Category Archives: 11. Regrets about Investing in RE

I thought I’d make a bundle……

2013 West Vancouver Sale At 2007 Prices

“Interesting data point out of West Vancouver. 4820 Headland Dr. sold last month [January 2013] for $1.17M. It sold in July 2007 for $1.2M. Poor location, corner of a 3-way stop, either way, they’ve done ‘well’ to have lost money over the past 5.5 yrs in Van RE. A few more of these coming I reckon….”
NoBid at VCI February 26th, 2013 at 6:00 pm

Former PM Kim Campbell Sues Vancouver Condo Developer For Market Weakness

Former prime minister Kim Campbell is suing the redevelopers of the Hotel Georgia in downtown Vancouver, alleging her condo wasn’t ready on time, and now she wants her money back.
In her statement of civil claim filed in B.C. Supreme Court Campbell says she paid a $368,000 deposit on a condo in the new residential high-rise at the Hotel Georgia in 2007.
Former prime minister Kim Campbell is suing the developers of the Hotel Georgia in Vancouver. (AP )
Her lawyer Bryan Baynham says the pre-sale agreement with Georgia Properties Partnership was that that the condo would be finished December 2011.
“The project wasn’t finished on time. They were more than a year late and not surprisingly the people don’t want to complete and they want their deposit back.”

– from ‘Former PM Kim Campbell sues Vancouver condo developer’, CBC, 15 Mar 2013

EVERYBODY speculates on Vancouver RE, it seems.
If prices were up, these claims wouldn’t be occurring.
– vreaa

“There’s a townhouse up for rent in a new(ish) development near my place that is owned by a realtor. After several unsuccessful attempts to sell he gave up and is offering it for a long term lease.”

“There’s a townhouse for rent in a new(ish) development near my place that is owned by a realtor and after several unsuccessful attempts to sell he gave up and is offering it for a long term lease.
The place is fairly expensive to rent, but still a fraction of what it would cost to buy.
Now get this – when I inquired about it, the reply I got stated that “the owner will pay property taxes, but I would be responsible for maintenance and strata fees” at around $350 a month on top of the rent.
OMFG, I still cannot stop laughing…”

vanpire at VCI 2 Mar 2013 2:05pm

The owner was unsuccessful in their attempt to sell.
This simply means that the owner has an overinflated idea of the value of the property.
Drop the price steadily until it hits a bid. That’s the market value.
And, yes, the statement regarding the addition of the strata fee is indeed laughable.
Trying to make a high rent sound lower. Unlikely to draw anything other than laughs.
– vreaa

Fitch Ratings – Canadian RE 20% Overvalued; BC 26% Overvalued

“American-based agency Fitch says house prices are overvalued by approximately 20 per cent in real terms across Canada, with regional variations.
But in releasing its ratings on Monday, it said Alberta’s market is overvalued by 15 per cent.
“Because of the effects of inflation and price momentum, it is not expected that prices would drop by this amount,” said the Fitch report. “If growth halted and prices began to drop, it would be expected to take several years for home prices to revert to their sustainable values, depending on a number of factors such as government support and credit availability. With this time frame, the actual observed decline in prices could be as low as 10 per cent.”
It said rises in prices have continued with small corrections since 1996, and specifically since 2008 have risen when underlying fundamentals suggest that growth is unsupportable.
It said the Ontario market is overvalued by 21 per cent, Alberta by 15 per cent, British Columbia by 26 per cent and Quebec by 26 per cent.”

– from ‘Canadian housing prices overvalued by 20%: Fitch Ratings’, Calgary Herald, 4 Mar 2013 [hat-tip Nemesis]

“Vancouver Island real estate is crashing.”

“Mid Vancouver Island real estate is crashing.
So many listings have been reduced 4-5 times and over $100,000 in price reductions, and still no greater fools buying.
Nanaimo to Courtney is kapoot!
Someone turn out the lights and end their misery.
This is not ending well!”

unbelieveable at greater fool.ca 1 Mar 2013 10:13pm

“Central Vancouver Island is kaput is almost an understatement. Comox Valley: MLS Inventory, 874. February sales, 36. MOI, 24.4. This is a total wipe out.”
Ford prefect at greaterfool.ca 1 Mar 2013 11:13pm

“I train automotive dealership employees how to use my employer’s software for a living.
Yesterday, one of my clients was a woman who used to be a realtor for 6 years on Vancouver Island……and last week I had another ex-realtor on Vancouver Island with 20 years of experience. Both left the RE industry recently, and just entered the car business.
That’s about 4 of them I have encountered in the last month alone.”

Carioca Canuck at VCI 2 Mar 2013 10:35am

The Blast Radius moves closer to the epicentre.
(cue Jaws theme)
– vreaa

“He had friends who wanted to sell, but who ‘couldn’t afford to sell’. They had withdrawn their properties from the market.”

“I was talking to a young professional who rents in Vancouver. He said he had friends who had purchased in the last few years and, given the soft market, he expressed genuine concern – fear even – for their financial well-being. More interesting, he talked of people he knew who owned RE in Vancouver, who wanted to sell, but who he said “couldn’t afford to sell”. Consequently, they had withdrawn their properties from the market. He seemed to think this made sense, and he didn’t see how the market could possibly drop by enough to put them at risk, or to force them to sell.”
– from ‘westsidefrank’, by e-mail to VREAA, 25 Feb 2013

See: The Myth of the Discretionary Sellersidebar.
– vreaa

‘CMHC seeking to hide foreclosure information from home buyers’ – “CMHC just told us that pricing will stay strong and now they want to keep information about foreclosure secret. Where there is smoke there is fire.”

“Canada Mortgage and Housing Corp. has been asking realtors for months to keep consumers in the dark about whether the properties it sells are part of a foreclosure, according to a document obtained by The Financial Post.
The move, said to be part of CMHC national policy, upset Quebec realtors who refused to play ball, worried about an ethical breach. …
Some real estate industry insiders wonder whether the Crown corporation is simply being prudent, not letting potential buyers know a property is part of a distressed sell so they can put in a low-ball bid.
Others question whether the Crown corporation is just getting things in order in case home prices collapse and they are forced to sell properties that are backed by government insurance. …
“Look at what is going on right now in financial institutions and everybody is ratcheting up their loan-loss provisions,” said Ben Rabidoux, a Canadian analyst for California-based Hanson Advisors, a market research firm whose clients are institutional investors. “Everybody expects loan losses to rise. I can’t imagine CMHC is in the dark on that. My suspicion is they want to limit any loss on that hits their books.”
By limiting the information on whether a property is part of foreclosure, the Crown corporation would potentially avoid a situation in which a buyer knows it has to sell. In the United States, foreclosed properties have sold at huge discounts.
“CMHC is trying to get the better price,” said Don Lawby, chief executive of Century 21 Canada, who had not heard of the new policy. “You know something is repossessed, you low-ball the offer. You know you are not dealing with a homeowner but an investor.”

– from ‘CMHC seeking to hide foreclosure information from home buyers’, Financial Post, 27 Feb 2013
[hat-tip Reader #4]

“If the price of a house is good or someone is putting a low ball price and the seller is ok with that…I call it the market. CMHC just told us that pricing will stay strong and now they want to keep information about foreclosure secret….When you have smoke…fire is not very far…” – ‘luckyluc’, commenting on the above article at the FP site

Is it within the CMHC mandate to take active measures to hide information from the public?
Aside from that, the need for deception is massively telling – the market is at risk from normal price discovery processes, and the CMHC obviously now sees that.
– vreaa