“Just went to the Open House at the recently discussed 6225 Balsam property. While I know what I’m providing is only anecdotal information about one house, it may be helpful.
First, the listing realtor said she’d had “only” 10 people through in the first 90 minutes. She said that last year she would preside over Open Houses where there wasn’t room to exit by the front door, the crowds were so large.
Nine more people came through in the last half hour, so a total of about 19 people saw the house, she said, including other realtors. The realtor still seemed to feel discouraged about the low numbers, but she did say she expected multiple bids.
I went back and forth to the house twice and spent almost an hour there total. I couldn’t talk to other people viewing it because with the exception of one multilingual Asian couple and two South Asian viewers, one of whom was I think a builder and one who was an investor (see below), the 13 other people/groups I saw throughout this process were all Mandarin-speaking.
Afterwards I did speak at length to that one other person who had attended the Open House with whom I could converse. The VREAA host has often reminded us that the speculative mania here depends a great deal on local speculators, and, as it turned out, this man was one. He had just sold his house a month ago and immediately bought another lot with an older house, where he said he and his extended family would live for some months until he saw what the market was doing. He had bought and sold at least two other properties in the past few years.
I asked him if he would bid on this house. He said he had done a lot of research in the past year as he had scouted various properties to buy and flip. He said he had considered buying this lot for the lot value, because according to his research, lot prices are still going up. (“Lots”, for anyone who likes older, smaller Vancouver houses, as I do, refers to “teardowns.”) A block away from 6225 Balsam, a very small bungalow had just sold, he said, after a 12-party bidding war, for $1.6 million (standard-size lot). This man also described two lots at 38th and Dunbar, which had recently sold for $1.6 million and — a week later, the second lot, the exact same size — $1.9 million, respectively.
However, he also said that he noticed many new/newer houses are not selling at all, just sitting. This is what confuses him, he said. Though he was very bullish on Vancouver RE, like the listing realtor here, insisting that “Chinese people” (his words) will keep buying and don’t care if the market goes down (the listing realtor said to me simply, “Vancouver RE always goes up”), he said that he wondered if he did build a new house here if it would just sit like other new houses he’s observed doing so now; that since December 1, only six new houses on the entire West Side of Vancouver have sold. (Of course, as more people like him start wondering the same thing, the market for lots may fall.)
When I suggested that some wealthy global investors might seek to buy in the U.S. instead of here, he said “Oh, no.” Then he gave as an example that “Chinese buyers have already bought up all the expensive places in San Francisco. They want to come HERE [i.e., to Vancouver].” This struck me as perhaps overconfident.
This local investor, it should be noted, told me he’s a “licensed realtor.” I think he has a license not to work as a realtor on others’ behalf, but to avoid transactional costs as he speculates with local properties.
He also complained that the listing realtor was acting “weird” because she was refusing to show anyone the title to the house, just saying that bids were due Wednesday. (Does anyone know what this might mean, I wonder?)
Finally, I had a chance to learn more from the current tenant at 6225 Balsam. He revealed that the current owners of the house had bought it last spring (at $1.4 million) with the thought of building on the lot themselves. Apparently they’ve changed their minds. Wonder if they also are worried about not being able to recover their initial investment by building?
One of the saddest aspects of all this for me is that, while it would need a lot of work, it’s in many ways a nice house, with historic features (some older, charming cabinetry, doors, doorknobs, etc., and hardwood floors, nearly all of which will of course go to the dump), and a nice yard. In a “normal” market, it would have been a good place for a young family.”
Many thanks to Vesta for this account.
+ [certain belief that Vancouver RE always goes up]
+ ["new houses aren't selling at all"]
= [local speculator "confusion"]
Interesting that this speculator can’t take the next step and ‘speculate’ as to the meaning and implications of a possible softening of the market in end-product.
There are a good number of people like this gentleman who have profited from buying and selling Vancouver RE over the last 10 years. Only a minority have banked all their profits, most have been rolling their gains into more RE projects. Many will be injured in the bust, some will be caught red-handed holding far too much RE and will be destroyed. Their bottomlines will only really be assessable once the dust settles.
Further: we are going to be interested to see the “Chinese-people-will-keep-buying-and-don’t-care-if-the-market-goes-down” hypothesis tested.
We believe that many, many buyers are naive momentum investors who have chased prices up and will add to supply by selling on the way down. Momentum investors hate markets that are plummeting, they bail.