Double Negatives – “They might look like geniuses in 4-5 years. If anything, your language regarding “a dangerous time” makes me think they are making a contrarian move – not necessarily a bad thing in RE is it?”

509 30th ave E
“509 30TH AVE E
MLS® V981538
33x143sqft
2230sqft house built 1960
$859,000
SOLD for $868,000 on 3-Dec-2012 after 5 days on the market.”

– eyesthebye

“WOW someone actually paid over asking for this place, it’s a dump inside. Need at least $200,000 to renovate it up to current standards. Needs new electrical, plumbing, drain tile, roof, total basement reno, new kitchen, bath, among a few other things, totally not worth it.”
– red_lantern

“Land value – not home.
This 4719sqft lot means a new home of 3303sqft can be built on the site.”

– eyesthebye

“What I see is risk and the fact that they spent 900k on an asset that is extremely dangerous at this time. It’s like buying a stock after it soars. The higher it goes the higher the risk. I’m sure there is nobody in this forum that is buying right now, I’m sure some bulls here wouldn’t jump in, would they?”
– HAM

“They might look like geniuses in 4-5 years from now.
Time will tell I suppose.
If anything, your language regarding “a dangerous time” makes me think they are making a contrarian move – not necessarily a bad thing in RE is it?”

– gobigorgohome

[above exchange from RETalks 7 Dec 2012 1:35pm to 8 Dec 2012 6:45pm]

The vast majority of Vancouverites continue to believe that the local RE market will remain relatively strong. It’s the guy who sees the purchase as risky who is the contrarian, not the guy trying to get cute by out contrarianing the contrarian. The actual contrarian buy signal will be when the man-in-the-street in Vancouver is disgusted with RE as an asset class. This is still a long, long way off. – vreaa

39 responses to “Double Negatives – “They might look like geniuses in 4-5 years. If anything, your language regarding “a dangerous time” makes me think they are making a contrarian move – not necessarily a bad thing in RE is it?”

  1. Quite frankly, I’m surprised that spec builders are showing such enthusiasm for parcels on the wrong side of the YVR ‘social’ DMZ… rumour has it that running the ‘morning gauntlet’ into the WestSide’s more popular schools is getting tougher by the day…

    http://tinyurl.com/axpc9jz

    • All part of the grand design, Nemesis. But we can all feel the true elusive tension — anyone not from “around here” is an outsider.

      • Indeed, Dr. J… it has ever been thus – the rise and fall of great powers and ‘baggage’ attendant thereto… Fortunately, the phenomenon is not without its upsides…

        [Xinhua] – 40 beauty contestants dance Gangnam Style in bikini

        http://tinyurl.com/c5nmdg2

        [NoteToEd: some satirists, this one included, often tease most those we like best. It’s all about the various abstractions of “MoneyPower” (ethnicity and/or nationalistic expressions/ambitions have little to do with it). Lincoln had a thought or two on that very topic: “Corporations have been enthroned… an era of corruption in high places will follow and the money power will endeavor to prolong its reign by working on the prejudices of the people…until wealth is aggregated in a few hands…and the Republic is destroyed.” – Abraham Lincoln, 1865]

      • On the downside, however… the Blighty experience is instructive…

        [UK Guardian] – Generation Rent: why millions are locked out of owning homes: Soaring property prices and a mortgage famine are having a radical social impact on the way renters live their life

        …”Andrew Visser’s four-bedroom home in the historic village of Mangotsfield near Bristol, with its views over rolling fields, is just the sort of place he had hoped to raise his two young children. Yet, despite earning a good salary as a software specialist, this 39-year-old does not own the house and sees no prospect of doing so.

        Andrew and his wife Amy belong to Generation Rent, an army of millions, all locked out of home ownership in Britain. They are among 60,000 households who rent privately in the Bristol area, more than at any time since the second world war. Rents are being hiked up as demand outstrips supply and the average age of a first-time buyer in the city has risen to 37.”…

        http://tinyurl.com/boap2nu

      • Nem, Southern England is being driven by London prices and they’ve committed the same mistake we have: allowing foreign investors to swoop in and snap up vast amounts of property, thus creating a knock-on tide that is raising all boats.

  2. contrarian buy signal … http://tinyurl.com/btz2de6

    • O.M.G. …
      It was inevitable, I suppose.
      12 years ago ‘contrarian’ was a dirty word, to the minute percentage of the population that even knew what it meant. It then went through a few quick succession cycles where it became very successful, and sexy (and oversubscribed). Now it’s a fashion line (of questionable appeal).
      Time to move on.

      • Ironically, being a real contrarian remains the smartest way to approach any market.

      • it’s O.M.G – MAGNUM! … shame^3 … however, taylor swift looked fairly smokin en contraria

      • au contraire – being contrarian *only* pays at the turns. being contrarian in the a bull (or bear) market only gets you run over…

      • blammo -> Sure, agreed.
        But Vancouver RE aside, how many significant turns have there been in various types of markets over the last 12 years? Many. Dozens, perhaps. Lots of places to have profited as a contrarian.

  3. What is the mental makeup of a country when it so easily sells itself and its future to a bunch of communists. In the past 15 years Vancouvers residents have so readily sold their childrens future down the river for a few shiny baubles to over 350,000 invaders. Essentially taken over the city without firing a shot. Jobs only for communist speakers, foreign governments taking over essential assets, filtjy lucre and pc multi culti have civilized people cowered to say a god damn thing.
    pathetic.

    • that must be why the overlords took away the hockey … but bob, the communistos actually lowered taxes, hiked rates, proactively enacted policies to kill ppty spec, etc. … meanwhile in the WEST … ps. the soviet anthem has inspired me … i will attempt make the ideologic transit from small govt conservatism to leninism in a single shot … no half-assed hybrid capitalism when it’s convenient, then socialism when it’s convenient $h!+ … that’s why we’re all in this mess … your sentiment hits the mark exactly – we can’t take responsibility and make the tough choices anymore

      • Cyril Tourneur

        “From the fact that people are very different it follows that, if we treat them equally, the result must be inequality in their actual position, and that the only way to place them in an equal position would be to treat them differently. Equality before the law and material equality are therefore not only different but are in conflict with each other; and we can achieve either one or the other, but not both at the same time”
        ― Friedrich A. von Hayek, The Constitution Of Liberty

      • cease you feeble attempts to sabotage the reprogramming process … i am off to print the youth recruitment pamphlets at kinkos and have completed work on accompanying anthem …
        she wears short skirts, i am geek dirt
        she’s cheer captain, and i hang with preverts

  4. gobigorgohome is posting all over RETalks trying to justify his purchase of a new place in Burke Mountain area a year ago which will likely go down as the absolute worst time ever to buy a first home. He was also trying to justify how putting almost nothing as a down payment was a great move on his part.

    That’s the big problem with real estate bubbles, it financially ruins people that think they made prudent decisions if they get their timing wrong or refuse to use some common sense – ie 1/2 a million dollars for a small cookie cutter place in the boonies might not make sense on this planet.

    • For reader’s who don’t yet know this, ‘an observer’ runs the indispensable ‘Vancouver Price Drop’ blog, which documents falling ask-prices throughout the greater Vancouver area.
      We all know that ask-prices are only one facet of all the data pertaining to the market, but they can be argued to be seen as some kind of measure of seller expectation, and are thus important in their own right. Some of the massive drops in properties documented by ‘observer’ speak of the painful reconciliation of fantasy with reality that is already occurring for some sellers. And we haven’t even really started the descent yet.

    • Haha. He’s the Burke Mountain guy? Oh man, his posts on GreaterFool are priceless.

      The way he references “Burke Mountain” is akin to how someone talks about living in “The Hamptons”.

      I laugh and laugh and laugh.

  5. I can give you some background on that house and the lots next to it. The other vancouver special @ 527 East 30th on the far right of the photo was just sold about a month ago for $911,000 The lot in between 509 and 527 East 30th Avenue is 66 x 143 and the old house was torn down 4 months ago. The rumour I heard was that a realtor bought it but I don’t know for sure. The property is now wide enough for 5 houses and I guess that is what they are planning to do.

    • 4SlicesofCheese

      This selfless small time developer has taken the mayors affordability task force to heart!
      He is selflessly putting his money and his good nights of sleep at risk all in an effort to increase the amount of SFH’s, at the dismay of F1.
      A saint among sinners I say.
      Three cheers!

  6. They will not look like geniuses in 4-5 years. The listing is still up but the picture links are broken, so I couldn’t see inside, but assuming what red_lantern says is accurate, and the fact that the realtor calls it a “renovator’s special”, suggests to me that $200K for a reno is a minimum. So that puts the price at almost $1.1M. If you tear down and rebuild, that’s probably a $400K to $500K proposition — so a total price tag closer to $1.4M. All of it mortgaged and HELOC’ed to the max, no doubt. The only way those numbers would produce a positive return is if we have another decade of bubble price escalation. Just the opposite is the more likely scenario, which would leave the new owners holding a very expensive bag. And probably torpedo their retirement savings.

    If Nosey Parker is right, and the house sold as part of a larger development project, and someone is going to build several new houses simultaneously, that changes the math somewhat, but I’m not sure it elevates the deal to ‘genius’ level. That block looks to be zoned RS-1, so I’m not sure what the profit margins would actually be, given what a developer would have paid for the land. If it were zoned for duplexes, that would probably have more chance of being profitable. If we’re in to a solidly falling market by mid-2013, someone might actually lose their shirt on a row of new builds.

  7. This was posted over at RE talks, which is a forum for Vancouver real estate. The guy who posted it is a noted bull who thinks east side (Main, Fraser, Knight, Killarney) will never go down, even as west side tanks.

    Anyway, it’s hard to imagine prices continually going up without incomes going up in this city. China is tanking, and rates have nowhere to go but up. Prices may stabilize but when rates go up, or another recession hits, we’re in big trouble.

    • UBCghettodweller

      Not that I’m questioning that all may not be well in China, you wouldn’t happen to have a few good links on the current malaise there?

  8. Seeking knowledge...

    Not relating directly to this post, but does anyone know whatever happened to the rows of houses some developers purchased along Cambie St. in Vancouver between King Ed and 41st for future condo’s? They were in the news a couple of years ago for being purchased between $3.5M to $4M. I know someone there who had such an offer, but since all his neighbours did not also take the offer, the deal fell through.

    At that time, I tried to do the math on the developers return, and I couldn’t fathom how they can make money. Now, with today’s market, I am convinced it was a bad speculation. What do you think will happen to all those boarded up houses on Cambie? Do you think the developer will go through with it and throw more money into the pit?

    As Ricky Richardo would say, “Lucy, you’ve got some ‘splaining to do!”

    • The sales prices did not account for Community Amenity Contributions that are levied whenever a lot in Vancouver is upzoned. The way it was put a year ago is that buyers need to be better “educated” on the process. Gulp!

  9. Real Estate Tsunami

    Thanks Cyril,
    For this nugget of wisdom.
    People and cultures are different and anyone who says so should not be called a racist.

  10. theboywhocriedbubble

    Mind-blowing reality checks on that ‘Vancouver Price Drop’ blog vreaa , thanks for that one !! That’s the kind of 100% verifiable stuff I’m looking for right now. If this is the ‘beginning’ , what kind of unspeakable horror will unfurl in the next years ? Guess I will curl up by the window of my rental in a comfy armchair and watch the city burn. yay !

  11. 4SlicesofCheese

    From the article in G&M

    http://www.theglobeandmail.com/life/home-and-garden/real-estate/in-toronto-more-condos-on-the-horizon-despite-dipping-prices/article6017842/

    According to this guy only 10-15% of Toronto condos are of good quality.
    Prices are going to go back up a la post 08 but at a more moderate uptick.

    Oh and hes only been around since 02, so no clue what a bearish market looks like.
    “Al Daimee

    2:01 PM on December 7, 2012

    As a Realtor and investor who personally owns a few condos downtown, I have to ask myself the same question.. what do I THINK will happen? Do I sell off investment properties and focus only on my principal residence?

    I find today’s sentiments toward real estate very similar to this time of year in 2008. Bargain hunters started coming out and then more people caught on to the fact that there were good opportunities. Prices soon rose as bidding wars returned on better quality homes and condos which then pushed prices to new limits before cooling off again slightly. I certainly don’t suggest as big of a swing as 2008-20010, but a similar trend at a more moderate uptick. Still enough to feel good about a purchase today.

    Had I possessed the cash flow 4 years ago, I could have had some amazing opportunities that would have paid off with profits in as little as 4-6 months. The key is to pick quality (just as you would any other investment vehicle) that will have a better chance of weathering softer markets. This screening process will amaze many people as to how few GOOD condos exist. I can shortlist the existing inventory to 10-15% of the overall market, but that comes with knowledge and a proper pulse on the buyer market demand. I find too many people paint the condo market with the same brush and these generalizations just aren’t true. Yes, there is location to consider first and foremost, but there is also quality, reputation of the building, fiscal management, vertical and area demographics, trends in the area, and the list goes on. Not all condos are equal.

    We have to remember that with these very, very low rates, there really is a genuine opportunity to create longer term value, even in downtown Toronto condos. The argument about renewing your mortgage in 5 years time at higher rates does require some financial planning and fiscal prudence to not get in over your head. Aggressively paying down a low mortgage in those first 5 years will reduce the principal amount enough that the next mortgage term will not feel much different, if at all. Given the cautious approach to interest rate changes in the past several years, the BoC is certainly not going to repeat the same tactic used in the 80s and 90s by introducing rate increased in rapid succession. That would be devastating to our economy and the BoC knows this all too well. All this speculation of a crash is largely dependent on increased rates and oversupply, yet we have bidding wars on rentals (especially 2-3 bedroom units) due to a low vacancy rate downtown.

    This conversation can get a lot more in depth and I am sure there are some anti-Realtor/real estate comments to be thrown around. Nothing I can do about that, but what I can do is provide the masses some honest insight from a person who is actually IN the trenches and hears both positive and negative views from the people who make the market what it is: the buyers and sellers… not economists, Realtors or the media.”

  12. Why settle for a DoubleNegative when you can… DoubleDown! Like TD, for example… who have revised their estimate of 2012 BC pricing declines upwards by a factor of two [albeit, actual declines will more than likely exceed their estimates by a factor of 5 – by the time it’s ‘baked’]….

    [G&M] – BC Property Prices a Lesson For Provinces

    …”The slump in British Columbia’s real estate market serves as a cautionary note for other provinces that are bracing for bumps in economic growth…

    …In a new provincial economic update, TD forecasts that average prices for existing homes in B.C. will decline 8.9 per cent this year. It is a steeper drop than TD’s previous June prediction for a 4.6-per-cent decrease in 2012, driven by a slowdown in Greater Vancouver’s housing market.”…

    http://tinyurl.com/8r5bjcj

    [NoteToEd: Excruciatingly delicious as it is… one nevertheless marvels at the Mop&Pail’s recent/sudden change of editoral ‘tone’ – BC property woes now a “cautionary tale” vs. HoratioAlger self-help guide.]

  13. Am I the only one who wonders if nothing but dreck has been built in East Van since 1939? Once WWII put an end to the “character home” the East Side has seen ugly stucco boxes like the subject photo, Vancouver Specials, the Hongcouver Special with vinyl siding & red tile roofs and now the ubiquitous neutral colour stucco box with projecting windows. Its an architectural wasteland.

  14. Why settle for a DoubleNegative when you can… DoubleDown! Like TD, for example… who have revised their estimate of 2012 BC pricing
    ______________________________________

    http://www.tesking.biz/%5Dhttp://tesking.biz

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