Monthly Archives: April 2012

“So long Vancouver! Adieu! It’s been nice, but now I feel like a young naïve girl who’s been tricked into having sex with a pretty but vapid jock. How many smart, motivated young people must you scare out with your over-inflated prices and lack of joy before you realize that you are headed to an economic and human disaster?”

“So long Vancouver! Adieu! It’s been nice, but now I feel like a young naïve girl who’s been tricked into having sex with a pretty but vapid jock.”


Disappointing thing #1: The job market …
There are no jobs here, and when a good one pops up, the competition is so fierce that you have to send a singing telegram to get noticed.

Disappointing thing #2: The cost of living …
How many people must cram into a 1500$/month 2-bedroom apartment just to make ends meet? “Why aren’t they moving somewhere cheaper?” you ask. Well, there isn’t anything cheaper. Well, actually, there is, but the cheaper stuff is often illegal, unsafe and unhealthy.

Disappointing thing #3: The heart …
The city has, how can I explain it… no soul. It is as superficial and empty as the endless condo towers growing like weeds. There are good people in Vancouver who give this city some spark and light; but most times I felt no joie de vivre, no… happiness. Everyone is working so hard to maintain the appearance of being affluent that they lose their souls in the process. They lose their ability to enjoy life. And what good is a city surrounded by nature if you can’t find it in your heart to enjoy it to its fullest because you are worried about bills all the time?

Conclusion …
I used to love Vancouver as a tourist… but staying there made me hate it. How many smart, motivated young people must you scare out with your over-inflated prices and lack of joy before you realize that you are headed to an economic and human disaster, Vancouver?


– excerpts from “Don’t Move to Vancouver”: Why I Changed My Mind After 6 Months”, by Anabelle, at her blog ‘Anabelle’s Blog’, 18 Mar 2012 [Hat-tip Aldus Huxtable]

“I laughed so hard when I saw the state it’s in that I almost crashed into the car in front of me. Later I just shook my head as I discovered it would take decades of my life just to buy a condemned rat hole, much less build a “decent” house on it.”

“I was driving with the wife today and spotted this “beauty”, 1950 (or 1954?) 1st Ave. It had a giant piece of plywood out front with “Danger, Do not enter” spray painted in neon red and it looks condemned (the google street view image is very accurate). According to MLS, it’s priced near $700,000 for “land value”. I laughed so hard when I saw the state it’s in that I almost crashed into the car in front of me. Later I just shook my head as I discovered it would take decades of my life just to buy a condemned rat hole, much less build a “decent” house on it.” 
– JS via e-mail to vreaa, 25 Mar 2012

“Their Open House this last Saturday (long weekend; nice weather) was advertised on a full page in the local realty paper, and netted Zero attendees. Is this normal for a 4-bedroom house in the Ladner area?”

“My parents had their second open house with a realtor. Last Saturday’s open house netted 6 people when it was first listed. This Saturday (the 7th, the long weekend which was nice weather) was advertised in the local realty paper on a full page, and netted 0 attendees. Is this normal for a 4-bedroom house in the Ladner area?”
yesmath at RE Talks 8 Apr 2012 6:07pm

Do serious prospective buyers use the Easter long weekend to search for homes?
We would think they would.
– vreaa

“So, here’s the punch line… At these killer low rates, AFTER a down payment of $600k, the carrying costs would be $1,374 per month MORE than renting, and that’s not even adding in the $500ish strata, taxes and special levy! Why would I buy? Why?”

“I’m renting a $1.5m house in Vancouver which was renovated to the tune of $180k just before we moved in. I had to peel the protective lining off the steel appliances and fittings in the 4 bathrooms.
“I have a 3 year lease for $2,900 per month. I don’t know how much the taxes are (surely more = better in the self gratifying eye of the locals) but the strata fee is $446, with a special levy of $43,000 (yes thousands) this year to refurb the outdoor and indoor pools and common facilities. It is in Shaugnessy where the cream is turned for its cream.
“So, here’s the punch line… At these killer low rates, AFTER a down payment of $600k (no 95% financing here) the carrying costs would be $1,374 per month MORE than renting and that’s not even adding in the $500ish strata, taxes and special levy! Why would I buy? Why?”

– Mark, as quoted at greaterfool.ca 8 Apr 2012

Why? Well, Mark, we agree you shouldn’t buy, but if you were a citizen who was buying, you’d be buying for two reasons:
1. if your net-worth was large enough that a 50% or more drop in the $1.75 Million home would be very easily tolerated; where such a drop would only make up an insignificant portion of your net-worth;
or,
2. if you were consciously or unconsciously betting (speculating) that the price of this house will rise substantially year after year.
There really is no other reason to buy.
(BTW, are there any $1.7M ‘homes’ left in Shaugnessy? Don’t think so.)
– vreaa

“Downtown condo sales are down dramatically. I can’t see buyers becoming more motivated because mortgage rates are already super-low. Sellers don’t really want to sell, because if they bought in the last two years they’re going to take a loss. If this continues, it’s going to impact prices. Only time will tell.”

“Downtown condo sales are down dramatically [YOY]… 23.5%… In 2011 Jan-Feb-March, we had 808 sales; in 2012 Jan-Feb-March, we have 619 sales. We used to have about 11.5 sales per day, now we have 8.5 sales per day… big changes.
But the pricing, as far as condo sales is concerned, hasn’t changed all that much…
Our listing counts are only up 5%; not a big deal right there…
But it goes to show you that people are not really motivated to buy right now…
And it goes to show you that sellers aren’t willing to drop their prices, and they’re not motivated to sell right now..
So, it’s a bit of a stand-off.. only time will tell if this is going to impact pricing… if people come more motivated to buy, or more motivated to sell… but as far as things are concerned right now, it just means activity is down…
Eventually, if this continues, it’s going to impact prices… and I can’t see it going up anytime soon… I can’t see buyers becoming more motivated because mortgage rates are already super-low… and sellers don’t really want to sell all that much, because if they bought in the last two years and they have to sell now they’re going to take a loss. So, it’ll be very interesting to see what happens in the next quarter.”

– Ian Watt, self-posted youtube video ‘Downtown Vancouver Condo Sales Down Almost 25% in 2012’, 9 Apr 2012

Nicely put (and, again, the gritty back-alley B&W production values are much appreciated).
This is exactly what’s going on across almost all property types and city regions at present.
Sales down; Inventory higher; Prices little changed.
A Vancouver stand-off.
Perhaps of particular interest to readers here is Watt’s observation that “I can’t see buyers becoming more motivated because mortgage rates are already super-low”. This adds some credence to suggestions (our own included) that the rate of change of interest rates is more important than the absolute rates themselves, and that limits can be reached even at very low rates.
– vreaa

“We live in a penthouse condo purchased for $800K in 2007 which we’d have trouble selling for $600K today. Who cares? I intend to leave here in horizontal mode. This place siphoned off less than a fifth of our estate, in cash.”

“We live in a penthouse condo purchased for $800,000 in 2007 which we’d have trouble selling for $600,000 today. Who cares? I intend to leave here in horizontal mode. This place siphoned off less than a fifth of our estate, in cash. With no mortgage to pay and regular dividends flowing in, we can afford to gaze at the snowcapped coastal mountains and try to invent ways to spend money. Life is good, and we earned it by saving every spare penny during the first half century of our lives. Living below your means is the key to lasting happiness. Debt is slavery.”
David at greater fool.ca 9 Apr 2012 10:16pm

David is correct. Owners in his position should not worry about a possible housing crash.
His net-worth is $4MM, and a 50%-66% drop in his $800K condo (a paper drawdown of $400K-$533K) would only represent a drop of 10%-13% of the value of his assets, and would likely not excessively interfere with his financial wellbeing or comfort in retirement.
His leverage to RE is 0.2, meaning that if RE drops 50%, his total net-worth drops 10%.
He can afford to own a $800K property, should not worry about the RE market, and should simply get on with his life.
But, how many owners in Vancouver are in David’s position? Only a very small minority.
Many longtime owners have ratios close to 1 (meaning that their RE holdings represent most of their net-worth).
And a large number of owners in Vancouver have ratios of >1, and a good percentage have ratios far higher, 3 or 4 or 5, or even 10 or more.
Remember, a young couple buying with 5%-down and no other assets has a ratio of 20. If prices drop just 5%, they lose everything.
This ratio is crucial in estimating the effects of a bust on individuals and on the community.
In a significant housing price collapse, many will see all of their accumulated wealth completely wiped out.
– vreaa

“I’m in my mid-late twenties and I would love to buy a house but I just don’t have the money. My elders tell me I can buy a house with little to no downpayment at all. Terrible advice.”

“I’m in my mid-late twenties and I would love to buy a house now but I just don’t have the money. I work full-time and make a reasonable wage for not having any dependents but it is very difficult to save a a $20,000 downpayment. My elders tell me I can buy a house with little to no downpayment at all. Terrible advice. My rent is still slightly less than a mortgage payment (with utilities included). All I can do at this point is keep feeding my RRSP.”
tiredofsex in the comment section at the Globe and Mail 5 Apr 2012

A 20-something who is perhaps wiser than their ‘elders’.
– vreaa

“My wife’s sister and husband are both software developers with masters degrees and they moved back to Ontario last year to raise a family as real estate prices became too much for them.”

“My wife’s sister and husband are both software developers with masters degrees and they moved back to Ontario last year to raise a family as real estate prices became too much for them.”
George, first time poster, at VREAA 5 Apr 2012 10:02am

“Shadow Inventory is the inventory where owners have removed their listing awaiting the market to improve. Add this to the actual listings and there are another 25% of listings available for Van-West.”

“Shadow Inventory is the inventory where the owners have removed their listing awaiting the market to improve. Some interesting stats can be seen by this and we can see that in this slow market, the shadow inventory is large.
One area where I have the stats for is for Van-West detached. I took the listings at September 1, 2011 and compared to what has occurred since then. Some interesting stats have emerged.
There were 648 properties listed for sale on September 1. Of these, only 238 sold or only 36%.
Of the remaining 410 properties, 185 are now listed for sale and 225 are not. This means there are at least 225 of failed sales attempts which now sit in the Shadows.
Add this to the actual listings and there are another 25% of listings available for Van-West. I will try to find some more data but this is a pretty large amount of unlisted shadow inventory properties. As well, it will likely only get worse as we continue to see slow sales.
However – one big stat is that only 36% of properties for sale as of Sep 1 actually sold.”


“Of the 850 or so properties for sale in Van-West detached, there are 193 “flippers” or those which purchased their property in the past 2 years. I would say a 2-year hold is a flip. These are the ones most likely to push this market down when it gets soft.”

zrh2yvr at vancouvercondo.info 6 Apr 2012 7:14am and 7:25am

Good analysis.
How will these ‘sellers-in-the-wings’ respond when prices start to declare a definite downward path?
– vreaa

Spot The Speculators #82 – “They are “borrowing” wedding rings until they can afford to buy real ones as they are maxed out on their HELOC’s. When I asked them why they don’t sell the condo or apartment I was told they need them to keep going up in value.”

“My sister is getting married and planning their wedding. With a house and apartment in Vancouver and a condo at Whistler you would think they were flush but no… The entire wedding is on their line of credit and they are “borrowing” wedding rings until they can afford to buy real ones as they are maxed on what they can get on their HELOC’s. When I asked them why they don’t sell the condo or apartment I was told they need them to keep going up in value. I’ve given up giving guidance anymore but felt chills when I realized that they need the places to go up in value so they can increase their credit lines to maintain their current lifestyle….god forbid what will happen to them if (when) the value declines.”
ChemGuy at VREAA 5 Apr 2012 1:30pm

Vancouver Courier Letter Of The Week – “My husband has an excellent job in finance with a great salary we continue to rent little bungalows on the West Side that sell for ridiculous prices. Sadly Vancouver has become our enemy rather than our friend. Every day we discuss leaving.”

‘reality check’, in a comment on these pages, pointed us to the following letter in the Vancouver Courier, with the remark:
“There is a nice whiney letter in yesterday Courier, VREAA, stating how a poor family of 3 who deserves to live on the west side is looking at leaving the province. BOO HOO. I thought you’d enjoy reading it.”


Letter of the week
Vancouver Courier APRIL 6, 2012

“To the editor:

Re: “Vancouver realtors cater to wealthy offshore Chinese as middle class gets squeezed,” vancourier.com, April 3.

It’s about time that this major problem be discussed. My husband and I are increasingly frustrated with what is going on in the city and although my husband has an excellent job in finance with a great salary we continue to rent little bungalows on the West Side that sell for ridiculous prices ($2 million or more) to Chinese investor class citizens.

We watch our previous rentals get torn down so that another huge empty house can take its place. It’s heartbreaking and the fact that we have a daughter who is two years old makes the situation more frustrating because we can’t provide a stable situation-a small house, near a good school in a safe neighbourhood. We watch as our trust-fund friends buy on the East Side paying crazy prices to live in houses that need a lot of work in less than perfect neighbourhoods.

We are on our own financially, so sadly Vancouver has become our enemy rather than our friend. Every day we discuss leaving. Our job search in other parts of the nation continues because we are getting the message loud and clear- Vancouver doesn’t want us here.

Sad but true.

Rebecca Kovacs, Vancouver”

“His North Shore townhouse is listed at $549K and is not selling. He bought 6 years ago, and will be selling for a loss. He commented that he is the only person losing money in the Vancouver real estate market.”

“I was shocked to hear a friend of a friend state on Facebook that his North Shore townhouse in North Vancouver was not selling. It is listed at $549,000 and has 360 degree mountain and water views. He bought almost 6 years ago and will be selling for a loss if it sells. I doubt Global will run with that story. He commented that he is the only person losing money in the Vancouver real estate market. Shocking that even a guy losing money in Vancouver thinks everyone else is still making it.”
Justsayin at greaterfool.ca 4 Apr 2012 9:29pm

There is No Time Limit in the Definition of a Speculative Mania

“I do believe there is a statute of limitations on a “bubble”. I think when prices continue to rise over a 12 year period and still show no signs of letting up, then it would be called a sustained trend.”
reality check at VREAA 5 Apr 2012 9:57pm

Nasdaq composite 1986-2012 (click on the chart for large version)
After more than 14 years of run-up, the Nasdaq ‘corrected’ by over 75%, and 12 years later is still 40% below its 2000 peak.
In 1999 the vast majority of market participants were arguing that tech stocks were in a ‘sustained trend’.

West Vancouver – “A lot of these crazy sales were done with the Buyer’s realtor coming from over town, and not knowing our local market. That is partially why we have seen some down right stupid sales over the past 18 months. It has finally slowed up. Did these people always have a plan to flip, or is it money laundering, or a change in monetary circumstances, who knows? But I smell a change.”

“West Vancouver has definitely seen the ripple effect over the past two years. The demographics in West Vancouver are changing rapidly. The bridge kept the West Vancouver real estate market (reasonably) a best kept secret, but no longer, the flood gates are open with approx. 70% of our sales coming from Asian buyers, and add in another 15% from Iran. It has been hard for the locals with such a big shift in such a short time. Real estate prices in some of the main target areas such as Ambleside, Dundarave, Queens, and the British Properties have increased as much as 50% in the last two years. A lot of the locals have sold out, with people moving to other B.C. locations, down sizers going to strata, and some just going to rentals. Sustainable? I don’t think so, but we shall see. I have never seen so many new spec. builds on go, and the number of lot value purchases that are soon to be pulled down. I don’t think any of these small time builders have thought out demographics, and how many new builds there will be coming to the market with only one group of buyers that would buy them.
Interesting when this major West Vancouver leg up started in the late summer of 2010 we really got saved as the listing count in West Vancouver was at an all time high for single family (577) matching 1998. I thought, as well most of my colleagues thought the West Vancouver market was set for a big decline, but in August 2010 (generally a slow seasonal local market time) some big sales started to occur. I think this was started as the West Vancouver market place seemed like such a better buy compared to the West Side, and people finally figured out some of West Van’s best kept secrets. Shhhh…… can’t talk about how quiet (45,000 people, and not going to move up much), safe, proximity to downtown, lot sizing, views, and price in comparison to the West Side it is. Sales were crazy in 2011, and our inventory dropped to under 400, and prices just went straight up. A lot of these crazy sales were done with the Buyer’s realtor coming from over town, and not knowing our local market. Lol…Can you imagine your Realtor showing you properties that he has no idea where he/her is, and having to use gps, and ask the Listing Agent where his/her next showing appointment is. How could you possibly assist the Buyer, and that is partially why we have seen some down right stupid sales over the past year, and a half. We have had two countries (China, Iran) where people having been trying to move money into property in a safe haven.
It has finally slowed up. For how long who knows, but we are due for a pause. The sales have really slowed up the last two weeks of March, and the listing count is moving up(426). Interesting how many of our listings were purchased in the last two years. Did these people always have a plan to flip, or is it money laundering, or a change in monetary circumstances, who knows, but I smell a change.”

nsguy at RETalks 3 Apr 2012 9:05am

“Garassino has actively discouraged her own kids from waiting around to find out how it unfolds” – “I tell my kids to go out and seek their fortune elsewhere. You can’t do it here. These are kids that could build Vancouver. They’re educated, ambitious and entrepreneurial, and they don’t think that Vancouver represents opportunity for them.”

“It’s not that Baroldi fell flat on her face when she moved to Vancouver. She found work, made friends and started to build a new life for herself. But she also didn’t feel like she was making enough meaningful progress in her life — instead, like so many other people her age, she was just effectively treading water. Vancouver, she says, is probably a wonderful place to be 20. But, as she discovered, people’s priorities change at 30, which is part of the reason she moved back to Edmonton late last year. “As soon as people hit 30, they run into a wall,” Baroldi says. “They have different life goals. While they can be achieved in Vancouver, they can’t be achieved as easily.”

“For those who do need to make a living, Vancouver is just about the furthest thing from livable. That’s a direct result of the city’s turbo-charged real-estate market. It wasn’t that long ago that middle-class families could afford to buy middle-class homes in Vancouver-proper without selling their children into slavery, but those days are long gone. According to Royal LePage, the price of an average detached home reached $1,017,500 in the fourth quarter of 2011. Meanwhile, Vancouver real estate team Faith Wilson Group says the price tag on a place located on the west side of the city hit a staggering $1,656,986. The average price of a condominium, on the other hand, was $536,500 — more than $200,000 higher than the average price of a house in Edmonton.”

“Eventually, something’s going to have to give — that is, if it isn’t giving already. That’s the message that Sandy Garossino, a Vancouver-born (and Alberta-raised) lawyer and business owner, spent the recent Vancouver civic election trying to spread as an independent candidate. She contends that while there has been plenty of talk about the negative impact of the recently implemented and more recently rejected harmonized sales tax, it’s the city’s real-estate market that’s doing the real damage to local business. “I have two concerns: That we’re in a housing bubble, or that we’re not.”
Either way, she’s actively discouraged her own kids from waiting around to find out how it unfolds. “I tell my kids to go out and seek their fortune elsewhere,” she says. “You can’t do it here.”
In fact, Garossino thinks that this exodus of young talent is the biggest cost associated with Vancouver’s real-estate mania. “These are kids that could build Vancouver. They’re educated, ambitious and entrepreneurial, and they don’t think that Vancouver represents opportunity for them.”


The Vancouver Foundation, an organization which works with all communities in the city, asked a wide range of people what they thought Vancouver’s biggest problems were, and it expected to find the usual suspects — homelessness, urban poverty and a lack of affordable housing — at the top of the list. Instead, it heard something quite different from Vancouverites: They felt isolated and alienated, and that they didn’t like it.

– excerpts and image from ‘Paradise Found’, by Max Fawcett, avenueedmonton.com, 3 Apr 2012. The article deals with Edmontonian ex-pats returning from Vancouver, and the deleterious effects of RE prices on Vancouver communities. [Perhaps rather ‘Paradise Regained’? -ed.]

The most profound negative effect of the speculative mania in Vancouver RE has been the severe misallocation of human capital.
– vreaa

RBC Survey – ‘Despite low rates, many Canadians holding off home purchases’

“A growing majority of Canadians do not intend to buy a house in the next two years, even with mortgage rates near record lows, according to a Royal Bank of Canada survey released on Thursday.
In RBC’s annual poll of Canadian homeowners, 73 per cent of respondents said they are unlikely to buy within the next two years, an increase of 2 per cent over the previous year’s survey.
However, 46 per cent of those polled expected mortgage rates to stay at ultra-low levels next year, up sharply from 30 per cent in 2011.”

– from ‘Despite low rates, many Canadians holding off home purchases: survey’, G&M, 5 Apr 2012

Coming soon, the sister article:
‘Despite falling prices, many Canadians holding off home purchases: survey’.
As has been discussed on these pages recently, despite very low rates, buyer limits will be reached.
And then prices will start declaring a downward direction.
And then the psychology changes completely.
– vreaa

Spot The Speculators #81 – “If we sell we may not be able to afford to buy again and the house down the street is listed at $1.8 million right now. Prices will never go down in Vancouver cause its different here and has a lot to do with lack of land and the Chinese buying up everything.”

“Talked to daughter of a friend here in Vancouver. They bought in 2007 for around $750K… old 1920′s place and needs complete redo…still same old single pane windows, sloping floors, old wiring and plumbing. Suggested that they look at selling if they think its worth the $1.4 million they say it is and cash in on their lottery ticket, rent and wait for prices to come down then rebuy. The answer I get is “If we sell we may not be able to afford to buy again and the house down the street is listed at $1.8 million right now. Prices will never go down in Vancouver cause its different here and has a lot to do with lack of land and the Chinese buying up everything.”
I shake my head in amazement. I tried.”

Ronaldo at greaterfool.ca 3 Apr 2012 1:08pm

“I have been watching this one since last summer. A perfectly usable house sits unused for a year.”

“Regarding anecdotal evidence for empty properties: I have been watching this one since last summer. [2667 Claymore Place, Burnaby. 3950sqft SFH on 7150sqft lot.] It has been empty and listed for sale since then. I know that HAM bought it in 2006. I don’t know how many pairs of hands it has been through between then and now. It was listed at $935,000 when I first noticed it last August. It has had 8s in every revised price ever since. Now asking $868,000. A perfectly usable house sits unused for a year.”
– ‘The poster formerly known as anonymous’ at VREAA 2 Apr 2012 9:19pm

How many houses and condos sit empty in Vancouver, playing the role of trading units rather than homes?
– vreaa

jesse’s Teranet Trendline Analysis

“…assuming one purchases a $500,000 property at today’s prices (170 Teranet index), looking at scenarios in 2015 and 2020 where prices re-align with the respective trend lines:

“New Normal” price will appreciate to $670,000 (10.6% CAGR) in 2015 and $1,030,000 (9.5%) in 2020
“Trendline” price will appreciate to $508,000 (0.9%) in 2015 and $655,000 (3.6%) in 2020
“Old Normal” price will depreciate to $341,000 (-11.7%) in 2015 and $394,000 (-2.8%) in 2020
“Old Normal Bottom” price will depreciate to $302,000 (-15.0%) in 2015 and $350,000 (-4.2%) in 2020

– from ‘Vancouver Teranet HPI Trendline Analysis’, by jesse, at Housing Analysis, 30 Mar 2012, see his article for definitions of various trend lines.

jesse’s analysis assumes return to various arguably-valid trend lines.
In each case there is the possibility of overshoot, a common scenario when ‘reverting to the mean’.
This analysis can be compared with our own technical analysis, previously posted [VREAA 11 Sep 2010, updates 12 Oct 2011 and 2 Jan 2012; see below]. Note, of course, that our analysis is of Vancouver average SFH prices, not the Teranet data which jesse’s analysis uses, and is limited by the use of straight lines on linear scale charts.
We foresee an ultimate reversion to a trendline reflecting growth at the rate of inflation (roughly equivalent to jesse’s ‘Old Normal’) but, given the magnitude of the diversion from mean on the way up, we fully expect a large overshoot to the downside on the way down. The speculative component will likely be completely wrung out of the market, and this will probably require a return to early 2000’s prices. That equates to the 75 range on the Teranet chart, and the 444K+ range on the Vancouver SFH chart. Thus, 50%-66%-off the peak prices.
– vreaa

Spot The Speculators #80 – “A couple who landed here in 2007/8 bought 2 new condos near Brentwood, and have owned and flipped no less than 5 properties since then.”

“A couple who landed here in 2007/8 bought 2 new condos near Brentwood, and have owned and flipped no less than 5 properties since then. He works in IT, and she a homemaker with 2 kids. He briefly lost employment but found another within months last year. Wife is always complaining about being financially strapped, but the real fact is that they are free loaders and expect others to foot their meals all the time.
When he was unemployed and could not make payment of the mortgages, he sold off one condo in Quangzhou and had his parents remit the funds to him as a gift, since there is no gift taxes in Canada. Recently she is thinking about buying in NV and selling another property in the province of Guangdong, and have the proceeds transmitted over in the same fashion. Most of their cash savings are offshore to take advantage of the much higher interest rates in fixed deposits. And when they need cash, they get their parents to remit gifts to their 2 kids.”

ToL at VREAA 1 Apr 2012 9:38am

Attentive Bears – “Sitting in front of my building enjoying the sun, not one person has rung to view the newly reduced price unit that’s having an open house from 2-4.”

“Sitting in front of my building enjoying the sun, not one person has rung to view the newly reduced price unit that’s having an open house from 2-4… As of 3:15”
– vangrl at vancouvercondo.info 1 Apr 2012 3:15pm

Some are watching this market even more closely than we are…
(Thanks, vangrl!)
With rising inventory, low sales, and YOY flat prices, bears smell blood.
But the market has yet to clearly declare direction. By May, perhaps.
– vreaa

Spot The Speculators #79 – “I have 2 RE agents in my extended family who have been flipping for about 7 years and they are both multi-millionaires on paper. They are completely leveraged to the hilt.”

“I am no realtor but I can guess that many of you can see the “gold rush” mentatlity of the last few years in Vancouver is a temporary blip – some people will make a fortune and those who came too late will be left with a bum claim. I think realistic numbers and a price correction is actually very healthy for the long-term health of RE in Van and surrounding areas. I am bearish on RE but unlike many others, I do not want to see a crash – that will wipe out too many families and destroy the economy. I do want to see some flippers get burned badly, and I want regular Vancouverites to be able to afford a home (with sacrifice and due to hard work). Unfortunately I have 2 RE agents in my extended family who have been doing this for about 7 years and they are both multi-millionaires on paper, by this I mean they are completely leveraged to the hilt. It is a tops-turvey bizarro world where a RE agent makes more than a surgeon selling “nothing special” or even teardown bungalows, and makes millions flipping a half-dozen presale condos with “creative” financing.”
Leben at yattermatterc.com 2 Apr 2012 10:59am

Westside Example, For The Record – Possible New Aesthetics:Price Ratio Extreme

5592 Larch Street, Vancouver Westside (V929848)
SFH built 1924; 2001sqft; 33×126 lot
Asking price: $2,100,000

[hat-tip Ben at greater fool.ca and Absinthe at VREAA]

Yeah, we know, “it’s the land value”, obviously.
Yet, why does the realtor still say in the blurb:
“This solid 4 bdrm+ 2bth+ 2kit house is in good condition with newer roof & newer water tank.”? And two thousand and ONE square feet? Really?
No matter; posted here for the chronological record, and representing a possible new Aesthetics:Price Ratio extreme.
By the way, to anybody who owns a house like this, and isn’t trying to sell it into this market… what are you waiting for?
– vreaa

Global TV Promotes RE, Yet Again – “Realtors like it because they want to get their realtors.. their clients, sorry… the best deal they can.”

Tara Fluet, ‘White Rock Investor’: “With Groupon, and the way it exploded, you do get great deals on there, so, why wouldn’t it work with condos, the developer here wants to sell the last few units, so if 20 people come in and buy them all at once, they’re obviously going to get a better deal than coming in one by one.”
– from ‘Groupon Style Condo Sales’, Global TV News Hour, Saturday 31 Mar 2012

In the Global clip, Ms Fluet is portrayed as a ‘White Rock Investor’, yet in an article in ‘The Province’ [‘Two homes are better than one’, 17 Oct 2010], it is revealed that she is a ‘sales representative’ selling condos for Cam Good’s ‘The Key’ marketing group, the same people behind this promotion.
Global TV continues to promote RE in the guise of ‘News’, and is disingenuous in the way it presents information to its viewers.
– vreaa

Two other things pertaining to this story:

1. The whole idea of ‘bulk’ sales of condos is noteworthy from the point of view of the RE mania. Would people consider this way of buying a home in ‘normal’ markets?

2. The Global piece also treats us to a really wonderful Freudian slip from Cam Good:

Cam Good, Condoday: “Buyers like it, they can get a better deal participating today in this group than they ever could on their own. Realtors like it because they want to get their realtors (sic).. their clients, sorry… the best deal they can; and developers, if they can do 10 or 30 deals on a Saturday, where they might do one or two.. why wouldn’t they want to do that?”

Global tends to take down their video clips from the web after about a month; intrepid video archivist Greenhorn has archived the clip for posterity, here:

Spot The Speculator #79 – “A relative of mine was caught chasing the “boom” in Calgary in 2006. Took a huge hit on 3 properties. Swore he would never buy again. Guess what? He’s now in Vancouver, buying at another crest.”

“A relative of mine was caught chasing the “boom” in Calgary a couple of years ago (2006). He bought 2 houses (one to live in and one as an investment) and a condo. He subsequently took a huge hit on all three when he was forced to move to Vancouver nearly 2 years ago. The properties all became completely illiquid a couple of years ago. He listed one house 5 times, with lower prices each time until he finally unloaded it, last month, at a huge loss.
Swore he would never buy again. Guess what. He’s back, now in Vancouver, buying at another crest.
Oh yeah, when he moved to Vancouver, he took a rather large (20%) salary cut.
Some people never learn. And the streets seem to be littered with these stories here in Calgary.”

LJ at VREAA 1 April 2012 11:37am

One has to stand in awe of the power and perversity of market psychology.
This anecdote reminds one of the recent discussion on these pages where commenters likened RE speculation to addiction.
– vreaa

Spot The Speculator #78 – “One couple recently spent $900,000 on an East Van house and also own a downtown condo.”

“Recently we hosted a meal at our home with 3 young couples present. The topic of real estate came up. One couple recently spent $900,000 on an East Van house. When someone referred to my bearish outlook the male owner of that home, who also owns a downtown condo, brought up a couple of classic arguments:
• even if this is a peak, real estate is still a good investment in the long term, just like the stock market.
• Vancouver is different.”

– b5baxter at vancouvercondo.info 30 Mar 2012 2:36pm, who also adds analysis.
—-

Real estate is only sometimes “a good investment in the long term”.
Buying (or holding) when it is historically overvalued is a certain recipe for underperformance.
Holding more than your personal residence, with leverage, through a downswing, is a recipe for crippling punishment.
– vreaa