“A friend is leaving Squamish and has to sell, but not a single viewing. They are looking at drastic price reductions, below their existing mortgage, or holding it as a rental until the ‘market turns around’.”

Posted on 16 July 2012 | 37 Comments

“A friend in Squamish is trying to sell his place…..not a single viewing even after an open house. They are leaving Squamish and so have to sell. Now they are looking at drastic price reductions (below their existing mortgage) or holding it as a rental until the ‘market turns around’ (his words, not mine). I feel for the guy and his family, but this is an example of what happens when you buy at the peak of a bubble. The Aqua development in Squamish still has units available, even after the significant price reductions. There are early purchasers in there that paid nearly a 100k more for the privilege of ownership than a present day buyer.”
– Anonymous at VCI 14 July 2012 10:29am

This entry was posted in 11. Regrets about Investing in RE, 14. Social Effects of the Boom, 16. Missed The Boat? and tagged , , , , , , , , . Bookmark the permalink.

37 responses to ““A friend is leaving Squamish and has to sell, but not a single viewing. They are looking at drastic price reductions, below their existing mortgage, or holding it as a rental until the ‘market turns around’.””

  1. rp1 | 16 July 2012 at 11:15 am | Reply

    The market is perfectly efficient… at capturing consumer surplus.

    • Jason | 19 November 2012 at 3:06 pm | Reply

      first comment is that guy “Farmer” is an ignorant asshole who obviously has more money than he can spend.
      I firmly believe that Squamish City is responsible for hyping up the city and attracting people under false pretences. Pre Olympic lies of a guaranteed boom in Squamish has led lots of peole in Squamish to loose thousand and even over hundred thousand on their “investments”

      • Naked Official #9000 | 19 November 2012 at 4:45 pm |

        I don’t know,

        Farmer sounds pretty smart (as good farmers tend to be; they feed us all, after all) so yeah, he might have a lot of cash as a result of his life’s work.

        I know it’s terrible when a thousand (people?) become loose.

        A house is not an investment – as my father took great pains to drum into my mind: “it’s a liability, like a car”

        Your friend sounds like a dumbass trying to cash a lottery ticket.

        You’re barely literate, so I’ll let you figure out the nicknames for Squamish yourself.

        Farmer > you

  2. MP | 16 July 2012 at 11:16 am | Reply

    when did they buy?

  3. CanAmerican | 16 July 2012 at 11:28 am | Reply

    Sadly, this is the type of story the MSM should be covering as opposed to the erroneous endless stream of coverage indicating stable market with stable prices, and implied low risk.

  4. Farmer | 16 July 2012 at 11:38 am | Reply

    Holding it as a rental until the market turns around……

    Funny stuff. That sentiment is very common amongst owners who simply cannot appreciate just how overvalued homes are in todays market. Their idea seems sound on the surface. Prices go up. Prices go down. So therefore “we” will not sell at a loss until the market gets bullish and turns around again (meaning the central belief is that home prices always go up…..eventually).

    The folly is unmistakable and this sad view which is widely held will eventually spell disaster for many home owners who will ultimately fall underwater on the mortgage and perhaps even be forced to sell at very significant losses or bankrupt following a foreclosure.

    You cannot educate them though.

    Pride stands in the way. As does mothers milk, apple pie, folklore, myth and the lies of the real estate cabal who keep pumping out nonsense about the value of the new HPI -Home Price Index.

    Balanced markets, my ass. Incredibly, people with no background in economics, accounting, real estate or market dynamics seem to think they know better than all the experts about what will happen next. They don’t have a single chart or any evidence to work with and yet they stupidly cling to ideas from another generation. Too few understand how the long run business cycles have now turned decisively against the premise of building wealth through property acquisitions.

    And so they hold. And so they do not profit at the top. And so they fail.

    They just don’t get the market dynamics. Have no concept of bubble deflations and house price corrections where price/income or rent/price are telling them in no uncertain terms to run for the hills. They have no idea how bubbles burst nor how low prices can go. So they know better and will not consider good advice.

    God love them. Poor saps they are.

    Hope springs eternal though. In their minds they will just tough it out and continue to make payments until the planets align in favour of home price gains sometime in the unknown future (sorry Paul, just a little dig at the astrology thingy there).

    But the bears are being vindicated now. Every single day. Still, the fools hold fast to beliefs that are as outdated and tired as Justin Bieber’s music. We told them so but they would not hear it. The bloggers on this site put forward a wealth of data on why the top was in and it was time to escape….

    Damn fools would not listen. Let them fail.

    • jesse | 16 July 2012 at 12:17 pm | Reply

      “holding it as a rental until the ‘market turns around'”

      My favourite catch phrase of this bubble. Every time I hear this I take a drinksie. I love you guyzh.

      • Allen | 16 July 2012 at 12:59 pm |

        I’m hoping this “flood” of new rental inventory might put downward pressure on local rents, or at least discourage increases.

      • jesse | 16 July 2012 at 1:21 pm |

        “new rental inventory might put downward pressure on local rents”

        Based on the research I’ve done rents do not react strongly to dwelling supply; rather increases continue even when there is significant oversupply. In San Diego, which Rich Toscano tracks closely, there was a slowdown in rental gains through their bear market but it was something like 100bps lower (say 1.5% rise instead of 2.5%).

        Why was this? Toscano had a few ideas (I’ll have to dig up his posts and arguments), but IIRC they were that the majority of those renting will still see income gains even in a recession and can afford rental increases. The costs of commissioning a suite to rent is enough that many units will remain unrented or go into foreclosure and this tempers the availability somewhat. In San Diego, like Vancouver, there is likely an undercurrent of rentals through house sharing and attached suites that will be more elastic to demand — this means the vacancy rate won’t spike significantly as marginal landlords who cannot find good tenants simply don’t rent their rooms out. As an example.

        In Vancouver the basement suite dynamic is in full force — basement suites are commissioned and decommissioned all the time and landlords of these units can be sensitive to finding good stable tenants. If they have no luck with this they will keep the unit vacant and tenants are forced to look elsewhere. In most cases the cash flow from a suite isn’t that much in terms of add to income and doing without is possible.

        Just some thoughts on the matter. My prediction is that rents will continue to increase through a sales slump. The real pain will be wrought through those who cannot find good tenants — they will either face rent payment issues or dwelling damage that forces margins lower than budgeted. The headline rent will look like it’s increasing but margins will get squeezed through “credit” degradation.

        The cynic in me thinks the way by which prices will revert will be a combination of “stuff that cannot happen”, including rents increasing at the inflation rate, mortgage rates remaining low, a slowdown in construction starts, and population growth, all in the face of falling prices. It won’t make any sense on the outside based on those measures; my thought is these measures are ancillary to the economy but it misses the mark to call them “fundamentals”.

        Sorry for the long answer.

      • Allen | 16 July 2012 at 2:15 pm |

        Hi Jesse, no need to apologize, thanks for the thoughtful reply.

  5. observer | 16 July 2012 at 12:00 pm | Reply

    I personally know two women who are now illustrious landlords. The company we worked for shut down, but luckily they were able to find other work, so they are not in the worst possible spot. One of them lived large with HELOC for years, the other was a bit more conservative, but they are both waiting for the market to turn around to capture their capital gains, or simply break even. The old thinking that they have neither made money nor lost money unless they sell keeps, them thinking they are in good shape. Every day the constant distraction of making a living will keep them from taking the necessary steps to extricate themselves from the inevitable financial nightmare awaiting them.

    • CanAmerican | 16 July 2012 at 5:48 pm | Reply

      “The old thinking that they have neither made money nor lost money unless they sell keeps, them thinking they are in good shape.”
      — This statement is why things will turn exponentially worse. Once the decline happens enough that people cannot reasonably see appreciation in a tolerable period of time, then they’ll look to exit through whatever means that takes. What’s the number 10%, 20%, 30%? At some number, dealing with the bank and legal system will seem better to them than dealing with the cash-flow drain. For others it won’t even be a decision, as the HELOC spout is turned off due to declining value, so is their ability to pay.

  6. Allen | 16 July 2012 at 1:02 pm | Reply

    Are you allowed to sell a property in Canada for less than the mortgage value, a “short sale”? For whatever reason I didn’t think the banks and CMHC would go for it.

    • Signs of the End | 16 July 2012 at 7:36 pm | Reply

      Banks will just foreclose and run to CMHC, which is you and I, so watch governments come up with new and innovative tax schemes which will be called anything but taxes. Sadly the squeeze will be on, so even those of us who have been conservative will end up paying for the folly of the Greatest fools this nation has ever seen! I may not buy even at dirt cheap prices because the tax burden may be just too high! I may have been forcibly turned into a life-long renter! C’est la vie!

  7. TheComingDepression (@TheDepression2) | 16 July 2012 at 1:30 pm | Reply

    Nobody will be living in the west coast soon:
    Radiation On West Coast of North America Could End Up Being 10 Times HIGHER than in Japan
    http://economicaldepression.blogspot.ca/

    • Farmer | 16 July 2012 at 2:19 pm | Reply

      You cannot be serious, ComingDepression. I really (really) want to argue with you but I have taken an oath to be more peaceful online so I am doing my level best to resist the engagement. That is all fluff though.

      Please.

      • El Ninja | 16 July 2012 at 2:49 pm |

        A small, not necessarily unintelligent, segment of the population inevitably subscribes to this doomer stuff. They’ve been calling for the end of the world for decades now. And they simply cannot grasp how anyone could merrily go about their life while ignoring the mighty disaster that’s about to unfold.

        It’s all a fraud that plays on some folks’ natural fears and, I think, a frustrated desire for respect / attention / power. Religious elements relating to sin, judgment, and reckoning may also be part of it. Interestingly, it seems to be mostly a North American phenomenon. Maybe as a result of the “guilt” some people feel for being part of a capitalistic, economically successful society.

        Don’t get me wrong, though. Vancouver RE is toast!

      • Nemesis | 16 July 2012 at 4:25 pm |

        “Oh, snap!”. I was so looking forward to my new career as a benevolent regional WarLord…

      • Nemesis | 16 July 2012 at 6:36 pm |

        Puleeeez!… He’s so much older. Which, come to think of it, is probably why the Hon. GT insists on riding a Harley… VeryNice machines some of them – eminently suited to AuthenticBoomers… Especially the self-aware – who, like the eponymous DirtyHarry…

      • Jason | 19 November 2012 at 3:01 pm |

        Man you are a nasty person. Your words are quite vulgar to me, I’m not a “poor sap” we are people who were caught in a world economic melt down. Promises of a Squamish boom were trampled on by the 2008 melt down. I don’t need your sympathy or your harsh critizism. We bought in Squamish at the height with consistent local promises of a city boom that failed drastically after the Olympics. What makes me sick is people like you, obviously with more money than u can spend critizizing other peoples decisions and telling them to suck it up and take a loss of well over 100k. In sensitive knob. Karma will bit that fat cat ass of yours one day.

      • Naked Official #9000 | 19 November 2012 at 4:58 pm |

        Jason, you’re the idiot that sold the cow for some magic beans.

        Caveat Emptor? I don’t expect you to know Latin, but that’s your homework for today.

        Our schadenfreude is deserved, we’ve waited 4 years for the other shoe to drop, which it appears is about to happen. You understand it’s going to get worse, right? The entire RE industry is like the used car industry. It’s bullshit. A house is to live in, not generate profit. At least, that’s how I was for most of the first 15000 years of civilization. I’m pretty sure when empires get close to the tipping point, speculative manias become endemic as cheap debt finds its way into the hands of your cohort. I am guessing your friends are 25-35?

        This is all you know, isnt it?

        “REAL ESTATE ALWAYS GOES UP”

        you just didn’t find this site before you jumped in – or you are trolling – not sure if. Your skill with the written word is indicative of your “investment” ability, no doubt.

        You couldn’t pay me to live in Squamish – I like not having my car broken into, thanks.

    • jesse | 16 July 2012 at 5:53 pm | Reply

      Is that you, Garth?

    • Ralph Cramdown | 16 July 2012 at 9:22 pm | Reply

      I skimmed the research that that blurb was based on. They put a radioisotope, believed to have similar characteristics to Cs137, in the water off Japan and let it drift for a bit, then projected forward using a few dispersion models? Being that there was already a radioisotope in the water which had EXACTLY the dispersion characteristics, concentration and starting point/time of the Cs137 they’re trying to model — to wit, THE ORIGINAL LEAK, and it had been dispersing longer and therefore more widely, why in the name of Cnut wouldn’t these clowns have measured the dispersion of the leak, instead of dumping more radioisotopes into the ocean?!?!?! I think they’re pulling your leg, but I’m open to plausible explanations.

  8. TheComingDepression (@TheDepression2) | 16 July 2012 at 2:26 pm | Reply

    farmer you have can’t be that far out to lunch can you? I have evidence from the University of Berkley, Norway scientists, Japanese Scientists, the list is ENDLESS. Before you even think of your so called “argument” you may want to do some RESEARCH..start here..
    http://enenews.com/

    • Farmer | 16 July 2012 at 6:54 pm | Reply

      Let me know when the radiation levels in Vancouver hit ten times those of Fukishima. Yeah, that will hurt real estate prices. Might even make that damn BowMac sign light up again like the old days. Until then I will keep ordering Sushi and making Tuna Fish sandwhiches.

      Is this a Simpson’s moment?

  9. TheComingDepression (@TheDepression2) | 16 July 2012 at 3:07 pm | Reply

    Its amazing the misinformed and dumb people who honestly believe everything is fine and the gov’t will take care of us. They call the so called “doomer conspiracy types” names because these “misinformed” and uneducated, refuse to do any research themselves or think outside the box. They honestly believe the media is telling them the truth always. Keeping the people dumb while carrying heavy debt in their tiny overpriced 400 sq. ft condo while twittering and facebooking their “friends,” is the top priority of the Gov’t and the media snakes. Better yet, keep them microwaving their food, shopping on credit, enlarging their debt, pharma pill popping, buying junk you don’t need while watching CNN, MSNBC or Dancing with the stars.

    • Signs of the End | 16 July 2012 at 7:43 pm | Reply

      Fukushima is and I emphasize IS the greatest nuclear catastrophe in history. Does it mean that the West coast will be toast? Only God knows but if Fukushima can happen then so can New Madrid, and San Andreas and other unknown unknowns to quote Donald Rumsfeld. Therefore I do not dismiss your view as ‘Conspiracy’ but agree that the probability of some Extinction level type event as technology becomes more and lethal, or due to catastrophic geophysical disasters is probable in the future, near or far.

  10. olga62 | 16 July 2012 at 3:20 pm | Reply

    By some reason I do not see a flood of the rental properties in Richmond and Vancouver, although I saw on a BNN today that Vancouver RE sales numbers are down 27.7 YOY.

  11. Loon | 16 July 2012 at 7:49 pm | Reply

    I think we need to look forward to more stagnation in sales and further price drops before people decide to rent out their units.

  12. jesse | 16 July 2012 at 11:11 pm | Reply

    Physics friend of mine described to me him attending a conference where there was a room devoted to those who subscribe to, shall we say, maverick views on how the world works; said attendees can present their views and proposed experiments that, if funding can be found, can make one of the great breakthroughs towards a new age of enlightenment. This was alongside one of the most prestigious mainstream applied physics conferences, bringing in eminence the world over. Why, I asked, did they have this room?

    Well it turns out some guy became upset with his papers being consistently rejected for presentation at said conference and took it upon himself to shoot one of the panel’s members in the face. Hence “the room”.

    Please — oh pretty please with sugar on top — do not be that room.

    • vreaa | 16 July 2012 at 11:39 pm | Reply

      Pleas noted.
      We wouldn’t want to be that room; we will not become that room.
      Please, everybody, let’s keep talk of microwaves, raw milk, astrology, and radiation off these threads. There are lots of ‘rooms’ on the web where those subjects can be given the thorough discussion they deserve. Here is not one of those places.

    • Nemesis | 17 July 2012 at 5:04 pm | Reply

      Talk about “in your face”! Clearly , Dr. J… ‘PeerReview’ in the physical sciences tends towards the ballistic. Those Wild&Crazy boffins really should get out and mingle more…

  13. Farmer | 17 July 2012 at 6:09 am | Reply

    Well I finally came across that chart I was talking about last week. It is not quite the sine wave that I had recalled but close enough. Anyway this one from back in February 17 this year is worth revisiting. It is the chart you will want to make a copy of and take around to dinner parties where foolish people still insist real estate is a great investment. Use this to prove that they got too much sun on the last Mexican holiday.

    I think it may be one of the most damning charts I have seen.

    This is the big picture. It shows the ratio of housing investment to GDP and it makes it pretty clear that renting will be a better bet for most of the next decade. If the future is any indication of the past then we are in for one hell of a ride down, albeit a long one, especially in Vancouver.

    http://business.financialpost.com/2012/02/17/housing-market-poised-for-severe-correction-finance-professor-says/

    Keep in mind the chart represents inflation adjusted prices. This one was courtesy of a guy named George Athanassakos, professor of finance at the Richard Ivey School of Business.

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