‘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

25 responses to “‘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”

  1. This whole Asian buying frenzy happened in the late 80’s. It’s why Vancouver earned the name “Hongcouver.” Then just as suddenly as it started back then, it came to a grinding halt. Unless we believe a billion Chinese are going to buy here, and continue to buy multiple dwellings, then this too will come to an abrupt end.

    And then our name will become “Chincouver.”

    History repeats itself, and this is no different.

  2. I hope you’re right, i hate watching this happen to my hometown….and I’m a property owner

  3. I take a walk almost everyday along the white rock promenade and usually between 9 to 11am nobody is there, parking places are empty. Curiously lately I see very often chinese roaming in cars or by foot and looking at properties. You cant miss them , they are so conspicously looking at properties along the way. I dont know if this is good or bad for us but you cant ignore them.
    On another theme, I just counted today 4 more “out of business signs” on marine drive near the pier where most our local busineses are located. How long before evth is for lease here.

    • “I see very often chinese roaming in cars or by foot and looking at properties.” – Paradox

      What, no helicopters????? Must be the ‘budget’ speculators… 😉

  4. the problem with these kinds of reports is that people will confuse their luck with skill and will now decide to use their windfall and superior skill to make even more money. Great time to read the “Black Swan” and “Fooled by Randomness” if you were lucky to sell at a huge profit.

  5. “This whole Asian buying frenzy happened in the late 80′s. It’s why Vancouver earned the name “Hongcouver.” – Canayjun

    and again in the 90’s with the Taiwanese…
    When we look at archived headlines that could easily have been written today…we see that “the Chinese are coming” is nothing new. Anecdotally, frenzied Asian purchasing, is as as good a top indicator as any Time magazine cover. Econ 101 says this is a sell signal.

  6. There’s little doubt that something very strange is happening here in Richmond. I don’t believe these kind of incredibly rapid increases are good for communities or the people trying to buy property here. Don’t get me wrong, it’s great if you on the right end of the deal, but in the bigger picture, it’s just not healthy or sustainable. But I guess that’s the nature of the beast. I will be really interested to see how long this lasts.

  7. “When we look at archived headlines that could easily have been written today…we see that “the Chinese are coming” is nothing new. ..”

    a half assed google search reveals headlines like these “Vancouver: Far East In The New West — Influx Of Asians Strengthens Trade, Alters City’s Character” Sunday June 25th 1995 …(take a peek at a historical price chart for point in cycle reference)

    http://community.seattletimes.nwsource.com/archive/?date=19950625&slug=2128110

    “Gee, the real estate salesman, has sold apartment buildings priced as high as $40 million, completing deals every five to 10 business days through 1990 at the height of the property boom.

    Gee said that Asians moving to Vancouver are “buying a lifestyle” unavailable for any price in congested, polluted Asian cities.”

    hmmmm

  8. Bubbles see the most agressive/extreme behavior at their zenith.

  9. PUKE…

    This “short term” feeding frenzy has been going on for a decade.

  10. Village_Whisperer

    Ahh yes… China will own everything. That’s okay tho, because the Japanese had to sell it to someone.

    What’s that you say? The Japanese don’t own all those homes that are selling?

    You must be incorrect because in the 1980s, Japan was the economic colossus that was buying everything and would own our souls.

    Oh yeah…. their bubble burst in spectacular fashion… As will China’s. Give it time.

  11. I would really like to know the address of this house and see a copy of the sales agreement showing +450K over asking. When I do a MLS search of Richmond for 40-50 year old homes on 60×120 lots there are a whole bunch for sale in the 900K-1M range. For 1.4 million you will get a 3200 sq/ft, 5 years old executive home in central Richmond. See Below:

    http://www.realtor.ca/propertyDetails.aspx?propertyId=10303263&PidKey=2078703585

    Either lot size data or age of house is incorrect or the person that fabricated this news thinks everyone is an idiot to believe that a buyer will pay more and get less via a cell phone call to overseas home.

    • To groundzeropat: My post didn’t say the property sold for $450K more than the asking price – it said that he would have accepted $950 three months before he sold for 1.4 M. I’m not about to give you the address, but if you look closely at the desirable areas for Asian buyers in Richmond (Seafair, Broadmore, Gibbons) you will find some comparable prices.

  12. Back in the early ’70’s (yes, I’m an old) I was a secretary to a man who, at the time, was an incredibly well-known real-estate developer/flipper – he would buy an apartment or office building, all on borrowed money, and re-sell it in a very short time frame – often in less than a week. My point is the buyers were almost always foreign and at that time tended to be Japanese. The stories going around now about the Chinese buyers coming in with bags of money were true in 1973 for the Japanese buyers – I saw many a briefcase loaded with cash. Sadly, we know what happened to the Japanese real-estate boom – prices in Japan have fallen steadily for the last 30+ years and many of the “moguls” lost the buildings they were only to happy to pay inflated prices for. As a side note, the man I worked for also lost pretty much everything and is probably still fighting lawsuits.

  13. The occupant is a 19yo student, whose mother paid for the >C$10M house in WV, apparently after 30 minutes from seeing it to signing the purchase contract .
    http://preview.tinyurl.com/4lv2kxm

  14. @groundzeropat yeah the same thing is happening in Vancouver too. There are lots of listings, some listings having been around for a while now, that aren’t moving. I’ll leave readers the exercise of figuring out why. (I don’t really know actually…)

    Rich guy buying property without leaving the car? Where have I heard that before? Actually, I mean WHEN have I heard that before? Plus ca change plus c’est la meme chose.

  15. I don’t know about any of you, but when I bought my condo in 2004, I was a 25 yo, and I sat in my car on the phone to my realtor the entire time. Never left my car! That’s the norm for a RE transaction where you have a realtor– the realtor handles the entire thing, and you never meet the sellers.

  16. A cautionary tale from New Zealand of potential interest to Richmond property Barons… 😉

    “Just beneath our feet on the concrete car park, suddenly big cracks appeared and mud just started oozing out… It all poured out of every hole. Ten seconds it was up, then before we know it we’re all a foot deep in mud.” – Paul White

    [BBC] – Liverpool man describes ground ‘melting’ after Christchurch earthquake

    http://tinyurl.com/663afl7

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