“The denial can be pretty funny. At coffee break today a guy was reading the paper and saw an ad for one of the housing lotteries. We all looked at the choices (a few houses, condo in North Van or $1.8 mill cash) and said what we would take. I generally stayed out of it, but not a single person would take the cash. Most agreed housing would go up and it’s better to just take a home and sell later. One guy had been keeping up with the news a bit more and said some places are actually down a little bit. Condos are starting to fall, but he didn’t think the houses would fall in value much, and didn’t go as far as to say he would take the cash.”
- davers at VREAA 14 Feb 2012 11:23am
From the lottery website:
“Now with 5 Super Grand Prize Choices! Choose from the majestic Cape Cod Style Beach Home package in White Rock – worth over $2.2 Million; or enjoy the beautiful Vancouver Skyline from our $2.1 Million+ grand prize package at Atrium at the Pier in North Vancouver. For those who enjoy the Island Life, you might choose the Circle at Swallows Landing grand prize package – worth over $2 Million. Our Craftsman-style grand prize home in South Surrey is a gorgeous family home, and that package is also worth over $2 Million! Or you can choose to just be rich – with a $1.8 Million Cash option. 5 Super reasons to buy a BC Children’s Hospital Choices Lottery ticket! Winner will choose one prize option; the other prize options will not be awarded.”
“Own RE in Vancouver, or Just Be Rich!” (Interesting. Lotteries aside, that reflects the choice for many owners, and prospective owners, alike!)
When the price descent is firmly established (10%-15% off and beyond), everybody fantasizing about wins in these lotteries will ‘take the money’, even when that is clearly the worse deal.
At the bottom, there won’t be housing lotteries. The idea of RE will so repulse people that you won’t be able to use it as a lure to raise money.
- vreaa
Houses never go down in value. A pair of crows told me so in a dream.
Crows are the smartest birds in the world, along with their close relatives, ravens. Therefore, there’s NO WAY crows would have said such a thing. Obviously your dream is meaningless and you should ignore it.
In the original text, in french, the raven is a crow…
“Perch’d on a lofty oak,
Sir Raven held a lunch of cheese;
Sir Fox, who smelt it in the breeze,
Thus to the holder spoke:─
“Ha! how do you do, Sir Raven?
Well, your coat, sir, is a brave one!
So black and glossy, on my word, sir,
With voice to match, you were a bird, sir,
Well fit to be the Phoenix of these days.”
Sir Raven, overset with praise,
Must show how musical his croak.
Down fell the luncheon from the oak;
Which snatching up, Sir Fox thus spoke:─
“The flatterer, my good sir,
Aye liveth on his listener;
Which lesson, if you please,
Is doubtless worth the cheese.”
A bit too late, Sir Raven swore
The rogue should never cheat him more.”
Jean de La Fontaine (1621-1695)
Interesting how they position the “value” of those prizes with the real estate all set at over $2m and the cash under $2m at $1.8m.
Vreaa, your comment about housing being a repulsive prize for these lotteries after the market turns is bang on. In fact, weren’t some of these lotteries having trouble last year, failing to raise enough money to cover their costs?
Yes. Back in October I pointed to the irony of the Peace Arch Hospital lottery. Here was a lottery with an obscenely priced house for a grand prize that coudn’t sell tickets in an environment where so many potential ticket buyers have so little money *because* of obscenely priced houses.
“Interesting how they position the “value” of those prizes with the real estate all set at over $2m and the cash under $2m at $1.8m”
Its probably because they REALLY want you to take the real estate…so they are not stuck with it in the end.
I would personally take the cash – 1.8M buys a pretty nice home in North Burnaby. Who the hell wants to live in White Rock?
Ha ha ha! Just went on the site…”Or choose $1.8m and just be rich!”
http://bcchildren.com/5-grand-prizes/1-8-million-cash/
Looks like reality is setting in: CBC just rana story headlined “Home foreclosures skyrocket in Kelowna” (http://www.cbc.ca/news/canada/british-columbia/story/2012/02/15/bc-okanagan-home-foreclosures.html).
Looks like the first of the lemming hordes just hit that cliff edge that everyone has been telling them doesn’t exist.
That is a very high number all right. The rate is running at more than one a day now and accelerating. Bad news for some and this will only serve to drive prices lower.
From the CBC: Home foreclosures skyrocket in Kelowna
http://www.cbc.ca/news/canada/british-columbia/story/2012/02/15/bc-okanagan-home-foreclosures.html
Looks like things are starting to go south in a big way…I think the first few lemmings just went over that cliff which everyone has been saying doesn’t exist.
Why are all these people foreclosing? I thought Canada is mainly recourse and that would prevent *coughcough* people from just walking away or foreclosing. What happened to our rock-solid lending practices?
What about people wanting to own their very own home and do not care about falling prices. The people that just want a “stable roof over their head”.
Ohh it’s Kelowna, who wants to live in Kelowna.
Apparently a lot of people did 3 years ago.
I think the way it works is, if you are foreclosed upon the bank sells the house, but receives CHMC mortgage payments in leiu of the payments they would have received from the owner, and after the home is sold, any amounts left o/s, the bank can go after the foreclosed upon owner.
Three words: blood from a stone
Okay, 4 words.
I saw that. So it’s begun. Crap.
“There are more than 170 court-ordered sale properties on the market in the Central Okanagan, more than 10 times more than three years ago.”
Is there a listing service for these court-ordered sales? Curious what they end up selling at.
http://www.okhomeseller.com/Kelowna-real-estate.asp
Of active listings, 50% are ‘reduced’ with one sold.
example:
http://www.trishwise.com/kelowna-listings.html
450 Curlew Drive
Paid $1.49mil in 2008
Sold for $999k
“Home foreclosures skyrocket in Kelowna” – RESkeptic
An indicator, perhaps. I also like to track the cottage properties around 100 Mile because people sacrifice those first in order to preserve their lower mainland holdings. In April 2009 I could pick up a virtually new RV on a freehold half acre for $20k. But at that time, people were trying to show 90 days of cash in the bank to buy in the dip. I also watch for unloading of other toys, boats, etc.
Kinda like going into shock. The extremities get cold as the blood concentrates in vital organs.
While I would take the cash myself, it is a bit misleading since the N. Van prize includes $900K in cash plus cars and a trip, and the Victoria home includes $1.1mil plus cars and a trip.
Just as I was reading this a flyer from Rennie came in through the door! I thought I’d share the hilarity with you.
THE VILLAGE ON FALSE CREEK
202 HOME SOLD LAST YEAR.
OVERHEARD AT TERRA BREADS CAFE -
“SERIOUSLY,
THIS IS THE SUCCESS STORY OF 2011…
AND MY 36-YEAR CAREER.” – BOB RENNIE
LUXURY RESIDENCES ON THE PLAZA OR WATERFROUNT FROM $385,500-$3 MILLION+
The hilarity continues inside where an aerial view of the village has arrows pointing to a Subway opening Spring 2012! London Drugs and Urban Fare will join at the same time! Don’t worry there is a TD, Village Cleaners, Liquor Store, Terra Breads an Aquabus port and also a notation of “SEAWALL” with “BUSY!” underneath it…
“Vancouverites love to boast about our unique, urban neighbourhoods. Beyond our snow-capped mountains, clear blue skies, and crisp cool waters. Quintessential Vancouver living happens right here on the seawall and THE VILLAGE ON FALSE CREEK’S GOT IT ALL.”
Does anyone have any numbers on what these units were attempting to sell for last year? They are labelled as NO HST and have listed 12 units and prices on the card (all ambitious).
That London Drugs *still* hasn’t gone in? I was walking down there two years ago and noted the “Coming Soon” signs for LD.
I have one question that I feel cuts to the heart of the matter. I direct it to those who still defend the current price of housing and believe it will continue to increase (ie: the guys in the above scenario above who’d take the $2 million condo over the cash, and F1). And that question is this:
Given that the Chinese wave (such as it were) is apparently subsiding, given that Canadians – and particularly BC-ites and Vancouverites – are one of the most heavily indebted per capita people on earth, given that we’ve already seen and expect further mortgage tightening, given that wages are not increasing, given that Vancouver is now widely being touted as having the most overpriced housing on the planet, given that prices in a few select bubble municipalities are the highest they’ve ever been even while municipalities all around the periphery are crashing (the earmark of a popping bubble), given that listings appear to be exploding even in the eye of the storm, given that the “bubble” word is now commonly used in the MSM (if just as a futile attempt to squelch its existence), given that buyers of investment (rental) properties cannot even *hope* to make money at current price points, given that one can buy a sunny ocean view mansion virtually anywhere on the US west coast for the same price as a gloomy Van East teardown, given that the cost of everything else in our little rainforest is hurtfully high, and given that the amazing Cam Good is now bailing on the BPOE for the *new* BPOE, Arizona, who will buy? Seriously, who will buy that ridiculous $2-million North van condo from you for an even more ridiculous price?
Gord,
I’ve never stated that I expect Vancouver real estate to continue it’s rise. I’ve been consistent with these premises:
-condo are overbuilt and speculative markets. The supply is continuous and seemingly unending. Any increase in demand can easily be met
-detached market is finite. The supply is diminishing at the same time the demand is increasing.
In the event of any economic slowdown the condo market is the first to go – if it’s a sustained (6mo+) downturn the detached market will eventually fall. The fall for detached will always be shallow and brief.
Not sure where you got the idea that I defend the current market for housing. It is what it is. Speculating on a crash or a boom is not on my agenda. I am neither seller or buyer.
Correct me if I am wrong but weren’t you advocating the property ladder theory.
Who are going to be the move up buyers if condos are toast?
we don’t have a step up property ladder at the moment, it’s step down.
This is why we have so many angry people – everyone is being displaced by the top 30% of our market which is being bought in cash by first time buyers who don’t need the traditional property ladder.
It’s difficult to make property ladder work under this scenario – but impossible if you don’t take any steps at all.
Do you even read what you are writing?
What the hell are you talking about.
“everyone is being displaced by the top 30% of our market which is being bought in cash by first time buyers who don’t need the traditional property ladder.”
This is the stupidest thing I have heard since.
“Canada Place is on par wth Sydney opera house. Stanley park on par with Central Park. Lions Gate Bridge as distinctive as Golden gate bridge. And new BC Place is fantastic and sets us miles ahead of any of the aforementioned.”
the total market numbers that conclude that Vancouver market is the most unaffordable is heavily skewed and misleading. The huge values on the west side taint the stats to the point where you honestly have to deduct them from the argument before you draw any reasonable conclusion.
We are nowhere close to the most unaffordable in the world once you adjust for the lunacy of the west side
If you remove all the overpriced stuff obviously being driven by ill-gotten foreign cash without regard to value, and at the same time remove all the too-small slummy stuff in bad neighbourhoods being bought by desperate, buy-now-or-BPOFE people who really can’t afford to own, what you’re left with is the “median.”
F1, thanks for your reply above. Seriously. However, I guess you and I will continue to disagree on a lot of things. Your post here, for example.
“Lunacy of the west side?’ Hey, we agree there. Yet look at Richmond. Not one SFH in the entire silt factory priced under a half million dollars. Indeed, the ONLY homes there in the past few months under the $500,000 mark have been 1- or 2-bedroom crack shack atrocities directly across from the casino and directly under the flight path. Homes of this ilk aren’t even fit for human habitation. This sort of scenario, built by lying realtors, corrupt media, speculators who treat housing like an IPO, insanely low interest rates and lax lending standards, is played out across the BPOE.
Granted, it looks as though the times are a-changing, and a-changing fast, but you *must* get my drift.
Gord, good questions.
All around me smaller, older houses are being torn down to make way for big new ones. Some of the smaller houses may well not be in good shape. But one of the worst shortsighted mistakes that’s been made here, I believe, is that the fad-and-mania-driven, wanton replacement of smaller houses with much bigger ones — while this filled City coffers with development-permit fees — will have made the market unaffordable for most locals for years and years to come. I think a lot of these big newer houses are not going to wind up easily selling or trading hands. A lot of the newer all-the-bells-and-whistles houses on the West Side (those built in the last 15 years) are, I’ve noticed, among those standing empty or remaining on the market for a long time.
Anyone who buys now after so much – signals – given by the MSM will have it coming. Signals are not clear yet, but the CYA (cover your ) phase has started, so that when questioning begins they can point fingers elsewhere.
That’s why I can’t believe I’m still getting advice to buy – Shoeshine moment.
*applause*
http://www.cbc.ca/news/business/story/2012/02/15/crea-january-home-sales.html
Too bad Cooper is talking broadly about Canada, it would seem Vancouver sales are much lower mom and yoy.
At least if you take the house you don’t have to worry about former acquaintances and investment advisors trying to help you allocate your new-found wealth.
I assume the developers sell the lottery the houses at cost and get a tax credit for the foregone profit. But there’s an option here… Who’s left holding the bag on the not-picked prizes if there’s a decline?
The correct answer, as every left coast real estate speculator knows, is to take the cash and spend it all on next year’s lottery tickets.
You make a stunningly good point in your first paragraph.
Relax… Vancouver is not the most expensive place to live in the world (i.e. highest cost of living), Zurich is! We’re 37th out of 131 cities covered by the Economist Magazine, but Raincouver, BPOE, VanCity can easily boast that we are simply the most expensive place to live in all of North America. Eat your heart out NYC & LA (there’s no bubble here – move on people, nothing to see, pffffft… bah hah ha ha!).
http://www.economist.com/blogs/graphicdetail/2012/02/daily-chart-7
Yeah! We have World Class cost-of-living.
Congrats!
The number of houses being sold as “foreclosures” is usually somewhat of a secret known only to the mortgage holder (i.e. one of the big banks). I used to work in what was grandly known as The Office of the Senior Vice-President of one of the banks, we would receive daily printouts of houses (across Canada) that we held the mortgage on and were in foreclosure. We would allocate the listings to various real estate agents that had been previously vetted for confidentiality and have the listings go wide. If the listings didn’t move the fact that they were in foreclosure could be made public but the banks didn’t want to enter into low ball situations unless forced. This usually meant 12 to 18 months of sitting on the market. I wonder if the houses now being listed as foreclosures in Kelowna are all CMHC insured so the banks are covered and don’t really care about maximizing the amount they can realize. Back in the day, CMHC didn’t insure nearly as many mortgages as they do now. In other words, the banks really don’t care about the loans since they’re not on the losing end of the equation.
First Victoria now Kelowna then… Vancouver?
http://www.cbc.ca/news/canada/british-columbia/story/2012/02/15/bc-okanagan-home-foreclosures.html
Some noteable quotes:
“What do you tell your sellers that are not in foreclosure that are now up against something they didn’t see coming? It’s one of those things where the bank is going to have to do what it’s got to do to get it sold.” – Real estate agent Jason Neumann
“People weren’t able to achieve their goals in doing this and so they quit making payments…The market in the Okanagan has really come to a standstill on that speculative investment front, and that is really what has been a major portion of the court-ordered sale thing that has increased so dramatically.” – Elton Ash, the vice-president of Remax Realty in Western Canada
What’s that smell emanating from their trousers?
and the bubble has popped…:O
Friends don’t let friends buy RE — soon coming to replace BNOBPF
Guys, you don’t understand. Now is a GREAT TIME TO BUY…
Cooling market offers investors a ‘in’
Falling knife anyone?
Good find, thanks for the link.
Will likely headline.
The Global BC sports anchor (Barry Deley) who won one of these lotteries live on air recently hinted when his colleague was giving him the good news over the phone that he’d take the cash prize instead of the house.
I was thinking the same thing….
Who wouldn’t take the cash…??? think about this for a moment… you get the cash and nothing else to worry about… you take the house and you get the joys of living free in a depreciating asset that is taxed every year.
I have never read the fine print on these tickets but does the winner have to pay HST taxes or any other winners taxes on these lotteries?
or take the cash and be free to move anywhere and rent till prices become real again.
Barry Deley actually took the house in Langley.
I knew about it. Plus the cash too – $400k?
At Variety’s children charity lottery (take the dream home or cash)you can check on their website to see past winners…in the last ten years only two people took the house. The rest all took the cash.