16 12.4 103 20 .3 Lower Downpayment 22 12.5 15 9.1 10 7.3 51 10 .0 Lower Monthly Payments 23 13.1 34 20.7 .18 14.0 79 15 .6 Freedom of E x t e r i o r Upkeep 41 23.3 50 30.5 42 32.6 142 28 .0 Recr e a t i o n a l F a c i l i t i e s 17 9.7 5 3.0 10 7.6 39 7 .7 Other 9 5.1 7 4.3 9 26 5 .1 1 2 6 . REASON FOR PURCHASING A CONDOMINIUM RATHER THAN A SINGLE DETACHED HOUSE C l a s s i f y i n g the features i n t h i s manner and providing d e t a i l s within each category should provide developers with greater i n f o r - mation on what consumers desire. Asking the respondents to i d e n t i f y the important feature i n the unit w i l l not provide a complete pi c t u r e , however, as they may desire others that were not avai l a b l e i n the unit. To correct t h i s , data were also c o l l e c t e d on the features the residents would have l i k e d and would be w i l l i n g to pay more for but were not provided i n t h e i r unit. The r e s u l t s of t h i s section are examined only on the basis of t h e i r s t r u c t u r a l type. Analyzing by structure type allows the comparisons with previous studies to be made. The important l o c a t i o n a l features are displayed i n Table 42. In t o t a l , the d i s t r i b u t i o n i s very uniform covering a wide range of the t r a d i t i o n a l l y important features. Proximity to work, shopping, parkland, downtown, quiet neighbourhoods, and well maintained neighbourhoods a l l accounted for approximately 10% of the t o t a l responses. Similar r e s u l t s were obtained using only the f i r s t choice selected. The proportion of respondents that indicated that location was not a factor i n the sel e c t i o n of the unit was 12.4%. Some small differences i n the frequency of the important features c i t e d were displayed between the structure types although they were i n the anticipated d i r e c t i o n given the owners character- i s t i c s . Townhouse residents c i t e d the closeness to work, well maintained neighbourhood, and quiet neighbourhood as the most 128. important features r e f l e c t i n g t h e i r family o r i e n t a t i o n . They also had the largest percentage of respondents of any structure type that indicated that location was not a factor, 15.9%. The residents of low-rise units l i s t e d the closeness to shopping, bus routes, downtown, and a quiet neighbourhood while those i n high-rises recorded the v i c i n i t y to parkland and shopping as the most frequently mentioned features. High-rise dwellers had the lowest proportion of respondents that f e l t l o c a tion was not a factor i n the s e l e c t i o n of t h e i r unit. The most often mentioned important features within the unit were apparent good q u a l i t y construction (22.0%), larger than average room size (17.8%), scenic view (13.1%), and a large patio or balcony (10.5%) (Table 43). Townhouse residents l i s t e d apparent good q u a l i t y construction (19.9%) and larger than average room s i z e (17.0%) most frequently, while the order was reversed i n low-rise apartments being larger than average room siz e (21.2%), apparent good q u a l i t y construction ( 1 9 . 6 % ) , and q u a l i t y appliances (12.8%). High-rise residents most frequently c i t e d apparent good qu a l i t y construction (28.4%), scenic view (19.9%), and larger than average room siz e (18.4%). Overall only 5.0% of a l l respondents indicated the features of the unit were not important i n i t s s e l e c t i o n , less than half those that s i m i l a r l y indicated the l o c a t i o n factor. F i f t y - e i g h t percent of the respondents indicated they would have wanted some changes i n t h e i r unit and they would have been w i l l i n g to pay more for them. The most frequently mentioned 129 TABLE 42 Important L o c a t i o n a l Features of the U n i t by Structure Type (To t a l Choices): Townhouse Low-Rise High-Rise T o t a l No. % No. % No.. % . No. % Close to Schools 11 6.7 0 0 2 1.5 15 3.0 Closeness t o Work 29 17.7 17 10.0 16 11.9 70 13.8 Closeness t o Shopping 15 9.1 27 15.9 18 13.4 62 12.2 Closeness t o Bus Routes 4 2.4 25 14.7 16 11.9 45 8.9 Closeness t o Downtown 9 5.5 22 12.9 15 11.2 51 10.1 Near Parkland or R e c r e a t i o n a l F a c i l i t i e s 16 9.8 15 8.8 24 17.9 62 12.2 Quiet Neighbourhood 23 14.0 21 12.4 9 . 6.7 57 11.2 Well Maintained 25 15.2 15 8.8 16 I 1-9 60 11.8 Neighbourhood Dwellings Surrounding Residents of S i m i l a r Education 7 4.3 1 0.6 1 ' 0.7 10 2.0 Surrounding Residents o f S i m i l a r Income Bracket 2 1.2 1 0.6 : 3 2.2 8 1.6 Close t o F r i e n d s 8 4.9 12 7.1 7 5.2 28 5.5 Other 3 1.8 3 1.8 2 1.5 9 1.8 L o c a t i o n was not a F a c t o r i n S e l e c t i n g t h i s P r o j e c t 12 7.3 11 6.5 5 3.7 30 5.9 TABLE 43 130. I m p o r t a n t F e a t u r e s o f t h e U n i t by S t r u c t u r e Type ( T o t a l C h o i c e s ) Townhouse Low- R i s e H i g h - R i s e T o t a l No. % No. o No. % . No. % L a r g e r Than A v e r a g e 29 17.0 38 21.2 26 18.4 95 17.8 S i z e d Rooms E x i s t e n c e o f a 19 11.1 13 7.2 2 1.4 41 7.7 F i r e p l a c e U n i que D e s i g n 15 8.8 4 2.2 1 0.7 25 4.7 F e a t u r e s S u p e r i o r A p p l i a n c e s 13 7.6 23 12.8 8 5.7 49 9.2 A p p a r e n t Good 34 19.9 35 19.6 40 28.4 117 22.0 Q u a l i t y C o n s t r u c t i o n G r e a t e r t h a n A v e r a g e 11 6.4 18 10.1 10 7.1 42 7.9 S t o r a g e Space L a r g e P a t i o o r B a l c o n y 18 10.5 19 10.6 17 12.1 56 10.5 S c e n i c View 16 9.4 20 11.2 28 19.9 70 13.1 O t h e r 10 5.8 7 3.9 5 3.5 26 4.9 F e a t u r e s o f t h e 6 3.8 2 1.1 4 2.8 12 2.3 U n i t were n o t I m p o r t a n t items were greater than average storage space, f i r e p l a c e , larger than average sized rooms and large patio or balcony (Table 44). Several of these items were also mentioned as the most important reasons for the sel e c t i o n of the unit which implies that these are widely desired features but are presently found i n only some projects. The d i s t r i b u t i o n of the important features of the project are displayed i n Table 45. Well maintained common areas, land- scaping, and covered parking i n t o t a l were the most frequently mentioned items. Apartment residents also c i t e d these reasons most frequently, however, the order was changed to covered parking, well maintained common areas and landscaping. The townhouse respondents l i s t e d landscaping, adequate playground f a c i l i t i e s for ch i l d r e n , well maintained common areas and the existence of a swimming pool most frequently, again r e f l e c t i n g t h e i r family o r i e n t a t i o n . An important point should be noted from these r e s u l t s . The concern for the landscaping and maintenance of the common areas reveals the importance of the exterior appearance of the project to the residents. Therefore, one might expect that the sale price w i l l be d i r e c t l y affected by the condition of these features. To enhance property values, the present owners might ensure these areas are properly maintained and developers should note t h e i r importance when designing the project. The desired changes i n the project were indicated by 45% of the respondents and are displayed i n Table 46. Considering a l l structure types, the most frequently mentioned items were TABLE 44 ' FREQUENCY OF DESIRED CHANGES IN THE UNIT BY STRUCTURE TYPE .' . • D e s i r e d Changes i n t h e U n i t Townhouse Low-Rise H i g h - R i s e T o t a l % % % % L a r g e r t h a n Average S i z e d Rooms 16.7 9.1 18.8 14.7 E x i s t e n c e o f a F i r e p l a c e 18.5 19.7 13.2 15.7 Unique D e s i g n F e a t u r e s 11.1 10.6 9.4 10.5 S u p e r i o r A p p l i a n c e s 11.1 1.5 9.4 6.8 A p p a r e n t Good Q u a l i t y C o n s t r u c t i o n 7.4 4.5 5.7 6.8 G r e a t e r t h a n Average S t o r a g e Space ; . 16.7 13.6 22.6 18.3 L a r g e P a t i o o r B a l c o n y 11.1 15.2 11.3 13.1 S c e n i c View 5.6 16.6 3.8 8.4 O t h e r 1.9 9.1 5.7 5.8 T o t a l Respondents d e s i r i n g changes i n t h e U n i t = 118 (58%) • • • T A B L E 45 I m p o r t a n t - F e a t u r e s o f t h e P r o j e c t b y S t r u c t u r e T V H P ( T o t a l C h o i c e s ) Towi i h o u se L o w - R i s e H i g h - R i s e T o t a l N o . % Mo % N o . 1 % N o . % W e l l L a n d s c a p e d Common A r e a s 33 21 .0 27 19 .1 23 19 .2 88 19 .5 L a r g e Open G a r d e n o r 22 14 . 0 10 7 41 Wooded A r e a w i t h i n t h e O 3 . 0 9 .1 D e v e l o p m e n t A d e q u a t e P l a y g r o u n d 15 19 .6 2 1 .4 0 0 20 4 .4 F a c i l i t i e s f o r C h i l d r e n E x i s t e n c e o f a S w i m m i n g P o o l 21 13 .4 5 3 .5 9 7 .5 39 8 .6 E x i s t e n c e o f a T e n n i s C o u r t 0 0 0 0 1 0 .8 1 0 .2 E x i s t e n c e o f a W o r k s h o p 1 0. 6 5 3 .5 5 4. 2 11 2. 4 W e l l M a i n t a i n e d Common A r e a s 27 17. 30' 21. 5 26 21. 7 94 20. 8 A d e q u a t e C o v e r e d P a r k i n g 16 10. 2 35 24. 8 32 26. 7 85 18. 8 A d e q u a t e V i s i t o r P a r k i n g 7 4. 5 4 2. 8 7 5. 8 . 18 4. o O t h e r . 9 5. 7 10 7. 1 1 0. 8 23 5. 1 F e a t u r e s o f t h e P r o j e c t Were N o t I m p o r t a n t 6 3. 8 13 9. 2 10 8. 3 32 7. 1 134. r e c r e a t i o n a l f a c i l i t i e s such as swimming p o o l or t e n n i s c o u r t , covered and v i s i t o r p a r k i n g . The d e s i r e f o r more p a r k i n g and 21 r e c r e a t i o n a l f a c i l i t i e s was a l s o noted by Hamilton and Roberts 22 and N o r c r o s s . I t would appear t h a t d e velopers should undertake some c a r e f u l market a n a l y s i s . o n the demand f o r a d d i t i o n a l p a r k i n g and a m e n i t i e s . P r o v i d i n g e x t r a p a r k i n g f a c i l i t i e s may not be e c o n o m i c a l l y f e a s i b l e i n the h i g h e r d e n s i t y apartment areas as would the p r o - v i d i n g of l a r g e area r e c r e a t i o n a l f a c i l i t i e s l i k e swimming p o o l s and t e n n i s c o u r t s . How much more people would be w i l l i n g t o pay f o r these items i s unknown but i t i s u n l i k e l y i t would cover the r e q u i r e d c o s t s . The same argument cannot be as s t r o n g l y made f o r townhouse developments as they have l a r g e r open areas which c o u l d accommodate r e c r e a t i o n a l f a c i l i t i e s or e x t r a p a r k i n g . A g a i n the t r a d e - o f f between the e x t r a c o s t and the e x t r a s e l l i n g p r i c e i s unknown so a d e f i n i t i v e statement cannot be made. The important f e a t u r e s of the u n i t , both p r e s e n t and d e s i r e d , have been r e v e a l e d above. In p l a n n i n g a development, c e r t a i n t r a d e o f f s between the areas are necessary however. The respondents were t h e r e f o r e asked which was the s i n g l e most important area of concern i n the s e l e c t i o n of t h e i r u n i t . The r e s u l t s are p r e s e n t e d i n T a b l e 47. The reason most f r e q u e n t l y c i t e d was p r i c e , t h i s was p a r t i c u - l a r l y t r u e f o r the respondents i n the younger age groups and those buying the below average p r i c e u n i t s . L o c a t i o n was the next most important f e a t u r e f o l l o w e d c l o s e l y by the f e a t u r e s of the u n i t and the f e a t u r e s of the p r o j e c t . The o l d e r age group showed a g r e a t e r TABLE 46 FREQUENCY OF DESIRED CHANGES IN THE PROJECT BY STRUCTURE TYPE.. D e s i r e d Changes i n t h e P r o j e c t Townhouse .Low-Rise H i g h - R i s e % T o t a l % W e l l L a n d s c a p e d Common A r e a s 4.-8 :f ••'.V'-i.'2.2-\.v'' 0.0 3.3 L a r g e Open Garden o r Wooded A r e a s W i t h i n t h e Development 6.3 13.0 " 7.4 9.2 Adequate P l a y g r o u n d F a c i l i t i e s f o r C h i l d r e n 9.5 0.0 0.0 3.9 E x i s t e n c e o f a Swimming P o o l 12.7 23.4 44.4 22.4 E x i s t e n c e o f a T e n n i s C o u r t 15.9 13.0 22.2 15.8 E x i s t e n c e o f a Workshop 9.5 15.2 3.7 9.9 W e l l M a i n t a i n e d Common A r e a s 4.8 4.3 3.7 3.9 Adequate C o v e r e d P a r k i n g 25.4 15.2 3.7 17.8 Adequate V i s i t o r P a r k i n g 7.9 13.0 14.8 12.5 O t h e r 3.2 0.0 0.0 1.3 T o t a l Respondents d e s i r i n g changes i n t h e P r o j e c t = 90 (45%) 136. preference for l o c a t i o n a l factors both i n comparison to the other^ age groups and the other features. Those buying above average priced units were f a i r l y evenly divided between the l o c a t i o n a l factors, features within the unit, and features of the project. To summarize, the projects that are designed for the lower price bracket w i l l be purchased lar g e l y by the younger age groups that are mainly concerned with the p r i c e . The desired features should therefore be s a c r i f i c e d i n l i e u of maintaining a low p r i c e . The above average priced units catering to the older group are evenly divided between the l o c a t i o n , features of the unit and features of the project. The trade-offs should be made between these groups rather than between them and the p r i c e . The f i n a l item examined concerning the features of the unit are those that were sales attractions at the time of purchase but have been used infrequently since then. The most frequently mentioned category was that of the sauna, steam bath, and w h i r l - pools (Table 48). This was followed by the games room and s u r p r i s i n g l y the swimming pool. Unfortunately the r e s u l t s cannot be translated into proportions as the features a v a i l a b l e to each unit are unknown. Further i n v e s t i g a t i o n i s therefore required to reach d e f i n i t e conclusions on t h i s item. 4.10 Level of S a t i s f a c t i o n for Condominium Owners The l e v e l of s a t i s f a c t i o n experienced by the owners w i l l have a great e f f e c t on the future of the concept. As such the l a s t part of the owners' questionnaire inquired into the general l e v e l of s a t i s f a c t i o n and into three areas s p e c i f i c a l l y ; s a t i s f a c - t i o n with the management, the behaviour of renters and s p e c i f i c c r i t i c i s m s . 137. TABLE 47 Host Important Reason for The Selection of the Units Reason Location Feature of Features of Price Other the Unit the Project No. % No. % No. % No. % No. % Structure Type Townhouse 7 15.2 11 28.9 15 42.9 36 49.3 0 0.0 Low-Rise 22 47.8 14 36.8 10 28.6 20 27.4 2 100.0 High-Rise 16 34.8 10 26.3 10 28.6 17': 23.3 0 0.0 Total 46 100.0 38 100.0 35 100.0 73 100.0 2 100.0 Age Group Under 30 7 15.2 8 21.0 6 17.1 22 ' 30.1 0 0.0 30 - 39 5 • 10.9 9 23.7 7 20.0 28 38.4 1 50.0 4 0 - 4 9 7 15.2 2 5.3 4 11.4 5. 6.8 0 0.0 Over 49 27 58.7 19 50.0 18 51.4 18 24.7 "1 50.0 Price of Unit Under Average 18 39.1 13 34.2 11 31.4 55 75.3 1 50.0 Price (By Year and Struc- ' ture Type) Over Average 28 60.9 25 65.8 24 68.6 18 24.7 1 50.0 Price (By Year and Struc- ture Type) TABLE 48 . Frequency o f Unused S a l e s A t t r a c t i o n s by S t r u c t u r e Type Townhouse L o w - R i s e H i q h - R i s e T o t a l Unused S a l e s A t t r a c t i o n s No. No. % No. % Wo. % Swiriming Pool 15 1 7 . 6 3 4 . 3 1 1 . 4 22 9 . 0 Tennis C o u r t 0 0 . 0 0 0 . 0 2 ' 2 . 9 2 0 . 1 Sames Room 9 1 0 . 6 8 1 1 . 4 11 1 5 . 9 30 1 2 . 3 Sauna , S t e a m , B a t h , 16 1 8 . 8 11 1 5 . 7 15 2 1 . 7 48 1 9 . 7 W h i r l p o o l P laygrounds 2 2 . 4 0 0 . 0 0 0 . 0 3 1 . 2 Garden A r e a s -6 . 7 . 1 2 2 . 9 6 . 8 . 7 14 5 .7 Workshop 0 0 . 0 5 7 . 1 8 1 1 . 6 " 1 5 6 . 1 Other 2 2 . 4 4 5 . 7 2 2 . 9 8 3 . 3 P r o j e c t does riot have any common f e a t u r e s 20 2 3 . 5 24 3 4 . 3 2 0 . 3 58 2 3 . 8 M l t h e f e a t u r e s a r e used r e g u l a r l y 15 1 7 . 6 13 1 8 . 6 10 1 4 . 5 44 1 8 . 0 139. 4.11 General Level of S a t i s f a c t i o n The l e v e l of s a t i s f a c t i o n i s l i k e l y to be influenced by the extent of the pre-purchase knowledge of the condominium concept. In turn, the l e v e l of knowledge may depend on the method of pur- chase. Table 49 displays both the source of purchase and the perceived l e v e l of information received from the source. The majority of purchases were made from the developers or t h e i r sales agents (74.5%), only 25.5% were resales. Of the sales made by the developer, 88% were from the developer's own salesmen, the rest being made through an independent agent. Sixty-four percent of the purchases made from a previous owner were also handled by an independent agent. Hamilton and Roberts hypothesized that the developer's agents, being s p e c i a l i s t s , would better inform the purchaser than 23 alternate sources . The evidence they received was not conclusive but they concluded the developer's salesmen had done a reasonably good job of educating the purchasers. Independent agents were found to be either very good or very poor, with no middle p o s i t i o n . Furthermore, while the r e s p o n s i b i l i t y of the vendor or his agent to educate the prospective purchasers was recognized, the purchaser himself must also bear part of the burden. Overall, these e a r l i e r conclusions are i n accordance with the findings of t h i s study. Of a l l purchasers, 32% f e l t they were very well informed, 44% were moderately well informed and 23.5% were poorly informed. There were no s i g n i f i c a n t differences i n the l e v e l of education based on the type of vendor. Unfortunately, the few number of purchases made from the developer through an independent agent T A B L E 49 140. Extent of Purchasers Knowledge by Method of Purchase Source of Purchase Very w e l l i No. nformed % Mode Ini No. j r a t e l y [formed % • Po Inf No. o r l y ormed % From Developer Developer's Salesman Independent Agent T o t a l 41 3 32.0 16.7 57 12 44.5 66.7 30 3 23.4 16.7 44 30.1 69. 47.3 33 22.6 From Previous Owner D i r e c t l y from Owner- Independent Agent T o t a l 8 11 44.4 . 34.4 6 12 33.3 37.5 4 9 22.2 28.1 19 38.0 18 36.0 13 26.0 Grand T o t a l 63 32.1 87 44 .4 46 23.5 141. or d i r e c t l y from the owner makes the evaluation of the agent's performance r e l a t i v e to the others precarious. Combining the sales made from both types of vendors through an independent agent, the same proportion (77%) of purchasers were very well or moderately well informed as those that purchased from the vendor d i r e c t l y or through his own agent. Independent agents then do not appear to be any better or worse at informing purchasers than the other sources. The owners were asked to what extent t h e i r expectations regarding condominium l i v i n g have been s a t i s f i e d . Eighty-eight percent reported that they were very well or moderately well s a t i s f i e d . Only 12% of the respondents indicated being moder- ately or very d i s s a t i s f i e d and the analysis of s a t i s f a c t i o n by age group, income group, structure type, unit's purchase p r i c e , management type, or length of residence provided no clear patterns of s a t i s f a c t i o n . However, the l e v e l of s a t i s f a c t i o n does appear to be p o s i t i v e l y correlated with the extent of pre- purchase knowledge (Table 50). Developers and agents handling condominiums, interested i n the long run success of the condo- minium concept, could play an important role i n properly educating t h e i r customers. The r e s u l t s discussed above p a r a l l e l e d those received when the owners were asked i f , knowing what they d i d of condominium l i v i n g at the time of the survey, would they s t i l l have purchased t h e i r u n i t . Eighty percent responded a f f i r m a t i v e l y , 8% higher than the response on the Hamilton and Roberts (1973) study. The r e s u l t s reveal the l e v e l of s a t i s f a c t i o n with condominium l i v i n g has remained high and i s not a major problem area. 4.12 S p e c i f i c Problem Areas The p a r t i c u l a r areas that have received owner complaints i n the past are the management and the behaviour of renters i n the projects. The questionnaire provided a d e f i n i t i o n of management for the respondents to ensure there would be no confusion as to 24 the meaning . The types of management were divided into two categories: professional management firms and the condominium association. Professional management firms are independent companies that perform the accounting, administrative, and super- visory duties on behalf of the s t r a t a corporation for a fee. Projects that are managed by the condominium association have the same duties performed, v o l u n t a r i l y by members of the s t r a t a corporation, usually by the s t r a t a council. O v e r a l l , 8 0.9% of the respondents were s a t i s f i e d with the management. The professional management firms did not rate as highly as the condominium association as only 75% were s a t i s f i e d under t h e i r d i r e c t i o n versus 91% for the condominium association. This may be the r e s u l t of two factors both pertaining to the fact that management firms tend to manage the larger projects (see l a t e r section on condominium management). F i r s t l y , the larger average size of the projects means the same number of projects may be poorly managed by both the professional firms and the condominium association, yet a greater number of responses would be recorded against the professional management group. Secondly, the larger TABLE 50 143. Extent of Purchaser's Knowledge by the Le v e l of S a t i s f a c t i o n L e v e l of S a t i s f a c t i o n Very w e l l s a t i s f i e d Moderately s a t i s f i e d Moderately d i s s a t i s f i e d Very d i s s a t i s f i e d T o t a l Ver Inf No. y Well ormed % Mod Well No. e r a t e l y Informed % Poe Inf< No. Drly Drmed % Tc No. t a l % 31 32 3 0 44.9 29.4 17.6 0 28 49 10 2 40.6 45.0 58.8 28.6 10 28 4 5 14.5 25.7 23.5 71.4 69 109 17 7 100 100 100 100 66 32.7 89 44.1 47 23.3 202 100 144. the project, the more d i f f i c u l t i t i s to be i n contact with a l l the residents and the more d i f f i c u l t i t i s to f u l l y explain a l l the problems. This would cause greater f e e l i n g of a l i e n a t i o n and loss of control and hence greater d i s s a t i s f a c t i o n on the part of the owners. 4.13 Reaction of Tenants The information covering the renters was c o l l e c t e d i n a four part question that was designed to have only those that had f i r s t hand knowledge of renters i n the project respond as to t h e i r behaviour. In doing so t h i s would eliminate those that were merely repeating heresay and give a c l e a r e r i n d i c a t i o n of the true scope of the problem. There were some problems encountered however as 66 respondents stated they knew of renters i n the pro- j e c t yet 88 responded to the question regarding the behaviour of the tenants. Normally th i s could cast doubt on the v a l i d i t y of the r e s u l t s , however, since the r e s u l t s are nearly unanimous t h i s compensates for the c o l l e c t i o n problem. 9 6.6 percent of the respondents stated the renters' behaviour was generally worse than that of other owners. I t i s d i f f i c u l t to understand how or why the renters' behaviour i s so poor i n compari- son to those of other owners. One of the management firms sugges- ted the difference was more perceived than r e a l according to the seriousness of the complaints they receive regarding renters. Information i s not available to confirm t h i s hypothesis or explain the bias, i f any. 145. 4.14 S p e c i f i c C r i t i c i s m s Concerning Condominiums The most important s p e c i f i c c r i t i c i s m s are displayed i n Table 51. They follow the same pattern established i n the previous study with the lack of soundproofing the most common complaint followed by "people problems." Poor soundproofing accounted for 40.5% of the f i r s t mentioned complaints and 22.1% of the t o t a l . The poor attitude of other owners (19.1% and 19.5%) was next followed by uncontrolled c h i l d r e n (9.2% and 9.7%). On the basis of structure type (Table 52) the complaint of poor soundproofing was most prevalent from apartment residents as expected given t h e i r higher density. The complaints against children was highest i n townhouse responses, again as expected given the greater number of children present. The r e p e t i t i o n of poor soundproofing as the single most frequent complaint gives cause to question the design of the projects. As i n the discussion of the features of the un i t , however, a balancing between cost and benefits must be achieved. Without further information on the price e l a s t i c i t y of the value of soundproofing to the consumers a conclusion regarding the design of the units cannot be reached. The complaints against condominium l i v i n g are largely the r e s u l t of higher density l i v i n g rather than a problem with the concept i t s e l f . I t i s doubtful that complete unanimity w i l l ever be achieved between a group of people l i v i n g i n r e l a t i v e l y close association. Only cooperation and understanding of those involved w i l l ensure a reasonable l e v e l of s a t i s f a c t i o n for a l l . TABLE 51 1 4 6 . Most important C r i t i c i s m s Of Condominiums Number of Times Mentioned F i r s t Second T h i r d T o t a l . C r i t i c i s m s No. % No. % No. % No. % Poor Soundproofing 53 40.5 10 10.0 3 4.5 66 22.1 Poor Con s t r u c t i o n 10 7.6 21 21.0 6 9.0 37 12.4 Lack of Pr i v a c y ' 5 3.8 14 14.0 6 9.0 25 8.4 Poor A t t i t u d e of Other Owners 25 19.1 14 14.0 19 28.4 58 19.5 Uncontrolled C h i l d r e n I.2 9.2 9 9.0 8 11.9 29 9.7 Uncontrolled Pets 5 3.8 17 17.0 12 17.9 34 11.4 Poor Management 7 5.3 6 6.0 5 7.5 18 6.0 Poor Upkeep 3 2.3 •• 5 5.0 4 6.0 12 4.0 Other 11 8.4 4 4.0 4 6.0 19 6.4 TABLE 52 Most Important C r i t i c i s m by Structure Type - F i r s t Mentioned St r u c t u r e Type Townhouse Low-Rise High-Rise Mixed C r i t i c i s m No. % No. % No. % No. % Poor Soundproofing 13 27.7 25 55.6 13 44.8 2 20 Poor C o n s t r u c t i o n 3 6.4 1 2.2 3 10.3 3 30 Lack of Privacy 4 8.5 1 2.2 0 0 0 0 Poor A t t i t u d e of Other 11 23.4 7 15.6 6 20.6 1 10 Owners Unc o n t r o l l e d C h i l d r e n 7 14.9 3 6.7 1 3.5 1 10 Unc o n t r o l l e d Pets 4 8.5 1 2.2 0 0 0 0 Poor Management 2 4.3 3 6.7 0 0 2 20 Poor Upkeep 2 4.3 0 0 1 3.5 0 0 Other 1 2.1 4 4.4 5 17.2 1 10 T o t a l 47 100 45 100 29 100 10 100 148. Given the general l e v e l of s a t i s f a c t i o n noted e a r l i e r and the frequency with which condominium owners purchase other condo- miniums , i t i s not l i k e l y the complaints expressed i n t h i s section are overly serious. 4.15 Tenant's P r o f i l e The primary intention of the tenants questionnaire was to determine the proportion of condominium residents that were tenants. These r e s u l t s have been discussed previously. A secondary intention was to provide a p r o f i l e that could be com- pared to the owners. As only 34 tenant questionnaires were re- turned only some general statements w i l l be made; the small response does not permit extensive analysis. The majority of the households (88%) contained 2 adults and had no children (62%). The household heads tended to be much younger than those in condominiums as 56% were under 30 years old and only 24% over 4 0 years old. The tenants tended to have a s i m i l a r income d i s t r i b u t i o n to condominium owners as approxi- mately one-half were below $16,000 and the other half above. The respondents were asked i f they considered the purchase of a single family dwelling or a condominium unit p r i o r to rent- ing t h e i r unit. The overwhelming majority in both cases did not consider any purchase (76.5% and 71.4% re s p e c t i v e l y ) . There were too few responses as to the reasons why they did not purchase to provide r e l i a b l e r e s u l t s . When asked t h e i r future intentions, 50% d e f i n i t e l y planned to purchase a home within the next f i v e years while another 17.6% were uncertain. Of those intending 149. to purchase, 88% intend to purchase a single family dwelling. 4.16 Conclusion At the s t a r t of t h i s chapter several objects were outlined: to provide a p r o f i l e of the e x i s t i n g owners, i d e n t i f y t h e i r motivations for purchase, and to e s t a b l i s h t h e i r l e v e l of s a t i s - f a c t i o n with the concept. These objectives have been met. I t was found the p r o f i l e of the owners, t h e i r motivations and the l e v e l of s a t i s f a c t i o n has changed very l i t t l e from the Hamilton and Roberts study i n 1973. This indicates the present oversupply of condominiums i s not due to unanticipated changes i n the type of consumers or a general l e v e l of d i s s a t i s f a c t i o n with the concept but rather i s due to an over zealous development industry. 150. FOOTNOTES 1. Hamilton, S.W. and Roberts, R., Condominium Development and Ownership, Real Estate Board of Greater Vancouver, Vancouver, 1973. 2. Eger, A.F., "Choice i n Housing", Housing: Its Your Move, Volume I I , Technical Reports, The Urban Land Economics D i v i s i o n , Faculty of Commerce and Business Administration, University of B r i t i s h Columbia, Vancouver, 1976. 3. Hamilton and Roberts, op. c i t . 4. Hamilton, S.W., Davis, I., and Lowden, J . , Condominium Development i n Metropolitan Vancouver, The Real Estate Council of B r i t i s h Columbia, Vancouver, 1971. 5. Condominium Research Associates, National Survey of Condominium Owners, Condominium Research Associates, Toronto, 1970. 6. Norcross, C , Townhouses and Condominiums: Residents' Likes and D i s l i k e s , The Urban Land I n s t i t u t e , Washington, D.c, 1973. 7. S t a t i s t i c s Canada, 1971 Census of Canada, Population - Age- Groups, Catalogue 92-715, Volume I, Part 2, A p r i l , 1973. 8. The respondents indicated they were employed i n one of 13 categories which were l a t e r reduced to 5. Professionals consisted of professionals and managerial po s i t i o n s , semi- s k i l l e d and s k i l l e d were tradesmen, sales, service, and c l e r i c a l workers, the "other" category i s made up of home- makers, students, and those that c l a s s i f i e d themselves as other, the u n s k i l l e d and r e t i r e d c l a s s i f i c a t i o n s need no explanation. 9. Eger, op. c i t . , p. 17. 10. The average family income i n B.C. during 1976 was $16,915. (Source: S t a t i s t i c s Canada, Income D i s t r i b u t i o n by Size i n Canada, Catalogue 13-206, 1976.) This figure was adjusted upwards by 8% to give an estimated figure of $18,270. 11. Hamilton and Roberts, op. c i t . , . p. 27. 12. A $40,000 unit with a 20% down payment, monthly property taxes of $50.00 and a mortgage at 11% would require a minimum of $17,000 income to q u a l i f y for a 25% debt service r a t i o . 13. Brown, Ian, That Classy Touch - Condominiums Promise a Way . of L i f e , F i n a n c i a l Post, Maclean-Hunter, Toronto, Ontario, July 2, 1977. 151. 14. Hamilton and Roberts, op. c i t . , p. 43. 15. Ibid. p. 27. 16. Ricketts, Mark, No Down Payment Lures the Renters, F i n a n c i a l Post, Maclean-Hunter, Toronto, June 4, 19 77, p. 2. 17. Eger, op. c i t . , p. 11. 18. The 13 variables used were:- 1. household income 2. loan-to-value r a t i o 3. existence of second mortgage 4. percentage of previous home ownership 5. existence of working spouse 6. t o t a l monthly payments 7. condominium purchase p r i c e 8. marital status 9. age of household head 10. occupation of household head 11. number of children 12. education of household head 13. reason for moving 19. Hamilton and Roberts, op. c i t . , p. 37. 20. See Appendix 4.1. 21. Hamilton and Roberts, op. c i t . , p. 44. 22. Norcross, op. c i t . pp. 8 and 10. 23. Hamilton and Roberts, op. c i t . , p. 35. 24. The d e f i n i t i o n of management which was provided was as follows:- "management" re f e r s to the administration of the by-laws, maintenance fund, etc., not to the caretaking or maintenance function i t s e l f . " l 152. Chapter 5 Condominium Development and Management 5.1 Introduction This chapter w i l l deal with the parti c i p a n t s i n the condo- minium market that are responsible for the development of the projects and t h e i r management on completion. The developers w i l l be examined f i r s t with the objective of defining the composition of the development sector and the c h a r a c t e r i s t i c s of the firms involved. The management and administration of the condominium projects i s the r e s p o n s i b i l i t y of the s t r a t a councils and the professional management firms. Both groups w i l l be examined but the major emphasis w i l l be on the management firms. 5.2 Data C o l l e c t i o n and Sample. Size - Developers Two sources of data were used i n the examination of condo- minium developers. F i r s t , the name of the developers was c o l - lected from the s t r a t a plans registered i n the Land Registry O f f i c e s . This method provided comprehensive information on the a c t i v i t i e s of developers but i t i s l i m i t e d by the following f a c t o r s : a) some names were i l l e g i b l e , b) the practice of es t a b l i s h i n g a separate company for the development of each s t r a t a project, and d i s s o l v i n g the company on completion of the project. Consequently a single p r i n c i p a l or group of p r i n c i p a l could be respon- s i b l e for several developments but t h e i r name could not be linked to a l l projects, 153. c) the use of subsidiary firms to develop the projects. Again the l i n k i n g of the subsidiaries together and to the parent was not possible,"'" d) firms changing t h e i r name. Where the change was known the development a c t i v i t i e s were grouped under a single code, e) time and budget constraints precluded the c o l l e c t i o n of a l l the developers' names i n the Kamloops Land Registry O f f i c e , however i n 50% of the projects the developer was i d e n t i f i e d . U t i l i z i n g the L.R.O. data i t was possible to i d e n t i f y the devel- 2 opers of 94% of the units and 90% of the projects. The second data source was a survey of developers conducted during the summer of 1977. The names were i d e n t i f i e d from the L.R.O. l i s t of developers, however there was s i g n i f i c a n t d i f f i - 3 culty i n contacting the registered firms. This was the r e s u l t of the l i m i t a t i o n s i n the o r i g i n a l data and subsequently the companies not being l i s t e d i n the telephone or business d i r e c t - o r i e s . S i x t y - f i v e firms active i n the Metropolitan Vancouver and V i c t o r i a markets were sent questionnaires and 25 were re- turned completed. These firms accounted for 35% of the 13,325 units i n these metropolitan areas and 26% of the 18,925 units developed i n the province, during the 1976-1977 period. Eleven of these firms were also interviewed. 154. 1 Developers' A c t i v i t i e s In t o t a l , 1,261 separate developers' names were i d e n t i f i e d from the L.R.O. records, t h i s i n i t s e l f indicates there are a large number of par t i c i p a n t s active i n t h i s aspect of the condominium market. The i d e n t i f i e d firms were responsible f o r 43,664 units and 2,128 projects from 1968 to November 30, 1977. The d i s t r i b u t i o n s of these developers' a c t i v i t i e s are displayed i n Table 53. The f i r s t point to note i n Table 53 i s that the majority of firms (78%) had produced only one project, these accounted f o r 46% of the projects and 35% of the units. Conversely, only 14 firms (1%) had done more than 10 projects but these involved 15% of the projects and 24% of the units. Comparing the a c t i v i t y in terms of the number of units produced a s i m i l a r dichotomy. T h i r t y - four percent of the firms had done only 1-2 units, e s s e n t i a l l y duplexes, while 77 firms (6%) had produced over 99 units. The l a t t e r firms were responsible for 21% of the projects and 56% of the un i t s . One may now conclude that while there are a s i g n i f i - cant number of entrepreneurs only a small proportion are responsible for a s i g n i f i c a n t portion of a l l developments. The same conclusion i s applicable to the Metropolitan * Vancouver and V i c t o r i a areas (Table 54). Eighty percent of the * I t should be noted that these tables r e f e r to the a c t i v i t y of the developers within each subarea and therefore adding the number of firms i n any one size category across the three areas w i l l not necessarily equal the number of firms i n that category when the province as a whole i s considered. Regional t o t a l s , however, w i l l always sum to the p r o v i n c i a l t o t a l . TABLE 53 D E V E L O P E R A C T I V I T Y P R O V I N C E A. DEVELOPER'S PROJECT DISTRIBUTION # Proj- ects F I R M * S C H A R A C T E R I S T I C S per Firm # Firms # Proj- ects # Units U N I T D I S T R I B U T I O N DEVELOPERS * AVERAGE PROJEC r SIZE DISTRIBUTION (UNITS) 1-2 3-9 10-19 20-39 40-59 60-99 100-499 500+ 0-2.99 3-4.99 5--9.99 10-19.99 20-29.99 30-49.99 50-99.99 100+ 1 979 979 15167 427 135 145 179 54 23 16 0 427 57 78 145 105 105 46 16 2 143 286 4812 0 54 15 23 19 23 9 • 0 48 6 15 23 19 23 8 1 3- 4 81 271 5803 0 26 3 7 9 13 22 1 25 A 1 6 13 14 13 4 2 5- 9 44 278 7335 0 0 16 1 2 3 20 2 16 1 3 4 3 8 9 0 10-19 8 111 1879 0 0 0 4 0 1 2 1 4 0 1 0 0 3 0 0 20+ 6 203 8668 0 0 0 0 2 0 0 4 2 0 0 0 1 1 1 1 B. DEVELOPER'S UNIT DISTRIBUTION # Units par Firm F I R M ' S C H A R A C T E R I S T I C S J # Proj- ects # Units PROJECT DISTRIBUTION DEVELOPERS' AVERAGE PROJECT SIZE DISTRIBUTION (UNITS) Firms 1 2 3-4 5-9 10-19 20+ 0-2.99 3-4.99 5-9.99 10-19.99 20-29.99 30-49.99 50--99.99 100+ 1- 2 427 427 853 427 0 0 0 0 0 427 0 0 0 0 0 0 0 3- 9 215 327 1157 135 54 26 0 0 0 73 ' 6 4 78 0 0 0 0 0 10-19 179 291 2514 145 15 3 16 0 0 16 3 15 145 0 0 0 0 20-39 214 306 6018 179 23 7 1 4 0 4 1 6 24 105 74 .0 0 40-59 86 180 4081 54 19 9 2 0 2 2 . 0 2 9 19 31 23 0 60-99 63 146 4540 23 23 13 3 1 0 0 0 2 5 9 24 23 o 100-499 69 260 13360 16 9 22 20 ' 2 0 0 0 0 2 8 22 19 18 500+ 8 191 11141 0 0 1 2 1 4 0 0 0 0 1 2 3 2 156 . TABLE 53 (cont'd) D E V E L O P E R A C T I V I T Y - P R O V I N C E C. DEVELOPER'S AVERAGE PROJECT SIZE Average Devel- oper's Project Size # Firms F I R M ' c C H A R A C T E R I S T I C S # Proj- ects # Units 1-2 U N I T D I S T R I B U T I O N 100-499 500+ PROJECT DISTRIBUTION 20+ 3-9 10-19 20-39 40-59 60-99 1 2 3-4 5-9 10-19 0- 2.99 522 810 1619 427 73 16 4 2 0 0 0 427 48 25 16 4 2 3- 4.99 68 88 327 0 64 3 1 0 0 0 0 57 6 4 1 0 0 5- 9.99 103 164 1154 0 78 15 6 2 2 0 0 78 15 6 3 1 0 10-19.99 185 258 3762 0 0 145 24 g 5 2 0 145 23 13 4 0 o 20-29.99 142 245 5844 0 0 0 105 19 9 8 1 105 19 14 3 0 1 30-49.99 153 321 11744 0 0 0 74 31 24 22 2 105 23 13 8 3 1 50-99.99 68 198 13861 0 0 0 0 23 23 19 3 46 3 4 9 0 1 100+ 20 44 5353 0 0 0 0 0 0 18 2 16 1 2 0 0 1 firms i n Metropolitan Vancouver and 76% i n Metropolitan V i c t o r i a had developed only one project. One percent and less than 1% of the firms i n each area respectively had developed 10 or more pro- j e c t s involving 32% of the units in Metropolitan Vancouver and 13% of the units i n Metropolitan V i c t o r i a . Examining the number of units per firm i n each area reveals a s i m i l a r trend. Again i t can be concluded that a small number of firms are responsible for a . s i g n i f i c a n t portion of the development i n each area. I t i s also noted that these firms are i n the largest categories i n Metropolitan Vancouver but moreso in the medium range i n Metro- p o l i t a n V i c t o r i a . The most s i g n i f i c a n t number of firms i n each area are small i n terms of number of units and number of projects Comparisons between the rest of the Province area and the other regions cannot be made with any accuracy due to the data c o l l e c t i o n problems i n the Kamloops L.R.O. as noted previously. Having examined the developers' a c t i v i t i e s i n general terms the two polar extremes w i l l be examined i n greater d e t a i l . 5.3.2 The Top Twenty Table 55 presents the top twenty firms i n terms of the numbe of units produced. The top f i v e firms produced 62.5% of the pro- jec t s and 58.9% of the units of the t o t a l production of the top twenty firms. This accounted for 7.4% of the projects and 20.1% of the units i n B r i t i s h Columbia. The a d d i t i o n a l f i f t e e n firms increased the percentage of t o t a l production to 11.7% of projects and 34.1% of units i n the province. The f i r s t conclusion that can be drawn i s that even within the group of the largest firms there i s a small number that dominate in terms of production. 158 . I TABLE 54 DEVELOPER ACTIVITY BY R3GION Province Metropolitan Vancouver Metropolitan V i c t o r i a Rest of Province # Projects Firms n<=>r f i rn $ % Projects Units # % # % Firms # % Projects Units # % # % Firms . # % Pr # Djects Units % t • % Firms # % Projects Units # # i 1 979 78 979 46 15167 35 557 80 557 . 46 8663 29 213 76 213 50 2560 46 249 77 249 50 4875 57 2 143 11 286 13 4812 11 65 9 130 11 2356 8 35 12 70 16 941 17 43 13 86 17 1276 15 3-4 81 6 271 13 5803 13 39 6 132 11 3818 13 21 8 71 17 924 17 15 5 54 11 1141 13 5-9 44 3 278 13 7335 17 23 3 144 12 5397 18 10 4 62 14 1013 18 12 4 76 15 1147 13 10-19 8 <1 111 5 1879 4 6 <1 87 7 3233 11 1 <1 13 3 69 13 1 <1 10 20 20 <1 20+ 6 <1 203 10 8668 20 4 <1 149 12 6183 21 0 0 0 0 0 0 1 <1 26 5 52 1 T o t a l 1261 100 2128 100 43664 100 694 100 1199 100 29650 100 280 100 429 100 5507 100 322 100 501 100 8511 100 I units per f i r m 1-2 427 34 427 20 853 2 270 39 270 23 540 2 112 40 112 26 223 4 59 18 59 12 118 1 3-9 215 17 327 15 1157 3 102 15 151 13 531 2 54 19 87 20 307 6 65 20 94 19 353 4 10-19 179 14 291 14 2514 6 81 12 123 10 1159 4 41 15 78 18 568 10 61 19 95 19 847 10 20-39 .214 17 306 14 6018 14 105 15 150 13 3024 10 34 12 • 44 10 942 17 80 25 108 22 2201 26 40-59 86 7 180 9 4081 9 55 8 100 8 2592 9 11 4 22 5 550 10 21 7 53 11 987 12 60-99 63 5 146 7 4540 10 32 5 69 6 2284 8 19 7 48 11 1385 25 17 5 29 6 1205 14 100-499 69 5 260 12 13360 30 42 6 : 189 16 9674 33 9 3 33 9 15 32 28 19 6 63 13 2800 33 500 + 8 <1 191 9 11141 26 7 1 147 12 9846 33 0 0 0 0 0 0 0 0 0 0 0 0 T o t a l 1261 100 2128 100 4 3664 100 694 101 1199 100 29650 100 280 100 429 100 5507 100 322 100 501 100 8511 100 Average developers' project s i z e 0-2.99 522 41 810 38 1619 4 314 45 4 50. 38 900 3 135 48 188 4 4 375 7 88 27 180 36 360 4 3-4.99 68 5 88 4 327 <1 31 4 32 3 117 0 22 8 35 8 135 2 17 5 23 5 83 1 5-9.99 103 8 164 8 1154 3 44 6 61 5 438 1 24 9 47 11 321 6 33 10 43 9 291 3 10-19.99 185 15 258 12 3762 9 91 1 153 13 2243 8 ' 40 14 62 14 944 17 63 20 84 17 1188 14 20-29.99 142 11 245 12 5844 13 69 10 100 8 2419 8 23 8 41 10 1009 18 50 16 66 13 1589 19 30-49.99 153 12 321 15 11744 27 87 13 211 18 7842 26 23 8 37 9 1360 25 45 14 69 14 2429 29 50-99.99 68 5 198 9 13861 32 44 6 160 13 11550 39 11 4 17 4 1121 20 21 7 29 6 1748 21 100+ 20 3 44 2 5353 12 14 2 32 3 4141 14 2 1 2 .<.! 242 4 5 2 7 1 823 10 T o t a l - r 1261 100 2128 100 4 36G4 100 694 100 11- - 100 29 6 50 100 280 100 429 100 5507 100 322 100 501 100 8511 100 159. T A B L E 55 PERCENTAGE OF DEVELOPMENT - TOP 20 DEVELOPERS IN TERMS OF UNITS percentage of Average15 pSuctdon Percentage G f # # Project ^oauction a l l production (B.C.) TO£ Project Units Size Project Units Project Units 1 - 5 172 9,347 54.3 62.5% 58.9% 7.4% 20.1% 6 -10 39 2,754 70.6 14.2 17.4 1.6 5.9 i l -15 35 2,074 59.3 12.7 13.1 1.5 4.5 16 -20 29 1,686 58.1 10.5 10.6 1.2 3.6 TOTAL 275 15,861 57.7 100.0%* 100.0 11.7% 34.1% * Rounding Error (1) Average for a l l Projects in B.C. 19.8 units/proj. 160. A l l of the top f i v e firms i n terms of units are i n the top ten firms i n terms of projects. Of the other f i f t e e n , however, only four are i n the top twenty firms i n terms of projects. The dominance of the production of units v i s - a - v i s the production of projects i s explained by the average project s i z e . The average project size for the top twenty firms was 57.7 units per project versus 18.8 for the province. The top f i v e firms i n terms of projects (Table 56) were responsible for 50% of the projects and 56% of the units of the top twenty firms. The production of the top f i v e firms accounted for 7.8% of the projects and 14.2% of the units i n the province. The remaining firms accounted for an a d d i t i o n a l 7.8% of a l l pro- jec t s and 11.3% of a l l units developed i n the province. The average project size of these twenty firms i s considerably smaller than that of the top firms i n terms of units. Much of t h i s i s att r i b u t e d to the fac t that eight of the largest firms i n terms of projects only produced duplexes ( t o t a l l i n g 116 projects, 232 u n i t s ) . The firms that had the largest average project s i z e are presented i n Table 57. Only two of these firms were i n the top twenty i n terms of units, and only one was i n the top twenty i n terms of projects. Further, these firms only accounted for 1.9% of a l l units in B r i t i s h Columbia, far less than that of the other two "top twenty". Therefore the firms producing the largest average project sizes are not responsible for a s i g n i f i c a n t proportion of the number of units i n the province. T A B L E 56 PERCENTAGE OF DEVELOPMENTS -• TOP 20 DEVELOPERS IN TERMS OF PROJECTS AVERAGE % OF TOP PROJ- 20 PRODUCTION PROJ- # ECTS PROJ- TOP ECTS UNITS SIZE ECTS UNITS 1- 5 183 6,606 36.1 50.0% 55,9% 6-10 84 2,998 35.7 23.0 25.4 11-15 56 1,627 29.1 15.3 13.8 16-20 43 583 13.6 11.7 4.9 TOTAL 366 11,814 32.3 100.0% 100.0% 161. % OF ALL PRODUCTION (B.C.) PROJ- ECTS UNITS 7.8% 14.2% 3.6 6.5 2.4 3.5 1.8 1.3 15.6% 25.5% (1) Average f o r a l l Projects i n B.C. 19.8 units/project. 1621 TOP TWENTY DEVELOPERS IN TERMS OF AVERAGE PROJECT SIZE % OF TOP 20's % OF ALL PRODUCTION PRODUCTION (B.C.) PROJ- # ECTS PROJ- PROJ-TOP ECTS UNITS SIZE ECTS UNITS ECTS UNITS f i - 5 7 1,221 174.4 15.9% 22.8% 2.6% 0.3% 6-10 5 727 145.4 11.4 13.6 1.6 0.2 11-15 6 698 116.3 13.6 13.0 1.5 0.3 19-20 26 2,707 104.1 .. 59.1 50.6 5.8 1.1 TOTAL 44 5,353 121.6 100.0 100.0 11.5 1.9 B.C. Average project size = 19.3 units per project. 163. One i s cautioned on the int e r p r e t a t i o n of the l a s t conclusion. I t referred to the average project sizes while the following top twenty refers to the developers of the largest projects. These projects ranged i n s i z e from 507 units to 150 units i n a single phase and account for 9.3% of the units i n the province. Ten of these projects were developed by the top six firms i n terms of units and projects. An addit i o n a l 15% of the projects were developed by firms i n the top ten i n terms of units. If the largest f o r t y projects (507 units to 129 units i n size) are con- sidered, 75% of them were developed by firms i n the top twenty i n terms of units. From the preceding information i t can be concluded that the largest twenty firms i n terms of units obtained t h i s status by eithe r producing several medium-sized projects (35% of the firms produced 13 or more projects, aver- aging 51.5 units per project) or a few large-sized projects (65% produced less than 10 projects, averaging 73.8 units per p r o j e c t ) . The geographical d i s t r i b u t i o n of the production of the top twenty firms i n terms of units i s presented i n Table 58. These firms are heavily concentrated i n the Metropolitan Vancouver market. Ninety-two percent of the projects and units these firms developed l i e within t h i s area and they represent 20% of the pro- jects and almost one half of the units i n t h i s region. Further, 28% of the units and 13% of the projects i n Metropolitan Vancouver were developed by the top f i v e firms. 5.3.3 Small Development Firms Small developers are defined as those having produced less 164 . TABLE 58 PERCENTAGE OF DEVELOPMENT ACTIVITY BY AREA - TOP 20 FIRMS IN TERMS OF UNITS METROPOLITAN VANCOUVER METROPOLITAN VICTORIA REST OF PROVINCE % OF TOTAL DEVELOPMENT IN REGION % OF TOTAL DEVELOPMENT IN REGION % OF TOTAL DEVELOPMENT IN REGICN TOP FIRMS PROJ- ECTS UNITS PROJ- ECTS UNITS PROJ- ECTS UNITS PROJ- ECTS UNITS PROJ- ECTS UNITS PROJ- ECTS UNITS 1- 5 161 8,613 12.8% 28.2% 3 147 0.7% 2.7% 8 587 1.2% 5.7% 6-10 37 2,654 2.9% 8.7% 0 0 0.0% 0.0% 2 100 0.3% 1.0% 11-15 27 1,608 2.1% 5.3% 7 448 1.6% 8.1% 1 18 0.1% » 0.2% 16-20 29 1,686 2.3% 5.5% 0 0 0.0% 0.0% 0 0 0.0% 0.0% TOTAL (1-20) 254 14,561 20.1% 47.7% 10 595 2.3% 10.8% 11 705 1.7% 6.8% TOTAL IN REGION 1,262 30,502 100% 100% 432 5,528 100% 100% 646 10,381 100% 100% 165. than 3 projects or under ten units, t h e i r a c t i v i t y was noted previously where i t was shown they accounted for a large propor- t i o n of the firms and projects but a small share of the u n i t s . Ninety percent of the firms p r o v i n c i a l l y produced less than 3 projects involving 59% of the projects and 46% of the units. Similar proportions were found i n Metropolitan Vancouver, V i c t o r i a and the r e s t of the Province. A s i m i l a r trend was noted f o r firms producing under 10 units. These figures indicate the s i g n i f i c a n t ease of entry and e x i t i n the condominium development f i e l d . Referring again to Table 53 i t can be seen that of the firms doing under 3 projects, 38% produced duplexes (average project size 0-2.99) and 44% of those doing only one project did only a single duplex. The balance of the firms doing only one project were d i s t r i b u t e d across the f u l l range i n terms of number of units produced and average project s i z e . Sixteen (1.6%) of the firms did projects of over 100 units i n size and 35% of the firms doing the 20 l a r g e s t projects did only one project. Of the firms producing only 1-2 units a l l of them developed a single duplex except for one which was a s t r a t a l o t subdivision. Sixty-three percent of the firms producing 3-9 units did so in only one project, none produced more than 4 projects. The average project sizes were evenly d i s t r i b u t e d amongst the three smallest categories, 0-2.99, 3-4.99, and 5-9.99 units per project. Part C .of Table 53 shows the developer's average project s i z e . Eighty- two percent of the firms producing 0-2.99 units per project on average did so in only one project. There were, however, 6 (1%) 166. which did ten or more such projects, these were noted previously in the discussion of the top 20 firms i n terms of projects pro- duced. The two firms producing 20 or more duplex projects were in the top 5 firms i n terms of projects but were not i n the top one hundred and s i x t y developers i n terms of u n i t s . 5.3.4 Developers' A c t i v i t y Over time The d i s t r i b u t i o n of developers' a c t i v i t y p r o v i n c i a l l y over time i s presented i n Table 59 and condensed i n Table 60. From 1968 to 197 7 there has been a trend towards more firms doing more projects and units per year (Table 59). Proportionally, however, there has been only a very modest trend towards firms doing more projects per year and a decline i n firms doing a large number of units per year (Table 60). The average project s i z e has decreased s i g n i f i c a n t l y from 1968 to 1977, from 44.6 to 13.62 units per project. Thus, the rapid growth i n condo- minium units that has occurred over the past decade i s more the re s u l t of an increase i n the number of firms and the development of more, but smaller projects, than through a trend towards pro- ducing larger projects. A s i m i l a r trend was noted i n the Metro- p o l i t a n Vancouver and V i c t o r i a areas. I t i s i n t e r e s t i n g to note that despite t h i s trend, 60% of the twenty largest projects have been developed since January 1, 1976. 5.3.5 Developers of Unique Projects The developers of two unique types of projects were selected for further examination, f i r s t , the developers of non-residential 167. TABLE 59 DEVELOPERS ACTIVITY BY YEAR AND''SIZE B.C. NUMBER OF FIRMS # PROJECTS PER FIRM PER YEAR 1 2 3- 4 5- 9 10-19 20+ # UNITS PER FIRM PER YEAR 1- 2 3- 9 10-19 20-39 40-59 60-99 100-499 500+ 1968 4 0 1 0 0 0 0 0 1 1 0 1 2 0 1969 17 1 0 0 0 0 1970 33 3 2 0 0 0 8 4 8 7 3 • 5 3 0 1971 65 5 2 1 0 0 7 11 17 20 4 8 6 0 1972 76 9 3 1 0 0 16 11 15 24 6 9 8 0 1973 104 9 4 1 2 0 17 18 19 36 11 10 8 1 1974 160 12 5 2 1 0 45 19 35 41 13 14 12 1 1975 223 21 14 3 2 0 86 34 37 55 21 16 13 1 1976 328 32 12 12 4 1 142 70 56 62 27 15 15 2 1977 319 39 12 8 3 0 159 96 35 47 24 12 6 2 1 6 8 . ! TABLE 59 (cont'd) DEVELOPERS ACTIVITY BY YEAR AND SIZE B.C. NUMBER OF FIRMS DEVELOPERS AVERAGE PROJECT SIZE PER YEAR 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 0-2.99 0 0 10 9 16 21 50 100 177 196 3-4.99 0 0 1 4 5 7 6 9 17 28 5-9.99 0 0 1 7 6 10 9 13 32 40 10-19.99 1 5 8 . 15 19 19 37 41 48 34 20-29.99 0 7 5 11 14 19 19 40 45 29 30-49.99 2 1 5 13 15 28 34 34 39 35 50-99.99 1 3 6 9 10 10 20 23 23 15 100+ 1 2 2 5 4 6 5 3 8 4 169 TABLE 60 SIZE DISTRIBUTION OF DEVELOPERS A ACTIyTT-T BY YEAR - B.C. PROJECTS PER FIRM PER YEAR UNITS PER FIRM PER YEAR DEVELOPERS AVERAGE PROJECT SIZE OVERALL AVERAGE PROJECT SIZE (UNITS/PROJECT) 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 # % # % # % # % # % # % ff % # % # % # % 1-4 5 100 18 100 38 100 72 99 88 99 117 98 177 98 258 98 372 96 370 97 5+ 0 0 0 0 0 0 1 1 1 1 3 2 3 2 5 2 17 4 11 3 1-39 2 40 13 72 27 71 55 75 66 74 90 75 140 78 212 81 330 85 337 88 40+ 3 60 5 28 11 29 18 25 23 26 30 25 40 22 51 19 59 15 44 12 -19.99 1 20 5 28 20 53 35 45 46 52 57 48 102 76 163 62 274 70 298 78 20+ 4 80 13 72 18 47 38 55 43 48 63 52 78 24 100 38 115 30 83 32 44.6 35 .3 28.0 32.3 28.2 25.7 25 .5 20.8 16.6 13.62 170 projects and secondly, those that were responsible for condominium conversions. (Non-residential and conversion projects are d i s - cussed i n Chapter 6.) A l l non-residential (warehouse, commercial, and mixed r e s i d e n t i a l and commercial) developers were small i n terms of both projects and units. Of the 39 developers of non- r e s i d e n t i a l projects, only 10% did more than one project, only 18% did more than 10 units, and nore did more than 65 units. Non- r e s i d e n t i a l developers concentrated t h e i r a c t i v i t i e s i n t h i s seg- ment of the market; only 7.6% of the developers of non-residential projects did r e s i d e n t i a l projects as w e l l , and none were involved i n the development of support structure, bare land or l o t sub- d i v i s i o n projects. The developers who were active i n the r e s i - d e n t i a l market did only two projects (one r e s i d e n t i a l and one non-residential), and none of the r e s i d e n t i a l projects contained more than twenty-five units. Thus one may conclude that non- r e s i d e n t i a l condominium developers are small developers active only i n t h i s submarket. Condominium conversion also tends to be a "one-shot" a c t i v i t y The developers of fourty-six conversion projects could be i d e n t i - f i e d from the data. Ninety-three percent of the developers i n - volved did only one such project. Further, f o r 69% of the firms, t h i s conversion project represented t h e i r e n t i r e a c t i v i t y i n the condominium market. A further 21% were involved i n only one other condominium project. Thus, only 9.5% of the firms active i n con- versions did two or more non-conversion condominium projects. Five percent of the firms which did condominium conversion project 171. were i n the top twenty firms i n terms of number of units and number of projects; none of these did more than one conversion project. 5.4.1 Developers' C h a r a c t e r i s t i c s : The Survey The respondents to the developers' survey included the developers of t h i r t y - t h r e e percent of the u n i t s , and fourteen percent of the projects i n Metropolitan Vancouver, and f i f t e e n percent of the units and s i x percent of the projects i n Metro- 4 p o l i t a n V i c t o r i a . The respondents included seven of the twenty largest producers of units, and four of the top twenty producers of projects, i n the province of B r i t i s h Columbia. I t also includes nine developers who had developed only one or two projects, and four which developed fewer than forty units. Thus the survey includes a reasonable cross-section of firms active i n the industry, although i t does omit the large number of duplex developers who are active i n the province. On the basis of t h i s survey, a de s c r i p t i o n of the character- i s t i c s of firms active i n the industry during the 1976-1977 period, and during the ten year period commencing i n 1968, i s presented i n the following sections. For purposes of analysis, developer re- sponses were tabulated according to three a r b i t r a r y s i z e classes on the basis of the t o t a l number of units they had produced, small (fewer than 60 un i t s ) ; medium (61-200 u n i t s ) , and large, (more than 200 u n i t s ) . This permits characterization of the indus- try according to both general aspects and v a r i a t i o n according to developer s i z e . 172. 5.4.2 Developers' Involvement i n the Condominium Market The extent to which developers are involved i n condominium development i s examined i n two ways, f i r s t the percentage of t h e i r t o t a l income derived from t h e i r a c t i v i t y (Table 61) and secondly, the ranking of r e a l estate a c t i v i t i e s i n order of importance (Table 62). Twelve percent of the respondent firms were active only i n condominium developments. Th i r t y percent of a l l firms derived between 75 and 100% of t h e i r income from condominium developments while 35% derived under 25% from t h i s source. The majority of large firms (57%) received over three-quarters of t h e i r income from condominiums. The medium and small firms ten- ded to be found at the opposite end of the scale, 67% of medium and 50% of small firms received less than half t h e i r income from condominium developments. These figures correlate with the rank- ing of the sources of revenue for the respondent firms. Thirty-seven percent of a l l the firms ranked condominium development f i r s t as a source of revenue. Other areas of import- ance were multiple unit rental development (16.7%), land develop- ment (12.5%), and commercial development (12.5%). The same trend was noted when the t o t a l rankings are considered. As was seen when the percentage of income was considered, large firms placed more importance on condominium development than small or medium firms. They also tended to be more active i n land development and less active i n commercial development than the other groups. On the basis of t h i s evidence one can conclude that large firms view condominium development as a primary a c t i v i t y while the smaller firms consider i t as secondary. TABLE 61 PERCENTAGE OF INCOME DERIVED FROM CONDOMINIUM DEVELOPMENT By s i z e Percentage of In com* 2 A l l Firms . Large Medium Small 75 - 100% 30.0% 57.2% 11.1% 25.0% 50 - 74% 20.0% 14.3% 22.2% 25.0% 25 - 49% .15.0% 14.3% 22.2% 0.0% 0 - 24% 35.0% 14.3% 44.4% 50.0% Total 100.0% 100.0% 100.0% 100.0% Response Rate =80% 174. T A B L E 62 MDST IMPORTANT AREAS OF REVENUE FOR CONIX MINIuTl DEVELOPERS A L L D E V E L 0 P E R S SM? JX DEVELOPERS MEDIUM D EVELOPEF S I JARGE DES /ELOPERS AREA/RANKING 1st 2nd . 3rd TOTAL 1st 2nd 3rd TOTAL 1st 2nd 3rd TOTAL 1st 2nd 3rd T O T A L Condominium/ Development 37.5% 23.8% 31.6% 31.3% 16.7% 33.3% 33.3% 27.8% 33.3% 12.5% 57.1% • 33.3% 55.6% 28.6% 0.0% 31.8% Commercial Development 12.5 14.3 15.8 14.1 16.7 33.3 16.7 22.2 22.2 12.5 14.3 16.7 11.1 0.0 16.7 9.1 Industrial Development 4.2 14.3 5.3 7.8 16.7 16.7 0.0 11.1 0.0 12.5 14.3 8.3 0.0 14.3 0.0 4.5 Single Family Residential Development 8.3 14.3 5.3 9.4 0.0 16.7 16.7 11.1 11.1 0.0 0.0 4.2 0.0 28.6 0.0 9 . 1 Land Development 12.5 28.6 26.3 21.9 0.0 0.0 33.3 11.1 11.1 62.5 14.3 2 9 . 2 22.2 14.3 33.3 22.7 Multiple Unit Rental Development 16.7 4.8 10.5 10.9 33.3 0.0 0.0 11.1 22.2 0.0 0.0 8.3 0.0 14.3 3 3 . 3 13.6 Commercial/ Industrial Investment 0.0 ' 0.0 5.3 1.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 16.7 4.5 Residential Real Estate Services 8.3 0.0 0.0 3.1 16.7 0.0 0.0 11.1 0.0 0.0 0.0 0.0 11.1 0.0 0.0 4.5 TOTAL 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% RESPONSE RATE = 96% The data represented i n the following two sections and the one on the management of completed projects by the developers (Section 5.4.5) refer s to a s p e c i f i c project each respondent had developed. 5.4.3 Project Financing The development of r e a l estate projects generally u t i l i z e s three basic sources of financing - the developer's i n t e r n a l funds and l i n e s of c r e d i t , interim or construction financing (short- term) and f i r s t mortgage financing (long-term). Table 63 displays the sources of financing for the respondent firms. Chartered banks and t r u s t companies are the most heavily r e l i e d on sources of funds which r e f l e c t s t h e i r dominance in the r e s i d e n t i a l mortgage market. ~* The; majority of firms (58%) u t i l i z e d interim financing from the chartered banks while 12.5% r e l i e d on t h e i r own funds or t h e i r l i n e of c r e d i t . The small firms placed the greatest reliance on the chartered banks (82.5% versus 33.3% and 62.5% for the medium and large firms respectively) and i n no instances did they use t h e i r own funds. Medium sized firms were spread f a i r l y evenly across a l l sources of financing while the large firms predomin- ately received funds from the chartered banks. Twenty-five per- cent of the large developers did not use any external sources other than t h e i r l i n e of c r e d i t . The sources of f i r s t mortgage financing were more evenly divided than those of interim financing with the chartered banks (29.2%) and the trust companies (33.3%) being the dominant sources. 176. SOURCE OF FINANCING BY TYPE AND DEVELOPER'] SIZE INTERIM FINANCING FIRST MORTGAGE FINANCING SOURCE OF INTERIM + FIRST MORTGAGE THE SAME SOURCE BY DEVELOPER SIZE BY DEVELOPER SIZE BY DEVELOPER SIZE ALL FIRMS LARGE MEDIUM SMALL ALL FIRMS LARGE MEDIUM SMALL ALL FIRMS LARGE MEDIUM SMALL CHARTERED BANK 58.3% 62.5% 33.3% e 85.7% 29.2% 50.0% 22.2% 14.3% 20.8% 42.9% 22.2% 0.0% TRUST COMPANY 8.3 0.0 11.1 14.3 33.3 12.5 33.3 57.1 8.3 0.0 11.1 14.3 MORTGAGE LOAN CO. 4.2 0.0 11.1 0.0 8.3 0.0 11.1 14.3 4.2 0.0 11.1 0.0 OTHER 16.7 12.5 33.3 0.0 16.7 37.5 11.1 0.0 4.2 0.0 11.1 0.0 NONE - 12.5 25.0 11.1 0.0 12.5 0.0 22.2 14.3 TOTAL . 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 37.5% 42.9% 55.5% 14.3% • SOURCE.NOT THE SAME 62.5% 57.11% 44.5% 85.7% RESPONSE RATE = 96% 177. The large firms tended to use the chartered banks more than other sources while the smaller developers r e l i e d more on t r u s t com- panies. I t i s i n t e r e s t i n g to note that none of the large firms went without long-term mortgage funds but 22.2% of medium sized firms and 14.3% of small firms did. Approximately 37% of a l l firms used f i r s t mortgage and interim financing from the same lender. Over one half of these were with chartered banks. Forty-three percent of large firms used the same lender f o r both loans, a l l of which were made with chartered banks. On the other hand only 14.3% of the small firms had the same lender for both loan types and these were a l l arranged with t r u s t companies. The medium sized firms were again d i s t r i b u t e d amongst a l l the sources. The pattern that i s evidenced here i s one of the large firms arranging t h e i r long and short term f i n - ancing (where needed) with the chartered banks (usually the same lender) while the small firms arrange t h e i r interim financing with the chartered banks and t h e i r f i r s t mortgage financing with the t r u s t companies. In the personal interviews, developers revealed that obtain- ing financing was not generally a problem. This must be q u a l i f i e d somewhat as the current poor market condition and corresponding long absorption periods have caused lenders to be more cautious than i n the past. Greater scrutiny of the borrower's covenant and the project's marketability i s given before the loans are approved. 5.4.4 Development Process - The questionnaire was not designed s p e c i f i c a l l y to i n v e s t i - T A B L E 64 AVERAGE DEVELOPMENT PERIOD (MONTHS) S T R U C T U R E T Y P E LOW RISE HIGH RISE TOWNHOUSE TOTAL ALL DEVELOPERS Municipal Approval 5.7 10.0 9.5 8.4 Construction 9.3 13.2 11.4 11.4 TOTAL 15.1 20.8 18.0 18.7 Start of Construction to Date of Registration 7.9 10.8 7.2 8.8 179. gate the development process but questions r e f e r r i n g to three areas were asked. These included the length of the development period, the method of i n i t i a t i o n , and the developer's perception of the consumer's preferences. For a more d e t a i l e d examination of developers of multiple family dwellings readers are referred 7 8 to D.D.Ulinder and M.A. Goldberg or M.A. Goldberg . The average municipal approval and construction periods are shown i n Table 64. Goldberg and Ulinder c i t e d a major concern by developers over the long delays encountered i n the approval 9 process. In a l l instances the construction period was longer 4 than that needed to receive municipal approval, but the difference was not s i g n i f i c a n t i n the case of townhouse and high-rise develop- ments. Referring back to Chapter 2, Section 2.3.2, townhouse and high-rise projects, tended, to. be. larger, than, low-rise developments .... Hence i t i s possible these developments required rezoning, land use contracts, or extensive impact studies, therefore accounting for the longer approval periods. Nevertheless, the requirements for municipal approval nearly doubled the development period f o r high-rises and townhouses. The tabulation of the development period by the s i z e of the firm did not reveal any systematic d i f f e r e n c e s . What v a r i a t i o n did e x i s t appeared to be explained by the type of development rather than the size of firm. Table 65 tabulates the responses to the the question concern- ing the i n i t i a t i o n of the development. T h i r t y - f i v e percent of the firms planned the project f i r s t , then s e l e c t an appropriate s i t e . 180. The balance reversed the process, f i r s t s e l e c t i n g a s i t e , then planning the development. The same d i s t r i b u t i o n s were found by Goldberg i n an e a r l i e r s t u d y . ^ The majority of large (75%) and small firms (86%) selected a s i t e f i r s t then planned the project while the medium sized firms were more evenly s p l i t bet- ween the two processes. This i s l i k e l y due to the medium siz e firms constructing mainly low-rise projects which do not have to be t a i l o r e d as s p e c i f i c a l l y to the s i t e as do townhouse and high-rise developments. The f i n a l question regarded the developers' perception of market preferences of consumer groups. The most important fea- tures, as perceived by the developers, (Table 66,) f o r a success- f u l condominium project aimed at the lower income groups were low p r i c e , l o c a t i o n , and low down-payment (or simply price and l o c a t i o n ) . For the upper income group the most important features were perceived to be location, layout of the unit and the si z e of the unit (or location and features of the u n i t ) . When these r e s u l t s are compared with the most important 6 reasons for the s e l e c t i o n of the unit as indicated by the owners (Chapter 4, Table 47) the developers appear to have accurately assessed the desires of the lower income group. Forty-three percent of owners with incomes below $16,000 indicated price as t h e i r most important reason, followed by 26% who indicated loca- t i o n as the primary reason for the s e l e c t i o n bf t h e i r unit. On the other hand, the upper income group (over $24,000 per year) showed a more even d i s t r i b u t i o n of primary reasons for the se l e c t i o n of units than the p o l a r i z a t i o n indicated by the developers. 181. TABLE 65 METHOD OF DEVELOPMENT Developer S i z e A l l f i r m s Large Medium Small P l a n p r o j e c t then s e l e c t s i t e 34.8% 25% 57.1% 14.3% S e l e c t s i t e then p l a n p r o j e c t 65.2% 75% 42.9% 85.7% Response r a t e = 9 2% . 182. TABLE 66 DEVELOPERS' PERCEPTION OF CONSUMER PREFERENCE ) Most important features f o r lower income groups: Features l s t 2nd To t a l Size of u n i t s 0 1 1 Location 6 5 11 Layout and design of un i t s 0 4 4 Low downpayment 7 2 9 Low p r i c e 7 7 14 Good r e c r e a t i o n a l f a c i l i t i e s 0 1 1 Good playground f a c i l i t i e s 0 0 0 Good amenities wi t h i n the un i t 1 - 1 2 (Dishwasher, carpets, etc.) Other 0 0 0 Most important features f o r higher income groups: Features l s t 2nd Total Size of u n i t s 3 4 7 Location 17 4 21 Layout and design of un i t s 2 9 11 Low downpayment 0 0 0 Low p r i c e 0 0 0 Good r e c r e a t i o n a l f a c i l i t i e s 0 0 0 Good playground f a c i l i t i e s 0 0 0 Good amemities within the un i t 0 4 4 (Dishwasher, carpets, etc.) Other 0 0 0 183. 5.4.5 Condominium Management By Developers One of the more controversial areas i n the past was the involvement of developers i n the management of t h e i r completed projects. Some of the management contracts were alleged to be very long term and l u c r a t i v e and there are areas where c o n f l i c t of i n t e r e s t charges may arise i f the developer i s also the manager. In response to these problems the Strata T i t l e s Act was amended to allow the s t r a t a corporation to cancel any management contract on three months notice. In general, the developers surveyed do not appear to be greatly interested i n the management of the completed projects. Table 67 reveals that only 8.7% of a l l firms are s t i l l responsible for, and plan to continue the management of t h e i r project. Approximately 70% of the firms are no longer responsible and 60% of these managed the project for six months or l e s s . Considering the responses by developer s i z e i t appears the larger firms have a greater propensity for continuing to act as managers. Approximately 43% of the small developers are s t i l l responsible for management but none plan to continue. One-half of the medium and large developers s t i l l responsible for manage- ment plan to r e t a i n t h e i r capacity. One of these firms revealed two reasons for t h e i r involvement i n management. One was i t s p r o f i t a b i l i t y and the other was the fe e l i n g that the long-term v i a b i l i t y of the condominium concept depended on the s a t i s f a c t o r y operation of the e x i s t i n g projects. They f e l t that t h e i r property management d i v i s i o n was best suited to ensure the owners' s a t i s f a c - t i o n . The lack of involvement by the small firm probably i s a TABLE 67 DEVELOPER INVOLVEMENT IN CONDOMINIUM MANAGEMENT A l l firms. Large Medium Small S t i l l responsible f o r management 30.4% (100.0%) 22.2% (100.%) 22.2% (100.0%) 42.9% (100.0%) - plan to r e l i n - quish management - plan to continue management 21.7% (71.4%) 8.7% (28.6%) 11.1% (50%) 11.1% (50%) 11.1% (50%) 11.1% (50%) 42.9%. (100.0%) 0 (0%) Not responsible f o r management 69.6% (100.0%) 78.8% (100.0%) 78.8% (100.0%) 57.1% (100.0%) - duration of ma- nagement p r i o r to r e l i n q u i s h i n g * 0 - 6 7 - 1 2 12 + (60.0%) (20.0%) (20.0%) (33.3%) (33.3%) (33.3%) (100.0%) (0) • (0) (50.0%) (25.0%) (25.0%) Response Rate = 96% •Response Rate =83% 185. r e f l e c t i o n of t h e i r lesser commitment to the f i e l d and a lack of administrative capacity to cope with the management functions. 5.4.6 The Present Situation and Future Expectations In Chapter Two, Section 2.6, the current poor market condition was discussed. I t was evidenced by so f t prices and a large inven- tory of unsold units. These conditions are also r e f l e c t e d i n the developers' responses. Approximately 5 3% of the t o t a l number of units they had produced since January 1, 1975 were s t i l l under t h e i r ownership. Of these 56.5% (2004 units) were unsold and vacant and 43.5% (1544 units) were rented. Only 13% of the res- pondents did not have any (rented or vacant) u n i t s . Table 68 displays the d i s t r i b u t i o n of developers having unsold units. There i s a tendancy for the large developers to have a greater number of units vacant or rented than do the smaller firms. Approximately 43% of the small firms do not hold any units. There i s also a tendancy of small firms holding unsold units rather than renting. Large firms are the more prevalent i n the renting of units and they tend to rent more units than do the smaller firms. There are several reasons explaining the general pattern discussed above. F i r s t , many of the firms had recently completed projects p r i o r to the date of the survey (July 1977) and therefore they are l i k e l y to be holding vacant and unsold units . Also by d e f i n i t i o n , large firms have produced more units and are there- fore the most l i k e l y to be reporting the largest inventories. Secondly, the tendancy of small firms to hold vacant rather than rented units l i k e l y stems from t h e i r i n a b i l i t y , f i n a n c i a l l y , to 186. T A B L E 68 DEVELOPERS HAVING UNSOLD UNITS WHICH ARE VACANT Oil RECITED UNSOLD UNITS RENTED OR VACANT VACANT UNSOLD UNITS RENTED UNSOLD UNITS NO.OF UNITS BY DEVELOPER SIZE BY DEVELOPER SIZE BY DEVELOPER SIZE ALL FIRMS LARGE MEDIUM SMALL ALL FIRMS LARGE MEDIUM ' SMA'fJj ALL • FIRMS ' LARGE MEDIUM SMALL 0 13.0% 0.0% 0.0% 42.9% 17.4% 0.0% 12.5% 42.9% 69.6% 62.5% 62.5% 85.7% 1-25 21.7 0.0 37.5 28.6 26.1 12.5 37.5 28.6 13.0 12.5 25.0 0.0 26-50 17.4 0.0 37.5 14.3 17.4 0.0 25.0 28.6 8.7 0.0 12.5 14.3 51-100 21.7 25.0 12.5 14.3 17.4 25.0 25.0 0.0 0.0 0.0 0.0 0.0 101-200 17.4 50.0 0.0 0.0 13.0 37.5 0.0 0.0 4.3 12.5 0.0 0.0 201+ 8.7 25.0 0.0 0.0 8.7 25.0 0.0 0.0 4.3- 12.5 0.0 0.0 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% *ROUNDING ERROR RESPONSE RATE = 92% 187. maintain the excess holding costs of these units for a lengthy period. If one project i s not successful i n terms of sales, these types of firms may be forced out of business and hence would not appear i n the survey. In l i g h t of the patterns displayed by firms having unsold units the responses to the question concerning future plans i s in t e r e s t i n g (Table 69). Approximately 42% of the firms had condo- minium projects planned for the future. The large firms were more l i k e l y to have projects planned (55.6% versus 37.5% of medium and 28.6% of small firms) and they plan more projects per firm (3.0 versus 2.3 and 1.5 for medium and small firms respectively) than do the other groups. This perhaps i s .indicative of the c h a r a c t e r i s t i c s of condominium development discussed i n t h i s chapter. The larger firms, with greater i n t e r n a l f i n a n c i a l resources, greater involvement (in terms of corporate a c t i v i t i e s ) and larger overhead expenses which require more continuous a c t i v i t y , are planning future projects. Smaller firms, with smaller cash reserves, a le s s e r corporate emphasis on condominium development, and greater f l e x i b i l i t y i n adjusting the l e v e l of a c t i v i t y , appear to be awaiting a change i n the conditions which currently character- ize the condominium market, and housing markets i n general. 5.5.1 Condominium Management The Strata T i t l e s Act allows the management of a project to be performed by the st r a t a corporation d i r e c t l y through the s t r a t a council or i n d i r e c t l y , through a property management firm. In the l a t t e r case the management firm does not acquire the r i g h t s , 188. T A B L E 69 DEVELOPMENT FIRMS WITH PROJECTS IN THE PLANNING STAGES (AT THE TIME OF THE SURVEY - JULY, 1977) BY DEVELOPER SIZE ALL FIRMS LARGE MEDIUM SMALL % of Firms with Projects Planned 41.6% 55.6% 37.5% 28.6% Average Number Pro j e c t s Planned per Firm 2.3 3.0 2.3 1.5 188. T A B L E 69 . DEVELOPMENT FIRMS WITH PROJECTS IN THE PLANNING STAGES (AT THE TIME OF THE SURVEY - JULY, 1977) BY DEVELOPER SIZE ALL FIRMS LARGE MEDIUM SMALL % of Firms with Projects Planned 41.6% 55.6% 37.5% 28.6% Average Number Projects Planned per Firm 2.3 3.0 2.3 1.5 189. duties, and powers of the strata corporation but rather acts under the d i r e c t i o n of the corporation with the f i n a l decisions remaining i n t h e i r hands. As a portion of t h i s study, a survey of property management firms involved i n r e s i d e n t i a l condominium management and of r e s i d e n t i a l s t r a t a councils was ca r r i e d out. The remainder of t h i s chapter presents a discussion of the re- s u l t s of t h i s survey, focusing on a presentation of the major problems encountered and the methods of enforcement of the by-laws. 5.5.2 Data C o l l e c t i o n and Sample Size The data was c o l l e c t e d from questionnaires d i s t r i b u t e d to condominium management firms and to s t r a t a councils. Management firms were i d e n t i f i e d by l i s t i n g s i n c l a s s i f i e d advertisements i n the Yellow Pages of the telephone d i r e c t o r i e s for Vancouver and V i c t o r i a and the s t r a t a council questionnaires. Strata councils contacted for t h i s l a t t e r survey were i d e n t i f i e d by the Owners' Survey (Chapter 4). Through t h i s process condominium management firms were i d e n t i f i e d and mailed a Property Managers' Questionnaire. Seven- teen management firms responded to the questionnaire- six of which were subsequently interviewed i n person. Sixty-four r e s i d e n t i a l s t r a t a council questionnaires were completed and returned out of the 120 that were d i s t r i b u t e d . Respondent management firms reported managing a t o t a l of 347 r e s i d e n t i a l projects, (21, 218 u n i t s ) . This represents 50.0% of a l l r e s i d e n t i a l projects, and 71.9% of a l l u n i t s , i n the strata projects which contain 10 or more units in the combined Metro- 190. 12 p o l i t a n Vancouver and V i c t o r i a areas. This corresponds to the r e s u l t s of the r e s i d e n t i a l s t r a t a council surveys which indicate that 43.8% of the projects were self-managed while 56.3% were managed by professional management firms. The proportion of units represented i n the management firm sample did vary between the Vancouver and V i c t o r i a areas, although i n both areas a large enough sample was obtained to provide r e l i a b l e r e s u l t s . Twelve firms active i n the Vancouver area managed 301 s t r a t a projects (19,466 units) representing 55.2% of a l l projects, and 77.0% of a l l units, of.the t o t a l r e s i d e n t i a l projects containing 10 or more units. In V i c t o r i a , f i v e firms - managed 46 projects (34.1%) containing 1,752 units (41.3%). There were also differences i n the average size of the p r o f e s s i o n a l l y managed r e s i d e n t i a l projects between the two metropolitan areas, although p r o f e s s i o n a l l y managed projects were larger than the average for a l l projects of 10 or more units i n both areas. In Vancouver, the average size of the p r o f e s s i o n a l l y managed projects was 64 units per project while the o v e r a l l average for projects of 10 or more units was 46 u n i t s . In V i c t o r i a the average size of p r o f e s s i o n a l l y managed r e s i d e n t i a l s t r a t a projects was 38 units versus 31 units for a l l projects of 10 or more units. The larger-than-average s i z e of the profes- s i o n a l l y managed projects r e f l e c t s the fact that larger projects are more suitable to be managed p r o f e s s i o n a l l y as economics of scale lower the per unit cost, and the larger s i z e requires more management time than most councils can d i r e c t l y provide. 191. 5.5.3 Management Firms Property management firms engaged i n management of residen- t i a l condominium projects display a s i g n i f i c a n t degree of p r i o r experience i n r e a l estate and property management, of non- condominium property. Only 18% of respondent managers had no p r i o r experience i n these areas; 53% had experience i n both pro- perty management and other non-management r e a l estate a c t i v i t i e s , (brokerage, development, e t c . ) , 6% had p r i o r r e a l estate experience i n areas other than property management, and 18% had p r i o r pro- perty management experience but had not been active i n other aspects of r e a l estate. Thus, approximately 70 percent of the condominium property managers have had p r i o r experience i n property management. Only 18% of the respondent firms were connected with, companies which were involved i n the development of condominium projects. Property management firms also demonstrated a high degree of involvement with t h e i r c l i e n t s t r a t a councils. Ninety-four percent send a representative to each general meeting of each project they manage, and seventy percent submit monthly reports to t h e i r c l i e n t s . Each of the six firms that were contacted through a follow-up interview stated that they regularly inspected each project (as often as once a week), and that they i n v i t e d contact with the s t r a t a council whenever problems arose i n the project. Ninety-four percent of the property managers were bonded 13 with respect to t h e i r r e s p o n s i b i l i t i e s as property managers. It i s the practice that the strata council's accounting records 192. MANAGERS PRIOR EXPERIENCE 193. be kept by the p r o p e r t y manager, i n 54% o f 347 p r o j e c t s , t h e i r r e c o r d s were independently a u d i t e d on a r e g u l a r b a s i s . F u r t h e r , some managers r e q u i r e d t h a t the p r o j e c t s ' r e c o r d s be independently a u d i t e d immediately p r i o r to the i n i t i a t i o n and t e r m i n a t i o n of t h e i r management c o n t a c t s . In a r e c e n t a r t i c l e i n a l o c a l magazine, c r i t i c i s m was 14 l e v e l l e d a t condominium p r o j e c t managers. Yet the r e s u l t s of the survey i n d i c a t e t h a t the m a j o r i t y of condominium p r o j e c t management f i r m s operate i n a p r o f e s s i o n a l manner, both i n terms of b u s i n e s s p r a c t i c e and degree of involvement w i t h the s t r a t a c o r p o r a t i o n s . F u r t h e r , the owner's survey i n d i c a t e d t h a t over t h r e e - q u a r t e r s of the u n i t owners i n p r o j e c t s managed by p r o p e r t y management f i r m s were s a t i s f i e d w i t h the a c t i v i t i e s of the managers. I t would appear t h a t the p u b l i c i z e d problems of condominium pro- p e r t y managers stem from a m i n o r i t y of c a s e s : i n a f i e l d as young as condominium management, such problems may be expected i n pro- j e c t s managed both under c o n t r a c t and d i r e c t l y by s t r a t a c o u n c i l s . Perhaps m o d i f i c a t i o n s to the S t r a t a T i t l e s Act w i t h r e s p e c t t o management would reduce the i n c i d e n c e of these problems f u r t h e r : however, as c o u n c i l s and managers become more f a m i l i a r with the management of p r o p e r t y occupied by persons who have both the e x p e c t a t i o n s of occupants and of i n v e s t o r s - the owner-occupiers - these problems w i l l a l s o be reduced. 5.5.4 Management of P r o j e c t s a) Budgets: A 1973 study by R.S. Roberts on condominiums i n B r i t i s h Columbia i n d i c a t e d t h a t , i n the f o u r t e e n r e s i d e n t i a l condominiums 194. that were examined, the majority (57%) had current operating expenses which were i n excess of the t o t a l common area (or 15 maintenance) charges. According to the response i n the s t r a t a council and project managers surveys c a r r i e d out i n conjunction with t h i s study, the incidence of such d e f i c i t s i s no longer as prevalent: only 8.5% of the projects covered by these surveys had d e f i c i e n c i e s between operating expenditures and revenues. This change stems, i n a l l l i k e l i h o o d , from the increased experi- ence of both s t r a t a councils and property management firms. A greater (although by no means dramatic) incidence of d e f i c i e n c i e s occurs i n the area of contingency reserves. In approximately 18% of the surveyed projects managed by property managers and by s t r a t a councils, the actual size of contingency reserves was below the l e v e l that the s t r a t a council deemed to be appropriate. In the majority of such cases reported by property managers,* t h i s deficiency was the r e s u l t of the subject projects being r e l a t i v e l y new, and consequently not having yet b u i l t the contingency fund to the desired l e v e l . P a r e n t h e t i c a l l y , discussion of the adequacy of the actual l e v e l of contingency reserves cannot center simply on analysis of t h i s amount v i s - a - v i s the desired l e v e l . The desired l e v e l of t h i s reserve i s established by the s t r a t a c o u n c i l . Consequently, even i f the desired l e v e l i s maintained, i t w i l l not necessarily be s u f f i c i e n t to meet the requirements of future repairs and maintenance. Some respondents to the project managers survey indicated that, i n t h e i r opinion, some str a t a councils had a *Similar information was not available from the s t r a t a c o u n c i l survey. tendency to underestimate the required size of the contingency reserve and, occasionally, the operating budget, i n order to reduce the l e v e l of monthly owner charges. Again t h i s appears to be a problem which w i l l be minimized with increased experience, b) Major Problems: Both property managers and st r a t a councils which manage t h e i r own projects, were asked to rank the problems which were, i n t h e i r experience, of greatest s i g n i f i c a n c e i n the management of r e s i d e n t i a l condominiums: the tabulation of these rankings are shown on Tables 70 and 71. From these responses there appears to be two major classes of problems associated with such projects, those which are a function of the degree of interpersonal contact which i s associated with the density and ph y s i c a l arrangement of space i n condominium projects and those which are associated with the unique, and r e l a t i v e l y new, form of tenure represented by condominium ownership. The f i r s t category of problems includes the frequently men- tioned problems of uncontrolled children and pets, and, less frequently, the l e v e l of noise made by other residents. Such problems are, perhaps, to be expected i n family owned housing which i s b u i l t at medium and high d e n s i t i e s . While good design and construction may somewhat reduce such problems, the ultimate solution w i l l be i n the area of tolerant and responsible behaviour on the part of the occupants. Cer t a i n l y , these problems are not unique to condominium projects, as many occupants and owners of re n t a l r e s i d e n t i a l and owner-occupied single-detached properties w i l l r e a d i l y a t t e s t . 196. T A B L E 70 Ranking_of Most S i g n i f i c a n t Management Problems By Management Firms Problems R a n k i n g l s t 2nd 3rd Total 1. Uncontrolled Children 3 1 1 5 2. Uncontrolled Pets 4 5 0 9 3. Excessive Noises by Residents 0 1 3 4 4. Breaches of By-Laws 4 1 3 8 5. Educating Owners of Rights and Duties 4 3 1 8 6. C o l l e c t i o n of Common Expenses 0 1 2 3 7. Level of Common P^xpenses 0 1 1 2 8. Other 1 2 0 3 197. T A B L E 71 Ranking of Most S i g n i f i c a n t Management Problems by Strata Councils Problems R a n k i n g s l s t 2nd 3rd T o t a l 1. Uncontrolled Children 4 4 2 10 2. Uncontrolled Pets 2 3 3 8 3. Excessive Noise by Residents 1 3 2 6 4. Breaches of By-Laws 2 2 3 7 5. Educating Owners of Rights and Duties 7 2 4 13 6. C o l l e c t i o n of Common Expenses 4 3 1 8 7. Level of Common Expenses 1 1 1 3 8. Other ' 5 3 1 9 19 8. One problem area which might be expected on the basis of the owner survey did not appear as a s i g n i f i c a n t problem to s e l f - managing st r a t a corporations nor to property management firms. While both the study by Roberts and the owners' survey c a r r i e d out i n conjunction with t h i s study (Chapter 4) indicated a d e f i n - i t e bias against tenants i n condominium projects on the part of owners, such a bias i s not shared by the two respondent groups involved i n management of these projects. Only 29% of the pro- j e c t managers and 32% of the respondent s t r a t a councils indicated that they had received more than the average number of complaints against tenants. The second category of problems are unique to condominium projects. The 'self - r e g u l a t i n g ' r e s p o n s i b i l i t i e s powers of the owners through t h e i r s t r a t a council i s , at . leas t. u n t i l f a m i l i a r i t y with condominium l i v i n g i s more widespread, bound to create d i f f i - c u l t i e s . Thus both managers and es p e c i a l l y s t r a t a councils, experienced s i g n i f i c a n t problems in educating owners i n the rig h t s and r e s p o n s i b i l i t i e s . Further, c o l l e c t i o n of common area charges was of concern, p a r t i c u l a r l y to st r a t a councils who are most d i r e c t l y involved: note, however, that the l e v e l of common area charges was not seen to be of sig n i f i c a n c e by either the coun c i l of owners or property managers. F i n a l l y , the problem of enforcing by-laws and taking action where breaches of these regulations occurred was of s i g n i f i c a n t concern to both groups of respondents. As t h i s problem a c t u a l l y encompasses both the education and c o l l e c t i o n problems, i t warranted further i n v e s t i g a t i o n . 19 9. c) By-law Enforcement: Both self-managing s t r a t a councils and property managers were asked to l i s t the order i n which appropriate powers were used i n the enforcement of by-laws: the r e s u l t s are tabulated on Table 72. Both groups follow e s s e n t i a l l y the same procedure. The f i r s t step i s to apply moral suasion i n the form of a l e t t e r of telephone c a l l advising the offending occupant or owner of the problem and asking that i t be corrected. In the majority of cases, respondents reported that t h i s was the only action required to correct the problem. If the contravention of the rules continues,* the s t r a t a council exercises i t s powers under the Strata T i t l e s Act. This w i l l r e s u l t i n either fines being levied or p r i v i l e g e s regarding the common.facilities being, suspended. A l t e r n a t i v e l y , a court order issued under municipal nuisance by-laws may be used to correct the s i t u a t i o n , (for example, by having an uncontrolled dog impounded). This l a t t e r course i s seldom followed, as i t creates substantial hard-feelings. If the action to t h i s l e v e l has not corrected the problem the next step i s to levy further f i n e s , usually i n increasing amounts. If the fines are not paid, a l i e n , i n the amount of the outstanding f i n e plus the administrative fees and land r e g i s t r y costs, may be placed against the t i t l e of the strata * I f a property management firm i s involved, they w i l l contact the strata council for a decision as to the subsequent course of action to be followed. 200 T A B L E 72 Ranking o f Methods Used t o E n f o r c e By-Laws - S t r a t a C o u n c i l s Method R a n k i n g 1st 2nd 3rd 4 t h T o t a l 1. Moral Suasion 21 2 1 0 24 2. Powers under the S t r a t a T i t l e s A c t 4 8 0 0 12 3. M u n i c i p a l Nuisance By-Laws 0 2 5 0 7 4. Other 1 1 1 1 4 Ranking of. Methods Used t o E n f o r c e By-Laws - Management Firms Method R a n k i n g 1st 2nd 3rd 4 th T o t a l ... e— 1. Moral Suasion 14 • 1 0 0 15 2. Powers under the Strata T i t l e s Act 2 12 0 0 14 3. Municipal Nuisance By-Laws 0 0 3 1 4 4. Other 1 0 2 1 4 201 l o t . If the fines are s t i l l not paid the f i n a l step would be to apply for a court sale of the unit to c o l l e c t the outstanding charges and thus to remove the offending owner. Despite the various means to enforce the by-laws, several managers complained they were not e f f e c t i v e or are not pursued beyond the moral suasion l e v e l even when the problem i s not corrected. Often, by the time strong action i s taken to correct the problem, several months had passed and the offence may have occurred repeatedly. This causes s i g n i f i c a n t hardships for othe owners, sometimes r e s u l t i n g in them leaving the project. The enforcement methods per se were not c r i t i c i z e d , but rather the relectance on the part of the st r a t a council to exercise these powers. 202 . Footnotes 1. The l i n k i n g of names of subsidiaries and multiple development firms with the same p r i n c i p a l s would be possible i f a detailed examination of the re g i s t e r of companies was made but time and budget constraints did not make t h i s possible. 2. I d e n t i f i e d developers' a c t i v i t i e s accounted for the following percentages of a c t i v i t y in the province: T O T A L Units Projects Metropolitan Vancouver 99.0% 95.4% Metropolitan V i c t o r i a 00.9% 99.3% Rest of Province 7 7 . 7 % 76.9% 3. Similar d i f f i c u l t y was encountered by Hamilton and Roberts, 197 3, i n t h e i r attempt to investigate condominium developers. 4. Surveyed developers' a c t i v i t y accounted for the following percentages of a c t i v i t y i n the province: T O T A E Units Projects Metropolitan Vancouver 32.9% 13.5% Metropolitan V i c t o r i a • 14.7% 5.9% Rest of Province 3.9% 1.1% Total - Province 23.9% 8.6% 5. Chartered banks and t r u s t companies provided 27% and 39% of the funds for a l l r e s i d e n t i a l mortgage loans i n 1976 in B r i t i s h Columbia respectively. Canadian Housing S t a t i s t i c s , Central Mortgage and Housing Corporation, Ottawa, 1976, Table 36, P. 30. 6. Revealed i n an informal survey of f i f t e e n lenders and brokers i n Metropolitan Vancouver. 7. Goldberg, M.A., and Ulinder, D.D., "Residential Developer Behaviour: 1975", Housing: It's Your Move, Volume I I , Technical Reports, The U r b a n Land Economics D i v i s i o n , Faculty of Commerce and Business Administration, University of B r i t i s h Columbia, 1976. 203. 8. Goldberg, M.A., Residential Developer Behaviour: Some Empirical Findings, Faculty of Commerce and Business Administration, University of B r i t i s h Columbia. 9. Goldberg, M.A., and Ulinder, D.D., op. c i t . , P. 295. 10. Goldberg, M.A., op. c i t . , P. 24. 11. Statutes of B r i t i s h Columbia, 1966, Chapter 46, New S.B.C. 1974, C. 89. Strata T i t l e s Act, Section 10. 12. During the interviews with the management firms i t was revealed that the projects managed by the firms were almost exclusively of at lea s t 10 units. I t was there- fore f e l t that a comparison on t h i s basis would be the most meaningful. The sample covers 20.5% of a l l projects and 5 8.9% of a l l units i n the metropolitan areas. 13. Firms that were active i n non-condominium property manage- ment which involved an agency function with respect to leasing, are required to be licensed under the Real Estate Act, a l l stated that bonding was a requirement of good business p r a c t i c e . 14. Sagi, Douglas, "Mondo Condo (A Man's Home May be His Hassle.)", Vancouver Magazine, Vol. 10, No. 3, March 1977, pp. 36-39. 15. Roberts, R.S., Condominium Housing i n Metropolitan Vancouver, unpublished t h e s i s , University of B r i t i s h Columbia, 1973, p. 86. 204. Chapter Six Condominiums: Unique Features and Special Considerations 6.1 Taxation of Condominiums Condominiums are generally treated as any other r e a l property for taxation purposes, however some p e c u l i a r i t i e s do a r i s e . This section w i l l h i g h l i g h t the differences for the r e a l property tax- ation and for the income taxation treatment of condominiums. a) Real Property Taxation Under the Assessment Act any r e a l property i s assessed at i t s "actual value" and t h i s value i s divided between the land the the improvements (Section 24, Assessment Act). The Act provides for a wide d i s c r e t i o n on the determining factors applicable to the "actual value" but i n practice i t i s usually the " f a i r market value." To separate the actual value into the land and improve- ment portions the "land residual approach" i s used. This proced- ure i s no d i f f e r e n t for condominiums than any other type of r e a l property. The problems concerning condominiums a r i s e from three sources: f i r s t , the conversion of e x i s t i n g buildings to s t r a t a units, secondly, the treatment of the common f a c i l i t i e s of the st r a t a corporations and f i n a l l y , the l e v e l of service that i s received for the taxes paid. Upon conversion of an e x i s t i n g b u i l d i n g to a s t r a t a project a re-assessment i s performed under Subsection 24 (6) (b) ( i i i ) of the Assessment Act. This includes buildings that existed at the time of the assessment "freeze" which fixed the assessed value as 205. t h a t o f the 1974 assessment r o l l . The re-assessment i s s i g n i f i - c ant because i t w i l l i n c r e a s e the tax l i a b i l i t y f o r two reasons. F i r s t l y , the val u e now w i l l l i k e l y be g r e a t e r than t h a t on the 1974 r o l l s . T h i s f a c t o r w i l l soon be e l i m i n a t e d when the c u r r e n t value r o l l s are put i n t o use. Secondly, but more i m p o r t a n t l y , the u n i t value of the s t r a t a l o t w i l l be g r e a t e r than i t s v a l u e i n l e a s e h o l d and hence the tax w i l l be i n c r e a s e d . T h i s r e s u l t s without any i n c r e a s e i n the l e v e l o f s e r v i c e s p r o v i d e d by the tax d o l l a r s . A s i m i l a r s i t u a t i o n . e x i s t s where a s t r a t a p r o j e c t i s being r e n t e d . The asses s e d v a l u e i s s t i l l c a l c u l a t e d on the b a s i s of the u n i t ' s condominium v a l u e , not t h e i r r e n t a l v a l u e . G e n e r a l l y , the t a x a t i o n w i l l t h e r e f o r e be g r e a t e r than i f i t had been b u i l t under a s i n g l e x t i t l e f o r r e n t a l purposes. The u n i t s ' share i n the common areas i s i n c l u d e d i n the value of s t r a t a l o t by v i r t u e of S e c t i o n 33 of the S t r a t a T i t l e s A c t . T h i s means the expected s a l e p r i c e or f a i r market v a l u e of the u n i t s may be used without any adjustment necessary t o r e f l e c t the u n i t s ' share of the common area s . T h i s i s i m p l i c i t l y i n c l u d e d i n the v a l u e determined. There are however, s t r a t a p r o j e c t s where the ammenities do not form p a r t o f common areas. They may be a separate s t r a t a l o t , or a separate p i e c e of p r o p e r t y which the s t r a t a c o r p o r a t i o n has purchased. For example, S t r a t a P l a n VR 120, Arbutus V i l l a g e , the r e c r e a t i o n a l c e n t r e i s l o c a t e d i n an a d j a c e n t b u i l d i n g and i s lea s e d t o the s t r a t a corporation."'" The l e a s e payments i n c l u d e a share of the r e a l p r o p e r t y taxes. 206. As the centre i s not part of the st r a t a project, i t i s taxed separately. In theory, t h i s w i l l not cause any inequality i n the l e v e l of taxation because i f the recrea t i o n a l centre were part of the project, i t would be c a p i t a l i z e d into the value of the s t r a t a l o t s , therefore increasing t h e i r value and hence, taxes. In pr a c t i c e , the market may or may not recognize the differences i n the l e v e l of common area charges, property taxes, and value of the assets of the str a t a corporation and adjust the price accordingly. The f i n a l problem facing condominiums i s the equating of service with the l e v e l of taxes to produce a " f a i r " return i n r e l a t i o n to other types of property. It has already been shown that the conversion of an ex i s t i n g b u i l d i n g to a st r a t a project can r e s u l t i n higher taxes without any improvement i n the l e v e l of services provided. In the eyes of the taxing a u t h o r i t i e s , no inequality exists as a l l r e a l property i s assessed on the basis of i t s actual value. An a d d i t i o n a l problem occurs i n instances of st r a t a develop- ments that have extensive roadways within t h e i r boundaries, par- t i c u l a r l y , bareland, support structures, sing l e detached or townhouse projects. F i r s t , a l l the common f a c i l i t i e s including the roadways, sewer pipe and water pipe are i n s t a l l e d by the developer and presumably the costs are included i n the price of the un i t s . Secondly, within the project, some mu n i c i p a l i t i e s w i l l not provide the same services as to those properties f r o n t i n on municipal roads. For example, snow removal and garbage c o l l e c t i o n within the project may be l e f t to the st r a t a corporation to 207. provide. The s t r a t a l o t owners are therefore paying taxes on the same basis as other property owners but are receiving a lower q u a l i t y of service. b) Income Tax - Owners Condominiums are treated i n the same manner as single family detached dwellings f o r the purposes of c l a s s i f y i n g them as p r i n c i - ple residences. The unit's share i n the common property i s i n c l u - ded as part of the condominium and hence receives the same t r e a t - ment. One point that should be noted for those that intend to purchase a unit that w i l l be rented u n t i l a l a t e r date when the owners w i l l occupy the unit. At the date the unit ceases to be re n t a l and becomes owner occupied a change i n use occurs. When th i s happens there i s a deemed sale and repurchase at f a i r market value and a c a p i t a l gains tax l i a b i l i t y may r e s u l t . c) Income Tax - Investors Condominiums have f a c i l i t a t e d the involvement of small investors i n the r e a l estate market by allowing portions of building to be purchased rather than the e n t i r e project. The demand has been accelerated by the rapid l y r i s i n g p r i c e s of r e a l estate i n the 1970's, the exemption of new r e n t a l units from the rent r e s t r i c t i o n s under the Landlord and Tenant Act, and the provision for deducting r e n t a l losses from other income for Class 31 arid 32 buildings. Developers have also been forced into the investor category i n some cases, as a r e s u l t of the slow absorption rate causing the units to be rented. The rules apply- ing to investors i n general w i l l be examined, then the developers' 208 * s i t u a t i o n w i l l be considered. The f i r s t point to note i s that where the property i s held by an i n d i v i d u a l , the income received i s c l a s s i f i e d as "passive income" unless extensive services are provided i n connection with the property. Passive income i s "taxed immediately at the high rate of 46% plus the excess of the p r o v i n c i a l rate over 2 10%." S i m i l a r l y , i f the property i s held by a corporation, the income derived w i l l be c l a s s i f i e d as business income but not necessarily active business income unless extensive services are again provided. Only active business income q u a l i f i e s for the small business deduction which provides for the reduced tax rate of 21% on the f i r s t $100,000 of income. The onerous taxation of r e n t a l income does not deter invest- ment as much of the revenue i s written-off against the c a p i t a l cost allowance claimed. Of p a r t i c u l a r importance i s the provision for c l a s s i f y i n g multiple-unit r e s i d e n t i a l buildings constructed between November 18, 1974 and January 1, 1976 as Class 31 and 32 depreciable properties. Such a c l a s s i f i c a t i o n allows taxable losses, created by the c a p i t a l cost allowance claimed in excess of net income, to be deducted from other income. This does not apply to any other taxation classes of r e a l property except where they are held by a r e a l estate corporation or a r e a l estate part- nership. Condominiums posed a small complication as to whether they constituted a "multiple family r e s i d n e t i a l building" e s p e c i a l l y where only one was owned. Interpretation B u l l e t i n IT-304 c l a r i - f i e d the s i t u a t i o n by stating that each unit i s c l a s s i f i e d as the b u i l d i n g i t s e l f would be c l a s s i f i e d i f i t were not divided 209. into s t r a t a l o t s . Further where two or more units i n the same buil d i n g are owned by the same taxpayer they are c l a s s i f i e d as a single building with a single c a p i t a l cost. If a portion of the taxpayer's holdings are sold his adjusted cost base and consequently his c a p i t a l cost i s apportioned between the part disposed of and the part retained for determining his c a p i t a l gain, recapture, or terminal l o s s . Condominiums b u i l t on leased land can be categorized f o r depreciation purposes under several classes. Where an owner acquires the unit a f t e r 1975 the building portion of the purchase price i s c l a s s i f i e d as Class 3 or 6. Where the building q u a l i f i e s under Class 31 or 32 the unit i s treated i n the same manner. In any other case the c a p i t a l cost i s depreciated under Class 13 which i s the normal treatment of buildings situated on leased lands. For the purpose of determining the c a p i t a l cost allowance an a l l o c a t i o n between the land and building must be made. Paragraphs 4 and 5 of Interpretation B u l l e t i n IT-304 apply and have been quoted i n f u l l . "For c a p i t a l cost allowance purposes, where a unit or s t r a t a l o t includes land, the usual a l l o c a t i o n of cost between land and building i s required to be made. This might a r i s e , for example, where a ground f l o o r apartment includes an outdoor patio, or where a row-type condominium unit includes a front or back yard which i s not p.art of the common property." "Where a unit or s t r a t a l o t i s purchased, the purchaser acquires an undivided i n t e r e s t i n the common elements or property appurtenant to such unit or l o t . To the extent that the common elements or property include land, a l l o c a t i o n of cost between the undivided i n t e r e s t i n such land and the i n t e r e s t i n the building or buildings i s also required to be made. The cost of a c q u i s i t i o n of the undivided i n t e r e s t in the common areas of the building or buildings included within the description or plan, or the owner's proportionate share of any c a p i t a l expenditures made thereon, forms part of the c a p i t a l cost of the b u i l d i n g portion of his unit or l o t . " 210. Developers who are forced or choose to rent condominiums that were o r i g i n a l l y intended for sale face two s p e c i a l problems. F i r s t l y , a taxpayer's inventory i s not e l i g i b l e for the deduction of c a p i t a l cost allowances according to Regulation 1102 (1) (b) of the federal Income Tax Act. However, "Interpretation B u l l e t i n IT-128 states that a taxpayer w i l l normally be allowed to treat income producing property f o r tax purposes i n the same manner as he handles his accounting That i s , c a p i t a l cost allowance w i l l be deductable on conversion to c a p i t a l property. Interpretation B u l l e t i n IT-102 deals with the converstion of inventory to or from c a p i t a l property, i n neither case i s there a deemed d i s p o s i t i o n . Where the conversion i s from inventory to c a p i t a l property the o r i g i n a l c a p i t a l cost i s equal to a l l the outlays that are reasonably a t t r i b u t e d to the property other than those currently deductable. However, these costs are l i m i t e d to those a c t u a l l y incurred and do not include a provision for p r o f i t Where the conversion i s reversed, c a p i t a l property becoming inventory, the f a i r market value at the date of conversion w i l l be the cost of inventory for the purpose of the trading p r o f i t . However "i n c a l c u l a t i n g the gain or loss on the d i s p o s i t i o n of the property under subsection 40(1) ( d e f i n i t i o n of taxpayer's c a p i t a l gain or loss) the adjusted cost base. . . i s based on the o r i g i n a l actual cost of the property and not i t s f a i r market value at the date of conversion. To the extent that the gain or loss as calculated under subsection 40(1) has been included i n computing the business income of the taxpayer, the amount so included reduces the c a p i t a l gain or on the d i s p o s i t i o n pursuant to subsection 39(1) ( d e f i n i - t i o n of the meaning of c a p i t a l gain)."4 211. The second problem that faces the developer i s whether the income received from the rentals i s c l a s s i f i e d as active business income, and hence e l i g i b l e for the small business deduction, or whether i t i s merely business income. Normally corporations which derive income from developing and s e l l i n g r e a l estate are carrying on an active business and have active business income; ren t a l income i s not active business income however.. According to the ru l i n g handed down i n the Granite Apartment Ltd. v MNR, 75 DTC 14 0, ".. . r e n t a l income earned on property held for a short period of time (is) active income because the pattern of the taxpayer's a c t i v i t i e s indicated that his business consisted of developing and s e l l i n g r e a l estate. Furthermore, Interpretation B u l l e t i n IT-72R2 indicates that a developer need not be p a r t i c u l a r l y active in each taxation year i n order to be regarded as having earned active income. The end r e s u l t i s that the re n t a l income w i l l l i k e l y be c l a s s i f i e d as active business income so long as i t does not p e r s i s t for greater than a "short period," probably one taxation year. If the renting continues the income may lose i t s "active" designation and the taxpayer w i l l face a reassessment for the previous year. 0 d) Income Tax - Developers The taxation of condominium developments i s the same as that for any other property type. It can be complicated however, i n cases of phased developments where extraordinary costs are incurred in one phase but w i l l benefit a l l phases. If the costs are a l l o - cated only to the one stage i t w i l l r e s u l t i n a lower income i n those years and higher incomes i n the years of the other phases. 212. The high incomes may exceed the $100,000 l i m i t a p p l i c a b l e t o the sm a l l b u s i n e s s d e d u c t i o n which would r e s u l t i n a g r e a t e r tax being p a i d . The f e d e r a l Income Tax Act or any I n t e r p r e t a t i o n B u l l e t i n d e a l s w i t h t h i s s i t u a t i o n but a study suggested: "That a p o r t i o n of the c o s t which b e n e f i t s the l a t e r phases o f the development should be a l l o c a t e d t o those . . phases t h a t w i l l e v e n t u a l l y r e c e i v e the b e n e f i t s therefrom" I f t h i s were done and the l a t e r phases were not c o n s t r u c t e d or there were c o s t overruns a re-assessment would have t o be made. S i m i l a r l y , i f the common f a c i l i t i e s were c o n s t r u c t e d i n the l a t e r phases an a l l o c a t i o n would be made to the i n i t i a l phases any d e v i - a t i o n s a d j u s t e d f o r by the re-assessment of the p r e v i o u s y e a r ( s ) taxes. 6'. 2 Conversion o f R e n t a l Apartments to r Condominiums' During 197 3 a s i g n i f i c a n t c o n t r o v e r s y arose as some r e n t a l apartments were conv e r t e d t o condominiums. T h i s was a t a time of a severe shortage o f r e n t a l apartments (0.4% vacancy i n Van- couver, 0.3% i n V i c t o r i a ) and t h e r e f o r e caused s i g n i f i c a n t prob- lems f o r those d i s p l a c e d by such a c t i o n . In response, the pro- v i n c i a l government ammended the S t r a t a T i t l e s A c t to r e q u i r e the approv a l o f the m u n i c i p a l c o u n c i l b e f o r e such a c o n v e r s i o n c o u l d 7 take p l a c e . The L a n d l o r d and Tenant A c t was a l s o changed t o r e q u i r e f o u r months n o t i c e to the e x i s t i n g tenant and the payment of r e l o c a t i o n expenses t o a maximum of $300. These l e g i s l a t i v e changes made subsequent c o n v e r s i o n s s i g n i f i c a n t l y more d i f f i c u l t . The only r e c o r d o f the number of c o n v e r s i o n s are those main- t a i n e d by the m u n i c i p a l i t i e s i n v o l v e d . Table 73 r e p r e s e n t s the number of plans and units authorized by the municipalities" i n each year. Those municipalities that are not represented have not approved any conversions or did not have the records a v a i l - able. The impact of the requirement of municipal approval has been a major obstacle to conversions. Several m u n i c i p a l i t i e s (Burnaby and New Westminster) reported to have established a moretorium on conversions while V i c t o r i a w i l l not allow any conversions so long as the apartment vacancy rate remains below 3%. Overall only 10 projects (225 units) have been converted a f t e r the requirement for municipal approval was i n s t i g a t e d (1974-76) versus 38 (963 units) from 1971-73. The number of conversions of r e n t a l apartments to condomin- iums should remain very li m i t e d i n the future. This i s a r e s u l t of continued government r e s t r i c t i o n s , the current oversupply of new condominiums, and the proposed removal of rental increase r e s t r i c t i o n s under the Landlord and Tenant Act ( B i l l 87, 1977). The l a t t e r two conditions w i l l bring the r e l a t i v e economic values of r e n t a l apartments and condominiums closer together and hence remove much of the stimulus for conversion. Where the economic r a t i o n a l for conversion has not been eliminated, the governmental r e s t r i c t i o n s w i l l l i k e l y thwart any conversion attempt. 6.3 Support Structures Support structures are condominium projects where the units consist of an area of land rather than a part of b u i l d i n g . By virtu e of subsection 3(4)(6) of the Strata T i t l e s Act the boun- daries as l a i d out on the horizontal plan are deemed to extend v e r t i c a l l y upward and downward without l i m i t . The most common TABLE 73 . CONVERSIONS TO CONDOMINIUMS: BRITISH COLUMBIA Land Registry Areas .1971 1972 1973 1974 1975 1976 1977 Total Pro- Unit ject Pro- Unit ject Pro- Unit ject Pro- Unit ject ... Unit ject P r o ~ n -i. • Unit ject P r o " r, -4. Unit ject P r c ~ r, Unit ject 1. Metropolitan Vancouver LRO 2. Balance Vancouver LRO 3. Total Vancouver LRO 7 0 7 119 0 119 14 0 14 305 0 305 6 0 6 114 0 114 3 0 3 51 0 51 4 0 4 63 0 63 2 0 2 109 0 109 1 0 1 2 0 2 37 0 763- 0 4. Metropolitan New West- minster LRO 5. Balance New Westmin- ster LRO 6. Total New Westminster LRO 0 0 0 0 0 0 1 0 1 19 0 19 2 0 2 49 0 49 0 0 0 0 0 0 0 0 0 0 0 0 Xti— 3 0 3 Pxi 68 0 68 7. Total Metropolitan Van-couver Area (1+4) 7 119 15 324 8 163 3 51 2 109 1 2 40 831 8. Metropolitan Victoria LRO 9. Balance Victoria LRO 10. Total Victoria LRO 3 0 3 136 0 136 5 0 5 221 0 221 8 0 .8 357 0 357 11. A l l Metropolitan Areas (1+4+8) . 7 119 18 460 13 384 . 3 51 . 4 63 2 109 . 1 2 48 1.188 12. Kamloops City 13. Kelowna 14. Vernon 15. Penticton 16. Balance Kamloops LRO 17. Total Kamloops LRO • 18. Nelson LRO 19. Prince George LRO 20. Prince Rupert LRO 21. Grand Total: B.C. 7 119 18 460 13 384 3 51 4 63 2 109 1 2 48 . 1188 215. usage of t h i s type of development i s i n mobile home parks where the t r a i l e r pads are sold as separate units and the roadways and other common f a c i l i t i e s are owned i n common. In t o t a l i t i s estimated there are 52 bare-land s t r a t a plans i n the province comprising 1509 units. P r i o r to B i l l 70 (Strata T i t l e s Amendment Act, 1977) which w i l l be retr o a c t i v e to June 24, 1977, a st r a t a plan supplying only support structures did not require the approval of the designated approving o f f i c e r in the area before r e g i s t r a t i o n . This resulted because the section of the Act that required the approvals be received (sections 4 and 5) referred only to new buildings, phased s t r a t a plans, or the conversion of the e x i s t - ing b uildings. The loophole allowed some developers to "circum- g vent municipal planning departments" and regional b u i l d i n g r e s t r i c t i o n s by creating subdivisions under the Strata T i t l e s Act. B i l l 70 eliminates t h i s p o s s i b i l i t y by s p e c i f i c a l l y requiring approval of the support structure plan p r i o r to r e g i s t - r a t i o n . Table 74 shows the d i s t r i b u t i o n of support structures by area and year. Only 13.4% of the projects and 3.2% of the units are located i n the major metropolitan areas. These are also small developments averaging 6.8 units per project versus 29.0 for the province. The Kamloops Land Registry O f f i c e contained more support structure condominiums than any other area, rep- resenting 42% of the plans and 36% of the units i n the province. In order to provide some insight into the use of the condominium concept i n support structure projects the documents TABLE 74 SUPPORT STRUCTURE CXMX3MINIUMS IN BRITISH COLUMBIA Land Registry Areas 1975 Project Units 1976 Project Units 1977 Project Units Total Project Units % Project Units 1. Metropolitan Vancouver LRO 3 31 2 9 5 40 2. Balance Vancouver LRO 2 112 7 200 9 312 3. Total Vancouver LRO 5 143 9 209 14 352 4. Metropolitan New Westminster LRO 0 0 0 0 0 0 5. Balance New Westminster LRO 1 157 0 0 1 157 6. Total New Westminster LRO 1 157 0 0 1 157 7. Total Metropolitan Vancouver Area (1+4) 3 31 2 9 5 40 8. Metropolitan Victoria LRO 0 o •- 2 8 2 8 9. Balance Victoria LRO 4 195 7 760 11 271 10. Total Victoria LRO 4 195 9 840 13 279 11. A l l Metropolitan Areas (1+4+8) 3 31 4 17 7 48 12. Kamloops City 0 0 0 0 0 0 0 0 13. Kelowna 0 0 2 6 0 0 2 6 14. Vernon 0 0 0 0 1 15 1 15 15. Penticton 1 4 0 0 0 0 1 4 16. Balance Kamloops LRO 1 20 8 177 9 320 18 517 17. Total Kamloops LRO 2 24 10 183 10 335 22 542 ' 18. Nelson LRO 0 0 0 0 19. Prince George LRO 1 79 1 79 20. Prince Rupert LRO 1 100 1 100 21. Grand Total B.C. 2 24 20 678 30 807 52 1509 of a large s t r a t a mobile home park were examined. The only unusual aspects of the by-laws were amendments which r e s t r i c t e d the s i z e of mobile homes (450 square f e e t ) , the minimum length of mobile homes (11 f e e t ) , a minimum construction standard (equiva- lent to the National Building Code or standard prefabrication) and a setback requirement. 6 • 4 Non-Residential Condominiums Non-residential condominiums are registered and operated i n the same manner as r e s i d e n t i a l projects - only the use of the property i s d i f f e r e n t . The Land Registry Offices do not separate non-residential s t r a t a plans from the others nor do they index them i n t h e i r catalogues. The only means of i d e n t i f y i n g the use i s the examination of each set of st r a t a plans. Since i t i s j ^ o t r ^ not always possible to determine the use from the plans, the number of non-residential projects i d e n t i f i e d must be taken as a minimum rather than a precise count, the margin of error how- ever, would appear to be very low. The completely non-residential projects are shown i n Table 75. There were also i d e n t i f i e d 5 projects involving 49 units which were p a r t i a l l y non-residential, a l l of which were located i n the Ci t y of Vancouver. Of those projects which were s t r i c t l y n on-residential, 31 were warehouses and 11 were commercial. The f i r s t s t r i c t l y non-residential plan registered i n the province 3 was i n May, 1971 i n Kelowns (Kamloops Land Registry O f f i c e ) , consisting of 3 units. The f i r s t one registered i n V i c t o r i a was in December 1972 and i t was not u n t i l February 1975 that one was TABLE 75 COMPLETELY NON-RESIDENTIAL CONDOMINIUM PROJECTS IN BRITISH COLUMBIA jar.d Registry Areas 1971 Project Units 1972 Project Units 1973 Project Units 1974 Project Units 1975 Project Units 1976 Project Units 1977 Project Units Total . Project Units 1. Metropolitan Vancouver LRO 2. Balance Vancouver LRO 3 . Total Vancouver LRO 1 i 2 11 0 0 2 11 1 4 0 0 1 4 i 5 34 1 1 6 35 8 49 1 1 9 50 4. Metropolitan New West- minster LRO 5. Balance New Westmin- ster LRO | 6 . Total New Westminsterl LRO 1 2 8 0 0 2 8 5 63 0 0 5 63 3 17 0 ;j 0 3 : 17 I 13 116 1 22 14 138 23 204 1 22 24 226 7. Total Metropolitan Van- couver Area (1+4) i 2 11 3 12 5 63 3 i 7 18 150 31 253 8. Metropolitan Victoria LRO , 9 . D a l a n c n Victoria LRO J L O . Total Victoria LRO | 1 4 0 0 1 4 2 11 0 0 2 11 4 1 ' :. 2; 0 : 0: 1 ;. 2 3 19 0 0 3 19 7 36 0 0 7 36 ! L I . A l l Metropolitan Areas' (1+ 4-t-8) 1 4 4 22 3 12 5 63 4 .' 19, 21 169 38 289 -.2. Kamloops City L 3 . Kclov/na .4 . Vernon L5. Penticton Jj. Balance Kamloops LRO L 7 . Total Kamloops LRO 0 0 1 3 1 3 0 0 1 7 0 0 0 0 0 0 1 7 0 0 2 10 0 0 0 0 0 0 2 10 15. Molson LRO 1 9 . Prince George LRO J O . Prince Rupert LRO I- • J I . Grand Total: B..C. 2 7 0 0 4 22 3 12 5 63 4 19 24 199 42 322 219. registered i n the Lower Mainland. The majority (90%) of the s t r i c t l y non-residential projects are located i n the major metropolitan areas. The development of condominium warehouses i n any major way 9 has been r e s t r i c t e d by financing d i f f i c u l t i e s u n t i l recently. I n i t i a l l y , i n s t i t u t i o n a l lenders would grant a maximum loan value of 75% of the units r e n t a l value which was only equal to 50-60% o the condominium value. Consequently the purchaser required a substantial downpayment or secondary financing to purchase the unit, neither of which was completely acceptable. Eventually the Mortgage Insurance Company of Canada (M.I.C.C.) was convinced to insure the loans to 75% of the condominium sale value which en- abled adequate financing to be arranged. The economic v i a b i l i t y for i n d u s t r i a l or commercial condo- minium w i l l naturally depend on the p a r t i c u l a r market being con- sidered. There are however several general advantages and d i s - advantages to the purchaser that are often c i t e d . The p o s i t i v e aspects are: (1) for users of small spaces there are considerable economies of scale by being i n a large development than i n having a single small b u i l d i n g , (2) the deduction of c a p i t a l cost allowance and mortgage i n t e r e s t payments from taxable income can provide greater tax benefit than the deduction of the lease payment alone would provide, (3) ownership eliminates the p o s s i b i l i t y of rent increases, (4) the required return on the investment for the s e l f - owner may be less than that required by an investor, (5) there i s p o t e n t i a l appreciation i n c a p i t a l value, (6) there i s a greater security of tenure i n ownership, 220. (7) the accumulation of equity as the mortgage i s repaid, (8) for i n d u s t r i a l users there i s often a shortage of small but f u n c t i o n a l l y e f f i c i e n t space which the new units can provide.10 The major disadvantages are: (1) the need for a 10-20% downpayment, (2) to date there has been a need for the same or even greater cash-flow to service the mortgage as the lease payments, (3) there i s yet an unknown resale market which may cause: (i) c a p i t a l depreciation, ( i i ) less f l e x i b i l i t y for expansion or contraction than under leasing, (4) the generally high loan to value r a t i o w i l l be included on the balance sheet of the firm which may a f f e c t the borrowing capacity of the company. From the developers' point of view he has the advantages of being able to recoup his investment more quickly and obtaining a higher (usually) s e l l i n g price i n a condominium development than under a r e n t a l arrangement. The disadvantages are the loss of any p o t e n t i a l c a p i t a l appreciation and increased r e n t a l revenue over the holding period i f the project i s retained. Through the developers' survey a firm that had constructed several condominium warehouse projects was contacted."'"'*' In an interview they revealed the majority of t h e i r projects and others s i m i l a r to them, were located i n the suburban areas of Vancouver. The units contained from 1800 to 2400 square feet and are designed for small suppliers or contractors needing only a l i m i t e d amount of space for storage, workshop, and an o f f i c e . One of the projects was selected for an analysis of the cost of ownership r e l a t i v e to leasing. The figures used were supplied by the development firm and r e f l e c t the current market conditions, the analysis i s presented i n E x h i b i t 2. The sample unit contained 1800 square feet and was offered for lease at $495 per month or could be purchased for $69,900. Eighty-five percent mortgage financing i s provided at the e x i s t i n g market rates and terms (11%, 25 year amortization period). Overall there did not appear to be any economic advantages to purchasing rather than renting a unit. There i s only an $0.08 per square foot advantage to purchasing i n the f i r s t year at the 46% taxation rate ( f u l l corporate taxation r a t e ) . At^the 25% tax rate (applicable to those q u a l i f y i n g for the small business deduc- t i o n ) , the s i t u a t i o n i s reversed with leasing, showing a $0.32 per square foot advantage. In subsequent years the purchase option w i l l become more expensive as the tax benefit i s reduced due to the d e c l i n i n g mortgage i n t e r e s t expense and c a p i t a l cost allowance. Under the lease option there i s a p o t e n t i a l f o r increasing r e n t a l costs on the expiration of the i n i t i a l term. I t appears those that have purchased a unit have placed a p o s i t i v e value on the intangible aspects of purchasing, discussed previously, as there i s not an economic advantage i n i t i a l l y . A r e a l t y firm which deals excl u s i v e l y with the leasing and s e l l i n g of warehouses was interviewed i n conjunction with the 12 developer. They stated the o v e r a l l c a p i t a l i z a t i o n rate for an owner-occupier was about 9% while an investor i n a s i m i l a r unit would require 11-12%. In r e l a t i o n to the sample unit t h i s EXHIBIT 2 222. Comparison of the Leasing and Purchasing Cost of a Warehouse Condominium LEASE 46% Tax Bracket $495 per month x 12 months = 46% Tax Bracket (.46 x 5940) Net A f t e r Tax Cost• $5940 2732.4 $3207.6 Cost per Square Foot $1,782 25% Tax Bracket (Applicable to those q u a l i f y i n g for the Small Business Deduction under the Federal Income Tax Act) $495 per month x 12 months ' $5940 25% Tax Bracket (.25 x 5940) 1485 Net A f t e r Tax Cost 4455 Cost per Square Foot $2,475 PURCHASE Price $69,900 15% Downpayment 10;, 485 say $10,500 85% Financed at 11%, 25 year amortization (59,400) Monthly Payment 9.6253 / month / 10,000 = 571.74 say $572 / month Yearly Payment 572 x 12 = $6864 Yearly Mortgage Payment $6864 Tax Benefit (Year 1) Interest Expense (.11 x 59,400) = 6534 C C A . (5% on 45,000) = 2250 T o t a l Deducation 8784 46% Tax Bracket Tax Benefit (.46 x 8652) (3980) Opportunity cost of Downpayment (.09 x 10,500) (1-.46) 510 Net cost before P r i n c i p l e Reduction 3394 Less P r i n c i p l e Reduction ' 330 Net Cost a f t e r P r i n c i p l e Reducation 3064 Cost per Square Foot $1,702 Cost per Square Foot Excluding P r i n c i p l e Reduction $1,886 25% Tax Bracket Yearly Mortgage Payment Tax Benefit .25 x 8784 Opportunity cost of Downpayment (.09 x 10,500) (1-.75) Net Cost before P r i n c i p l e Reduction Less P r i n c i p l e Reduction Net Cost a f t e r P r i n c i p l e Reduction Cost per Square Foot Cost per Square Foot Excluding P r i n c i p l e Reduction Summary - Cost per Square Foot Lease Purchase* Difference 46% Tax Bracket $1.78 $1.70 $0.08 25% Tax Bracket $2.48 $2.80 -$0.32 $6864 (2196) 709 5377 330 5047 $2,804 *Cost per Square Foot a f t e r P r i n c i p l e Reduction 224. means the value as a condominium i s about $70,000 and the value 13 as an investment i s from $52,500 to $57,300. There i s therefore an advantage of 18-25% i n the value of a condominium warehouse over the more t r a d i t i o n a l forms. Three hundred thousand square feet of condominium warehouse space had been sold by the realty firm since February, 1975. Another 500,000 square feet i s reported to be i n the planning stages and i s expected to come on the market i n the next 12 to 18 months. The rate of absorption of new units has been d e c l i n i n g recently however, i n d i c a t i n g that a substantial oversupply may r e s u l t i f the planned projects are developed as expected. 6.5 Common Area Charges Common area charges are levie s by the s t r a t a corporation on each unit i n order to pay the maintenance and upkeep expenses of the common areas. The amount of the charges per unit i s based on proportionate share, as defined by the unit entitlement, of the t o t a l expenses. Two areas concerning the common area charges were examined. F i r s t l y , the average unit charges and t h e i r rate of increase were tabulated and secondly, the reported underestima- t i n g of charges by the developers. It should be noted that the cornmon area changes can vary s i g n i f i c a n t l y from one project to another depending upon the amount and type of amenities and upon the physical arrangements of the bu i l d i n g . For example, one would expect the common areas to be higher for projects with numerous amenities and extensive common areas such as swimming pools, health spa's, and covered 225. parking. What i s less obvious i s that common area changes may also vary, for two otherwise i d e n t i c a l projects, because of the physical arrangements f o r services such as heating and a i r - conditioning. In one case the heating and ai r - c o n d i t i o n i n g may be a cen t r a l service (common area charge) while i n another i t may form part of the d i r e c t charges ( e l e c t r i c a l ) to the owners. Due to the p o t e n t i a l variations i n amenities and arrangements for services, i t becomes extremely d i f f i c u l t to generalize with respect to common area charges. Therefore the data provided i n the following tables should be used with extreme caution. During the Owners' Survey (Chapter Four) the respondents were asked to state t h e i r current monthly common area charges, these are presented i n Table 76. Approximately one ha l f (51.5%) of the charges are less than $51 per month, only 6.7% are over $80 per month. The highest average charge i s found i n the high- r i s e units followed by low-rise, townhouse, and f i n a l l y i n those projects containing a mix of structure types. In 81.2% of the units, the common area charges per month exceeded the monthly equivalent of the r e a l property tax, thereby representing the second largest cost per month af t e r mortgage payments. In order to estimate the rate of increase of common area charges the res- pondents to the owners' survey were asked the l e v e l of common area charges when they f i r s t purchased the unit. This combined with the current l e v e l and the date of purchase allowed the rate of increase to be calculated. The average annual compound rate of increase was found to be 12.7% from 1972 to 1977. By comparison, TABLE 76 Percentage Distribution of 1977 Common Area Charges by Structure Type (Metropolitan Vancouver and Victoria) STRUCTURE CHARGES TOWN- LOW HIGH PER MONTH HOUSE RISE RISE MIXED TOTAL $ 0 - 30 2.0% 1.0% 3.6% 1.6% 8.3% 3 1 - 4 0 6.8 1.0 2.6 * 10.9 41 - 50 15.1 8.2 5.7 3.1 32.3 51 - 60 4.7 9.4 3.1 2.0 19.3 6 1 - 8 0 2.6 12.5 7.3 0 22.4 81 -100 0 * 4.1 0 4.7 100 or more 0 : • • 1.0 •• 1.0 & - 2.0 %Total Sample 33% "3. 3 5- 27% 7% 100% Average % $50 $58 $67 $45 $57 *Less than one percent. Source: Survey of 20 2 condominium owners randomly selected i n the Metropolitan Vancouver and V i c t o r i a areas. the average weekly earnings as measured by the i n d u s t r i a l compo- s i t e index increased by approximately 12 percent per annum dur- ing the same f i v e years. In the past accusations have been leveled against developers that had allegedly underestimated the common area expenses i n 14 order to a t t r a c t people into purchasing. The 1974 amendments to the Strata T i t l e s Act included changes to correct t h i s p r a c t i c e . The developers were required to prepare an interim budget for the operation of the project and were responsible for a l l the excess of the actual cost over the estimated. To investigate the extent of t h i s problem the respondents to the owners' questionnaire were requested to state the estimated charges p r i o r to occupation and the actual le v i e s a f t e r having moved i n . Sixty-eight percent of the responses noted no difference between the actual and estimated charges. Of those that were underestimated (actual charges exceeding estimated), 12% were done so by $1 to $5 and 18.3% by over $5, only three responses indicated the charges were overestimated. Analyzing those that were underestimated by more than $5 reveals that they represent exactly the same proportion of the sales a f t e r the l e g i s l a t i v e amendments (1975-1977) as they did over the three years p r i o r to the amendments (1972-1974) , 18.2%. It can therefore be con- cluded the l e g a l requirements are i n e f f e c t i v e i n reducing the underestimation of common area charges. However, given that t h i s occurs i n less than 20% of the units, i t does not appear to be a serious problem. 228. 6.6 Government Involvement i n Condominium Financing a) Federal Government During the introductory stages of the condominium concept the extent of government involvement was substantial. From 1967 to 1970 approximately 50% of the t o t a l d o l l a r amount of condomin ium f i r s t mortgages i n Canada were supplied d i r e c t l y by a 15 government agency. Further, v i r t u a l l y a l l the loans made by conventional lenders were insured under the National Housing Act (N.H.A.). "The majority of the lending i n s t i t u t i o n s stated that they would not provide any financing for condominiums unless the loans were insured under the National Housing A c t . " I 6 As the condominium market matured and lenders became more f a m i l i a r with the concept the heavy reliance on the government was reduced. In the 1971 study, 85% of the condominium units in Metropolitan Vancouver were insured under N.H.A. or financed 17 d i r e c t l y from CM.H.C, th i s figure was reduced to 60% i n 1973 Over a l l , from 196 7 to 1976, 36.2% of the condominiums i n Metro- p o l i t a n Vancouver and 29.4% of those i n Metropolitan V i c t o r i a were financed d i r e c t l y by CM.H.C. or the loans insured under N.H.A. The breakdown i s shown i n Table 77. C l e a r l y the l e v e l of government involvement has been reduced substancially through time. In B r i t i s h Columbia from 1967-1976, 11,230 N.H.A. mortgage 19 loans were approved on new condominium units. This represents 30.5% of a l l newly created units in the province. One would TABLE 7 7 N.H.A. and CM.H.C. INVOLVEMENT IN CONDOMINIUM FINANCING (1967 TO 1976) N.H .A. 1 C.M.H.Ĉ " TOTAL 2 INSURED DIRECT CONDOMINIUM REGISTRATIONS NO. Q. ~o NO. % NO. % 1967-1975 VANCOUVER 6141 32.1 1003 5.3 19104 100 VICTORIA 552 15.9 147 4.2 3470 100 1976 VANCOUVER 2232 32. 8 - 0.0 6812 100 VICTORIA 640 59.6 — 0.0 1073 100 1967-1976 TOTAL VANCOUVER , 3373 32.3 .. 10,0 3 . 3.9 25916 ,100 VICTORIA 1192 26.2 147 • 3.2 4543 100 TOTAL 9563 31.4 1150 3.8 30459 100.0 SOURCE: 1. CENTRAL MORTGAGE AND HOUSING CORPORATION, CANADIAN HOUSING STATISTICS, OTTAWA, 1976, P. 65. 2. TABLE 1. 230. expect the involvement of the government to be greater i n the the outlying areas and less i n the major metropolitan regions due to the d i f f i c u l t y i n a t t r a c t i n g private funds. In comparing the figures presented here t h i s hypothesis i s not substanciated. Considering only 1976 there were 3553 N.H.A. loans approved on new condominium units. Ninety-one of these were d i r e c t loans from C.M.H.C. and the balance were from approved lenders. This represented an increase over the previous years as these units represented 36.0% of a l l units registered i n B r i t i s h Columbia i n that year. The general increase i n the involvement of C.M.H.C. in condominium financing i n 1976 i s l i k e l y due to the soft mar- ket conditions that were being experienced and therefore lenders requiring the extra security offered through the insurance pro- gramme. Furthermore, there was a s h i f t i n the composition of the financing with a s i g n i f i c a n t reduction i n the d i r e c t lending of C.M.H.C. From 1967-1975, 3144 d i r e c t lajons or 29% were made by C.M.H.C. while the 91 d i r e c t loans i n 1976 represent less than 3% of the loans made under the N.H.A. The Assisted Home Ownership Program (A.H.O.P.) has become an important factor i n the condominium market of l a t e . The pro- gram i s designed to encourage the production of moderate cost housing by providing assistance to the purchaser. Loans of up to 95% of value at low in t e r e s t rates are ava i l a b l e plus a sub- sidy of $750 per year from the federal governemnt, and a further $750 from the p r o v i n c i a l government i f the debt service r a t i o i s greater than 25%. The maximum sale price for the unit to q u a l i f y under the program i s $47,000 in Vancouver and $45,000 i n V i c t o r i a 231. which i s with the economically p r o f i t a b l e range for the production of most condominiums. In 1976, 2418 units were approved under A. H.O.P. i n Metropolitan Vancouver, one thousand, one hundred and f i f t e e n were single family detached dwellings and 1186 were row or apartment condominiums. ~* These condominiums represented approximately one-sixth of the units registered i n that year. b) B.C. Government Second Mortgages The B.C. government provides grants of $1,000 or a second mortgage of $5,000 on new units or a $500 grant or $2,500 second mortgage on e x i s t i n g units to purchasers who have not previously owned a home. The e a r l i e r studies both reported high percentages of purchasers using the second mortgages (60.9% i n 1971 and 61.5% in 1973), however these represent only the N.H.A. insured purchases. Including the low-cost units and the conventionally financed units t h i s percentage i s reduced to 47.6% i n the 197 3 study.^ The s t a t i s t i c s recorded i n t h i s study show a reduction i n the use of the second mortgages from those previously recorded. Considering only the N.H.A. insured purchases, 46% used a B. C. government second mortgage, a decline of 15% from the 197 3 study. T h i r t y percent of a l l purchasers used a B.C. government second mortgage while 3% used a second mortgage from an alternate source, again a decline of 15%. Removing the purchases made for a l l cash the proportions increase to 37% and 4% respectively. I t i s d i f f i c u l t to explain why there was a reduction i n the use of the second mortgages. Only a small part of i t can be attrib u t e d to an increase in the number of pr i o r owners which are 232. i n e l i g i b l e for the assistance (32% i n 1973, 36.5% now). Unfor- tunately information was not c o l l e c t e d on the use of the grant which may have accounted for the difference. Footnotes 1. B r i e f to the Commission of Inquiry On Property Assessment and Taxation, Council of Strata Corporation VR 120, Arbutus V i l l a g e , December, 1975. 2. Truster, Perry, and Rosewig, Michael, Income Taxation i n the Real Estate Industry, Canadian In s t i t u t e of Chartered Accountants, 1975, pp. 4-01. 3. Beach, Donald J . , Tax Guide for the Real Estate Industry, A Handbook for the Canadian Real Estate Association, Methuen, Toronto, 1975, p. 65. 4. Interpretation B u l l e t i n , IT-102. 5. Truster and Rosewig, op. c i t . , p. 40-6,. 6. Ibid., pp. 6^05. 7. Statutes of B r i t i s h Columbia, 1966, C. 46, Now S.B.C., 1974 c. 89, Section 8. "Strata T i t l e Rules to be Tightened", The Columbian, New Westminster, July 29, 1977. 9. Based on an interview with P. Day, President of Coranodo Mortgage Corporation. 10. Melaniphy, John C. J r . , Commercial and I n d u s t r i a l Condo- miniums , The Urban Land I n s t i t u t e , Washington, D.C, 1976, p. 8. 11. Technics Development Corporation. 12. Town Group Realty, John Mclntyre. 13. Market r e n t a l of $3.50 per square foot = $6300 per year $6300 ^ .09 = $70,000 $6300 T .11 = $57,300 $6300 4 .12 = $52,300 14. Sagi, Douglas, "Mondo Condo (A Man's Home May be His Hassle)", Vancouver Magazine, Vol. 10, No. 3, March 1977, p. 37. 234. 15. Forty percent was supplied by the Ontario Housing Corpora- t i o n and 12% by the Central Mortgage and Housing Corpora- t i o n . Condominium Research Associates, National Survey of Condominium Lenders, Condominium Research Associates Toronto, 1970, Table IV. 16. Ibid, p. 46. 17. Hamilton, S.W., Davis, I., and Lowden, J . , Condominium Development i n Metropolitan Vancouver, The Real Estate Council of B r i t i s h Columbia, Vancouver, 1971, pp. 14-15. 18. Hamilton, S.W. and Roberts, R.S., Condominium Development and Ownership, Real Estate Board of Greater Vancouver, Vancouver, 1973, p. 19. 19. S t a t i s t i c s quoted i n t h i s section from: Canadian Housing S t a t i s t i c s , 1976, Central Mortgage and Housing Corporation, Ottawa, 1976, p. 64. 235. Chapter Seven Summary and Conclusions This study comprises an extensive amount of information on the condominium market and i t s p a r t i c i p a n t s . I t would be impos- s i b l e to condense a l l the findings into a few pages but a summary of major points i s provided. Also, i t i s noted that the vast quantity of primary data has not been analysed to i t s f u l l e s t o and therefore some suggestions for future research are included. The condominium market has grown s i g n i f i c a n t l y since i t s introduction i n 196 8. In that year only 7 plans involving 312 units were developed while in 1976, 667 plans involving 11,052 units were registered. As of November 30, 1977, 46,411 units in 2 340 plans existed" i n B r i t i s h Columbia. The growth i n the number of condominiums was accompanied by an increasing impor- tance i n terms of t h e i r representation i n the housing market. By 1976, condominium developments accounted for 26 percent of a l l housing s t a r t s i n the province and 58 percent of a l l multiple unit s t a r t s . As the condominium experience increased and mortgage lenders, developers and the public in general became more accustomed to the concept, a greater variety of projects was developed. This was p a r t i c u l a r l y true a f t e r 197 3 as commercial, i n d u s t r i a l , mixed commercial and r e s i d e n t i a l , bareland, and support structure s t r a t a projects became more common. Other innovative uses of the concept w i l l l i k e l y appear i n the future. 236. The occupants' survey showed a broadening of the market as a wider range, i n terms of the purchaser's age, f i n a n c i a l capa- b i l i t i e s , stage in the l i f e - c y c l e , and the unit's purchase p r i c e was observed r e l a t i v e to that displayed i n 1973. The major reasons for purchasing a condominium rather than a single de- tached house remained t h e i r economic advantage and the freedom from exterior upkeep. S i m i l a r l y , the high l e v e l of s a t i s f a c t i o n that was observed i n 1973 was again repeated here as almost 90% of the purchasers expressed s a t i s f a c t i o n with t h e i r unit. The i n v e s t i g a t i o n of the developers revealed a dichotomy i n the l e v e l of involvement of the entrepreneurs. The majority of developers (89%) had produced two or fewer projects involving 46 percent of the units i n the province. Conversely, the top twenty firms i n terms of units, representing 1.6% of a l l firms accounted for 11.7% of projects and 34.1% of u n i t s . These firms were heavily concentrated i n Metropolitan Vancouver with 91% of t h e i r production i n terms of units located i n t h i s area. The top f i v e firms i n terms of units alone produced 12.8% of the projects and 28.2% of the units i n Metropolitan Vancouver. The management of condominiums, involving s t r a t a councils and management firms has improved since 197 3. Only 9 percent of the reported s t r a t a projects were experiencing d e f i c i e n c i e s of operating budgets or i n the l e v e l of t h e i r contingency re- serve i n comparison to approximately one-half i n 197 3. The major problems encountered by the management stem from the higher density l i v i n g s t y l e that characterizes most condominiums. The 237. condominium concept or i t s operation i s not a source of major complaint. The short-run outlook for the condominium market i s poor. There now ex i s t s a large inventory of unsold and/or rented units and the rate of increase i n s e l l i n g prices has moderated to where l i t t l e or no gain has been experienced i n the l a s t year. These factors are compounded by the reduction i n the rate of population growth and increase of r e a l incomes i n the province which reduces the l e v e l of o v e r a l l demand for housing. In the long-run there are some p o s i t i v e aspects which w i l l contribute to the future development of condominiums. F i r s t , the r a p i d l y r i s i n g energy costs w i l l l i k e l y lead to a concentra- tion of housing i n the urban areas. This w i l l mean higher densi- t i e s to which condominiums are well suited... Secondly,, the propor- t i o n of older people i n the population i s increasing and i t has been shown these make up a s i g n i f i c a n t share of the condominium market. F i n a l l y , the slowing of growth i n r e a l incomes, although lowering o v e r a l l housing demand, may s h i f t some of the demand into the less expensive condominium sector away from the single detached house market. The conclusion that i s reached from assessing these factors i s that condominiums w i l l remain viable i n the long-run. Due to the broad nature of this study, d e t a i l e d examinations of a l l areas within the condominium market were not possible. Having established a base from which to work from several areas for future research are indicated. 238. The occupants' survey (Chapter Four) investigated the condominium market i n Metropolitan Vancouver and V i c t o r i a . I t i s suggested that increasing the sample size to allow for s t r a t i f i c a t i o n geographically (Metropolitan Vancouver, Metro- p o l i t a n V i c t o r i a and the Rest of the Province) and by structure type would provide useful information as to the composition of the subsectors within the market. Further, an expanded sample may provide a s u f f i c i e n t number of renters to s t r a t i f y on the same basis and the type of landlord (investor or developer) could be ascertained. Several l i m i t a t i o n s to the i n v e s t i g a t i o n of developers were noted previously i n Chapter Five: completing the l i s t of develop- ers' names from the Land Registry Offices i n Kamloops and the l i n k i n g of company's names are obvious areas to be pursued. Also, greater emphasis could be placed on surveying the numerous small developers and to defining the types of lenders providing the development funds to the entrepreneurs. An e s s e n t i a l piece of information that has been missing to date i s a comprehensive price index providing r e l i a b l e price trends by l o c a t i o n , structure type, and by the l e v e l of amenities pro- vided. In conjunction with t h i s an i n d i c a t i o n of the rate of absorption of new projects through time could be constructed. The p r i c e index and absorption rates would be invaluable i n in v e s t i g a t i n g the trends of the development of condominiums and consumer preferences. F i n a l l y , Chapter Two provided a b r i e f discussion of the factors influencing the development of condominiums and t h e i r 239. re l a t i o n s h i p to the o v e r a l l housing market. Having now estab- l i s h e d a data base i t would be possible to attempt to quantify the e f f e c t s of these factors. This would not only provide a greater understanding of the condominium market but also of a l l sectors of the housing market. 240. Bibliography Baxter, David,"The B r i t i s h Columbia and Vancouver Housing Markets: Short Run R e a l i t i e s and Long Run Trends", a paper presented at The Economic Outlook for the Real Estate Industry i n B r i t i s h Columbia forum, presented by Executive Programmes, Faculty of Commerce and Business Administration, University of B r i t i s h Columbia, Vancouver, December 14, 1977. Beach, Donald J . , Tax Guide for the Real Estate Industry, A Handbook for the Canadian Real Estate Association, Methuen, Toronto, 1975. B r i e f to the Commission of Inquiry On Property Assessment and Taxation, Council of^Strata Corporation VR 120, Arbutus V i l l a g e , December, 1975. Brown, Ian, That Classy Touch - Condominiums Promice a Way of L i f e , F i n a n c i a l Post, Maclean-Hunter, Toronto, Ontario, July 2, 1977. Strata T i t l e Rules to the Tightened, The Columbian, New Westminster, July 29, 1977. Condominium Research Associates, National Survey of Condominium Lenders, Central Mortgage and Housing Corporation, toronto, 1970. Condominium Research Associates, National Survey of Condominium Owners, Condominium Research Associates, Toronto, 1970. Eger, A.F., "Choice i n Housing", Housing: It's Your Move, Volume I I , Technical Reports, The Urban Land Economics D i v i s i o n , Faculty of Commerce and Business Administration, University of B r i t i s h Columbia, Vancouver, 1976. Goldberg, M.A., Residential Developer Behaviour: Some Empirical Findings, Faculty of Commerce and Business Administration, University of B r i t i s h Columbia, 1975. Goldberg, M. A., and Ulinder, D.D., "Residential Developer Behaviour: 1975", Housing" It's Your Move, Volume I I , Technical Reports, The Urban Land Economics D i v i s i o n , Faculty of Commerce and Business Administration, University of B r i t i s h Columbia, 1976. Hamilton, S.W., Davis, I . , and Lowden, J . , Condominium Development in Metropolitan Vancouver, The Real Estate Council of B r i t i s h Columbia, Vancouver, 1971. Hamilton, S.W. and Roberts, R.S., Condominium Development and Ownership, Real Estate Board of Greater Vancouver, Vancouver, 1973. 241. J4elaniphy, John C. J r . , Commercial and I n d u s t r i a l Condominiums, The Urban Land I n s t i t u t e , Washington, D.C, 1976. Norcross, C , Townhouses and Condominiums: Residents' Likes and D i s l i k e s , The Urban Land I n s t i t u t e , Washington, D.C, 1973. Pavlich, D.J., "The Strata T i t l e s Act", unpublished, University of B r i t i s h Columbia. Ricketts, Mark, No Down Payment Lures the Renters, F i n a n c i a l Post, Maclean-Hunter, Toronto, Ontario, June 4, 1977. Roberts, R.A., "Condominium Housing i n Metropolitan Vancouver", M.SC Thesis, University of B r i t i s h Columbia, 1973. Rosenberg, A l v i n B., Condominiums i n Canada, Canada Law Book Ltd., Toronto, 1969. Sagi, Douglas, "Mondo Condo (A Man's Home May Be His Hassle)", Vancouver, Magazine, Vol. 10, No. 3, March 1977. Statutes of B r i t i s h Columbia, 1966, Chapter 46, Now S.B.C 1974, C 89, Strata T i t l e s Act. Statutes of B r i t i s h Columbia, 1974, Chapter 77, Real Estate Amendment Act. Subo.czIrene,, "House Price I n d i c i e s " , M. Ser. Thesis, University of B r i t i s h Columbia, 1976. Truster, Perry, and Rosewig, Michael, Income Taxation i n the Real Estate Industry, Canadian I n s t i t u t e of Chartered Accountants, 1975. 242. APPENDIX I Appendix 1 Synopsis of Previous S t u d i e s . Category Condominium Research A s s o c i a t e s Hamilton, Davis, and Lowden Norcross Hamilton and Roberts Eger Year 1970 1971 1973 1973 1976 Methodology Survey of Owners acros s Canada Use of NHA Loan A p p l i c a t i o n F i l e s f o r M e t r o p o l i t a n Vancouver Survey of Townhouse Owners i n Washington D.C. and C a l i f o r n i a Survey of Owners i n M e t r o p o l i t a n Vancouver Mortgage A p p l i c - a t i o n forms of I n s t i t u t i o n a l Lenders f o r Loans i n M e t r o p o l i t a n Vancouver Age Most Young Most Young but a Small Older Group Wide Spread of Ages, Largest Group 30 - 39 Years Old Apartment Purchasers Considerably Older than Townhouse Young Group, Average 34, Empty Nest, Average 4 0 Years Married N.A.* N.A. 09% East 73% West 83.1% 61% Young Group 57% Old Group Number of \ C h i l d r e n Average 1.20 52% with no C h i l d r e n Average 1.04 1.05 Townhouse 0.31 Apartment 0.67 Young Group 0.52 Old Group Occupation 45% Managerial, P r o f e s s i o n a l or T e c h n i c a l 41% P r o f e s s i o n a l and Managerial 82% White C o l l a r N.A. Young Group - 21% P r o f e s s i o n a l Old Group - 47% P r o f e s s i o n a l Incomes Average $11,009 68% Greater than $10,000 26% 15,000- 20,000 25% 10,000- 15,000 . Moderate incomes 65% l e s s than $12,000 Young Average $19,760 Old Average. $24,900 Previous Tenancy 85% Rented 8 6% Rented 66% Rented 67% of Townhouse Rented 57.8% of Apartments rented Young - 4 6% Rented ' Old - 25% Rented Appendix 1 Synopsis o f Previous S t u d i e s (contd.) Category Condominium Research A s s o c i a t e s Hamilton, Davis, and Lowden Norcross Hamilton and Roberts Eger Year 1970 1971 1973 1973 1976 Working Wives 50% 48% 41% 40% N.A. Reason f o r Move De s i r e t o Own More Space M.A. B u i l d E q u i t y B e t t e r Environment N.A. N.A. Reason f o r Condominium Purchase Economic, Maintenance Free N.A. Economic, Maintenance Free, R e c r e a t i o n a l F a c i l i t i e s Economic, Maintenance Free N.A. 245. APPENDIX 2 247. OWNERS' QUESTIONNAIRE This questionnaire should be completed only by those OWNING and OCCUPYING the condominium u n i t . I f you rent the u n i t , please complete the enclosed "TENANTS* QUESTIONNAIRE". Before you begin the questionnaire, we would l i k e to emphasize that a l l respondents w i l l remain anonymous, and a l l information obtained w i l l be aggregated i n the f i n a l report. INSTRUCTIONS: Where a l i s t of possible responses to the question i s provided, please i n s e r t the NUMBER of the appropriate response i n the space provided i n the right-hand column. ( I f the appropriate answer's number includes a zero such as 01, please i n s e r t the 0 and the 1 i n the spaces pro- vided). I f a l i s t of responses i s not provided but the answer can be expressed numerically, please complete the spaces with the appropriate number. I f the answer cannot be expressed numerically, please complete the blanks provided but do not use the spaces i n the right-hand margin. I f you do not know the answer or i f the question i s not applicable to you, please leave the space blank. EXAMPLES: 1. QUESTION - What i s your m a r i t a l status? 01. s i n g l e 02. married 03. separated or divorced 04. widow or widower ANSWER - I f s i n g l e , enter 01 i n the right-hand column as indi c a t e d . 2. QUESTION - How o l d are you? ANSWER - I f 34, enter "34" i n the right-hand column as in d i c a t e d . 0 1 3 4 3. QUESTION - What i s your occupation? ANSWER - ENTER OCCUPATION IN SPACE e.g. TEACHER DO NOT USE OFFICIAL Ubfc, Û LX 248. 2 T~ ~T~ ~T~ ~T~ ~5 When did you purchase this condominium unit? (Please give the month and year). Please indicate the month with the corresponding numbers as follows: January 01 February 02 March 03 April 04 May 05 June 06 July 07 August 08 September 09 October 10 November December 11 12 2. What type of development is this unit contained in? 1) townhouse or rowhouse only 2) low-rise apartment only (3 stories or less) 3) high-rise apartment only (4 stories or more) 4) mixed apartment and townhouse 5) single family detached 6) mobile home park 7) mixed residential and commercial 8) non-residential 9) semi-detached (duplex) (Include the den as 3. How many bedrooms does this unit contain? one bedroom,; i f applicable),. 4. How many people occupy this unit? a) number of adults b) number of dependant children 5. The following question applies to those adults residing in the unit. Space has been provided for responses from up to four (4) adults but please use only as many columns as required. That i s , i f only two (2) adults live in the unit use only the columns for "Adult 1" and "Adult 2" leaving the rest blank. Please answer a l l the questions for each adult l i v i n g i n the unit. Month 6 7 Year 19 8 9 10 11 12 13 Adult 1 Adult 2 Adult 3 Adult 4 a) Sex (select the appropriate category for each adult and enter the corresponding number in the appropriate column). 14 15 16 17 1 male 2 female - 2 - 249. b) Age (enter the age of each adult in the appropriate spaces). c) Marital status (select the appropriate category for each adult and enter the corresponding number in the appropriate column). 1 single 2 married or equivalent 3 separated or divorced 4 widow or widower d) Education (select the appropriate category for each adult and enter the corresponding number in the appropriate column). 1 highschool or less 2 1-2 years post-secondary 3 2 - 4 years post-secondary 4 postgraduate 5 vocational training 6 technical training e) Occupation (select the appropriate: category for each adult and enter the corresponding number in the appropriate column). 1 professional 2 managerial 3 service 4 sales 5 tradesman 6 labourer 7 clerical 8 retired 9 homemaker 10 student 11 other, please specify f) Did you work full-time, part-time or did not work at the time of purchase of this unit? (select the appropriate category for each adult and enter the corresponding number in the appropriate column. Please include homemaker and student as "did not work".) Adult 1 Adult 2 Adult 3 Adult 4 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 - 3 - 250. 1 full-time 2 part-time 3 did not work g) Do you work full-time, part-time, or do not work now? Select the appropriate category for each adult and enter the corresponding number in the appropriate column. Please include homemaker and student as "do not work". 1 full-time 2 part-time 3 do not work Adult 1 "Adult 2 Adult 3 Adult 4 42 46 43 47 44 48 45 49 a) Into which of the following ranges did your total family income f a l l when you first occupied this unit? 1 less than $8,000 2 $8,001 to $16,000 3 $16,001 to $24,000 4 over $24,000 b) Into which of the following ranges does your total family income f a l l now? 1 less than $8,000 2 $8,001 to $16,000 3 $16,001 to $24,000 4 over $24,00 Please indicate the terms of your purchase of the unit, a) f u l l purchase price b) first mortgage amount c) interest rate on first mortgage d) second mortgage amount 50 51 $ , 52 53 54 55 56 57 $ ; 58 59 60 61 62 63 . % 64 65 66 67 $ , 68 69 70 71 72 - 4 - 251. e) was this a B. C. government second mortgage? Yes 1 No 2 f) cash downpayment g) i s the f i r s t mortgage NHA insured? Yes 1 No 2 h) i s this unit financed under the Assisted Home Ownership Plan (AHOP)? Yes 1 No 2 i) i s this unit financed under an agreement for sale instead of a mortgage? Yes 1 No 2 8. What are your present monthly payments for the following items? a) mortgage payment (principal and interest) b) taxes c) common area charges d) TOTAL 9. a) What were the estimated common area charges for your unit before you moved in? b) What were the actual common area charges after you moved in? 73 1$ .C 74 75 76 77 78 79 80 $ .0 8 9 10 11 .0 12 13 14 15 16 17 $ , .Oi 18 19 20 21 $ .01 22 23 24 $ _.0l 25 26 27 10. Which of the following were the two (2) most important reasons for moving from your previous dwilling? (Please rank in order of importance). 01. change in household membership 02. desired less space 03. desired less upkeep 04. desired more living space - 5 - 252. 05. desired better neighbourhood conditions 06. desired a l e s s expensive unit 07. to e s t a b l i s h an equity 08. to be closer to transportation, work, s e r v i c e s , e tc. 09. job t r a n s f e r or change 10. other(s) (please specify) 1st 28 29 2nd 30 31 11. a) Did you own a home immediately before buying your condo- minium or were you renting accommodation? 1 owned 2 rented 3 l i v e d at home or with friends but did not pay rent b) I f you owned a home immediately before buying t h i s condo- minium u n i t , which of the following types was i t ? 1 s i n g l e family residence 2 semi-detached residence 3 townhouse condominium 4 low-rise apartment condominium 5 h i g h - r i s e apartment condominium 6 mobile home c) I f you rented accommodation immediately before buying th i s .condominium u n i t , which of the following types was i t ? 1 s i n g l e family residence 2 semi-detached residence 3 townhouse 4 low-rise apartment 5 h i g h - r i s e apartment 6 mobile home 32 33 34 12. Did you look for a s i n g l e family house before deciding to buy your condominium (within 6 months)? 1 Yes 2 No 35 13. a) Did you buy your unit d i r e c t l y from the developer, or from an i n d i v i d u a l who owned i t previously? 1 from developer 2 from previous owner 36 - 6 - 253. b) If you bought i t from the developer, did you buy i t through one of his sales people, or through an independent agent? 1 developer's salesman 2 independent agent c) If you bought i t from a previous owner, did you deal directly with the owner, or through an independent agent? 1 directly with owner 2 independent agent d) To what extent were you informed of your rights and obligations as a condominium owner before you purchased the unit? 1 very well informed 2 moderately well informed 3 poorly informed 37 38 39 14. Why did you decide to buy a condominium rather than a single family house? (Please rank only the three (3) most important reasons in order of importance.) 01. better location 02. lower f u l l price for equal or better unit 03. lower downpayment 04. lower monthly payments 05. freedom from exterior upkeep 06. recreational f a c i l i t i e s included with the condominium 07. other(s) (please specify and rank) l s t 40 41 2nd 42 43 3rd 44 45 15. Which of the following locational features did you consider to be the most important i n selecting this condominium project? (Please rank only the three (3) most important reasons i n order of importance). 01. closeness to schools 02. closeness to work 03. closeness to shopping 04. closeness to bus routes 05. closeness to downtown Vancouver 06. near parkland, other wooded areas or recreational f a c i l i t i e s 07. quiet neighbourhood 08. well maintained neighbourhood dwellings 09. surrounding residents of similar education 10. surrounding residents of s i m i l a r income bracket 11. close to f r i e n d s 12. other(s) (please specify and rank) 13. l o c a t i o n was not a factor i n s e l e c t i n g t h i s p roject 254 1st 46 47 2nd 48 49 3rd 50 51 16. a) What features of your unit were most important to you i n the s e l e c t i o n of your unit? (Please rank only three (3) most important i n order of importance). 01. 02. 03. 04. 05. 06. 07. 08. 09. l a r g e r than average sized rooms existence of a f i r e p l a c e unique design features such as s k y l i g h t s , l o f t s , etc. (please specify) . superior appliances (stove, r e f r i g e r a t o r s , etc.) apparent good q u a l i t y construction greater than average storage space large patio or balcony scenic view other (s) (please specify and rank) 1st 52 53 2nd 54 55 3rd 56 57 10. features of the unit were not important i n i t s s e l e c t i o n b) What changes i n the design of your unit would have improved i t s s u i t a b i l i t y to you such that you would be prepared to pay more for i t ? (Please l i m i t your choice to 2 or l e s s ) . You may s e l e c t from the l i s t above or answer below. 58 59 60 61 17. a) What features of the project as a whole were the most important i n the s e l e c t i o n of your unit? (Please rank the three (3) most important i n order of importance.) 01. w e l l landscaped common areas 02. large open garden or wooded areas within the development 03. adequate playground f a c i l i t i e s f o r children 04. existence of a swimming pool 05. existence of a tennis court 06. existence of a workshop - 8 - 07. well maintained common areas 08. adequate covered parking 09. adequate v i s i t o r parking 10. other(s) (please specify and rank) 11. features of the project were not important in the selection of this unit b) What changes in the design of the project would have imporved i t s s u i t a b i l i t y to you such that you would be prepared to pay more for them? (Please limit your choice to 2 or less.) You may select from the l i s t above or answer in the space below. 18. Of the following l i s t , generally which was the most important reason in the selection of this unit? 1 location 2 features of the unit 3 features of the project as a whole 4 price 5 other (please specify) 19. Which features of the project were sales attractions when you bought, but which you don't use now? (Limit your selection to 3 or less.) 01. swimming pool 02. tennis court 03. games room 04. sauna, steam bath, whirlpool 05. playgrounds 06. garden areas 07. workshop 08. other (please specify) 255. ls t 62 63 2nd 64 65 3rd 66 67 68 69 70 71 72 73 74 75 76 77 78 09. 10. project does not have any special common features a l l the features are used regularly - 9 - 20. a) Do you plan to live in your present condominium for the foreseeable future? 1 Yes 2 No b) If not, when do you expect to move? 1 within one year 2 1 to 2 years 3 2 to 5 years c) If you intend to move, into which of the following w i l l be your most l i k e l y choice? 01. single family detached - rental 02. single family detached - self-owned 03. townhouse - rental 04. townhouse - self-owned 05. apartment - rental 06. apartment - self-owned 07. duplex - rental 08. duplex - self-owned 09. mobile home - rental 10. mobile home - self-owned 11. other (please specify) 21. Is the management* of this condominium project performed by the condominium association or by a professional management company? (* "management" refers to the administration of the by-laws, maintenance fund, etc.; not to the caretaking or maintenance function i t s e l f . ) 1 condominium association 2 professional management 3 don't know 22. a) Are you generally satisfied with the management of this condominium? 1 Yes 2 No b) If no, can you suggest any changes which you think would improve i t s management? - 10 - 257. 23. a) Are there.any renters occupying units in this project that you know of? b) 1 Yes 2 No If yes, do you know how many renters there are i n this project (leave blank i f you do not know)? c) Is there a noticeable difference in the behavior of the renters relative to other owners generally? 1 Yes 2 No d) If yes, i s the behavior better or worse than that of the other owners? 1 better 2 worse 11 12 13 14 15 24. Are you a member of the Strata Council? 1 Yes 2 No 16 25. a) In general, to what extent have your original expecta- tions regarding condominium l i v i n g been satisfied? 1 very well satisfied 2 moderately satisfied 3 moderately dissatisfied 4 very dissatisfied b) If you have not been entirely satisfied, what are your most important criticisms? (Please rank only the three (3) most important criticisms.) 01. poor soundproofing 02. poor construction 03. lack of privacy 04. poor attitude of other owners 05. uncontrolled children 06. uncontrolled pets 07. poor management 08. poor upkeep 09. other(s) (please specify and rank) 17 l s t 18 19 2nd 20 21 3rd 22 23 258. - 11 26. I f you had known as much about condominium l i v i n g when you bought your unit as you do now, would you s t i l l have purchased i t ? • 1 Yes 2 No 27. Do you foresee any major problems ahead for your condominium? What are they? ' ; I f so, how would you t r y to prevent them? Are your e f f o r t s i n dealing with present problems successful? 28. Would you l i k e any help i n the running of your condominium (such as courses, advice, etc.)? v 29. Are there any changes you would l i k e to see with respect to, say, the mortgage financing, the arrangements made by the developer regarding construction, s a l e s , s e t t i n g up the condominium corporation, etc. Any changes you would l i k e to see i n the condominium l e g i s l a t i o n ? 30. I f you have any other comments concerning condominium l i v i n g i n general, please use the space below (or the back of the page). Please i n s e r t the completed questionnaire (along with the unused one) into the envelope provided and return as soon as po s s i b l e . Thank you for your cooperation. END 259. APPENDIX 3 \ 260. TENANTS' QUESTIONNAIRE This questionnaire should be coir.pleted only by those RENTING and OCCUPYING the condominium u n i t . I f you own and occupy the u n i t , please complete the enclosed "Owners' Questionnaire". Before you begin the questionnaire, we would l i k e to emphasize that a l l respondents w i l l remain anonymous, and a l l information obtained w i l l be aggregated i n the f i n a l report. INSTRUCTIONS: Where a l i s t of possible responses to the question i s pro- vided, i n s e r t the NUMBER of the appropriate response i n the space provided i n the right-hand column. (If the appropriate answer's number includes a zero such as 01, please i n s e r t both the 0 and the 1 i n the spaces provided) I f a l i s t of responses i s not provided but the answer can be expressed numerically, please complete the spaces with the appropriate numbers. EXAMPLES: 1. QUESTION - What i s your m a r i t a l status? 01. married 02. s i n g l e 03. separated or divorced 04. widow or widower ANSWER - I f married, enter 01 i n the right-hand column: as i n d i c a t e d . 2. QUESTION ANSWER - How o l d are you? If 34 years o l d , enter 34 i n the right-hand column as i n d i c a t e d . 0 1 3 4 OFFICIAL USE ONLY 2 g i 1 1. When did you start renting this unit? (Please give the month and year). Please indicate the month with the corresponding number as follows: January 01 February 02 March 03 April 04 May 05 June 06 July 07 August 08 September 09 October 10 November 11 December 12 Month Year 6 7 8 9 2. How many people occupy this unit? a) number of adults? b) number of dependent children? (enter number) (enter number) 10 11 12 13 What are the ages of the adults occupying this unit? Please complete the answers for a l l adult residents. Adult 1 Adult 2 Adult 3 Adult 4 enter age 14 15 16 17 18 19 20 21 a) Into which of the following ranges did your total family income f a l l when you f i r s t occupied this unit? 1. less than $8,000 2. $8,001 to $16,000 3. $16,001 to $24,000 4. over $24,000 b) Into which of the following ranges does your total family income f a l l now? 1. less than $8,000 2. $8,001 to $16,000 3. $16,001 to $24,000 4. over $24,000 22 23 LEAF 262 OMITTED IN PAGE NUMBERING. - 2 - 262 a 5. What type of development is this unit contained in? 1. townhouse or rowhouse only 2. low-rise apartment only (3 stories or less) 3. high-rise apartment only (4 stories or more) 4. mixed apartment and townhouse 5. single family detached 6. mobile home park 7. mixed residential and commercial 8. non-residential 9. semi-detached (duplex) 24 6. How many bedrooms does this unit have? (Include a den as one bedroom i f applicable). 25 7. a) Into which of the following ranges does your monthly rental fall? 1. 0 -$100 6. $351 - 400 2. $101 - 200 7. $401 - 500 3. $201 - 250 8. $501 - 700 4. $251 - 300 9. more than $700 5. $301 - 350 b) Does this include the property taxes and' common area charges on the unit? Yes 1 No 2 26 27 c) If no, how much extra are these charges per month to the closest dollar? a. taxes b. common area charges d) If yes, but you know how much these charges are, please indicate. a. taxes b. common area charges ,00 28 29 30 .00 31 32 33 .00 34 35 36 .00 37 38 39 P r i o r to renting t h i s unit (within s i x months) did you consider purchasing a s i n g l e family home or a condominium unit? a) i . s i n g l e family home Yes 1 No 2 i i . I f yes, why di d you not do so? 1. i n s u f f i c i e n t downpayment 2. monthly payments were too high 3. r e n t a l payments were s u b s t a n t i a l l y l e s s than payments on a s i m i l a r s i n g l e family house 4 . a s u b s t a n t i a l l y b e t t e r unit could be obtained renting f o r the same payment as on a s i n g l e family house 5. p r e f e r r e d the f l e x i b i l i t y of r e n t i n g 6. d i d not f e e l i t would a good investment 7. other (please specify) condominium u n i t Yes 1 No 2 I f yes, why d i d you not do so? 1. i n s u f f i c i e n t downpayment 2. monthly payments were too high 3. r e n t a l payments were s u b s t a n t i a l l y l e s s than payments on a s i m i l a r condominium 4. a s u b s t a n t i a l l y b e t t e r unit could be obtained r e n t i n g f o r the same payment as on a condominium 5. pr e f e r r e d the f l e x i b i l i t y of renting 6. d i d not f e e l i t would be a good investment 7. other (please specify) b) i . i x . Immediately p r i o r to occupying t h i s u n i t , i n which of the foll o w i n g types of accommodation did you l i v e ? 01. s i n g l e family detached - rented 02. s i n g l e family detached - oimed 03. semi-detached (duplex) - rented 04. semi-detached (duplex) - owned 05. townhouse - rented 06. townhouse - owned 07. low-rise apartment - rented . • . 08. low-rise apartment - owned 09. h i g h - r i s e apartment - rented 10. h i g h - r i s e apartment - owned 11. mobile home - rented 12. mobile home - owned - 4 - 263. 10. a) Do you d e f i n i t e l y plan to purchase a home within the next five (5) years? 1. Yes 2. No 3. . Uncertain b) I f yes, which of the following structure types w i l l be your most l i k e l y choice? 1. s i n g l e family detached 2. townhouse condominium 3. apartment condominium 4. duplex condominium 5. mobile home 6. other (please s p e c i f y ) c) Of the above, which would you most prefer? 46 47 48 E N D Please i n s e r t the completed questionnaire into the envelope provided and return as soon as p o s s i b l e . Thank you for your cooperation. 264. APPENDIX 4 266. DEVELOPERS' QUESTIONNAIRE Before you begin the questionnaire, we would like to emphasize that a l l respondents w i l l remain anonymous and a l l information obtained w i l l be kept in the strictest confindence. The data released in the f i n a l report w i l l only appear in aggregated form. INSTRUCTIONS: Where a l i s t of possible responses to the question i s provided, please insert the NUMBER of the appropriate response in the space provided in the right-hand margin. If a l i s t of responses i s not provided but the number can be expressed numerically, please complete the spaces with the appropriate number(s). EXAMPLES: 1. QUESTION - What type of development i s this project? 01. high-rise apartment 02. low-rise apartment 03. townhouse 04. other (please specify) ANSWER - If i t i s a high-rise apartment, enter 01 in the spaces provided as shown. 2. QUESTION - How many units are in this project? ANSWER - If 100 units in the project enter 100 as shown. 0 1 1 0 0 UriiciAL l^E ONLi 267. 4 1 2 3 4 5 Strata Plan #: Date of Re g i s t r a t i o n : Name of Development: Number of u n i t : (enter number i n margin) Location: (to be coded l a t e r ) The following questions apply s p e c i f i c a l l y to the development indic a t e d above. 1. What type of development i s th i s project? 1. townhouse or rowhouse only 2. low-rise apartment only (3 s t o r i e s or le s s ) 3. h i g h - r i s e apartment only (4 s t o r i e s or more) 4. mixed apartment and townhouse 5. single family detached 6. mobile home park 7. mixed r e s i d e n t i a l and commercial 8. n o n - r e s i d e n t i a l 9. semi-detached (duplex) 10. other (please specify) 2. a) When was the construction of the project started? (Please give the number of the month and the year i n the right-hand margin). b) When was the l a s t unit completed? (Please give the number of the month and the year i n the right-hand margin). Month 6 7 Year 19 8 9 10 11 12 DO NOT USE 13 14 15 16 M o n t h ^ e a T 1 9 1 9 2 0 M o n t h ^2 - 2 - 268. c) Was t h i s b u i l d i n g converted from an alternate use to s t r a t a t i t l e units? 1. 2. Yes No 25 a) When were the units f i r s t o f f e r e d f o r sale? (Please give the number of the month and the year i n the right-hand margin). b) Are a l l the units sold? c) Month Year 19 1. 2. Yes No I f a l l the units are sold please give the date when the l a s t u nit was s o l d . (Please give the number of the month and the year i n the right-hand margin). Month 26 27 28 29 30 31 32 Year 19 33 34 How many months did i t take to obtain authorization from the municipal government before commencing construction? 35 36 Which source of funds provided the f i r s t mortgage financing f o r t h i s project? 01. chartered bank 02. tr u s t company 03. l i f e insurance company 04. mortgage loan company 05. Central Mortgage and Housing Corporation (C.M.H.C.) 06. i n s t i t u t i o n s (pension funds, etc.) 07. pr i v a t e funds (including syndicated investors) 08. personal savings 09. retained earnings 10. partnership funds 11. no f i r s t mortgage financing required 12. other (please specify) 37 38 6. a) I f you required i n t e r i m financing other than your normal l i n e of c r e d i t , please indicate which source of 269, - 3 - funds was used. 01. chartered bank 02. t r u s t company 03. l i f e insurance company 04. mortgage loan company 05. Central Mortgage and Housing Corporation(C.M.H.C.) 06. i n s t i t u t i o n s (pension funds, etc.) 07. p r i v a t e funds (including syndicated investors) 08. personal savings 09. retained earnings 10. partnership funds 11. other (please specify) 39 40 b) Was the lender who supplied the f i r s t mortgage funds the same as who supplied the interim funds? 1. 2. Yes No 41 a) Is your f i r m or a subsidiary thereof s t i l l responsible fo r the management of t h i s condominium? 1. 2. 42 Yes No b) If your firm i s s t i l l responsible f o r the management, do you intend to r e l i n q u i s h t h i s respon- s i b i l i t y within the next three (3) years? 1. Yes 2. No 43 i i . I f you plan to r e l i n q u i s h the r e s p o n s i b i l i t y w i t h i n the next three years, please give the expected date of relinquishment. (Please give the number of the month and the year i n the right-hand margin). c) I f your firm i s not presently responsible f o r the management of the condominiums, when d i d you r e l i n q u i s h the management? (Please give the number of the month and the year i n the right-hand margin). d) When you relinquished the management function d i d the residents h i r e a p r o f e s s i o n a l manager or d i d they attempt to manage the condominiums themselves? Month 44 45 Year 19 46 47 Month 48 49 Year 19 50 51 52 - 4 270. 1. hired a professional p 2. managed themselves 3. don't know e) Who i s managing the condominiums now? 1. the residents 2. professional managers 3. don't know The following questions are designed to provide background information on your firm. 7. How many condominium projects has your firm developed in the past 10 years? 8. How many condominium projects does your firm have currently in the planning stages? 9. How many condominium units w i l l your company complete by the end of 1977? How -many, were completed .in 1976?: How may in 1975? 10. a) Does your firm develop other types of real estate projects? 1. Yes 2. No b) If yes, what percentage of your net income i s derived from the condominium sector? c) Please rank the three (3) most important areas in terms of generating revenue from your real estate business. 1. commercial development 2. industrial development 3. single family residential development 4. condominium development 5. land development (to the construction stage) 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 % 72 73 l s t 2nd 3rd 74 75 76 - 5 - 271. 6. multiple family r e n t a l 7. commercial/industrial investment 8. commercial r e a l estate services (leasing, etc.) 9. r e s i d e n t i a l r e a l estate services (sales, etc.) 10. other (please s p e c i f y and rank) 11. a) Do you u s u a l l y plan a project and then search for a s i t e with the appropriate q u a l i t i e s (1) or do you usually j u s t look f o r a "good buy" and plan a project s u i t a b l e f o r that s i t e ? (2) (Please i n d i c a t e response as e i t h e r 1 or 2). b) Do you u s u a l l y plan the developments with a p a r t i c u - l a r economic or s o c i a l group i n mind? 1. Yes 2. No 77 78 12. a) In general, which of the features l i s t e d below are the most important f o r a successful condominium project catering to lower or middle income groups? (Please rank only the two (2) most important features i n order of importance). 01. s i z e of the units 02. l o c a t i o n 03. layout and design of the units 04. low downpayment 05. low p r i c e 06. good r e c r e a t i o n a l f a c i l i t i e s 07. good playground f a c i l i t i e s 08. good amenities within the unit (dishwasher, carpets, etc.) 09. other(s) (please s p e c i f y and rank) l s t 2nd 79 80 6 7 b) In general, which of the features l i s t e d below are the two (2) most important for a successful condo- minium development designed for upper income groups? 01. s i z e of the units 02. l o c a t i o n 03. layout and design of the units 04. low downpayment 05. low p r i c e 06. good r e c r e a t i o n a l f a c i l i t i e s 07. good playground f a c i l i t i e s 08. good amenities within the unit (dishwasher, carpets, etc.) l s t 2nd - 6 - 272. 09. other(s) (please specify and rank 13. a) How many units does your firm have now that are completed, unsold, and vacant? b) How many units does your firm have now that were intended to be sold but are being rented now? 14. I f you have any other comments pertinent to the development of condominiums which have not been dealt with, please use the space below to express them. 10 11 12 13 14 15 END Please i n s e r t the completed questionnaire i n t o the envelope provided and return as soon as po s s i b l e . Thank you for your cooperation. I f you would l i k e a copy of the survey r e s u l t s , please state your company name and address below. NAME OF FIRM ADDRESS 273. APPENDIX 5 275. MANAGERS' QUESTIONNAIRE Before you begin the questionnaire, we would l i k e t o emphasize that a l l respondents w i l l remain anonymous, and a l l information obtained w i l l be aggre- gated i n the f i n a l report. INSTRUCTIONS; Where a l i s t of possible responses to the question i s pro- vided, please insert the NUMBER of the appropriate response i n the space pro- vided i n the right-hand column. I f a l i s t of responses i s not provided but the answer can be expressed numerically, please complete the spaces with the appropriate number(s). I f the answer cannot be expressed numerically, please complete the blanks provided but do not use the spaces i n the right-hand margin. I f you cannot answer the question or i t does not apply, please leave the spaces blank. 3 276. m i l tl.a) Is this firm part of or a subsidiary of a condominium develop- ment firm? 1. yes 2. no b) If yes, do you manage only those projects developed by the parent firm? 1. yes 2. no "2. Did this firm have prior experience in the real estate industry or property management before taking.on the management function of this Strata Plan? a) real estate industry 1. yes 2. no "7 b) property management 1. yes 2. no ;3.a) How many condominium projects does your firm manage? b) What is the total number of units managed? 4. Is your firm bonded for its duties as a condominium manager? 1. yes 2. no 5. Of a l l the strata projects.you manage, how many have their books audited professionally? :6. Of a l l the strata projects you manage, in how many does the current total common area charges NOT equal or exceed the current actual operating coats (including a l l charges which must be covered by the maintenance fund)? 10 11 Tl 13 Ti TS 16 17 T8 1 9 "20"2T 277. "7,. Of a l l the s t r a t a p r o j e c t s you manage, in how many does the current level of the contingency reserve fund NOT' equal or exceed the desired level of the contingency reserve fund? 8. Of a l l the units managed by your firm, how many are: a) owned by the original developer and rented? b) owned.by someone other than the developer but rented? T)—• o r nn no 29 30 31 32 9. How -would you rate the number of complaints against or problems encountered with non-owner residents relative to owner residents? 1. more than average 2. average 3. less than average .10.a) What are the most significant problems you have encountered in managing strata projects ( i . e . the most frequent or the most contentious problems; please rank the three (3) most important in order of importance)? 1. uncontrolled children 2. uncontrolled pets 3. excessive noise from other residents 4. breaches of the by-laws by the residents 5. educating owners as to their rights and duties as condominium residents 6. collection of common expense charges 7. complaints about the level of common expense charges 8. other(s), please specify b) Please rank the following in order of most frequent use to enforce the by-laws. 1. moral suasion 2. enforcement under the Strata T i t l e s Act 3. enforcement under the municipal nuisance by-laws 4. other(s), please specify - 3 _ 278. Generally, how would you rate the Strata Councils in terms of their knowledge of and capability for the management functions? 1. 2. 3. 4. 5. very good moderately good average moderately poor very poor 41 12. How often do you report to the Strata Council? 1. 12 or more times a year 2. 6 to 11 times a year 3. 4 to 6 times a year 4. 2 to 3 times a year 5. 1 or fewer times a year 13. Does a representative of your firm attend the strata corporation's general meetings? 42 1. yes 2. no 43 If you have any other comments on the management of this Strata Plan or on the management of condominiums in general, please use this space to express them. Please insert the completed questionnaire into the envelope provided and return i t as soon as possible. Thank you for your co-operation. END 279. APPENDIX 6 281. STRATA COUNCIL QUESTIONNAIRE Before you begin the questionnaire, we would l i k e to emphasize that a l l respondents w i l l remain anonymous, and a l l information obtained w i l l be aggre- gated in the f i n a l report. INSTRUCTIONS: Where a l i s t of possible responses to the question i s pro- vided, please insert the NUMBER of the appropriate response in the space provi- ded in the right-hand column. I f a l i s t of responses i s not provided but the answer can be expressed numerically, please complete the spaces with the appro- priate number(s). If the answer cannot be expressed numerically, please complete the blanks provided but do not use the spaces in the right-hand margin. If the answer i s unknown or the question i s not applicable, please leave the spaces blank. i 5 282. 1 2 3 4 5 This questionnaire i s divided into two parts. The f i r s t part should be answered by a l l strata councils. Part II i s to be completed only by those councils that manage their own project. PART I - To be answered by a l l strata councils. l.a) Has there been any d i f f i c u l t y in getting people to run for the Strata Council of the condominium corporations? 1. yes 2. no b) Are the members of the Strata Council paid? 1. yes 2. no c) What is the average level of attendance by the members of the Strata Council at the Council meetings? 1. 80-100% attendance 2. 60-79% attendance 3.. 40-59% attendance 4. 20-39% attendance 5. 0-19% attendance d) How often do you have regular general meetings of the Strata Council? 1. 12 or more times a year 2. 6 to 11 times a year 3. 3 to 5 times a year 4. 2 or less times a year 2.a) What is the average level of attendance of the owners at the general meetings? ~1 1. 80-100% attendance 2. 60-79% attendance 3. 40-59% attendance 4. 20-39% attendance 5. 0-19% attendance 10 b) How would you rate the level of involvement in the condominium corporation a c t i v i t i e s by the owners? 1. 2. 3. 4. very high high medium low 11 283. 3. How often do you have regular general meetings with the owners? 1. 12 or more times a year 2. 6 to 11 times a year 3. 3 to 5 times a year 4. 2 or less times a year 4. Do you communicate regularly (other than by general meetings) with the owners? (for example, through regular news bulletins) 1. yes 2. no Do you manage this project yourself or is i t managed by a profess- ional management firm? 1. managed by strata council 2. managed by professional firm T2" T 3 14 If the project is managed by the strata council, please complete Part II. If the project is managed by a professional firm, please give the name and address in the space below and return the completed questionnaire in the envelope pro- vided. Thank you for your co-operation. Management firm (PLEASE PRINT): Name Person in charge Address END OF PART I - 3 - 284, PART II - This section i s to be completed only by strata councils managing their own project. 1. Did any member of the Strata Council have prior experience in the real estate industry or property management before taking on the management function of this Strata Plan? a) real estate industry 1. yes 2. no b) property management 1. yes 2 . no 2 . Does this Strata Council manage Strata Plans other than i t s own? 1. yes 2 / no If yes, how many other plans? 3.a) When did you assume the management of this Strata Plan? Please indicate the NUMBER of the month and year in the right-hand margin. Month Year b) Did you take over the management directly from: 1. the developer 2. a professional manager 4 .a) What are the most significant problems you have encountered In managing this Strata Plan ( i . e . the most frequent or the most contentious problems; please rank the three(3) most important in order of importance)? 1. uncontrolled children 2. uncontrolled pets 3. excessive noise from other residents 4 . breaches of the by-laws by the residents 5. educating owners as to their rights and duties as condominium residents 6. collection of common expense charges 7. complaints about the level of common expense charges 8 . other(s), p l e a s e specify and rank 15 16 17 18 19 20 I T 22 "2*3 24 1st >nd 3rd 15" 2~6 27 - 4 - 285. b) Please rank the following in order of most frequent use to en- force the by-laws. 1. moral suasion 2. enforcement under the strata T i t l e s Act 3. enforcement under the municipal nuisance by-laws 4. other(s), please specify 5.a) To the best of your knowledge, how many units are not occupied by their owners? b) How would you rate the number of complaints against or problems encountered with non-owner residents relative to owner residents? 1. more than average 2. average 3. less than average 6.a) Did the developer provide any warranty as to the structure of this development? 1. yes 2. no 3. don't know If yes, please continue; otherwise,- go to number 7. b) Have any major repairs been made under the developer's warranty? 1. yes 2. no c) If yes, were there any complications in having the repairs done under warranty? 1. yes 2. no I f yes, please explain l s t 2nd 3rd 4th 28 29 30 31 32 33 34 36 37 37 3S d) Do you feel that some repairs that have been done to this project should have been done under the warranty but were not? 1. yes 2 „ no 39 - s> - 286 '7.a) Have there been any major physical improvements or additions since the development was originally completed? 1. yes 2. no b) If yes, what are they? c) Have there been any major deletions from the physical property since the development was originally completed (e.g., sale of part of the lands)? 1. yes 2. no d) I f yes, what are they? 8. What were the monthly common area charges and date when the units were sold, and what i s the monthly levy nov.'? 40 DO NOT USE "4T DO NOT USE DATE ORIGINAL LEVY CURRENT LEVY NO. OF UNITS Month Year ,19 4 4 45 46 4 7 4 9 50 . 00 "5T 32"o*3 . 00 33 35" 3o ,19 57 58 59 60 , 19 To 71 72 75 61 62 63 74 75 To . 00 . 00 "64 65 66 77 Ts 79 00 . 00 67 68 69 6 7 9. What are the current actual operating costs per month of this Strata Plan? Include a l l charges which must be covered by the maintenance fund. % """9" TO" TI Tl T: 1 0 .a) What i s the current level oF the contingency reserve fund? $ , 14 TS T?j T7 T? T b) What is the desire;! level of the contingency reserve fund? $ f "2*0 71 "25 73 ~ T; - 6 _ 287. •I.a) Have there been any significant changes in the by-laws of this Strata Plan since the Council of Owners was formed? 1 . yes 2. no b) I f yes, what are they? 26 DO NOT USE T 7 1 2 . I f you have any other comments on the management of this Strata Plan or on the management of condominiums in general, please use this space to express them. Please insert the completed questionnaire into the envelope provided and return i t as soon as possible. Thank you for your co-operation. END

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