Keith Roy, Revisited – “I’m a REALTOR and I sold my own home 4 weeks ago. I think its time to cash out!”


Two and a half years ago we headlined and sidebarred the story of a young Vancouver realtor named Keith Roy who was the subject of a National Film Board of Canada short-film documentary series. As we said of the films: “Keith, who works the Marpole area of South Vancouver, shows remarkable confidence and even more remarkable candidness as he describes his dreams & strategies, and tells us what it takes to muscle in as a RE ‘professional’. Dressing for ‘gravitas’, becoming a celebrity, poaching assistants, ‘taking it up a notch’, quick profits, bribing tenants.  [For links to the documentaries and transcriptions thereof, see “I am Realtor. Nothing Realtorian is Alien to Me.”, VREAA 10 Dec 2009]

Fast-forward to the present and Keith Roy has apparently come to see the Vancouver RE market for what it is. And, to his credit, in the spirit of his aforementioned candour, he has penned a very bearish entry on his blog. He describes how he sold his own home 4 weeks ago, analyses the high inventory and low sales of Westside homes, and advises clients to “cash out”. He doesn’t make it clear what magnitude of price drops he’s anticipating [see comments section for more on his understanding and intentions], and he advertises for sellers when he probably should be ardently seeking buyers. Regardless, this is the first time we have seen a local realtor go this public with this bearish a prediction.

See:
‘Time to Cash Out: Is the Vancouver real estate market heading for another crash?’, Keith Roy at keithroy.com, 4 July 2012 [hat-tip E.G.]

Excerpt:
“I’m a REALTOR and I sold my own home 4 weeks ago. It wasn’t too big or too small. It’s only 6 years old and still feels new. I sold because in 6 months my home will be worth less than it is today. I think its time to cash out! Let me explain…..
To ignore the truth doesn’t change the truth. And so it is in the Vancouver real estate lately. Far too often the real estate industry, of which I am obviously a part, makes excuses for slow sales periods, declining prices and difficult negotiations. These excuses are self serving. The facts are simple; real estate is easier to sell when prices are going up, realtors are happier when more houses are selling and open houses are more fun when buyers come to look. However, the good times pass like the bad ones do. I would suggest that good times have passed in the Vancouver real estate market, at least for the foreseeable future.
Here is a great example of where the real estate industry loses the public trust. The headline of the June 2012 Real Estate Board of Greater Vancouver Newsflash is “Greater Vancouver housing market favoured buyers in June”. The opening line was a bit more accurate: “The number of residential property sales hit a 10-year low in Greater Vancouver for June, while prices remained relatively stable.” But what does “relatively stable” mean in a market as hyper sensitive as Vancouver where real estate is a hobby, sport, profession, retirement plan and cocktail party conversation all rolled into one?”

“There is still lots of opportunity to sell your home. I’m just not sure how much longer it lasts. Prices have started to fall but demand is nowhere near the levels it dropped to in fall 2008. … If you are on fence about selling your home, thinking of cashing out, nearing retirement or need your equity to buy your next home, now might be the right time to call a REALTOR. Otherwise, I’d plan to hold on for another rough ride. I think 2012 will be another one of those years where Summer is better than Fall.”

54 responses to “Keith Roy, Revisited – “I’m a REALTOR and I sold my own home 4 weeks ago. I think its time to cash out!”

  1. Village Whisperer

    As JR noted on my blog, the Financial Post has picked up on this story: http://business.financialpost.com/2012/07/05/tepid-numbers-spur-call-to-cash-out-of-housing-market/

    • He’s ahead of the curve. Drumming up business for the trek down. He’s going to hear it from industry peers though. When realtors are jumping on the crash bandwagon then we know the end is here. The crack in the dam is widening everyday. Already 14.1% off average Vancouver SFH prices from all time high in Feb. 2012-$1,235,244 to June 2012-$1,061,067) . I see 30% off by year end, 50% off by end of 2013 and 70% off by 2015.

      • The worst case scenario could be a 100% drop, not that you could pick up a house for zero but the big picture (Global Economy) becomes so horrible that no one would touch Real Estate or pretty much any investment with a 10 foot pole. So there would be no buyers not matter how steep the discount. Unprecedented times will present unprecedented scenarios!

      • Anonymouse

        “The worst case scenario could be a 100% drop”

        I’ll have some of whatever it is you’re smoking.

      • Re: 100% drop. Seems very far from where we are, but it is possible and it has happened in the US. Imagine property taxes much greater than annual rent.

      • Yup. We have 100% price drops in Canada right now. They are out on the cold flat prairies in small towns though. Mostly in places normal people don’t want to live. You can take places over for back taxes or less depending on what the town council decides but the neighbors might just be hillbillies. Actually, I am kidding about the hillbilly part. Most of these little towns have few, if any services, no shops to speak of except maybe a post office (if that) and the average age of residents is often above 55. My point though is that you can still get a house cheap or for near zero cost if that’s all you want. Lots of people buy them just for storage and I have known more than a few that turned prairie houses into grain bins.

        They are not advertised in MLS in case you are curious. You pretty much need to drive to one and ask the Reeve what’s available or call the council office. I am sort of surprised more people don’t move out this way for a quieter lifestyle. Where else can you go in this country and get a habitable place with one single Mastercard payment and annual taxes under 500 bucks a year?

  2. Four active listings with total asking price of just over 1.6M… he needs the publicity. This looks like an act of desperation to me.

  3. Joe Mainlander

    Smart move. The only thing a realtor doesn’t like is a stagnant market. Gotta stimulate some movement, one way or the other.

    As long as there’s sales, there’s cash flow. Volume can make up for less $ per sale.

    These guys make money on the way up, and they make money on the way down.

    It’s like the Italian guy in Catch 22. “When the Germans were her, I was-a fanatically pro-German. Now that the Americans are here, I am-a fanatically pro-American”

    Roy’s a survivor.

    • Mind you Realtors, Mortgage brokers, renovators, landscapers, windows, blinds, hardwood flooring sales people have multiplied like mushrooms these past 6 years. They will not all survive, actually very few will, just like the early 90’s

    • 4SlicesofCheese

      Buy back in Oct-Nov?
      He sounds like a bear but I am not sure I believe he really understands what he is talking about.

    • Thanks for the link.
      Here are some quotes from Keith Roy in that interview:

      “When you’ve got 10.5 months of inventory of houses on the Westside of Vancouver, buyers are going to start taking their time and sellers are going to have to adjust their prices…”

      In reply to a question about cap rates:
      “If you take downtown Vancouver, you’ve got your typical one bedroom apartment ranging $400K to $450K, that’s going to generate $1600 to $1800 per month in rent… [cap rate about 3.5% after expenses. -ed.] but the Vancouver market has never made sense for an investor… it makes sense from a capital perspective where you’re more likely to see a gain than you are in a market like Winnipeg that remains somewhat static.” [As we’ve always said, every buyer is a speculator. -ed.]

      “I’ll probably buy back sometime in October, November”.


      It is clear that he doesn’t really understand the nature of the market. He believes it has gotten frothy, he sold his town home in East Van and he’s hoping to “buy the dip” in the fall; hoping to upgrade to a westside SFH in the process. He doesn’t really have a feel for the magnitude of the speculative mania, and how much fresh air there is between current prices and those supported by fundamental values.
      If he actually buys in the fall (he may not.. he may sincerely think he’ll buy in the fall but then sit on his hands), he’ll still get badly punished with further drops… particularly if he stretches to buy.
      Buyers planning to buy the dips will likely contribute to the bear market bounce we’re anticipating in the vicinity of the 2009 lows. Those supports will later give away.

      • These pretzels are making me thirsty

        “I’ll probably buy back sometime in October, November”.
        Looks like this guy has no real insight into markets or bubbles.

      • “cap rate less than 2% before expenses”

        I’m calculating 1800*12/450K at about 5% gross. Cap rate is probably around 3.5%. Having a hard time seeing how buying this fall is going to make this a decent investment.

        I’m sure he’s a nice guy.

      • There will be no bear market rally like 2009. In ’09 all stops were pulled to stimulate the bubble, emerg rates, liar loans, cash backs, and all the shenanigans that went on in the US. This time the opposite is happening; a tightening is in process, not a loosening. It will be straight down from here!

      • Jesse -> thanks, my math there was incorrect; edited to reflect.

        And agree; it’s interesting that he quotes the fundamental but then says he plans to buy soon while it’ll clearly still be way out of whack. He seems to believe that fundamentals will never matter in Vancouver.
        He is very short term bearish, but medium and LT bullish.

    • When GVREB total listings exceed 30K and MOI tops 18Mo. is when the real ‘fun’ starts… An ad hoc, heuristic WAO (but an informed one)…

  4. I’m a REALTOR. You don’t understand, I NEED this commission.

  5. Internal conflict abounds. October or November, eh? Thinking real estate cycles in a year, like what happened in 2008, I’m not a believer.

    While not certain, I don’t think there should be any doubt that a probable severe downturn will shock more than a few “experts”!

  6. What he has forgotten is that buying costs include Property Transfer Taxes and Legal fees. Selling involves legal fees and realtor’s Commission. Then there is moving and leasing a place. So the whole shabbam puts you out 4-5% depending on the price of the house.

    Does he really think that RE will drop > 5% between now and October/November and then go up or did he just shoot from the hip on that question?

    Of course it is possible he sold a house and intends to buy something smaller in fall, but the message is definately mixed. Many of those listing now will be lucky to sell by November with a high MOI.

  7. Bet this guy has a few pilfered astrologers on his staff. I know I would. Something important happens in late October, early November that indicates a time of critical breakdown in authority. Will he be picking up bargains for a short term turnover? My guess is he and his cronies may be setting up a fund to buy foreclosures offered by distressed mortgage companies.

  8. Courtesy Mr. Rabidoux: http://www.donrcampbell.com/commentary-on-the-vancouverbc-real-estate-market-video

    More wonderful screen shots for headlining. Despite how inane some of his points are, I have to admit Canada would be a much duller place without Don. Disclosure: I follow Don on twitter.

  9. Here’s a brief true story of riding the market down. I was a RE agent in Los Angeles when the market crashed circa 1987. I had a listing with a seller who had a well-kept home but essentially unchanged since it was built in 1962. She was a widow who had bought the house with her husband for about $50,000 new. She wanted to list for $650,000 which was about $50,000 over the comparables. I could only get her down $10,000. She was sure the house would get her asking and more.
    The crash seemed to happen overnight although, of course, it had been building for a while.
    A week later we got an offer for $590 K. I advised taking it and got a tongue lashing from her boyfriend. He accused me of wanting to rob her of $50K.
    This scenario played out several more times. Each time I managed to get her to lower her asking but never by enough. We became mutually frustrated with each other and I willingly gave up the listing.
    Months later she sold her house. She got $390 K. That was $200 K cash she lost out on by “refusing” to sell.
    How many Vancouverites afflicted with the same resistance to selling for a good margin will make the same mistake? More than don’t I wager.

    • These pretzels are making me thirsty

      The problem with Vancouver is that the dump that has been selling for more than a million dollars is still not worth 700K even after 30 percent correction.

    • I bought a house in Redondo Beach, California in 1993. It was originally listed in 1990 for $419k. Since the market had already slowed, they decided to rent the house for a while until the market “improved”. I paid $205k for it. I’m looking forward to getting a similar discount here in a couple of years.

      • “I’m looking forward to getting a similar discount here in a couple of years”

        a familiar refrain. How many dozens of posters waiting for the same thing? Bullish indicator of the pent up demand for detached housing in Vancouver. I wouldn’t be so confident about this segment had I not been hearing all of your plans over the past years.

      • “I wouldn’t be so confident about this segment had I not been hearing all of your plans over the past years”

        You get your buy signals from a handful of bearish comments on a blog that isn’t widely read? Mkay. Good luck with that.

      • The Poster Formerly Known As Anonymous

        “Bullish indicator of the pent up demand for detached housing in Vancouver.”

        about 30-40 bears buying the dip would make up one slow sales day. How many commenters can you list? And don’t forget we are not talking about idiots who will buy at 15% off. Most are looking to swoop at 50 – 60% off.

        So that’s your army of pent-up demand buyers who will swoop to rescue your property values?

      • 4SlicesofCheese

        “How many dozens of posters waiting for the same thing? Bullish indicator of the pent up demand for detached housing in Vancouver.”

        So before it was a small group of bitter renters complaining on some pathetic blog, and now the same small group is going to save the market?

      • How many people like me waiting for a big price drop to get into the market? Not very many – you can’t have a bubble if lots of people are sitting on the sidelines…

        http://www.vancouversun.com/business/Home+ownership+costs+climbing/6698167/story.html#ixzz1zrqSllzv

        “Of course, affordability is biting, and what I mean by that is that it is creating challenges for people who can’t afford the housing that they wanted to have,” Somerville said.

        “But for the most part the way people have reacted here is to go small or move further out rather than not buy.

        “Given our affordability issues, you’d think that our home ownership rate would be low, but it’s not.”

      • Selection bias. You spend time on bear blogs you think everybody is a prospective buyer; you speak to people at certain BBQs you think everybody owns two properties.

    • Is there the opposite of bidding wars on the way down via extreme lowball offers hoping to take advantage of people desperate to sell?

      I suspect that this won’t be a problem in the near future …
      http://www.moneyville.ca/article/1221563–stiffer-bidding-war-rules-sought-as-buyer-offers-90-000-over-asking-with-no-rival-bids

  10. From all of the media coverage today (did you catch the CBC National this evening?), I’m worried that this blog is becoming mainstream.

    • Gone mainstream?…..OK that is interesting. I don’t have TV so tell me what happened if you have a moment. Links are good. Maybe I have picked them up already but if there is more I am interested in hearing it. Maybe we are not just voices in the wilderness after all.

      • Check out the “Buyers’ Market” segment on the National last night.

        http://www.cbc.ca/player/Shows/Shows/The+National/ID/2253644258/

      • That CBC National segment was so ‘tired’… I’d transcribe some of it but couldn’t bear to watch it twice.
        Their final analysis “Toronto is driven by a construction boom while Vancouver takes it’s cue from Pacific-rim countries.” They have no clue as to the big picture, and flounder around with a piece that says nothing about anything.

      • Still important from the perspective of what people are watching at this junction; thanks for linking.

      • Yeah, I agree. It was fluffy and indicates that the media have not thought one iota about this side of the equation until now.

        Tired… apt description. Even that TD economist at the end looked tired.

    • Froogle Scott

      One thing that will prevent this blog from becoming mainstream is that most of the readers here will consider a severe correction, or a crash, a good thing — as in, a necessary thing. I will too, even though our equity could shrink dramatically, along with every other homeowner’s. The MSM, I suspect, would largely play a collapse for its horror value, at least in the initial hair-raising period, and most of their audience would see a collapse as a bad thing — which it could definitely be on personal basis, depending on one’s circumstances. What the MSM, and in particular the Vancouver MSM, has refused to do over the past decade is develop the larger picture, look for context, build in historical precedent, do even some basic analysis based on fundamentals, and so on. They’ve been in a bubble as much as house prices have. I expect more of the same on the way down.

      • Bums in seats, bums in seats.

        Maybe this blog’s (and my) thesis will be wrong and Vancouver will remain insanely priced forever, but if it does crash it is becoming obvious the vast majority are unprepared for what it truly means, even those who live and breathe real estate 7 days a week, and will sit shocked as their investments are eroded.

        One of the reasons why RE will look a pariah is that people will refuse to add to losing positions. If such a crash does occur, roughly 7 in 10 will have “losing” positions (even if these positions are still returning positive).

  11. Where the hell is “reality check” now that we need him comic relief…..that guy was almost as amusing as formula1. C’mon, reality check…..tell us how you’re cashing all those commission cheques and laughing at the bitter renters. You know you want to….

  12. Pingback: “I was a RE agent in Los Angeles when the market crashed circa 1987. Here’s a brief true story of riding the market down.” | Vancouver Real Estate Anecdote Archive

  13. “Bullish indicator of the pent up demand for detached housing in Vancouver.”
    When in doubt look to the stats. Housing ownership in the lower mainland is at an historical high of roughly 70%. So where would that “pent up demand” be coming from?

  14. Excellent comment above from Froogle Scott above and he’s had “hands on” experience with the housing bubble. Even people who should know better and protect themselves get caught up (and out for that matter). Case in point Prof. Tsur Sommerville the RE expert at UBC’s Sauder School of Business. He ruefully admitted in an interview that he too had used the “equity” in his home to finance renovations. Risky move, Tsur.

  15. Er, one redundant above, above.

  16. Pingback: Keith Roy, Revisited – “I'm a REALTOR and I sold my own home 4 … | | Vancouver Realty News BlogVancouver Realty News Blog

  17. Keith is hoping to scoop as many listings as possible, try and establish a foothold in the detached market on the westside. Which incidently is much more profitable than selling in Marpole!
    Hoping he can cause a frenzy, so he can catch a “dip” in the cycle and buy on the westside. He knows how many people are testing the market with listings on the westside. Prices have already started adjusting and many those testing the market with their listings will cancel them.

    Good luck Keith! All hail the Oppurtunist!

  18. He’s dishonest – head for the hills!!

  19. I personaly know that he just bought a house in East Van for ~ 750K

  20. Easy to read this, almost three year old, story at the time and figure it was a good move.
    I don’t recall a ‘cash-out’ in 2012, or at any time after.
    At least for now, cashing out had better come with a pretty good second step, and probably that step should be to a more reasonable real estate market.

  21. Whipmaster~kerthwhack!

    What a fawkin’ idjiot!
    Today is June 22, 2015.
    Prices have gone straight up since his first posting.
    He is gonna be just another renter if he didn’t buy
    back in. Woe is him! 🙂

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