‘Martin From Richmond’ Update – “Prices are down more than 15%. Another thing worth considering is that 2013 is the Year of the Snake for those of Chinese ancestry.”

“Prices have dropped more than 15 per cent in one popular neighbourhood in Richmond.
Almost a year ago, a 2800 square foot, five bedroom three bath house sold in the Garden City area for $952,000, a bit above asking price in what was described as a cash sale that followed a bidding war between two interest parties.
Within the last week, another house, a 2400 square foot, three bath house on a similar-sized lot sold in the same neighbourhood for $805,000, below the asking price of $838,900 and even below assessed value.
In both cases, the homes didn’t need any work, and were move-in ready, updated, and well-designed.
The $147,000 drop in price works out to be a 15.4 per cent price drop in the area.
And I think it’s an indication that at least one home owner seriously considered “cashing out”, and ultimately did, and that others might do the same, if the real estate industry continues to grind to a halt.
Another thing worth considering is that 2013 is the Year of the Snake for those of Chinese ancestry.
A renowned Richmond fortune teller and feng shui expert predicts that the Year of the Snake will see profit margins slip, and said business will slow down
Whether you believe in Chinese astrology is not the point; considering the influence of foreign and mostly Chinese buyers on the price spikes since late in 2010, it’s whether this significant subset of deep-pocketed people believe it.
The fortune teller said 2013 will see a significant slow down, and said people will be more careful in spending their money.
As with my earlier “self fulfilling prophecy” comment, if Chinese investors really do believe that 2013 will be a slow year, that could influence their decisions, and in fact, result in a slow down. It all depends on if enough people are drinking the Kool-Aid.
But the fortune teller also noted that the “wealthy Chinese” are unlikely to liquidate their assets by taking low-ball offers, and will decide to rather sit on their properties, awaiting better times.
So, recent sales activity (according to the Greater Vancouver Real Estate Board, January 2013 sales were the second lowest for that month since 2002) combined with the Chinese New Year, could further trigger prices to slide.
Something worth considering for those who are mullling over the possibility of re-entering the world of home ownership.”

– Martin from Richmond, via e-mail to VREAA, 6 Feb 2013

We don’t believe in astrology any more than we believe in leprechauns, but we do ‘believe’ in the fact that others believe in such things, and that those beliefs can influence herd behaviour.
A speculative mania is itself based on false beliefs.
– vreaa

18 responses to “‘Martin From Richmond’ Update – “Prices are down more than 15%. Another thing worth considering is that 2013 is the Year of the Snake for those of Chinese ancestry.”

  1. Some initiative for the buyers now is when the home is listed lower than the BC assessment number, it might even look like a discount for now – its like at the stores you might see when something is shown to be sold less than the MSP! But today’s cheaper sold prices – almost all are sold at 10-15% lower then the assessed value – will be reflected in the next year assessed value. They use the last year sales to come up with the assessment number plus some other considerations. It leaves no room for the seller to claim a discount anymore – or they will have to go another 100k less from the assessed value again…

  2. The Poster Formerly Known As Anonymous

    I just spoke with my now grade 11 student whose parents sold at 1.2 m and bought again at 1.4 m. He saw in the 24 hours that values were going down; told his parents. They said, no they aren’t ; they are only going up. Then they went and checked a Real Estate listings website and found some houses for 1.8m in the hood, and said, See! Prices are going up.

    and we still believe that people watch the markets and will hold off on buying? puh-leaase. There ARE next to no buyers. Good luck realtors.

  3. 4SlicesofCheese

    The year of the snake is supposed to be a transition year, like how a snake changes its skin.

    I guess this year will be a transition year from boom to bust?

  4. To be fair the example is misleading… the $/SF goes from $340 to $335.. a 1.5% drop, which could very well be due to the different layout, etc. of the 2 homes.

    • I saw the same thing. The market is slowing down in the Vancouver area and I think there will be lots of examples to draw from in the future. However, this example is misleading given the difference in the size of the houses.

      • If we were talking about condos, I would agree that your argument have merit.
        But for single family houses that were built in the 1970s, and have the bulk of their value in the land, making the calculations based on the home’s square footage is misguided. These two homes were for the most part similar (not identical) and to say that the $147,000 price difference was due to 400 square feet of difference in interiour square footage is incorrect, with all due respect.

    • Fair comment, gokou and Diggstown.
      We’d ask Martin to discuss when he sees your argument.

      One point I’d make is that calculating the value the market is currently bestowing upon a property is not a simple matter of dividing price by the square footage of the house.
      Remember:
      ‘Value’ = House plus Lot
      In many cases it has been argued that the value of the lot is far greater than the value of the house (sometimes infinitely so).
      Thus, a drop in 15% in the price of a (house + lot) may still be significant, even with variation in the size of the house.

      • That’s a very good point.

        Since it sold almost a year ago, I would think looking up the mid-2011 assessments for each of the houses will be the only way to really tell if prices have gone done (from when the 2800 sq. ft. one was sold) in this situation.

        Use that time as a baseline, then calculate how much the bigger home is now worth based on the difference in price of the recently sold one from it’s own 2011 assessment.

  5. My mom has a townhouse in Pitt Meadows. This development’s last sale was 409K early 2012. They wanted to list and were told by the realtor they would be lucky to get 350K right now, according to similar townhouses in the area selling for that much lately.

    Richmond is not down 15%, it’s down 25% folks. And that’s if you can even sell at all. A few lucky people finding a sucker to buy their place only 15% below 2012 doesn’t constitute the entire market.

    • pricedoutfornow

      Exactly….my parents own two houses in some nowheresville town in BC (one was inherited after a death). They would love to get rid of both houses, they wold take less than assessed values (no mortgages on either). Unfortunately there are so few sales in the town right now that they’ve barely had any interest in either house. When these houses do sell (one day), they will sell for much less than assessed (and certainly a lot less than what the neighbours think is “fair market value” ahem). So…things look “not so bad” when there are so few sales. But it can’t go on forever like this. I predict we will soon see news stories on Global about “Guess what it sold for in 2011, and what it sold for now (substantially less)-just like the stories they had in the early 2000s about how high certain houses were selling for. Yup it will come!

  6. I’m not superstitious but we all know others know someone who knows someone who heard from someone that some guy learned of someone who believes snakes are inauspicious. As the mayor of Richmond put it yesterday, the year of the snake is one of a slower pace.

  7. Realtor behavior

    Chinese are superstituous. When the outlook will be fair, they will say it will be good; when it is going to slow down, they will call it fair; so when it is looking ominous, they will smooth out a bit by calling it “slowing down”.

    • Realtor behavior

      Got to better explain the motive for their “smoothing”, bc they don’t want to put an evil spell by their own words.

  8. Wait. Leprechauns don’t exist?

  9. Real Estate Tsunami

    So, Malcolm Brodie is drinking the CNY Cool-Aid too.
    I guess he has to if he wants to get reelected.

  10. There is a house in that area with 2800 sq ft on corner of Blundell & Ash that’s asking $799K, while a 2200 sq ft house on a smaller lot with less sunlight and finishings asking $763K. Lots of other similar houses in the same area asking $1.2M+. Buyers may have dried up but if you want to buy a house, it will still cost you as sellers aren’t capitulating yet. So it is a stand off, it’s who’s got the most will power and ability to wait it out.

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