Monthly Archives: February 2011

‘The Province’ Runs ‘Greater Vancouver Home Builders’ Association’ Advertisement As News Item

The Province ran the announcement ‘First-time buyer seminar‘ as a ‘news’ item, 27 Feb 2011. Seems like an ad to us. We hope no innocent FTBs see the ‘article’, or the seminar itself, as anything other. Excerpts follow. [hat-tip joycer at vancouvercondo.info]

“The Greater Vancouver Home Builders’ Association is once again offering a seminar aimed at helping first-time homebuyers sort through the often overwhelming process of making the jump into home ownership.”

“The presenting sponsor is the provincial Homeowner Protection Office, branch of BC Housing, and corporate sponsors are The Vancouver Sun, The Province, Canada Mortgage and Housing Corporation, Real Estate Board of Greater Vancouver, Genworth Financial Canada, Scotiabank, Travelers Guarantee, Sheraton Vancouver Guildford Hotel, Shaw Cablesystems, CKNW, Rock 101, AM 730 and 99.3 the FOX.”

Maclean’s – “Plenty of speculation that Vancouver’s hot housing market is in bubble territory”

Maclean’s 23 Feb 2011 article highlights BCs vulnerable personal debt situation.
Excerpts:

‘Canada’s Worst Spenders’
British Columbia has been Canada’s real estate debt champion since at least 1999

There’s been plenty of speculation that Vancouver’s hot housing market is in bubble territory, and as interest rates rise, that view is going to be put to the test. A new Toronto-Dominion Bank report says that one in 10 British Columbia households could find themselves scrambling to pay their bills if the Bank of Canada ups rates, as TD predicts it will—up to three per cent by the end of 2012.
The province has been Canada’s real estate debt champion since at least 1999, and it is the only one where the average savings rate is negative, according to TD.
Vancouver in particular seems to most resemble the housing run-up seen in the U.S. Two weeks ago, Robert Shiller, an economist at Yale University who correctly forecast the U.S. housing bust and helped develop the influential Standard and Poor’s Case-Shiller real estate index, likened the B.C. capital to San Francisco, one of the areas worst hit by the slump in the States.

“I’ve calculated it very carefully. It will be well worth the wait (even if it takes 5 years) when I buy that nearly new foreclosed detached home for cash.”

mattymatt at vancouvercondo.info February 24th, 2011 at 9:22 am“My wife makes the average income of about $52,000 a year and I own a machine shop in Richmond, my take home is about $110,000. In 2008 we thought the market was going to tank, so we sold (“Big mistake”) our paid-off condo in Richmond, banked some of the money and invested the rest. For a 1-1/2 years we rented a top floor of a Vancouver “shit” house in the neighborhood of 20th and Fraser (bigger mistake). It also had a “basement” which was rented out.
LIVING IN VANCOUVER IS NOT GREAT! : Traffic and commuting back to Richmond. Expensive rent for really old and shitty place! Assholes in basement suite…No parking everywhere… and the list goes on and on.
So, as of January, we moved to Queensborough New West and are renting a nice 2 bdr top floor 1300 sqft condo for about the same price as the home in Vancouver. Even better, my Brother in-law is staying with us and pays us a-little rent. We can enjoy our money instead of throw it into high mortgage payments, taxes and (“strata” – cause even with our combined wage and money saved, to buy a “detached house” for 800k + is retarded!).
I’ve calculated it very carefully. It will be well worth the wait (even if it takes 5 years) when I buy that nearly new foreclosed detached home for cash.
The longer Vancouver RE market goes up, the bigger the crash. I can’t believe people (especially first time home buyers) with average incomes are still foolishly buying!”

Three Strikes; We’re Outta Here – “If you like shoebox living or eighteen renters in your basement, by all means, make Vancouver your home.”

Angie at VREAA 26 February 2011 at 3:09 pm“After living and working abroad for a few years my husband (Scottish Nationality) and I moved back to Vancouver, my home town to start our family. After 1 year of living here we packed our bags for Ottawa and a decent wage and cost of living average. We bought a house and had 3 kids and lived the good life. We decided to move back to the West Coast to be closer to family and see if maybe things have changed. Instead of getting better things are just getting worse. It is only when you see how life is lived elsewhere that you can appreciate how wrong things are here. Vancouver is my home but there is only so much hype one can take, if you like shoebox living or eighteen renters in your basement by all means make vancouver your home, but after three failed attempts at finding balance in Vancouver I am happy to say I am making the right decision by leaving for good!!!”

Avoiding Vancouver – “Out-of-towners have been offered the job but all declined when they learned about RE values here.” … “My kids are looking to relocate. My family’s 150 years in Vancouver is likely to end with this generation.”

5th generation Vancouver at VREAA 22 Feb 2011 3:00pm“I also know of many professionals (Professors, doctors, many teachers, planners, engineers) who have decided to leave the city and even the country because of the RE costs and many jobs that can’t be filled. I have been approached five times over the last year for a certain $120,000 a year job in Vancouver and have learned that most of my colleagues in similar positions have also been headhunted. A few out-of-towners have been offered the job but all declined when they learned about RE values here. The rest of us turned down the offer because the cost to relocate to Vancouver from Maple Ridge/Langley/Coquitlam was too high and commuting for 2 hours a day was not on.
But my biggest concern involves my children who are now young adults in arts jobs. They have woken up to the fact that they will never be able to afford anything beyond a small condo in Surrey. So, my family’s legacy of helping this city for over 150 years, being involved in coaching, volunteering, and leaders in the community is likely to end with this generation. The kids are looking to relocate to New Zealand, Montreal or somewhere in the US.”

Home Offered For Sale and For Rent Simultaneously

From ’29’ at VREAA 21 Feb 2011 9:47am-
1494 West 40th Ave, Vancouver (40th & Granville)
3175 sqft home; 6905 sqft lot
Listed for rent on craiglist: $4,300 x12 = $51,600 p.a. “prefer long term lease”
Listed for sale MLS V859209: Sales price $1,288,000
Cap rate: 4% [High for a west side SFH, many renting at 2% cap rates. -ed.]

http://postimage.org/image/782rwdpg/
http://postimage.org/image/78mmcjms/

’29’ adds: “I came across sellers, to fool buyers, arranged with their tenants to rent at higher than market rents with a written promise to return the excess rents collected plus a bonus when the house was sold.”

“I know a number of cases of underused houses purchased by asian buyers.”

900kCrackHouse at vancouvercondo.info February 15th, 2011 at 8:43 am“I know a number of cases of underused houses purchased by asian buyers:
1) My friends apartment was just purchased by foreign buyers and he was kicked out for “renovations”
2) I know a 20 year old university student who’s rich aunt from Asia just bought him a house in North Burnaby. He manages the tenants and when he can afford to pay the 70% mortgage, he gets the house. Oh, and I should mention they own two more houses in Burnaby, one of them a $1 million dollar house occupied only by the Aunt’s 18 year old kid.
3) Huge house in Fraser Heights in Surrey occupied by a 90 year old Grandma. The 18 year old daughter used to live there, but she wanted to live close to UBC so they bought her a condo out there.”

What do you do when you’re the investor owner of an ‘underused house’ and the price starts steadily dropping, month after month? Along with ‘local speculator’, and ‘boomer’ supply, ‘foreign investor’ supply will all start coming into the market at the same time. These groups of investors are largely momentum players, and they’ll start leaving when prices start heading the wrong way. -vreaa



“Completely Baffled” Realtor Sees Market As “Obscenely Hot”

Agent Will at agentwill.com 16 Feb 2011 11:48pm“This has NEVER happened before. How hot is the market? Obscenely hot. At least for detached properties. Point blank it has me (and most realtors I speak with) completely baffled.”

[They'd be less baffled if they recognized that the market was a frenzied speculative bubble. -vreaa]

Prior very bullish opinion from the same realtor archived here: [VREAA 14 Dec 2010].

To give Will his due, he did say, in his recent post: “All I know is that it makes many (myself included) question their sanity. Reality just no longer aligns with perception.”

Vested Interests – “Are the developers and the condo industry and others really pushing the government hard saying you’ve gotta have a big CMHC to get more people into this market or we can’t sell that product?”

From BNN interview 17 Jan 2011 5:40pm with Neil Mohindra, Director Centre For Financial Policy Studies, Fraser Institute [hat-tip vancouvercondo.info] -

Interviewer: “What might surprise a lot of viewers is that fully 70% of existing Canadian mortgages are 100% guaranteed by the CMHC. I mean, why do you think Flaherty and others weren’t taking a harder look at that today and pulling the balance sheet of CMHC back towards more of its historical average which is almost a fifth of its current size. Are the developers and the condo industry and others really pushing the government hard saying you’ve gotta have a big CMHC to get more people into this market or we can’t sell that product and construction and housing is part of our national economy is going to suffer?”

Mohindra: “To the extent [that] those industries lobby, I don’t know. I’ve certainly seen testimony on the House of Commons Finance Committee, and the Senate Committee on Banking, Trade and Commerce, where those industries have made those types of points, and so they are very much in favour of the current system. Certainly it works very well for the banks as well, because, they take the returns and for the premiums their customers pay, all the risk is handed over to the taxpayers. So they get the returns, and the risk is on the taxpayers.”

Panicked Urge To Buy (continued) – “She’s worried that if she does not buy now, she will be priced-out forever.”

Enlightened at VREAA 25 Feb 2011 1:56pm“We were thinking of upgrading when we sold our house a month ago. Then we were enlightened and we have decided to rent for now.
My friend has a townhouse and she’s worried that her townhouse has reached it’s max and if she does not buy [a SFH] now, she will be priced-out forever. She still wants to buy because of this logic but she can’t b/c all $800K+ houses out there are like crap!”

“I have friends who are panicking to upgrade before the Mainland Chinese price them out and before the mortgage rules change.”

SethM [aka Greenhorn the video archivist] at RE Talks 24 Feb 2011 10:39pm -
“A lot of people want to sell right now so that they can upgrade to larger, nicer homes. In a hot market, it is better to upgrade before prices increase too much as the relative difference (between your new house and old house) gets amplified. Lots of homeowners fear being priced out of their upgrade/dream home because Mainland Chinese are putting upward pressure on prices.
Let me give you an example Vanpro. You have a $700,000 home but really want a $1,400,000 home. The price difference is $700,000. Let’s say you wait 10 years. Your home is now worth $1,400,000 but your dream home is now $2,800,000. The price difference is now $1,400,000. For some upgrade buyers, they won’t be able to close the gap.
I have friends who are panicking to upgrade before the Mainland Chinese price them out and before the mortgage rules change.
You may see listings increasing, but these sellers will be buying more expensive homes. Expect to see prices rise with increasing listings in this scenario.
Make sense?
It is perverse, but this is how Vancouver real estate works. This market is different. It really is.”

Opinion and anecdote from SethM. [hat-tip to jesse].
Note that the anecdote part is about locals extending themselves even more into RE based on two beliefs -
– 1. “Prices will continue to increase.”
– 2. “The mainland Chinese are going to price us out.”
The first belief has driven almost all Vancouver buying for 5-6 years.
The second has increasingly affected buying by locals, even moreso this past 1-2 years.
Regardless, we have people buying for speculative reasons. (They are paying stratospheric prices based on the belief that prices will continue ever upwards, not based on the utility of the property.)
Note that the sentiment mentioned is now ‘panic’.
Panic buying. When does that happen in the RE cycle?
– vreaa

“The unit is up for sale once again, and yesterday they reduced it down to the same price they bought it for 5 years ago. They cannot afford to reduce it anymore.”

Anonymous at vancouvercondo.info February 18th, 2011 at 9:34 am – “I was talking to a friend last night and he mentioned they’re trying to sell their Coquitlam condo – they’re out of room and want to have another kid. They bought 5 years ago and have tried selling it two times last year with no luck. The unit is up for sale once again, and yesterday they reduced it down to the same price they bought it for 5 years ago. They cannot afford to reduce it anymore, so if they cannot sell they’ve come to the realization that they’re basically trapped – potentially for 5+ years depending on where the market goes.

jesse at vancouvercondo.info February 18th, 2011 at 11:16 am“A relative of mine bought a DT unit on presale and sold it mid-2010 for the same price they paid after fees, with no depreciation (sold within 4 months of completion). The presale contract was signed in about 2007. Some specific Coquitlam stuff, being more on the periphery, may now be 2006 break-even. Not sure if it’s representative of the entire market but I’m not surprised some people are finding it challenging selling at a capital gain.”

“My company just laid off 80 well paid people. On average 75-80k a year jobs. Some with kids, condos, even houses. Some just bought recently.”

4SlicesofCheese at vancouvercondo.info 22 Feb 2011 8:24pm, and later – “My company just laid off 80 well paid people. On average 75-80k a year jobs. Some with kids, condos, even houses. Some just bought recently.” … “Game development, Tech Sector.”

$695K (35%) Over Ask Dunbar Tear-Down; 52×130 For $2,683,000

calguy asked today at VREAA: “Can someone confirm a sale recently, last week in Dunbar. A bungalow at 4035 west 28th was listed at 1.9 million and sold for 2.6!!! I thought I saw it somewhere but can’t remember where. It was listed as a building lot. A shame as it looked like a nice home for a reno. I remember when these homes were 1 million and we thought that was expensive then!”

4035 28th Ave W
3,057 sqft house; 52×130 lot; MLS V869100
Listed 10 Feb 2011: Ask price $1,988,000
Sold 19 Feb 2011: Sale price $2,683,000
$695k [35%] over ask.

Near private schools. Fairly solid house, by Vancouver standards, but clearly bought as a tear-down. It was advertised as “An excellent holding property or build your dream home.” It’s hard to imagine anybody sinking $2.7M into RE so they could live in this modest house. More likely they will spend another $1M on top of that to rebuild. So, we could use this sales price as rough lot value for this area. And, arguably, as another example of misallocation of resources (a perfectly usable home is destroyed).
As frequent readers know, we often cite the possibility of 50% off in the crash. Here we’ll make an exception and say that we wouldn’t be at all surprised if lots this size change hands for a lot less than $1M in Dunbar in future years. That’d be a drop of more than 63%.
It would be interesting to know if this house was purchased by a SFH developer or end-user. Anybody know more? -vreaa

Twitter Vancouver RE Chat ['YVRREChat'] – Three Realtors, Four Mortgage Brokers, One Home-Stager, and Three Civilians Discuss The Market

“Gold, Jerry, gold.”
Recorded here for those of us who don’t ‘tweet’, this ‘twitter chat’ between realtors, mortgage brokers, home-stagers, and three regular civilians, 22 Feb 2011, 9am-10am [#YVRREChat]. There were a number of ‘threads’ to the chat stream, and we have done our best to parse the various threads. Our summary/analysis of the discussion follows at the end.

The cast:

Scott Dawson [mortgage broker, moderator]

Leah Bach [realtor]

Christopher W. Earl [realtor, 'earl of condos']

Jason Krist [ex-nurse, mortgage broker]

Rossana Wyatt [mortgage broker]

Heather Stewart [homestager]

Teri Conrad [realtor]

Conrad DeJong [mortgage broker; RE investor]

Gary Jones [financial security advisor]

Jonah Lewis [website builder, prospective FTB]

Lynne Robson [web designer, non-owner]

The discussion:

Scott Dawson: Welcome to YVRREChat. Hope everyone’s been having a productive start to the week. I have noticed a definite uptick in business. Today’s topic is an open discussion on the YVR Real Estate market. Does anyone has anything they want to start with?
Lynne Robson: All I know is the market is way out of control…this from a third party perspective.
Leah Bach: I’m really interested in why you feel that way.
Lynne Robson: I just don’t quite get it…I have a cousin in wpg who is an agent…heritage houses sell here for 1 mil, same homes in wpg 300g.
Leah Bach: So, your thought is that it is the price disparity between yvr and wpg (for example)?
Lynne Robson: I have no idea how someone can be a 1st time buyer here. With cost of living, and home prices, there is no way an average person with an average income can even think about it…I know I can’t.
Scott Dawson: Vancouver has been rated as ‘most liveable city’ in the world. This has to have effect on pricing.
Leah Bach: The drivers of this market are two fold. First time condo buyers (get into the market), and upgraders.
Jonah Lewis: Compare Vancouver to New York, a 300,000 apartment here is bigger and more affordable.
Lynne Robson: I am not going to pay 300g plus for an apartment.
Leah Bach: Of course not, because you don’t see the value. If however, you want land 300g gets you Mission.
Christopher W. Earl: location, location, location.
Scott Dawson: You may not pay $300k but many people do. Like Earl_of_Condos says, location, location.
Lynne Robson: But what is the location? the view? the weather? what makes this “the location”?
Leah Bach: My first house was $147k at the time, I thought we were going to eat KD for the rest of our life.
Lynne Robson: The market in Vancouver makes me crazy…I should just be quiet…
Leah Bach: No, I LOVE that you will talk to us about how you feel about the market. Your info is like gold to RE’s.
Lynne Robson: I know I keep saying wpg, but you can still get a very nice home in wpg for 147k.
Christopher W. Earl: Location is demand, first and foremost. Like anything, the more the demand, the higher the price.
Leah Bach: Exactly which is why we see strong immigration in Richmond condos. Scarcity drives prices (less listings/more offers) and people who “get in” the market eventually “move up”.
Jonah Lewis: What I find unreasonable is the average cost of a house 1-1.5 million. Who can afford that!?
Lynne Robson: I agree, there is no way to get into the market with that family home.
Leah Bach: AND the fact is we all feel a pinch when we get a mortgage, however, our earning power grows over time.
Scott Dawson: You’d be surprised. Homes that price [1-1.5M] are going into multiple offers.
Lynne Robson: But what happened to the day when you got married, bought a home and lived in it while your family grew…?
Jason Krist: A lot of people are doing it with a rental suite now.
Leah Bach: ..you can do that in a three bedroom condo in Maple Ridge.
Leah Bach: The whole affordability argument is earning power does not rise in step with housing prices, but those in the market make equity.
Lynne Robson: Back in the day you actually saved for a down payment.

Scott Dawson: Your first home is never your dream home it’s a stepping stone.
Leah Bach: Exactly. I tripled my investment in 5 yrs and moved up.
Heather Stewart: Wasn’t that an extreme anomaly, though?
Leah Bach: Which part? the buyer or the return?
Heather Stewart: The return, so quickly. [No specific reply to this point. -ed.]
Lynne Robson: My parents did not buy their first home with the thought that it was a step stone, they bought it because they loved it.
Scott Dawson: Previous generations also settled down at one job for 35 years. Didn’t move as much.
Jason Krist: Homes are like jobs there days, people rarely keep the same one for long right.
Scott Dawson: Exactly! I rarely see a client that’s been employed longer than 3yrs at current job.

Christopher W. Earl: Average Vancouver home buyers can afford average Vancouver homes.
Lynne Robson: I don’t want an apartment…I want a house where my kids (if i had them) can play in a yard, or I can plant a real garden.
Jonah Lewis: It’s a question of wanting average or not. I’d rather live somewhere affordable if I could.

Leah Bach: I have clients that paid cash for a 750k place (dinks under 35)
Rossana Wyatt: Nice for them!
Gary Jones: Really? How did they amass that much wealth in such a short time?
Leah Bach: One good job (overseas) one well educated, some inheritance, one car, no kids, good investing etc.

Teri Conrad: Seems to me I’ve read somewhere that ratio of income to mortgage not far off from parent’s generation here in Van [Nobody responded to this statement. Too 'facty'. -ed.]

Rossana Wyatt [mortgage broker]: hello evry1. We pd 190000 4 our condo at City gate and were lucky 2 get tht when we sold – now worth 400000 :( [Example of flat market. Ignore. No responses to this either. -ed.]

Gary Jones: Is every home an investment or not?
Scott Dawson: I believe so. You have to live somewhere why not pay your mortgage instead of your landlords?
Jason Krist: As someone who has tenants it’s great, I tell clients all the time how much they waste on rent
Gary Jones: All the money savings books suggest renting is cheaper.
Scott Dawson: The first step when thinking of buying is to do a budget. For some it might make sense to rent.
Jason Krist: Renting may be cheaper but it doesn’t mean it’ll get them further ahead
Conrad De Jong: That’s why homeowners are rich and renters are poor; FACT.
Leah Bach: The fact remains, renters are covering somebody’s mortgage.
Conrad De Jong: I encourage people to start somewhere, even if its a 500 sq ft condo, you create leverage, you can rent it out
Lynne Robson: As someone not in the industry, I don’t want to have to look at buying a home as only an investment, I want a home
Jonah Lewis: It’s hard to go from a good size rental deal to 500sq of nothing and be house poor though. 1st time buyer.
Leah Bach: The secret to getting in is usually sacrifice. Save for the downpayment and buy the best you can afford.
Jason Krist: I agree, sacrifice for long term gain. Rent $1,000/mth = 60K over 5 year period would you rather build your equity or someone else’s?
Scott Dawson: Owners realize this once they’re in the market. Most wish they got in sooner.
Conrad De Jong: I think its worth the sacrifice in the longer term
Rossana Wyatt: Yes, pays off in long run!
Lynne Robson: Do people even save for a down payment now a days?
Jason Krist: They should be saving, problem is they walk into a bank, open a savings acct and feel relieved.
Scott Dawson: People are saving more than you think. Most of my current files are not high ratio.
Lynne Robson: Back in the day you had to save 25% for a down payment…how the hell do you save 25% of a mil…?
Leah Bach: You can always try the “bank of dad”
Christopher W. Earl: Get a REALLY high paying job ;)
Lynne Robson: So 25% of $1mil.. $250,000.. will buy me an ocean front property with a rental in barbados…hummm let’s reconsider..
Jason Krist: 25% was a lot less “back in the day”, now if you get 5-10% as a down payment, get into the market, smart purchase
Leah Bach: You don’t need 25%, mortgage people…where are you? and can you get a work visa in Barbados?
Lynne Robson: lol, actually I can…I have a virtual business, and a husband who is retired…

Heather Stewart: Best time to buy is always last year!
Jason Krist: Trying to “time the market” rarely works out for a FTHB
Scott Dawson: You can’t time market & mortgage rates. Buy when you’re ready.
Christopher W. Earl: You should buy where you see value…that fits your budget.
Rossana Wyatt: If u wait too long, never a rt time

Scott Dawson: Contrary to belief by some it’s the market that sets housing prices in YVR not Realtors. [Mentioned out of the blue and for no apparent reason. Agreed with repeatedly by realtors. Not sure who the 'some' are who are arguing this in the first place. -ed.]

Christopher W. Earl: Housing prices always trend towards affordable.
Lynne Robson: Exactly what planet are you living on?
Christopher W. Earl: I didn’t say affordable for whom :)
Conrad DeJong: Vancouver hasn’t been affordable for 27 years
Leah Bach: It’s affordable [to renters? -ed.] because renters aren’t paying for the initial deposit, carrying costs, infrstrcture mtnc.
Heather Stewart: I guess when rent is almost unaffordable, coming up w/dnpmt and maintainence can be seen as unaffordable – investment or not
Heather Stewart: Market is what market will bear – it’s just too bad the market is out of reach for so many, now

Leah Bach: So, then let’s talk bubble….[..with minutes to go. -ed.]
Scott Dawson: Ohhhhh nooooo for the RE bubble chat we’d need hours.
Heather Stewart: Or days!
Leah Bach: It’s 10 anyway [time to end the chat hour]… bubble chat next week…
Rossana Wyatt: Thx evryone for gr8 chat – gotta run. Have a gr8 day! :)
Scott Dawson: Thanks for the chat everyone! Some great discussion today!
Lynne Robson: Sorry if I stepped on anyone’s toes
Christopher W. Earl: It’s important to have a wide range of opinions…otherwise, there is no discussion.
—/end of twitter chat/

——-
Summary/Analysis:
Okay, let’s breakdown the “wide range of opinions” offered in this discussion:

1. Why pay a landlord’s mortgage?:
– You have to live somewhere why not pay your mortgage instead of your landlords?
– I tell clients all the time how much they waste on rent
– Homeowners are rich and renters are poor; FACT.
– The fact remains, renters are covering somebody’s mortgage.
– Rent $1,000/mth = 60K over 5 year period would you rather build your equity or someone else’s?

2. Other people are buying; Therefore there must be some logic to buying:
– You may not pay $300k but many people do.
– Homes that price [1-1.5M] are going into multiple offers.
– I have clients that paid cash for a 750k place

3. Overextend yourself to buy; This is normal; It pays off; Always:
– My first house was $147k at the time, I thought we were going to eat KD for the rest of our life.
– The fact is we all feel a pinch when we get a mortgage, however, our earning power grows over time.
– …earning power does not rise in step with housing prices, but those in the market make equity.
– I tripled my investment in 5 yrs and moved up.
– I encourage people to start somewhere, even if its a 500 sq ft condo, you create leverage
– The secret to getting in is usually sacrifice. Save for the downpayment and buy the best you can afford.
– I agree, sacrifice for long term gain.
– Most wish they got in sooner.
– It’s worth the sacrifice in the longer term
– Pays off in long run!
– If you get 5-10% as a down payment, get into the market, smart purchase
– You don’t need 25% mortgage, people…

4. Accept less than you reasonably expect:
– If however, you want land, 300K gets you Mission.
– ..you can do that in a three bedroom condo in Maple Ridge.
– Your first home is never your dream home, it’s a stepping stone.
– Average Vancouver home buyers can afford average Vancouver homes.

5. Don’t try to time the market; Buy now:
– Trying to “time the market” rarely works out for a FTHB
– You can’t time market & mortgage rates.
– If u wait too long, never a right time
– Vancouver hasn’t been affordable for 27 years

6. Always keep in mind the compulsory RE wisdom:
– location, location, location.
– Vancouver has been rated as ‘most liveable city’ in the world. This has to have effect on pricing.
– Location is demand, first and foremost. Like anything, the more the demand, the higher the price.
– Scarcity drives prices (less listings/more offers)
– Market is what market will bear
– Contrary to belief by some it’s the market that sets housing prices in YVR not Realtors.

7. Ignore counterarguments; Avoid logical consequences of sensible statements/questions:
– Isn’t it an anomaly to triple your investment in 5 years?
– I have no idea how someone can be a 1st time buyer here. With cost of living, and home prices, there is no way an average person with an average income can even think about it…I know I can’t.
– But what is the location? the view? the weather? what makes this “the location”?
– What I find unreasonable is the average cost of a house 1-1.5 million. Who can afford that!?
– All the money savings books suggest renting is cheaper.
– Ohhhhh nooooo for the RE bubble chat we’d need hours. [And we'd have to consider actual facts and arguments! -ed.] – gotta run

8. Silence the dissidents; Or, rather, just keep talking to them until they silence themselves:
– The market in Vancouver makes me crazy…I should just be quiet…
– Sorry if I stepped on anyone’s toes
[Note to Lynne Robson -> Next chat, no need to apologize for your sensible observations. -ed.]

“It doesn’t matter how intelligent, educated, or mathematically inclined someone is: when it comes to real estate, it’s like they’ve suddenly taken crazy pills.”

Yalie at vancouvercondo.info February 21st, 2011 at 5:28 pm“I don’t know why, but for some reason it doesn’t matter how intelligent, educated, or mathematically inclined someone is: when it comes to real estate, it’s like they’ve suddenly taken crazy pills. Case in point – I was having lunch with a friend who’s an extremely successful (and highly paid) corporate lawyer, who’s looking to buy a house soon. This is one of the smartest guys I know, and he deals exclusively with corporate finance and securities law.
He mentioned that he’s in a rush to find a place soon, because “interest rates are likely going up and that’s going to increase monthly payments”. I mentioned that higher interest rates would mean lower prices, but he countered with “sure, but that still means the monthly payment will be the same either way”. So he figures it’s still better to buy now.
So one of the most intelligent, financially-savvy guys I know can’t figure out that it’s better to pay a lower price with higher rates than a higher price with lower rates, given the same monthly. And this guy deals with billion-dollar securities all day long.
There really is no reasoning with people over real estate. I have had similar conversations with several other people, and it never seems to make a difference. When someone has made up their mind to buy a house, all they want to hear is reasons why they should do it.”

Spot The Speculators #28 – Olympic Village Speculations Gone Sour

Early buyers are being sued for trying to back out of their commitments to purchase at the Olympic Village [Globe and Mail, 20 Feb 2011].
Examples, from the article -

1. Port Coquitlam resident Cordelia Lins and her husband had put down $50,090 in May of 2008 for a unit they originally agreed to buy for $500,900. Problems with records make it difficult to determine the assessed value. Ms. Lin said she couldn’t say anything about the lawsuit because she was “in negotiations.”

2. Vancouver resident Gee Lim, who paid the largest deposit for a unit he originally agreed to buy for $1.4-million, did not answer his phone. He originally agreed to buy his unit in April 2008. Last July, the province’s land-assessment authority valued that unit at only $1.172-million.

3. Tian Qi, who has no phone listing at the Richmond address provided in the suit, had agreed to pay $516,000 for his unit in the Kayak building that is now being marketed. It was assessed at $504,000 by B.C. Assessment Authority last July. He put down his deposit in April 2008.

‘Feeding Frenzy’ in Richmond – “45yr old house; 60×120 lot; Willing to Accept $950K 3mths Ago; Sold For $1.4M; Buyer 21yr old Kid In Car, On Phone To Parents In China”

Richmond Owner at VREAA 22 Feb 2011 11:16am“Just another example of the feeding frenzy here in Richmond – a good friend of mine was willing to accept $950,000 about three months ago for his 45 year old house on a 60 x 120 lot. That deal fell through, luckily for him, as he just sold for 1.4 million. That’s a $450,000 increase in three months. The 21 yr old kid never left his car that was parked in the driveway as the deal was negotiated with help from the realtor. He was on the phone the whole time with his parents in China.”

Congratulations to this seller. By chance, they make an extra $450K, after tax, in three months.
Q: How long does it take someone with the average Richmond income to save $450K after tax?
A: If they are a very prudent saver/investor, perhaps 15-20 years.
At current lower mainland savings rates, which are negative, the average Richmond earner will never save $450K.
Therefore, the draw to RE speculation.
As somebody said in an anecdote not so long ago, “How else can I accumulate wealth?”
Feeding frenzies, by their nature, don’t last long.
-vreaa

“Even at the corporate level, locals have a desire to ‘overpay’ for RE assets and make strange choices when it comes to parting with cash for RE.”

Mango at financialinsights February 20, 2011 at 1:44 am- “Lululemon just paid $65M for a building in Kits. That is 25% of the cash they have on their balance sheet. That [building] would have cost them less than $3 million a year to rent. They have massive growth in earnings per share (EPS), so common sense [should have told them to rather use the money to invest further in their business].  Instead, they bought the building? So even at the corporate level, locals have a desire to “overpay” for RE assets and make strange choices when it comes to parting with cash for RE.”

Frances Bula On CBC – “This is a city where we’ve built our economy, and many of us have built our personal lives, on speculating on real estate. Even our own houses, we pay crazy prices for them, in the expectation that prices are going to rise, not because our incomes can in any way cover them.”

When it comes to deducing what mainstream commentators really think about the Vancouver real estate market, television clips and radio interviews can be far more telling than newspaper articles. The carefully phrased, edited, and re-edited written word, doesn’t reveal as much as the verbal nuances, body-language, facial expression, and less censored content that often emerges in interview.  Frances Bula is a contributor to The Globe & Mail, a city columnist for Vancouver Magazine, and a blogger  with focus on city affairs (‘State of Vancouver’). We are unaware of her writing anything, anywhere, that explicitly identifies a RE speculation problem broadly amongst Vancouverites. Here, however, she identifies such a problem, in a radio interview:

Frances Bula: “Yeah, I mean, one of the things I’ve always found fascinating about this project is that in a way it’s symbolic of Vancouver and all of us… uhm, you know, this is a city that in a way we’ve built our economy and many of us have built our personal lives, in a way, on speculating on real estate… even our own houses, we pay crazy prices for them, in the expectation that prices are going to rise, not because our incomes can in any way cover them [laughing, and laughter from others] so we have a whole city that’s kinda gotten caught up in this because really what happened there [at the Olympic Village] is that everyone thought the real estate market would just keep going up and up, that the market could bear all the different things they were doing… making it green, building beautiful things around it, and so on, and, we were all caught out.” – CBC Radio, ‘The Early Edition’, 17 Feb 2011, interview with Kathryn Gretsinger, about the Olympic Village sales plan.

Almost every Vancouver RE purchase has a speculative component, even if it is most often coated in a veneer of wholesome innocence. The willingness of locals to borrow vast sums of money, and to use that money to bid up RE prices, has driven our bubble. As Bula implies (and as we have long argued) stratospheric prices would not have been paid by people who didn’t expect ongoing limitless price appreciation. This speculation, by all buyers, is a far, far more important engine to our bubble than other commonly touted phenomena, such as, for instance, foreign money.
See the ‘Spot The Speculator’ sidebar category for numerous relevant examples.
Q: What happens to speculative demand when prices start dropping?
A: It evaporates.
Q: What happens to speculative holdings when prices start dropping?
A: They become supply.
-vreaa

Thanks to Froogle Scott for alerting us to this clip. As Froogle writes, via e-mail: “Frances Bula sounds like she harbours quite a bit of bearish sentiment, and doesn’t exclude herself from what has gone on with Van RE. And given her professional background, she’s obviously someone who’s very knowledgeable about Vancouver, past and present. A member of the MSM who isn’t willing to be a purveyor of the Kool-Aid?”
Those of you who don’t yet know Froogle’s own story, take a look here.

Westside SFHs At Less Than 2% Rental Yield – “I can easily and I mean easily rent a “today’s market price” $2 million dollar home for $3k per month.”

DaMann at vancouvercondo.info February 17th, 2011 at 4:37 pm“I agree with you full well on living on the westside, I love it here and really wouldn’t want to live anywhere else. I sold my place so I could move back to the westside and rent.
A “land value” house on the westside doesn’t go for $5k a month, not a chance. I could rent many a nice house on the westside for $2500 a month that I would love to own, although they would be old and rough. $3k I could easily and I mean easily rent a “today’s market price” $2 million dollar home. I have lived on the westside for 20 years with the exception of my 3 years of owning, I know the rental market very well.”

Realtor Strategy For Bidding Wars – Recently Listed $1.5M; Relisted Under $1M; “The plan was to sell it in one day, expecting 20 or 30 offers.”

mousey at greaterfool.ca 18 Feb 2011 1:07am“I noticed a double lot property listed on the MLS in the “hot hot hot” Cambie area of Vancouver. It had heritage features and was not obviously a knock down. It was priced at just under 1 million which is about $300,000 less than that knockdown on a regular lot in the same area that sold about 2 weeks ago. Had to phone the real estate agent and ask what was wrong with the property. The agent said there was nothing wrong with the property and that it had been listed for about 1.5 million just recently. The plan was to sell it in one day and that they expected to receive 20 or 30 offers right away. There was no expectation that it would go for 1 million. The price looked wrong right off the bat, but I felt bad for the young families who might have actually thought that the asking price really was the 1 million as opposed to the opening bid price in a land auction.
Further, a house down the street that couldn’t sell for about 1.2 million last fall is now back on the market as priced to sell for just over $1.3 million. There is something truly wacky about our little jewel on the coast. The lattes must be spiked, I swear.”

We would always expect realtors to be using whatever strategies it takes to sell properties, regardless of market conditions. Currently, however, there are perhaps an unusually large number of stories of  strategies designed to manipulate buyer psychology. Helicopters, Paid for line ups, Media coverage, Deadline pamphlets, ‘Land auction’ pricing. It seems we have a narrowing market with hot and cold patches. This could be a ‘distribution top’ pattern, where smart money and insiders are unloading and market darlings show a last hurrah. All against a turbulent and frantic circus-like backdrop. -vreaa

“I’ve directly witnessed the negative impact of real estate pricing on our capacity to recruit/retain clinical and research talent here.”

Royce McCutcheon at VREAA 16 February 2011 at 2:47 pm-
“I’ve directly witnessed the negative impact of real estate pricing on our capacity to recruit/retain clinical and research talent here. The reality is that the offers in Vancouver (vs. Toronto or USA) have typically been lower with respect to salary and support funding. From what I gather, it’s been this way for a long time. This was somewhat sustainable in the past because Vancouver held enough appeal that some folks were willing to take a hit. Of course, that hit was usually small-ish; by my estimation, we’re talking about ~15% lower salary at most. Lately, I’ve heard multiple stories about potential hires (MDs, researchers) expressing legitimate interest in these slightly lower Vancouver offers… but only until they started investigating our grossly inflated house prices. Once these people realized the true size of the hit they’d be taking after buying a place, they walked. One individual who was being recruited for a very senior position – who had local ties and wanted to come here – spelled out that he could make much more money in his current, more intellectually satisfying position while only working 9 months a year. He pointed out that this set-up left him ample time to pay for travel and rental accommodations at all kinds of fun spots in Vancouver and surrounding areas.
We are losing talent and we are having a tough time recruiting more. I fear this fact will stay masked until we see a real estate correction, so the sooner that happens, the better.”

“I left Vancouver in 2004. I thought it was crazy then. It just got crazier.”

TedsBundy at VREAA 18 Feb 2011 11:27am“I left Vancouver in 2004. I thought it was crazy then. It just got crazier. I loved Vancouver. I lived there for 15 years. But things changed. The character got stripped away as tends to happen when everything is driven by condos and Starbucks. The people got nasty and frankly, the world knows the average vancouverite is not rich. No one is fooled. Yet everyone seems to be playing the ego trip game. None of them can afford it. Everyone else in the world knows this.
Vancouver does have a lot of foreign capital. However I think that will change as their home countires are living the dream far more than Canada is right now. Hong Kong came to Vancouver to find that they pretty much still live in Hong Kong but without their own culture.
For me, the change meant starbucks, gap and conversation about condo pre sales. Boring. Beautiful location but highly taxed citizens in the mental burden way. I now live in a waterfront home elsewhere with $ to burn. Its not as pretty but I have no worries about paying my bills and living my interests. All for less than a tiny bachelor in a west end walk up. Easy choice.
Like others mentioned, a crash will not be immediate. Face the fact that you are priced out of Vancouver. That’s life. Becoming a slave to a city will never do anyone justice. The fall will come. And when it does about 90% of Vancouver’s population will all be crying at once. About 2 years later is when I’d look at coming back. When they are foreclosed on. Just like Las Vegas and most of California, Phoenix, Miami etc right now. All great locations that couldn’t go wrong 5 years ago. Just like Vancouver.”

“In the last three years, at least six of my married friends have left town because of the cost of living here.”

tincup at VREAA  16 February 2011 at 7:22 pm
“I seen this more and more lately as well. In the last three years, at least six of my married friends have left town because of the cost of living here. Their professions are solid middle class; teachers, physiotherapists, plumbers, carpenters etc. all with young children. The new people we’ve met who’ve moved here in that time? Two couples where both husband and wife are specialist doctors. One couple moved back to Ontario after a year due to the ridiculous house prices. The other couple is staying because they are heavily into the outdoor lifestyle, but they live what would be considered an upper middle class lifestyle in the rest of the country.
Also, just the other day a friend who works as a manager in the federal government said they keep losing people here (mostly for jobs that pay $50k-$60k) because of the cost of living.
In Vancouver, a family living a middle class lifestyle means two wage earners, both with six figure incomes.”

“I’m one of these guys that just left Vancouver for London, UK. The prospect of not being able to afford anything despite my $100K/year salary finally turned me off.”

El Magnifico at VREAA 15 Feb 2011 4:03 pm -
“I’m one of these guys that just left Vancouver for London, UK. I really loved the 5 years I spend in Vancouver, but the prospect of not being able to afford anything despite my $100/year salary finally turned me off. My company offered me a 6-month mission with expat package in London, which I accepted despite the fact that my wife was pregnant (she just delivered last Friday!). I arrived in London on January 14 and I truly love it. My local boss offered me to stay in London after my mission, on a local contract… I thought about it, discussed with my wife and we decided it was the best option for us. London is expensive too (although groceries are much cheaper), but I’ll be paid 30% more here than in Vancouver. My standard of living is and will be better than in Vancouver and I will be able to afford something here in the foreseeable future. Job opportunities are limitless here, unlike tiny Vancouver…
After spending a month here and looking back, I just think Vancouver is so outrageously expensive. From Groceries to housing, shopping, restaurants, etc., everything is overprice with most often questionable quality/service. In Vancouver, I find I’m getting ripped off all day long (don’t get me started on Banking or worse mobile phone). Things are expensive too here, but I find I do get value for what I pay. And I just love so much going to Museum… for free!
Vancouver is good but certainly not the “best place on earth” (how pretentious!!!), and there are lots of amazing places around the world that are more worth it than Vancouver.”

Moral Hazard Mindset – “34% of responders think that people that were crazy enough to pay ridiculous prices for a little space in Vancouver should be compensated for their stupidity and greed!”

Barb at greaterfool.ca 18 Feb 2011 4:02am and 4:10am- “Today in Vancouver, the radio station “News 1130″ had a doozer of a headline. Bob Rennie is selling a bunch of the Olympic condos at 30% less that original asking. Should the people who paid full price be able to sue?!!! Are you kidding me??? 60% of responders said no. That leaves 40% of people who think that people that were crazy enough to pay ridiculous prices for a little space in Vancouver should be compensated for their stupidity and greed. So, if they happened to have made a ton of money on the investment they could keep it, but losing isn’t allowed???!!!”
“I just looked up the radio announcement [and poll] from news 1130. It was 34% who thought the people who bought the Olympic condos prior to the 30% discount should be able to sue!!! What are they thinking??”

Thank you, Barb; we share your exasperation regarding this issue. 34% of the responders (at the point of posting this) are of the opinion that “people who paid a premium for a condo in the former Olympic Village have grounds to sue”. Methodological issues aside (the actual number could be considerably more, or less), this is amazing, eh? It’s an example of a ‘moral hazard’ mind-set: the tendency to take on inappropriate risk with the expectation of being protected from any future negative free-market forces. This phenomenon will not only manifest at the Olympic Village, it’ll be broad when price drops start in earnest across all properties. We’ll have cries for bail-outs from RE owners. The politics of all that will probably get gruesome, particularly since the politicians, and their families, and their supporters, and the RE industry shoring up their communities’ economies, are all up to the eye-balls in leveraged RE.
(sigh) -vreaa

Another Family Gathering; Another RE Discussion – “A few words into mentioning that she plans to sell her home, she was interrupted with “Don’t do it… you can never buy one back. Prices will keep going up and you’ll be priced out…”

specialfx3000 at vancouvercondo.info February 14th, 2011 at 7:57 am-
“Another family gathering, another discussion that led to RE:
A family member was given an opportunity to work on the island but she knows she’ll miss the family and the GVR so she suggests that she will do the stint for a couple years then return home.
A few words into mentioning that she plans to sell her home, she was interrupted with “Don’t do it… you can never buy one back. Prices will keep going up and you’ll be priced out…” Another agreed. Then a 3rd agreed. (Of course they go on mentioning the Asian invasion and low interest rates, and blah blah blah) I wanted to say something but decided to keep my mouth shut. Why bother? These people believe the world is flat and I could bring whatever data I wanted to and there’s no way of convincing them otherwise.
I will chat with the family member in private at a later time.”

Developer Pamphlet – “3 Reasons To Buy In 30 Days” [before prices drop]

Developers ‘Onni’ lay out why we should all rush to buy ASAP. If you pause for a moment, of course, you’ll realize that tightening requirements will restrict you and everybody else after 18 March, and thus put downward pressure on prices, and thus you’ll very likely save even more money by simply waiting. But, then, Vancouver buyers aren’t well known for letting logic get in the way of a good speculative buying opportunity.  Race you to the sales desk! -vreaa [hat-tip to VillageWhisperer]

Burnaby Condo Presale Lineup – More Shameless RE Promotion Presented As ‘News’ By Global TV

Last week the helicopters, this week the paid-for line-up. The crazy swirling circus music is reaching fever pitch. -vreaa

In brief:
A condo development is going on sale in Burnaby this coming weekend (19 Feb 2011). A line-up commenced Wednesday 16 Feb. Online ads had appeared in the days before, offering to pay individuals to stand/sit/sleep in this line-up. Global TV covered this line-up as news. ‘Alex’ published an open letter to Global TV accusing them of knowingly airing commercial promotional material as ‘news’.

In more depth:
The “Sovereign” by Bosa Properties, corner of Kingsway & Willingdon, in Burnaby.
45 stories, 202 units, starting at $260K.
Construction scheduled to be complete by 2014.

A craigslist ad appeared on 13 Feb 2011 [hat-tip greaterfool.ca] -
“PEOPLE NEEDED TO LINE UP FOR NEW CONDO PROJECT
Date: 2011-02-13, 4:06PM PST
Just as the title says, we need people to hold spots and line up for a new condo project located in Burnaby (Kingsway/Willingdon Ave). Line up may start as early as weds/thurs night. Grand opening is Saturday February 19, 2011.
Warm beverages and washrooms will be provided by the developer.
Shifts are determined on how long you would like to stay. (preferably 8hours+)
Get paid cash quickly for sitting in a line up!
E-mail me your phone number + e-mail for more details. job-syk6p-2212992997@craigslist.org”

’29’ at VREAA told us of other online ads offering to pay people to line up:
“need help to line up, tonight, urgent, contact
Shirley 7788633870″
[link]
“urgently required, night shift persons, 7, 8pm – 6am
contact 6047159389″
[link]
“Builders Assoc CNY Meetup, Feb 19, Bonsor Community Centre, 6550 Bonsor Ave, 27:30-22:00 hours, 6048888888″ [link]
[It remains unclear to us whether the parties advertising for people to line-up were prospective buyers, realtors, or parties directly or indirectly interested in creating a media buzz. -ed.]

29, offered further info, in a series of comments at VREAA 16 Feb 2011“One can earn $100 lining up during the day and $120 night. 1 guy said he made $1000 to line up 3 days for a friend. Naturally hiring ad for this role is in Chinese. A few genuine buyers. Most are flippers.
Latest. Prospective buyers must produce IDs and register in person; they will then get a number like in a doctor’s waiting room. Further more they cannot transfer their option to purchase to a 3rd party. If that is true, kudos to the sales organizer to bring in some sanity to this fracas.”


[Photos sourced here.]

Global TV covered the line-up as news, 16 Feb 2011

“Remember when people were actually lining up to buy apartments in buildings that hadn’t even been built yet? Well, it’s happening again today despite what is supposed to be a slower condo market in the lower mainland. People camping out for a shot at a pre-sale in Burnaby for a new tower that won’t be completed for years.”


[Note project name prominence for the Global piece. -ed.]

“This building, you know, very good at 450, houses they go for 1 million, one point four, you know, that’s very good (laughs).” – Person in line-up:

“Metrotown is a very strong area in terms of transportation routes, it’s got a lot of infrastructure in place, as well as it’s at a critical mass in retail as well as housing, so I can see that as being attractive for buyers.” – Cameron Muir, BCREA [Introduced just as an 'economist' by the voice over. -ed.]

Announcer: “…and as an investment.”
Interviewer: “Are you going to live in this building?”
Guy in line-up: “Uhm…I have no idea right now..because that depends how the economy goes.. because it’s completed three years later… who knows, hey?”

Jen, somebody who works nearby, as quoted by Garth Turner, at greaterfool.ca 16 Feb 2011 -“When I went to work Tuesday morning I noticed a bunch of people at the empty lot and wondered what was up.  Through the morning, the crowd/lineup grew.  At noon, I noticed the porta-potty in a parking lot behind an adjacent building.  An hour later it was gone (I kinda wonder if we should call the employment standards people – after all, I think it was in the job offer).  The line grew by 50% from what was there at 9:30, so at 2:45 when I left, the lineup stretched beyond the length of the adjacent building.  By 4, they were erecting tents (like very nice party tents –  fully enclosed) for the people in the lineup exposed to the rain. When I went back to work at 8 there were flood lights for the people now in the tents.  And alas, when I left at 10, the floodlights were extinguished, but several police cruisers were in attendance.” “A co-worker went out and spoke to the people in the lineup at lunch.  When asked what they were in the lineup for, the first two people in line didn’t know.  A little further down the line, someone said they were waiting to buy a condo.  When asked if one of them were going to buy a condo, the guy said no, but his friend beside him was going to buy one.  Asked if they were getting paid to stand in line….answer…no!  Upon leaving the project with a loud comment from my co-worker  “hope you guys are getting paid well for this”,  the answer from one “not bad, not bad”.

Alex, at greaterfool.ca 16 Feb 2011 11:22pm, posted a letter that he has sent to Global BC TV -
“Regarding your item on the evening news tonite where you gushed over the line-up for that condo development in Burnaby: Are you aware there was an advertisement on craigslist this week offering to PAY people to stand in that line? That’s right – either the developer or the marketing company created a FAKE lineup. And here you are covering it as “news.” How reprehensible is that? Only as reprehensible as your coverage last week of that trumped-up helicopter tour over White Rock, where you wrongly intimated that mainland Chinese were flocking to the area when in fact it was simply a desperate marketing measure of a failing condo tower.
Now, I am aware that the local real estate mob (and I use that word knowingly) pays what must be a handsome fee to advertise on your station. In fact, most of your segments tonite were “sponsored” either by Re/Max or a mortgage broker. Coincidence? Hardly.
So tell me: In this climate, where Canadian families have maxed their credit, where real estate prices are some of the highest in the world, where the income to household debt-servicing ratio is in excess of TEN (an all-time record, by a long shot), where even the governor of the Bank of Canada has begged Canadians to STOP SPENDING, and where mortgage restrictions are continuously being initiated to stop the obvious insanity created in part by mainstream media lies, are you knowingly committing fraud? Because this spot tonight, along with the White Rock piece last week, most definitely weren’t “news.”
If you have even an ounce of shame, you’ll at least admit to me in a reply that you were either: A) Duped beyond all reason, or B) Lying and committing fraud. So, Global, which is it?”

Brian at greaterfool.ca 17 Feb 2011 3:48am“I heard from someone that knows someone that works for the developer that they have no knowledge of anyone being paid to stand in the lineup….I find that very hard to believe.”

Peter Pan at greaterfool.ca 17 Feb 2011 3:56am - “A journalist from the Vancouver Sun asked me to provide him with the Craigslist ad… I told him it was pulled soon after appearing on this website…”

Burnaby Boy at greaterfool.ca 17 Feb 2011 4:31am- “As of midnight the line ups of people at the Burnaby condo development have all gone as have the tents and security guards. I guess getting on the six o’clock news did the trick.”

Supersogs, at vancouvercondo.info 16 Feb 2011 11:47 am, reprinted a note from Bosa regarding the line-up.. they have changed to a system of “a sequential list of interested parties”: “While we knew that the interest in Sovereign was very healthy, we were surprised to find last night that over 125 clients had elected to begin lining up for our sales event this Saturday. While we anticipated that there would likely be a line-up, we could not have anticipated that it would begin forming so soon, and as a result have elected to modify our plans for the coming days.” [Where did the tents come from? -ed.]

UPDATES:

1. Bosa announces, on the day of the sales, 19 Feb 2011, that the project is “100% Sold out”:
“We’re thrilled to announce that
Sovereign by Bosa Properties is 100% sold out!
On behalf of Bosa Properties, we would like to extend our gratitude and appreciation to all of our new homeowners and everyone who came out to see us at the Sales Centre throughout the past weeks.”


2. Flip attempts appear within hours on craigslist:
Date: 2011-02-19, 8:06PM PST
Reply to: hous-ue4zb-2224133573_at_craigslist.org
Any body
[sic -ed.] who is interested in an assignment please contact me.
I have 3 units ready for signing
2 one bedrooms
1 studio
Adding $25k assignment to original pre open day price. (first 80 units)
If you are interested – you need to be quick cause these will be signed over on monday or tuesday (no assignment fees if done in the next few days)
SOLD OUT BUILDING ( in one day)
Basa http://www.bosaproperties.com/sovereign/
Email with phone number and cash needs to be ready.
Thanks
PostingID: 2224133573

3. Follow up breathless infomercial from Global. Archived by Greenhorn at youtube: Condo Boom in Vancouver
Including great quotes:
“We are still remembering the two years ago, the economic crisis.. you know.. people don’t have a lot of confidence.. those monetary products… but, as a real estate, you’re buying something” – Sunny Lee, Royal Pacific Realty
“And a quick footnote to the story, if you were interested in buying a condo at The Sovereign… it is now Sold Out.” – Announcer (with, arguably, ‘told-you-so’ delivery)

“Stories ABOUT the offshore rich Chinese minority of buyers spread a LOT faster than those of the majority of local buyers.”

alx at vancouvercondo.info February 15th, 2011 at 11:06 am-
“A couple of weeks ago I was surprised to hear that my uncle and aunt sold their house at $680K. Sold in 2 days. Yup, by that price it was most certainly a dump. My aunt was complaining that she should’ve asked $720K, and it sold too quickly (meaning the buyer must’ve gotten a steal)! The new owners had no intention of living there so my uncle and aunt were living there for $600 a month. Wow. Who got the steal here? Live in the same place for $600 and pockets $680K. They bought their house a long time ago for $180K and it’s paid for.
I chimed in saying they were very smart to sell at this time. Then they were talking to my parents about wanting to buy back in. I said that would be extremely stupid. They started going off on the standard fool’s logic of how the new house they were looking at has a rental suite on the main floor that current has a tenant, putting money in the bank doesn’t get much interest, and some others. My parents tried to tell them it’s a bad idea, but that only made them that much more certain they need to buy back in.
Days later they bought a smaller (but newer) home, NOT closer to work as they originally planned, and it was missing some other requirements that they talked about earlier. And this for $800K! Now they have to deal with a tenant.
They are already IN retirement age (~65 years old), and are Chinese. After living here for 25+ years, their English is still heavily accented (I have trouble understanding it) and would probably be perceived as an “offshore rich Chinese buyer who paid all cash”. No, they are certainly not offshore, nor rich, nor paid all cash (still needs a small mortgage).
It’s well known the Chinese have an affinity to real estate, but my feeling is that it’s just a bunch of foolish ones trading houses with each other right now, and since they have equity from purchasing their homes earlier (due to the same affinity for RE), they are able to “bid up” a little. Outsiders think they are offshore because their English sucks. They think they need to buy or else be priced out forever by those new offshore Chinese!!
Yes, there are offshore rich Chinese who buys million dollar homes, but the stories ABOUT the minority spreads a LOT faster than the majority of locals who buy so it makes it seem like they are a majority. You have 1 buyer who overpays, and the 1 realtor tells 10 of his buddies, and each of his buddies tells 10 of their clients, and each of their client tells 10 of their friends. And the story is affirmed when some of those friends get together and they all heard about some guy from China paid $x over asking. This is not even counting all those local Chinese who are mistaken as rich offshore Chinese! Stories of a local Caucasian buying a home at 5% off asking is not news. So suddenly only the Chinese are buying. And then you see the staged helicopter Chinese overlords who pay to buy the whole White Rock!”

Comments:
1. Local speculators adding fuel to the RE fire. Moving up at 65.
2. We have long shared ‘alx’s opinion that the indirect effect of the stories about off-shore Asian buyers has been far more important in juicing our market that the actual direct effect of those buyers.
Local speculators cling to the story, it reassures them that demand will forever be limitless.
-vreaa

Here’s another relevant exchange, this one from TIME MACHINE at vancouvercondo.info 15 Feb 2011 9:38 pm -
“Lunch today with my usually smart colleague:
HIM: An old-timer on my block just sold for $2.6 million. That’s $400,000 over the asking price!
ME: Wow, that’s crazy.
HIM: The mainland Chinese are buying up everything.
ME: What makes you say that?
HIM: They like the neighborhood. It has the best public schools.
ME: Oh. I would have thought someone paying nearly $3 million for an old-timer would have the money to pay for private school. Do you know who bought the house on your block?
HIM: Yeah, our neighbor says it’s a couple with teenage kids who just sold their place a few blocks away.
ME: Are they from China?
HIM: No.
ME: Are they even Asian?
HIM: I don’t think so.
ME: Ah.

And this from van coffee at vancouvercondo.info 15 Feb 2011 7:54pm -
“I am white.
Married Asian (Hotty).
Her Parents Love real estate (apparently at any price…). Parents live in Richmond.
They just bought house #3 (2 in Richmond) and this final one is one the Westside.
It is a shit hole.
One speaks mandarin and cantonese and the other just cantonese.
They are not rich, but they have saved for a long time and have done ok.
They are not offshore (in fact, I the whitey have been to the PRC more in the last 30 years or 2 years than either of them).
Mom in law has never even been there, but she is convinced all the rich asians are coming here. LOL.
I like my in laws but they are soooo delusional.
The rationale for buying the place……get this……saving on taxes because now they wont have all that interest income.
I f*cking love vancouver.”

“We are in a position to buy a house without a mortgage, but I have no interest in touching this particular RE market, because it is grossly overpriced.”

Canayjun at VREAA 15 Feb 2011 8:27am“We owned a house from 1987 to 2009. We sold for a good price in 2009. When we bought in 1987 we put 25% down. But today they made it so anyone could buy a house, which on the surface sounds good, but in reality, some people should not buy a house. Specifically those people who can’t afford it, should not buy a house. By enabling people who can’t really afford to buy a house to do just that, they made it so people with actual wealth are shut out.
We sold because our adult children moved out. And we didn’t want or need to live across the street from a school anymore. We lived in that particular area because it was best for our kids. When they moved out it made sense to sell and move to an area that we liked. We are in a position to buy a house without a mortgage, but I have no interest in touching this particular RE market, because it is grossly overpriced. I really don’t care what anyone thinks of renters, good or bad. And the longer we rent the more I like it, outside of some of the weird stuff newbie landlords do, it’s mostly good.”

Speculating With Vancouver SFHs – “He invites investors to either to buy the properties at a certain price, or join him to build where investors are either guaranteed 20% return, or 50% profit.”

The recent ‘Richmond Review’ article about a ‘miffed’ Richmond seller who’s former property was immediately put on the market as a flip, stated:
“The company behind the deals, New Land Strategies Corp. [owned by Ze Yu Wu], 703-6081 No. 3 Rd., has upwards of 10 similar Richmond properties currently available.”

unicas at RE Talks has this to add 15 Feb 2011 9:28pm-
“I wanted to post about this guy before this article came out. And he is not alone. This is how he works. He has full page ads on cheap free Chinese newspaper that are mostly read by mainlanders. On this ads, there are about 10-12 properties, mostly in richmond, some in vancouverWest . He put specifics why these properties are good investment, including big lot, close to good school etc. On the ad, the guy offers $5K tips to lead about properties fitting into such specifications that someone wants to sell. He invites investors either to buy the properties at a certain price, or join him to build where investors are either guaranteed 20% return, or 50% profit. Investors will have 50% of title of the property. For each of such joint investment, the cash requirement is around $500K. Apparently some of those properties have been taken, he would put a taken flag on the ad, like realtors put sold sign.
There are other chinese groups doing the same thing. Only difference is percentage of payout to investors. And there are ready buyers for such houses. As I mentioned in another thread, most builders are asked about the houses they build in Richmond before completion.
Many parts of richmond is like construction site now, with many house being built. It is crazy, like gold rush.”

Doctors Leaving Vancouver – “My friend, a surgeon at Children’s Hospital, said he couldn’t have the life he wanted in Vancouver because of the insane real estate prices here.”

WFT? at vancouvercondo.info February 15th, 2011 at 4:22 pm-
“Just got off the phone with a university friend of mine. He is a surgeon at Children’s Hospital. He took just took a job in Bellevue, Washington. Said he couldn’t have the life he wanted in Vancouver (private schools for kids, nice house with a yard in a good neighbourhood, vacations) because of the insane real estate prices here.
The pay is about the same as here but the real estate is way cheaper. He said that after all his hard work, he can “finally enjoy the good life”.
I asked him if he feels guilty about the government subsidizing his education only for him to leave the country. He said “a little but I’m not sacrificing my children’s future for it”.

pricedoutfornow at vancouvercondo.info February 15th, 2011 at 6:51 pm- “I’ve had two doctors move away on me in the last few years. And no wonder, how would you feel if you were a doctor, after years of studying, and all you can afford is some ugly 60 year old crack shack in East Van? YES!!! All those years of hard work REALLY paid off!”

Sure, we know that people come and go. We are, after all, nomads. But unnecessarily outrageous housing prices systematically disadvantage a city like ours. In addition to those who leave, there are those who don’t come here in the first place, because of the cost of housing. We personally know of such examples: people who travel here to interview for jobs, but then decline the offer after an incredulous drive-around with their spouse. Loss of human capital is initially relatively invisible, and its consequences easily hidden under the superficial and temporary apparent advantages of a housing boom. The RE market is sapping our communities, and interfering with almost all kinds of sustainable growth. Things will equilibrate eventually after the crash, but it will take time. – vreaa

“We’re staying in Vancouver but my subconscious has something else to say: twice this past week, I’ve dreamed of the relief of packing up and moving to Toronto or Montreal.”

Absinthe at VREAA 15 feb 2011 12:39pm“We’re staying in Vancouver because we’ve got 3 sets of grandparents for the kids nearby, and neither my husband or I has much interest in BC outside of Vancouver proper. But my subconscious has something else to say: twice this past week, I’ve dreamed of the relief of packing up and moving to Toronto or Montreal.”

RE pervades everything here, even our sleep.
Any more housing dreams, nightmares, out there? Please post.
-vreaa

“An investor friend of mine is actively involved in spec building on the west side of Vancouver. She thinks 1/2 the SFH volume right now is investor/flippers.”

jesse at vancouvercondo.info February 14th, 2011 at 11:48 am“An investor friend of mine is actively involved in spec building on the west side of Vancouver. According to her, there was significant activity amongst investors who are buying teardown lots and building to suit (this was late last year). There is a large backlog at the City for permit applications that is just now being cleared. She does not see the market as strong: the margins are very thin right now and the quality of builders and contractors is oscillating. In her words the market is “competitive”, meaning land prices are high and profits for spec builders are getting razor thin, given the effect of carrying high land prices for the construction period. She thinks 1/2 the SFH volume right now is investor/flippers.”

Richmond Speculation – ‘Home seller miffed after buyer flips home’

From Richmond Review, 11 Feb 2011- “Imagine Jim Davis’ surprise when he learned his home was again being offered for sale even before the deal he’d signed in December had passed its completion date. After Davis’ mother passed away last year, he and his brother inherited her Jesmond Avenue split-level house in desirable West Richmond.
They sold the property to a man who claimed he was going to build his dream home for his wife and child. But last Friday, a phone call from a realtor alerted Davis to the fact that the buyer was actually trying to flip his property for a $100,000 profit, one of many such transactions currently underway in Richmond’s white-hot real estate market.
“I feel like I’ve been snookered,” Davis said from inside his mom’s home. “If they’d just been honest with me up front…”

And a second example, from ‘itsonlymoney’ at RE Talks 13 Feb 2011 2:48 pm - “On the same road [in Richmond] that I grew up on (and my parents still own a house on), one of our neighbours sold their 60 x 120 lot house for $900k in September (which in itself is ridiculous). The new owner has now relisted it for $1.4 million, and, as of January, he has offers of over $1.2 million. (for lot value essentially as its quite an old house).”

“I put on my Vancouver real-estate price calculator and made a guess… I had guessed over 10 times too much.”

A great story regarding the slow and steady desensitization we in Vancouver have experienced, over 6-8 years, regarding price levels that, to almost any outside observer, make absolutely no sense. -vreaa

Billy Bob at greaterfool.ca 15 Feb 2011 4:46am -
“I had an ”oh-my-gosh” moment when I realized just how big and dangerous this real estate bubble is here in Vancouver. It happened last summer.
I was riding my bike in a beautiful suburb south of Seattle. I would have guessed that I was in West Vancouver, with sleepy windy streets hugging the sunny shoreline. The birds were singing in the mature trees. BMWs and Porsches populated the the driveways of classy houses.
I took note of two properties for sale. One was a small high-bank waterfront building lot while the other was a quaint well-maintained older home bordering a small nicely-landscaped ocean-front park with a lighthouse. Both properties enjoyed stunning views.
I thought to myself, ”Wow. I would love to live here. It’s just gorgeous. But I’d never be able to afford it.” I put on my Vancouver real-estate price calculator and made a guess… For the waterfront building lot in a West Van like location, say, $1M -$2M? Not sure. For the little house adjacent to a picture postcard lighthouse park and steps from a stunning pebble beach, say, $1M-$1.5M?
Later in the day, I looked them up on the Internet. The asking prices? $50K and $120K, respectively. I had guessed over 10 times too much. When I showed my wife her immediate response was, ”Oh, that can’t be right.” But it was right.
That’s what Vancouver real-estate insanity does to you over time. You start thinking that $750K is a pretty good deal for a tear down starter house in the suburbs. It takes a dose of reality to make you realize just how wrong Vancouver prices are and how far Vancouver has to fall. That applies to all of Canada, for that matter.”

Leaving – “We have decided to give up on Vancouver.”

SDBound at vancouvercondo.info February 9th, 2011 at 11:18 am- “After scrimping and saving for a downpayment for the past 5 years – we are of the traditional 20pct downpayment 25 year mortgage mentality – only to have house prices run up faster than we could save we have decided to give up on Vancouver. Don’t get me wrong the city is wonderful but the cost of living and opportunities are not here for the average or even above average blue/white/grey collar working class.
When we went look at houses every one has mortgage helpers and basement suites. To me that’s not right. Single family detached houses turning into tri-plexes and 4-plexes. That is what is driving up house prices. City council should approve more multifamily and higher density house all over the city.
For the past while I been working with a recruitment firm and last night I accepted a job in San Diego. The salary is about 10pct higher with health plan and 2 weeks of paid vacation. We will rent first and then later look to buy a house for around 320k. With the lower living costs, my wife can afford to stay home with the kids. My parents and inlaws will come visit us every few months and will probably stay a few weeks at a time especially in the winter.
Some pundits will say good riddance and maybe that we are complainers and so forth. This is not a pity attention getting post. I do this to say there are options out there. Why take the narrow view to say this is the only nice place to live – the world is a big place. If Vancouver wants to be a rich man playground so be it.”

Joshua at vancouvercondo.info February 9th, 2011 at 11:31 am- “Good for you! Its funny, my wife and I have been having this exact conversation. I was recently in San Diego for a conference – it was November, and I had some time to stroll around on the beaches in my short sleeves, gorgeous and sunny. When I got home, we pulled up some real estate pages and marveled at what we could buy for $400K. She is pregnant, and it sure would be nice if she could stay home with the kids, while I work, and still have more money every month…”

Patiently Waiting at vancouvercondo.info February 9th, 2011 at 11:47 am- “My wife and I are discussing Ontario. She has lots of family there, and I have many old friends from University who went to TO for their careers. If Ontario continues to grow while BC shrinks, we will go. Its more about our limited job market than housing prices, really.”

“This is what it’s like dealing with newbie landlords.”

Canayjun at greaterfool.ca 12 Feb 2011 4:47pm“The numerous first time landlords, that arose from the enormous level of spec buying in past two years, are an interesting bunch. They have no clue what they are doing. The four I have negotiated a lease with recently, all believed they were going to buy in and flip the property for a quick profit of $20,000 to $50,000.

None of them knows how to be a landlord. One gave back the damage deposit, not mine, the previous tenant’s, (minus $200), then tallied up the costs to repair the damage (which totalled $600). He was informed by his realtor (who did a market evaluation for him), that he rented us the condo far below market value. I thought it was a good deal. And apparently it was a good deal. Good for us.

Another newbie landlord didn’t know how to fill out the rental agreement forms. I had to do it for them. Another landlord thought they could store whatever they wanted in our back yard, after we moved in. We actually got into arguments over it. They didn’t understand that the house and yard was now ours, not theirs.

Another landlord increased the rent by the allowable amount in BC, then threatened to kick us out if we didn’t sign another one year lease–totally illegal. When he realized he couldn’t kick us out for not signing another lease, he offered to reduce the rent to its original amount if we signed another lease.

Another landlord thought he would store dump trucks on the unused/unoccupied portion of the property on our current acreage rental. I already shut down the dump truck storage (30 trucks) that was beside us on the neighbours property by complaining to city hall. So our landlord thought he could move in 50 dump trucks and store them on the other side of us to make some money. Never going to happen.

Another landlord deposited our rent cheque into the wrong bank account, apparently he has several bank accounts, and then demanded another rent cheque to cover the “missing” rent from August. It took five hours to make him understand he wasn’t missing any rent.

This is what it’s like dealing with newbie landlords.

It’s so much better to rent through a management company. On high end properties they are very, very willing to fix things quickly. And we are currently renting three high end properties.

But these are all minor worries really. My two big worries are if they are going to sell at lease renewal time and whether they might end up in foreclosure.
In reality, my worst case scenario is having to move before I want to, and even that is not the end of the world.”

“Our rented condo is supposedly worth $460k (based on a current listing in the building). And yet we can’t believe that this piece of crap is worth any more than $150k.”

pricedoutfornow vancouvercondo.info February 12th, 2011 at 6:56 pm- “My rented condo is supposedly worth $460k (based on a current listing in the building.) And yet…SO and I can’t believe that this piece of crap is worth any more than $150k. It’s 6 years old, and every morning and night we have the privilege of listening to what we’ve dubbed “Niagara Falls”-water gushing down the pipes in the wall whenever the people upstairs flush the toilet/have a shower/wash their hands. We moved our bed so the water gushing isn’t above our heads (heaven forbid a pipe bursts) and SO has taken to yelling “Quit peeing!” whenever the water starts to gush. As a bonus, we’re beside a corridor which leads outside, we can hear people clomping down the stairs ALL THE WAY from the 4th floor! Starts at about 6am every morning as people rush out to get to work.
Dear God, I’m so glad I didn’t buy this place, because I would be planting pipe bombs in the developer’s mailbox right about now. This market has got to correct, if only because owners are pissed enough to realize they’ve bought into a garbage wood-frame building.”

He said “It is different now, as property always goes up in Vancouver, unlike the overinflated expectations of .com”.

‘BC is even better than ten best place on earth’ at greaterfool.ca on 12 Feb 2011 at 4:07 am- “I have just had a really strong argument with a friend. He took out a HELOC to do a granite-n-steel refurb. Plus the mandatory Porsche panakake (panamera) for the drive. He had to have a new one as well with an immediate depreciation attached.
I reminded him how he borrowed money against his stock options in the .com days and how he wound up with a loss that took him 5 years to repay. He said “it is different now, as property always goes up in Vancouver, unlike the overinflated expectations of .com”.
Then he criticized me for renting (a very nice, just renovated 2500 sqf townhouse in Shaugnessy where the owner gave me a 3 year lease) and having an ’09 Jeep (bought in cash) Libby.
When we looked under the covers and I explained I have $500k in a diversified portfolio (made me $56k in netreturns last year) and my expenses are only rent allowing me to max out my and my wife’s TFSA, RRESP and save for the kid’s education. This still leaves me about 50% of my disposable income (of my base salary, commissions always go to non reg savings) to enjoy my debt free life.
I think a year from now, I’ll buy his pancake-American porkie for cents to the dollar. He needs his commissions to make ends meet. If he loses his job, he’s in fire sale land.
If I lost mine, at my current burn rate I could survive quite well for just under 10 years.
I live KNOWING my family is safe, he lives HOPING everything stays as it is…
I do have a property, it is in Rome, Italy, where I will retire, I bought it second hand, only about 400 years old…”

Spot The Speculators #28 – Innocent RE Gamblers: Mid-Forties Couple; Income $163K; Two Properties $650K; Debt Load $603K; Net-Worth $66K

From the Financial Post 9 Feb 2011 -
“A couple we’ll call Alex, 45, and Susan, 43, make their home in British Columbia with their son, age 16, who is in Grade 11. They want to plan retirement, but with a debt load equal to four years of income and few financial assets, their choice of when to quit work is limited. They have chosen educating our child in private school over other options and we have lived fairly simply as a result. Now, however, they need to know if they should sell their one big investment, a rental condo, or keep it? And are we headed to disaster or are we on a good track for the future?
They have good jobs — Alex in a building trade, Susan in the provincial government — and have gross incomes that total $163,000 a year. Through decades of hard work, they have built up $668,900 of assets, including their $350,000 home, a $300,000 rental condo and financial assets that total $8,000, as well as their son’s RESP with a $8,900 balance. They also have two dilapidated cars worth, they say, a total of $2,000. Their liabilities are two mortgages that add up to $570,000 and a $33,000 line of credit. That leaves them with net worth of $65,900, which is not a lot for folks in middle age contemplating retirement.”

“Through decades of hard work” they have a net-worth of $66K, a debt load of $603K, and are carrying RE with a current market value of $650K. These guys are gambling heavily on future RE prices, and they barely act as if they know it. A ten percent RE pullback will put their net-worth at zero. Thirty percent off will put them $130K underwater, and their retirement prospects will be profoundly altered. – vreaa

“It’s very frustrating. We’re willing to pay but we can’t find anything.”

From ‘Tight market sparks bidding wars in hot neighbourhoods‘,  Vancouver Sun 12 Feb 2011“Miri Malkin and Gabi Kabazo, the parents of three children under 4, are living in a Yaletown condo while they look for a house in Vancouver in the $800,000 to $1-million range. The couple are pre-approved and plan a 40- or 50-per-cent down payment. They’ve been looking since May, but have yet to put in a bid because all the houses they’ve looked at are either fixer-uppers or don’t have enough space for their family. They would prefer to live in Vancouver rather than move to the suburbs.
“It’s very frustrating,” Malkin said. “We’re willing to pay but we can’t find anything.”
The couple, who moved to Vancouver from Israel in 2004, were looking in 2008 but didn’t buy because they thought prices might come down. One Arbutus townhouse they looked at was priced in the $700,000 range and is now listed for more than $1 million.”

“News of bidding wars in an overheating Vancouver market comes on the heels of a TD Economics report that identifies B.C. residents as most vulnerable to interest rate hikes, a housing correction or an economic downturn. The province’s average household debt-to-income ratio of 160 per cent is the highest in the country and matches levels reached in the U.S. just before the financial crisis and housing bust.”

[It probably goes without saying that, if we were in this couple's position, we'd sit tight in the current rental or, perhaps better still, rent a SFH in one of our target areas. That way, when prices collapse, we'll know even more about where we want to eventually buy. ... The Sun perhaps deserves some kudos for at the very least printing a few words of reservation (citing the TD warnings). It continued the article, however, with old stalwart Tsur Sommerville again assuring us that a crash is impossible in Vancouver, and, whatever the outcome, "It’s just sort of what variant of expensive we’re looking at.” -vreaa]

“Two datapoints in the North Van market as a reflection of the mentality of some sellers.”

tincup via e-mail to VREAA 10 Feb 2011. Thanks, tincup. -
“Thought you might be interested in these two data-points in the North Van market as a reflection of the mentality of some sellers.

MLS#V820058

1290 Plateau Dr, N Van; 2076 sqft on 50×133 lot
On the market for 310 days.
Bought in 2004 for $450k
April 2010 listed for $770k
Sept $755k
Nov $749k
Nov $739k
Jan 2011 $699k
Jan 25 $727k


I like that saucy increase there at the end. If you look at the pics, it appears to be an amateur reno. I especially like the floor-to-ceiling window beside the toilet. They paid $450k in 2004. I’d guess they are simply fishing for a fool.

Second example:
MLS#V865011

4743 Hoskins Rd; 1680 sqft Townhouse (strata)
Bought in 2004 for $405k
Jan21, listed for $599k
Feb 8, increased to $610k”

Global BC TV Shameless Helicopter RE Infomercial – ‘Waterfront'; ‘Good School'; ‘Chinese Buyers’ A ‘Powerful Force'; Metro Vancouver RE ‘Cheap’

The US has ‘Helicopter Ben’, here in Vancouver, we have ‘Helicopter Cam’, as in ‘Cam Good’, local condo peddler, who took local realtors who have mainland China marketing connections on a promotional helicopter flight over White Rock. Somehow a Global TV crew happened to come along for the ride.
This all came just one week after tincup, on an earlier thread at VREAA, had presciently commented: “I think the next anecdote will be that rich asians are rappelling down at night from black helicopters with duffle bags of cash, signing a few docs and then zooming away in jet packs.” [1 Feb 2011] Well, the helicopters weren’t black, but the gist and the intention of the story were precisely as tincup predicted. The Global piece has been very extensively discussed at other sites, but we feel we’d be remiss to not document it here. It reads like a shameless infomercial. Possibly it’ll mark some kind of ‘high point’ in the fever.  Here follows visual and quote excerpts from ‘Chinese Buyers Flock To White Rock’, Global BC TV network, 9 Feb 2011 [thanks to Greenhorn for the video archive] -

“Could this be a sign of the times?
While Chinese buyers have long been a powerful force in places like Richmond, it looks like they are now casting their investment nets even wider.”

“These aren’t your average group of helicopter riders. They are on a mission – To find property for their clients back in mainland China.”

“For five thousand bucks today ‘The Key’, a real estate marketing group, invited Vancouver’s top mainland China realtors to sell their clients on White Rock”.

“White Rock is a very good location.” – Realtor voice over

“I like the area. And I like the school. And also the environment here.” – Lui Wei

“Waterfront view, you know, actually, yes, very good school, a lot of Chinese, they’re looking for, good school for their kids.” – Chris Chan

“In Vancouver, freehold land, you own it forever. But in China, it’s not freehold, they are leasehold, … just like the condominium in UBC, you have to return the land to whoever owns it. This is a new concept to them, and they like real estate here.” – Chris Chan

“Finally for mainland Chinese, metro Vancouver is what Phoenix or Arizona is to Canadians right now… Cheap. Today’s trip netted the marketing group about a half dozen sales.” – Voice over


—-

ADDENDUM:
Further information from unicas at RE Talks 10 Feb 2011“From a translation of a Sing Tao article: The same company that invites those chinese realtors on helicopter tour to white rock is setting up display centre in downtown beijing. The centre will open in March to sell Avra, a 17 story condo project. The centre will employ 6 people. Over 50 of the 117 are already sold in Beijing, before the centre opens. Big draw to the Chinese, Semiahmoo which offers the IB course.  Of all the real estate sales in the city of White Rock for the past 6 months, 75% are by the mainland buyers.”

“He said that his agent told him that the Chinese government is telling their people they should invest in Vancouver.”

ams at VREAA 8 Feb 2011 9:24am“I was at a birthday part on the weekend, one of the people is putting up his condo for sale because he wants to move to a different neighborhood. We got talking about real estate and he said that his agent told him that the Chinese government is telling their people they should invest in Vancouver and that investing in Vancouver is an authorized investment. I pushed back on that idea and said that China instructing their citizens was pretty far fetched.”

We’d agree, the idea that the Chinese government is encouraging citizens to buy up Vancouver is a bit of a leap. This is another interesting anecdote as a record of what locals are telling themselves as they peddle RE to one another, and as they overextend themselves further into RE.
Would the above “move to a different neighbourhood” involve an increased exposure to RE? It usually does, particularly when the protagonist is speaking that kind of bull. -vreaa

“How will I ever be able to afford that tear down crack shack on the West Side when I’m competing against overleveraged idiots?”

Manna from heaven at vancouvercondo.info February 9th, 2011 at 9:26 am- [After referencing BC's 160% debt to disposable income ratio:] “How will I ever be able to afford that tear down crack shack on the West Side when I’m competing against overleveraged idiots? Now, before some cheerleader chimes in and says that I should lower my sights, I’d like to add that I’m an accredited investor (more than $1 million in liquid assets) and routinely make in excess of $200,000 a year. Please don’t think that I’ve shared that information for the purposes of bragging. My financial situation and my inability to purchase a dump clearly illustrates the absolute absurdity of this market and anyone who wishes to defend it.
Tempted to buy some waterfront on the coast and say the hell with it! I could fish, harvest clams, mussels and oysters, and forage for berries. Doesn’t sound too bad.”

“There was obviously an insularity to the Irish mentality during their bubble. I feel something of that insularity here in Vancouver.”

Froogle Scott at VREAA 10 Feb 2011 1:44am“I’m halfway through the Vanity Fair article (“When Irish Eyes Are Crying,” by Michael Lewis [hat-tip to Nick for alerting us all to it -ed.]). Every couple of paragraphs I’ve been struck by the parallels to our situation here in Vancouver. Ireland is interesting, because in some respects it might be a better parallel for Vancouver than the United States. The US is such a vast economy, that even down on one knee, it’s still a heavyweight. Ireland is the provincial society that suddenly blew up grand — with a bad result. Something about that dynamic feels closer to home than what’s occurred across the entire US real estate market. Although BC is part of a much larger country, our geographic isolation, our relatively small population, our history of being outside the centers of power, does have an “Irish” aspect to it. And perhaps that isolation can lead to becoming ungrounded, or disconnected in certain ways. There was obviously an insularity to the Irish mentality during their bubble. I feel something of that insularity here in Vancouver.”

Thanks for the thoughts, Froogle, very interesting associations. We don’t have the overbuilding that the Irish had, but the fact that we are ‘insulated’, as you describe, may make us vulnerable to some of the same engines that popped their bubble. It is possible that, with a simple turn of sentiment & loss of imagination, we rapidly find ourselves less a cosmopolitan capital and more a medium sized provincial city with almost no discernible means of economic support. Another way in which we are ‘insulated’ is one which is, of course, common to all bubbles: statements like “All real estate is local” and “It’s different here” are used unconsciously by bubble-players to ‘insulate’ themselves from glaring external realities. When the history of our boom and bust is written (by you, perhaps?), we are sure that one of the most remarkable features will be how long prices chugged on up to more and more preposterous levels despite the glaring examples of bubble implosion all around. US, Spain, Ireland, etc, etc. All a testimony to the ability of the human mind, in particular the ‘group mind’, to ignore that which is inconvenient to face. -vreaa

While we’re partly on the subject of Ireland, ‘Charlie Mackay’ is a blogger who has archived quotes from their bubble. Take a look; Spot the similarities.
Here’s a nice one, from Sean Dunne, Property Developer, in 2006, just before their bubble imploded: “Every economist associated with every stockbroker in Ireland mistakenly forecast the end of the housing and property boom in Ireland”. They had been “vociferous and repetitive”, in the process encouraging outside commentators, including the Economist, the IMF and the OECD, to issue warnings about Irish house prices being overvalued. Well, “The hyenas have stopped laughing . . . each and every one of them was wrong. Instead, the price and supply of housing units has continued to break records.”
[For examples of quotes from Vancouver Sean-Dunne-equivalents (and a few 'hyena' naysayers), recorded here, in real time, while our bubble is actually still a bubble, see the 'What Bubble?' sidebar.]

“My parents sold their house for $1.1 million in Vancouver and moved to a lovely home in central B.C for $500,000. They pocketed nearly $600,000.”

anonymous, commenting in the Vancouver Sun 9 Feb 2011 2:11pm“My parents sold their house for $1.1 million in Vancouver and moved to a lovely home -waterfront in central B.C for $500,000.They pocketed nearly $600,000.They have lots of cash to make 3 or 4 westjet trips to Vancouver ,Hawaii every year.The rest is invested.They love having some money and investments !”