Arbutus vs Maui – Momentum Players Choose Half The Property At Twice The Price

Another Vancouver-vs-US comparison, this one from ‘vancouverites should consider opening their eyes’ over at 14 May 2011 11:00pm

“You can buy one of these:

2216 W 21st, Vancouver (Arbutus area, Vancouver westside)
3100sqft SFH; 50x122ft lot (6,100 sqft)
Asking price: $2,498,000

Or move to Maui and buy *two* of these:

40 Hale Alii Place, Kihei
5071sqft SFH; 14,422 sqft lot (0.33acres)
Asking price: $1,249,999

The former is a 3100 square foot house on a 6000 square foot lot in the world class neighborhood of Asthma Flats, err, Arbutus. It’s only an hour’s walk from the beach.
The latter is a 5000 square foot house on a 14000 square foot lot in Wailea, and 500 meters from the beach.
I’m sure these Vancouver prices are *perfectly* sustainable. Arbutus is the new Wailea, right?”


Our Comment: The attraction of the Arbutus property, to some buyers [and all it takes is ‘some buyers’], would simply be that prices on the westside of Vancouver have been consistently rising, whereas the same buyers are likely deterred from purchasing the Maui property on the basis of the fact that prices there have been dropping.
Yes, we know this makes no sense, the buyers are being attracted to buying high, rather than looking for good value.
That is precisely what momentum investors do, they like prices that are going up, and they dislike prices that are going down… they pay no attention to the concept of value as determined by fundamental measures. By all such measures (price:rent, price:income) the Arbutus property is greatly overvalued when compared with the Maui property.
This is what happens in speculative manias, prices run away with themselves because of momentum players. Once prices turn, the momentum can be just as ferocious on the way down.
We suspect that prices on Vancouver’s westside are still going up solely because of the false belief held by some that this is one of the only RE pockets on earth where prices are immune to a serious pullback. The belief is fallacious, and we foresee price drops of about 66% for some of the properties now exchanging hands. Homes like the headlined property, for instance, will very likely change hands for $1M or less by the time we hit a trough. And, by global standards, and fundamental value, they will still be richly priced at those levels. Vancouver buyers are currently overpaying by ludicrous amounts. – vreaa

16 responses to “Arbutus vs Maui – Momentum Players Choose Half The Property At Twice The Price

  1. The Wailea house really does illustrate how crazy people are to be buying in Vancouver. No one can seriously argue that any part of Vancouver is as desirable as Wailea, ESPECIALLY to non-local buyers. Wailea is one of the nicest areas in one of the most popular and luxurious vacation destinations on earth. That Arbutus house should be 1/3 the price of the Wailea house, at most, not double the price.

    • Vita -> You do realize that you are suggesting that the Arbutus house should sell for about $400K? This would represent a price drop of 84% from current ask (a number that would make even the most ardent Vancouver RE bear blush).
      We can’t see it going quite that far (Vancouver will always have some weather premium over the rest of Canada), but we’d not be surprised by 70%-off some properties currently changing hands.

  2. Here are some more USA reference points for you, from Coranado island a 5 minute drive from downtown San Diego, the only down side to this great spot are the US Navy flights since the north of the island has a US Navy base. San Diego has a GDP of 191 Billion according to wikipedia.

    1600 SQF condo with water views 780K

    4000 SQF SHF on the water comes with a private doc for a 75 foot boat $2,657,512

    Here are some more more properties click and search after you have done that tell me that Vancouver prices are normal and justified! Anyone who is thinking of spending 1 million for an average Vancouver shit hole should instead spend 5 to 15K traveling around for a couple of weeks in the USA and other parts of Canada to compare prices, after all you are about to drop 1 million on a house. oh wait if but with 5% down that means 50K down payment oops 5 to 15K for travel would cut the down payment too much oh shit, better look for pennies under the couch.

    Vancouver is so screwed!

  3. I for one prefer mid-’70s Tudorian architecture.

    • Hahaha.
      Yes, a box of dark brown 1″x6″ planks (stick-on; from Ikea) for converting your 1970-80’s Vancouver cereal-box into ‘Tudor’ — decidedly creepy.
      By contrast, the Wailea house ‘is what it is’, and has architecture and design that works for the climate and setting.
      Vancouver Tudor = Artifice.

  4. Yes, but Canadian immigration laws are easier for investors and our airport is fairly easy to navigate through.
    Of course we are still in a bubble, but I really dont think its Asians buying all the properties.

    • The major driving force of the market remains local speculators: the speculative component in every purchase (buying trusting that prices will only go up). Once locals realize that prices can come down very significantly, there will be a flood of supply and almost cessation of demand (both local and foreign).

    • “our airport is fairly easy to navigate through.” 🙂 Good one. If they make it any easier to navigate through, our prices will instantly double.

      “I really dont think its Asians buying all the properties.” Well, the Asians are now the majority here. Of course, they should be counted as locals, but don’t tell that to Cam Good

  5. holy f**k! I’d move to Maui tomorrow if I didn’t think those islands would be buried in water with an earthquake.
    BTW, Arbutus property is 1/2 hr walk to beach, not 1hr.
    [Correct, it’s about 2.5km from Kits beach; further coming back 😉 -ed.]

  6. kooch sniffer

    lol Rusty your stupidity cracks me up. Keep it coming… are on a roll.

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