“There are at least 7 houses within a stone’s throw from my house that have been for sale since the summer and have failed to sell. Do crashes begin at the top or bottom end of the market?”

Posted on 19 November 2011 | 37 Comments

“I have definitely noticed a change in the air since the summer, even if it hasn’t materialized in a drastic reduction in sales yet. There are at least 7 houses within a stone’s throw from my house that have been for sale since the summer and have failed to sell. One was de-listed this week. Only a couple have sold this past summer/fall and both were ‘tear-downs’ listed north of $1.5MM It seems that the houses selling in the $2-4MM range in my neighborhood are not selling. For this reason I am slightly surprised by the relatively stable sales numbers over the last few months, these sales certainly aren’t coming from my neck of the woods. Simply put, the high end stuff is just not moving, nor has it been in my area since late spring/early summer.
Do crashes begin at the top end or bottom end of the market?”
- chopper at vancouvercondo.info November 16th, 2011 at 8:28 pm

This entry was posted in 09. Delaying Buying, 16. Missed The Boat? and tagged , , , , , , , . Bookmark the permalink.

37 Responses to “There are at least 7 houses within a stone’s throw from my house that have been for sale since the summer and have failed to sell. Do crashes begin at the top or bottom end of the market?”

  1. keeperofthederp | 19 November 2011 at 6:45 am | Reply

    sounds like another bitter renter

    you should work harder! stop whining!

  2. Chubster | 19 November 2011 at 8:31 am | Reply

    Bud! I think all the fun people in van got locked up. How’d you escape? Or may be it’s more like body snatchers. Ham credit’s getting cut off IMO. Maybe you’ll get an indication as to how the external inflows were leveraged. Anyways, it occurred to me last night that when the fallout from the credit device hits the states there will be some flight capital headed north – for sure some of mine anyway. Years away but it won’t come leveraged. Keep the faith good bud. What’s a derp?

  3. diablo | 19 November 2011 at 9:11 am | Reply

    need the address or area to investigate – otherwise this is pretty much useless information

  4. Canayjun | 19 November 2011 at 9:21 am | Reply

    Sounds like a lot realtors are getting defensive.

  5. Beyond Debt | 19 November 2011 at 9:43 am | Reply

    keeperofthederp wasn’t being serious.

    diablo, on the other hand, is a paid minion of Scam Good.

  6. 4SlicesofCheese | 19 November 2011 at 10:53 am | Reply

    I noticed a few new my parents place near metrotown.

    Duplex going for 900k on the corner of Sussex and Imperial had a MLS listing but never a sign up.

    One on Dow Ave listed I think was 1.3 mil, good bones well kept house on a large lot, but needed major updating unless you like wood paneling throughout.

    Two near my place,
    2333 East 34th ave and the house right beside it.
    Both had the same realtor.
    One was just over 1mil and the other around 800k I think.

  7. chubster | 19 November 2011 at 1:37 pm | Reply

    hey buds, i haven’t made time to watch the bass vid some friends sent but i caught a snip mish posted – thought it was purrrfect for yooz here.

    Bass finishes on a strong note “Buying gold is just buying a put on the idiocy of the political cycle. … Capitalism without failure is like Christianity without Hell. You have to have atonement for ridiculous levels of spending both the US and Europe have gone through. The spending idiocy of the world is going to catch up to itself. And that’s where we are today.”

    van’s just a little part of the same grand affliction – shiva is coming friendos, shiva is coming

    • Nemesis | 19 November 2011 at 6:20 pm | Reply

      “friendos”

      Thank you for that, Chubster. Anton Chigurh… shoulda been a Realtor:

      “What’s the most you ever lost on a coin toss?
      Call it.
      I can’t call it for you. It wouldn’t be fair.
      You stand to win everything.”

    • keeperofthederp | 20 November 2011 at 9:39 am | Reply

      shiva? fuck that, its Ah-Pook for sure

      “death is the seed from which i grow”

      the crash is the cure

      God Speed You Black Swan!

  8. Jeff Murdock | 19 November 2011 at 1:37 pm | Reply

    Another great NPR interview:
    http://www.npr.org/blogs/money/2011/11/18/142518568/the-friday-podcast-a-financial-adviser-bets-the-house?ft=1&f=93559255

    A lot of people bought more house than they can afford. But this guy, he was ‘highly trained’ as a financial advisor.
    …
    I was working for a landscape company… We looked through the want ads. We were under the impression it was a security job… like a rent-a-cop… Found out that it was a “securities” job at a Fidelity call center.
    …
    New rows of subdivisions… You’d go to these open houses of these new communities. There would be lines of people, younger than we were. These were $300k-$600k houses. At every new phase, the price would go up. And so that’s kinda the feeling you got “Wow, these prices are increasing so fast, we might not be able to buy a house if we don’t now.” It was just like this train was leaving, and if you weren’t on it, you were never going to get on.
    …
    We started looking at $350k. Quickly things spiralled. If you just spend $50k more you get this. We ended up buying a house for $575k.
    …
    In hindsight, these things are all blazingly obvious. We made mistakes. At the time, it made sense. Everywhere you looked, you were reinforced with the idea that you buy as much house as you possibly can because the thing is just going up in value… It’s silly to view this as just a home. This is also one of the best opportunities to increase your net worth that you could ever have.
    …
    Housing prices were going up, my income was going up, everything was going the right way. Which leads you to another classic mistake, which is projecting the recent past into the future infinitely.
    …
    The market starts to turn, pretty abruptly. It’s so easy to look back and say “we should have known”. There weren’t a lot of people sounding alarm bells. There were some. Nobody wanted to be the person at the party that said “Hey, this thing’s about to end.”
    …
    We sold the house for between $200k-$300k less than we owed the bank. That screwed up our credit. It shows up as “settled for less than the amount owed”… Couldn’t buy a house now if we wanted to.

    • Jeff Murdock | 19 November 2011 at 4:06 pm | Reply

      I also like his discussion at the end about not “focusing on probabilities”.

      In other words, you should look at the “expected utility” of your outcome rather than simply the probability of a bad outcome. If you’re taking a cool photo while standing on the edge of a cliff, you might get a slightly better photo if you take a few steps closer to the edge, although you might be increasing your probability of falling off the cliff from 0% to 1%.

      Thinking just in probabilities, a 1% chance is pretty small. Seems reasonable to step closer to the cliff.

      Now suppose the utility of the “better photo” is +10 and the utility of falling off the cliff is -infinity. After stepping closer to the cliff, your expected utility is 0.99*(+10) * 0.01*(-infinity) = -infinity. Better stay back from the cliff edge.

      A tragic example:
      http://www.niagarafallsreview.ca/ArticleDisplay.aspx?e=3265314
      http://www.windsorstar.com/Falls+image+final+moments/5264111/story.html

      • vreaa | 19 November 2011 at 5:51 pm |

        Jeff -> Great stuff. The thinking you demonstrate IS “focusing on probabilities” but with the additional step of thoroughly weighing the implications of various outcomes.

        Relevance to Vancouver is the ‘falling off a cliff’ equivalent for bulls and bears:
        - for very overextended bulls, the FOAC scenario is market collapse, in which case they are financially destroyed.
        - for frustrated prospective buyer bears who are renting, the FOAC scenario is ongoing very powerful price gains, in which case they keep renting or leave town.

        Most ‘players’ aren’t even trying to do these imperfect but important calculations.

      • Robert Dudek | 20 November 2011 at 7:42 am |

        Now suppose the utility of the “better photo” is +10 and the utility of falling off the cliff is -infinity. After stepping closer to the cliff, your expected utility is 0.99*(+10) * 0.01*(-infinity) = -infinity. Better stay back from the cliff edge.

        Death can’t be minus infinity because that would mean it would be a poor decision to do anything that increases the chance of death – like commuting to work or walking around downtown or playing a sport. Most of us don’t live our lives hyper-sensitive to risk.

        Also, it’s worth pointing out that we all have are own calculus for risky adventures (i.e it is relative to the individual). Some, like extreme adventurers, do not place quite as negative a value of death as others who have a more conventional lifestyle.

      • vreaa | 20 November 2011 at 7:51 am |

        Robert -> Great point/catch; death can’t be -infinity.
        Yet the principle applies: weight probabilities and the personal impact of each. There is an ‘outcome profile’ that can be roughly sketched for each individual.

  9. T | 19 November 2011 at 2:48 pm | Reply

    It is interesting that in the comments section attached to that article, the big debate revolves around mortgages as business contracts, and whether or not it is morally responsible to walk away from underwater mortgages even though you have the right to…obviously the posters are in the states. I am going to lmao when Canadians try to apply the same tactic up here of simply walking away. Everyone seams to think that bankruptcy only lasts seven years…lol

    • jesse | 19 November 2011 at 3:50 pm | Reply

      What does morality have to do with business decisions? It’s about maximizing returns; if BK is the best alternative from a bunch of sh!t choices, why not?

    • AG Sage | 20 November 2011 at 11:21 am | Reply

      The banks employ legions of numbers guys and should (in theory) know far more about the underlying value of a property, i.e., what will it fetch in rent and therefore how much it will fetch as a distressed sale later in a bad market when you can’t (or won’t) pay the monthly nut. The banks choose to willingly lend outside this conservative range; that was their conscious business decision. Individuals were ignorant enough to trust the banks when they said they will loan you X it meant the bank expected you could repay X. Turns out they were lying, or very very incompetent at their core business. Or both. Either way, deciding to stand on the weak side of this contract and hold up your end and claim the moral high ground simply means your righteousness outweighs your best interests. That’s not true for everyone.

  10. jesse | 19 November 2011 at 3:16 pm | Reply

    I’ve been following Vancouver RE blogs since 2006. This story comes up every non-crash. Then prices go higher. These are the ways of things.

  11. jesse | 19 November 2011 at 4:02 pm | Reply

    Update vreaa on friends who moved into new house. They explained it as a subdivided lot, now I find out it’s a duplex lot with 2 structures. Not quite the same thing but whatever. More evidence that they are convincing themselves that their purchase was better than it really was. Rose-coloured glasses bias or what have you.

    They listed their old (old) place in EVan on the market, will keep it on for a while to see if there are any bites but will rent out otherwise. It’s about 10-15 years away from being teardown. Practically this is not a good time to sell because first if you don’t you have to get tenants in, it’s on short-term tenure to catch peak selling season in the spring or you forgo a sale next year.

    When we hear stories of people trying to rent family-sized dwellings, especially this time of year when sales aren’t strong, I am convinced many owners right now are going through the same logic. They want to rent it out but Vancouver’s RE market is so seasonal they have to inform tenants they will likely be listing in the springtime, and we get month-to-month leases, often with discounts.

    So there you go. I’ll let you know how the sale goes! I’m pulling for them because they’re friends, but I’m also pulling for Rennie getting full value for Village at False Creek. My altruistic rational self-interest hypocrisy shows its colours. Maybe I should run for office :lol:

    • chubster | 19 November 2011 at 9:49 pm | Reply

      put “collars” for “colours”, just for kix. intelligence and character, these are not virtues in the political arena. they’re more like impediments and obstacles to overcome, few succeed.

  12. chubster | 19 November 2011 at 4:19 pm | Reply

    i grew up in van working a variety of jobs. on the service side, whenever i’d have these brushes with wealth, i used to ask how did they make their money. most of the time, it wasn’t local. this was completely unlike my time in the bay area, where it almost always was local. i have both the outsider looking in and the insider looking out pov. van’s fortunes seem always so closely tied to influx/efflux of external wealth. it’s almost like van itself is a nice rental for external wealth. they don’t mind taking up residence for a while, trying it out. but in the end, most decide it’s too high a price to pay (i.e. the local opportunities just aren’t rich and varied enough) to own.

    • vreaa | 19 November 2011 at 5:40 pm | Reply

      Up to now this has worked for VanRE market strength.
      But it makes the outcome more wild-card, IMO.
      Will we end up being the only island of strength in a world of deflation? Seems a very long shot.

      • chubster | 19 November 2011 at 9:45 pm |

        just a random thought. i was looking at P/R trough valuations west side. somewhere around 15-ish during the last purge in the 80s, i think. if true, that’s a pretty low yield for a major trough. so, a sizeable external component at work is not implausible. van market seems both small enough and attractive enough s.t. external funds have such a large influence.

  13. jesse | 19 November 2011 at 4:41 pm | Reply

    Just voted. Let’s just say if candidates answered vreaa’s set of questions, they have at least one vote.

    • vreaa | 19 November 2011 at 5:38 pm | Reply

      Voted earlier, too.
      Used slightly different criteria, less generous than jesse.

      We have the two major parties essentially in bed with the developers, and their leaders saying that they wouldn’t even examine popular issues like ‘foreign ownership’; and almost all others promising to do something (anything!) about housing but, like ‘OccVan’, unable to really articulate what. Position statements that more often than not read like pap. And everybody saying they’d do everything they can to stop prices tanking.

      Again, we have to return to our somewhat jaundiced observation that civic policy is highly unlikely to be significant, in the face of far larger market forces.
      Yet, we vote.
      Results at 9!

      • jesse | 19 November 2011 at 11:44 pm |

        I know people like to rail on the “in bed with developers” but look at the City’s budget. Is it any wonder. Lest we consider the alternatives; perhaps homeowners can when opening up their BC Assessment every January and figuring how much money there is left over for meat in the spaghetti sauce.

  14. Makaya | 19 November 2011 at 6:36 pm | Reply

    Did you guys see the article on the Sun regarding the Mansion for Sale in Shaughnessy?

    “High-end homes like this often take a while to sell, because once you get into the tens of millions, there aren’t many buyers. In fact, the $31.9-million Shaughnessy home was for sale last year for $17.9 million, but didn’t sell.

    Property records list the owners as K. Fan Hiu and H.F. Chi, who purchased the home in April 2004 for $6 million.

    This is so screwed up!!! It didn’t sell at $17.9 million so the guy put it back a year later on the market for $14 millions more??? And to add to the insult, he bought it in April 2004 for less than a fifth of the current asking price!!! Who in his right mind would buy this property knowing this???

    Sorry for the language, but Vancouver RE is really fucked up!

  15. terminalcitygirl | 19 November 2011 at 6:44 pm | Reply

    We just returned from voting at probably the most scenic ballot box in Vancouver! We were voting at the Museum with a spectacular view of English Bay, with downtown and the snow covered mountains beyond! The evil genius got a vote from us because, well, how can you not vote for a self proclaimed evil genius?!
    What I wanted to mention though was the 50′s gallery at the MOV, specifically the domestic scene with a write-up that talked about how Canadians didn’t embrace the post-war prosperity with the same indulgence as our American neighbours, Canadians aspired to a “comfortable” life and measured their purchases, they knew exactly how many payments would be needed and adjusted their budgets accordingly. This isn’t word-for-word, but was the gist of it. I was amused that this meme we hear today about Canadians being more conservative/ responsible with their money and purchasing decisions than Americans is rooted at least this far back…

    • keeperofthederp | 20 November 2011 at 8:52 am | Reply

      we were hit by the depression harder because we were so dependent on our resources (thats different now, y’see)

      it is actually true, though – we WERE sane once. xenophobic loyalists, but miserly. in the travel/hospitality industry canadians have a well-deserved reputation for being cheap abroad.

      we would do well to reacquaint ourselves to the old way of being happy with your lot, and hoping for the Canadian dream:

      SUCCESS without risk. (risk being irrelevant now – what with the new paradigm, “good” debt and prices always going up, etc etc.)

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