“I am a boomer. I am appalled at some of the financial situations that my contemporaries have gotten themselves into. I can’t stand it, it is all around me.”

“I am a boomer. I am appalled at some of the financial situations that my contemporaries have gotten themselves into. They have borrowed against their homes while saying “that’s just a line of credit, the house is paid for”. They have counted on the run up in real estate without selling and now owe more on the house than when they bought it TWENTY years ago! When renewing their mortgages they roll in their latest credit card debt. Then they keep the amortization high so the payments are as low as possible. These people owe hundreds of thousands of dollars and now are having health issues, divorces, and want to retire. How can you do all that and not have a thought as to paying off your debt? Time is not on their side.
When the lender they started with is cautious and turns them down, they go elsewhere, get the loan and a promise of more if needed and then bad mouth their first lender. They never miss a chance to go somewhere warm for a month and love the casino and the lottery. Their cars are new, Friends, family, acquaintances, I can’t stand it, it is all around me.”
– camper at VREAA 8 Mar 2013 11:05am

… and then prices start to descend, and the whole debt expansion process goes into reverse (as is occurring just about… now). Ghastly implications for the individuals involved; not good for the group, either.
– vreaa

Vancouver Secretary’s Urgency To Buy Condo At 7.7x Annual Pre-Tax Income – “I’m worried about keeping pace. I’m worried that no matter how long I keep saving, the prices will keep climbing and I’m never going to be able to catch up.”

[photo Rafal Gerszak, The Globe and Mail]

“Alice Soo is developing a case of spring fever for real estate.
In 2011, five years after graduating from university, she made a final payment to erase $25,000 in student loans. At the same time, she has been a disciplined saver, with $30,000 now socked away. Ms. Soo, a clinical secretary at Vancouver General Hospital, is eager to use it for a down payment on a condominium in the suburb of Burnaby, and soon.
Why the urgency? Condo prices in Greater Vancouver have slipped 3 per cent over the past year, but Ms. Soo believes the softness in the market won’t last. “I’m worried about keeping pace. I’m worried that no matter how long I keep saving, the prices will keep climbing and I’m never going to be able to catch up. That is my main concern.”
Such is the psychology of the first-time buyer in Vancouver, the country’s most expensive property market. Prices here have soared 24 per cent since the summer of 2009, according to the Teranet-National Bank house price index, and the price of a typical detached home is still about $900,000. But prices have cooled and sales activity is way down – there were nearly 30 per cent fewer transactions this February than a year earlier – so Ms. Soo’s concern about missing out may be unwarranted….
“For every first-time buyer, there’s an owner who`s looking to sell and trade up, and for every upgrade, there`s a retiree looking to cash out. The “trickle-up” effect can make the difference between hot and cold in the market.
This year, the big question is: Will the first-timers come back?”
For Ms. Soo, who is now renting the basement of her sister’s home, the first choice is to buy a Burnaby condo priced at roughly $300,000, preferably close to a SkyTrain rapid transit station. Given her modest annual pretax salary of $39,000, Ms. Soo is excited by the prospect of moving into her own place by the time she turns 30 this summer. But price remains the sticking point for buying a condo this spring. She and her agent, Eddy Shan of Homeland Realty, are finding that sellers aren’t budging much from their asking prices.”
– this anecdote from ‘Will nervous first-time buyers make this spring housing market bloom?’, Tara Perkins and Brent Jang, Globe and Mail, 9 Mar 2013 [hat-tip OH YAH]

We agree that this FTB’s “concern about missing out may be unwarranted”. She is still living in the not too distant past, and continues to suffer from the “buy now or be priced out forever” fever. It’d be interesting to know more about her knowledge of current market conditions, and to understand her sources of information.
The current market action is precisely what one would expect through a topping process: sales declining, prices sticky but beginning to give, buyers waiting and watching. Sales volumes always lead prices.
And there will always be some buyers, at any point in the descent, thinking they have “bought the dip”.
The most vulnerable owners in the coming downturn will be the over-leveraged, the latecomers, and the retirees with far too much RE for their life-stage. If Ms. Soo buys, she’d be both over-leveraged and a latecomer.
– vreaa
————————-

Some further excerpts of interest from the same article:

“Will McKitka, a real estate agent with Macdonald Realty, said the spotlight has turned on the slump in property sales in February, but prices haven’t collapsed. “People use the B-word, in terms of a housing bubble. Vancouver isn’t in one,” Mr. McKitka said. Monthly sales volumes are being crimped by stalemates over pricing, he noted.
Two of his clients watched negotiations fall apart last month, even though the asking and offering prices were tantalizingly close. “Not close enough,” he said. But Mr. McKitka insists that buying into the Vancouver area’s cooled-off housing market makes sense. Gone are the days of huge jumps in home values, but for those able to save for a down payment in 2013, it will be a better financial decision to own than rent, he argues.”
…
“It still seems that the much greater risk is that sales weaken further, not that they surprise to the high side,” BMO Nesbitt Burns economist Douglas Porter said in a research note this week.
Prices remain stubbornly high in most urban markets. Fitch, a ratings agency, said this week that prices nationally are about 20 per cent too high. Such headlines add to the fear among first-time buyers that, even if they can afford to get into the market, now might not be the time.”
…
“Large marketing campaigns and incentives on the part of mortgage lenders are likely to play a significant role in driving the market this spring. “People buy payments, they don’t buy house prices,” says Toronto-based mortgage planner Calum Ross. “There is a huge psychological impact of five-year mortgage rates dropping below three per cent.” Mr. Ross adds that he’s now seeing “massive” amounts of marketing by mortgage lenders.”
…
“Phil Soper, CEO of real estate agency Royal LePage, said the slowdown is a good thing, because the market was too hot, but he thinks that the changes that Mr. Flaherty made in July went too far. “It pushed things for young people, for first-time buyers, to a place it didn’t need to be,” he said.
Now, he says, the impact of the change has largely been felt. “Young people have had eight months to either save up a larger down payment or look farther afield for a home,” he says. “As long as the cost of mortgage financing remains very low, we’re going to attract financially stable young people, first-time buyers, into the housing market. The desire to own one’s home hasn’t changed one bit.”
…

Will McKitka’s comment added to the ‘What Bubble?’ sidebar collection of bubble denier quotes.
We agree with Doug Porter’s observation that “surprises” are more likely to be to the downside.
– vreaa

VanCityBuzz – Vancouver vs. NYC – “If Vancouver wants to keep waving the world class flag, she’d better get used to being compared to those with a few hundred years experience, because beauty and access to a lot of natural resources can only take her so far.”

“Vancouver is often touted as a world class city by local boosters. While the costs of living and real estate prices are certainly indicative of that caliber, our culture (or lack thereof) and the locals’ inability to get to know themselves without making a big stink about how dissatisfied we are with one another, leaves us to question whether or not our very young city is really ready to step up onto the global stage. There’s only so many years a city can ride on having hosted the lesser of the Olympics, no matter how many gold medals were won by locals. Only so many venues can close before the so-called ‘creative’ class finally throws in the towel and leaves everything to the mercy of developers, corrupt political parties and their sycophant friends. So since I’ve just returned from a five month stint in New York, I’ve been asked by the good people at Vancity Buzz to write up a piece comparing some of the finer points of life in both cities.” …
“Housing and Real Estate Development
I’m no expert when it comes to discussing the finer points of housing and real estate, however as someone who at this point can never even hope to think of one day dreaming about the mere thought of buying a property in or around Vancouver, it’s important to mention that many New Yorkers are in the same boat. I was warned that everything is much more expensive in NYC, but this isn’t true at all. If anything, prices for lodging are almost exactly the same. My trendy, 1500 square foot loft cost close to, if not slightly less, than what you’d end up paying here, which is about three grand per month. And just like here, it pays to have roommates.
There are always new development projects happening all over the city, with walk-ups and high rises popping up all over New York, like zits on a teenager’s chin, boasting deals “starting at only 500K!” The difference between there and here is less of a marketing push. Of course, there are the requisite flyers falling out of every free weekly, but I didn’t notice such an in-your-face attempt as Vancouver’s to get me to sign over the next 30 years of my wages in exchange for a tiny, poorly built shoebox in the sky. Nor did I see any buildings wanting to have sex with the handsome new 12 story about to go up just off Bedford. Maybe it’s because I wasn’t looking, or there was a lack of real estate focused billboards, I don’t recall.
New Yorkers, while dealing with various gentrifying forces, are less likely to complain about being priced out of their neighborhoods thanks to fairly rigorous rent control initiatives, which, like the subway, place the rich and poor side by side, often in the same building. Still, just like Vancouverites, there are grumblings among Gotham locals about everything going condo and being sold to absentee foreign investors. But boy did they have a laugh when I showed off CrackshackorMansion.com.” …
“Conclusion
If New York is a grand dame of the urban world, gaudy, spackled with lights and experienced in the ways of love and war, then Vancouver is like a naturally beautiful teenage girl: not sure of what she yet wants or what she’s capable of, only that she’s good looking enough to, for now, have her pick of suitors at the expense of those who really have her best interests at heart. …
All in all, these are two different places, with their own unique styles, so is it even really fair to compare the two? Well, if Vancouver wants to keep waving the world class flag, she’d better get used to being compared to those with a few hundred years experience, because beauty and access to a lot of natural resources can only take her so far.”
– from ‘A Tale of Two Cities: Vancouver vs. New York’, by Hipster Designer, VanCityBuzz, 6 Mar 2013 [hat-tip proteus]

Attaining Escape Velocity For The Constructive Evolution Of Imbalances In Order To Leverage The Opportunity And Break Through In Thought Leadership [“You know what I’m saying?”]

“..and that’s one of the things that I enjoy most, ah, about this convention… It’s not so much, as so little, as to do with what everything is… but it is within our self interest to understand the topography of our lives unto ourselves. The future states that there is no time other than the collapsation of that sensation of the mirror of the memories in which we are living. Common knowledge, but important nonetheless. As we face fear in these times, and fear is all around us, we also have anti-fear… it’s hard to imagine or measure… the background radiation is simply too static to be able to be seen under the normal spectral analysis. [Accent alters from British to that of deep-voiced American soul singer] But we fuse though there are times when.. a lot of us.. you know what I’m saying? cos, like, as a hip-hop thing, you know what I’m saying, like TED be rocking, like, you know what I’m saying?.. so I wrote a song, and I hope that you guys dig it… it’s a song about people, and sasquatches, and other French science stuff… Okay, here we go.”
– Reggie Watts, TED, March 2012, Long Beach, California. This piece was preceded by a passage in Spanish and then one in French.
—-

“Escape Velocity” – measure of the amount of newly concocted liquidity required to allow Canadian RE to cast off the bounds of gravity and remain afloat; coined by BOC Gov. Mark Carney

“Constructive Evolution Of Imbalances” – [household debt increasing at a slower rate; the tap on the brakes that presages a housing price crash]
“With a more constructive evolution of imbalances in the household sector, residential investment is expected to decline further from historically high levels.” – Bank of Canada statement, March 2013

“Breaking Through In Thought Leadership” – [over-reaching optimism, with a twist of Orwell]
“This is a game-changer for Vancouver. We’re known as a world-class tourism destination but this shows we’re breaking through in thought leadership. I’d like to explore how we can best leverage the opportunity to vault Vancouver into the spotlight and endear us to the leading thinkers who come here.” – Mayor Gregor Robertson, commenting on Vancouver buying the TED conference, March 2013
—

Who writes this stuff?
The above three samples added to our growing bubblexicon.
PS: We Love the subversive Reggie Watts. He was in Vancouver recently.
– vreaa

Lower Mainland Couple In Their 70’s; RE Makes Up 216% Of Net-Worth; Desire To Buy More – “My friend is getting worried about his parents’ financial situation.”

“I was talking to a friend earlier today, He’s getting worried about his parents’ financial situation…
Get this:
$2.6 million invested in real estate… all in the Lower Mainland.
$1.4 million of mortgage debt (54%). Dad is over 70, mom not much younger.
Imagine a collapse of 50% of the market in the LM. The entire family’s net worth would be wiped out. Really scary. The irony? They want to invest even more in real estate (because they lost so much money in mutual funds…).”
– Makaya at VREAA 6 March 2013 8:22am

We still believe that the (90 minus age)% guideline for maximum percentage of net-worth that should be in RE makes sense.
These guys should have less than 20% in RE, their actual number is 216%… and they want to increase it!
We’ve heard enough of these stories now to extrapolate that there are a significant number of people in this position. They are very vulnerable to price declines, and they make the market that much more vulnerable, too.
– vreaa

“Forty percent of homeowners over age 65 had mortgage debt in 2010, compared with just 18% as recently as 1992, Reuters reports.
The Investor Education Fund recently found that 24% of Canadian homeowners surveyed expect to have debt on their principal residence after they retire. Of those who expect to owe money on their homes when they retire, more than one-quarter said they don’t know how they will pay it off.”
– advoc8 at VREAA 6 Mar 2013 at 2:12pm, quoting from ‘How Baby Boomers are rewriting the rules of retirement’, Financial Post, 6 Mar 2013

Bank Of Canada’s New Euphemism For Contraction – “Constructive evolution of imbalances”

“With continued slack in the Canadian economy, the muted outlook for inflation, and the more constructive evolution of imbalances in the household sector, the considerable monetary policy stimulus currently in place will likely remain appropriate for a period of time, after which some modest withdrawal will likely be required,” the Bank of Canada said Wednesday. …
“With a more constructive evolution of imbalances in the household sector, residential investment is expected to decline further from historically high levels,” the central bank said in its policy statement. “The bank expects trend growth in household credit to moderate further, with the debt-to-income ratio stabilizing near current levels.”
– from ‘Battle of housing bubble won, Carney focuses on economic growth’, Kevin Carmichael, The Globe and Mail, 6 Mar 2013

Somehow the Globe and Mail concludes that “concern about a housing bubble” has “deflated” and that the “battle of the housing bubble is won”.
We fail to follow the logic.
What is happening is that, as debt hits limits, the entire economy, overly dependent on debt spending, is slowing.
This is precisely what one would expect at this point in the cycle.
The housing bubble hasn’t even really begun to unwind yet, let alone any battle being “won”.
It is not at all surprising that there is no intention to raise interest rates.
As we have said before repeatedly, we don’t need rising interest rates for the bubble to implode; it will do so by collapsing under its own weight.
We look forward to the “constructive evolution of imbalances” that will come with 50% to 66% price drops in Vancouver.
Viva La Constructive Evolution Of Imbalances!
– vreaa

Realtor On Marketing Deceit – “They could have just found a waitress or whatever, somebody who didn’t obviously work for them.”

“Amazing quote here [in this article in ‘The Vancouver Observer’], regarding the MAC Marketing scandal, from a Vancouver realtor:
“It’s not just what they did, but that they did it so badly. They could have just found a waitress or whatever, somebody who didn’t obviously work for them.”
– Nick at VREAA 5 March 2013 at 10:00 am [Thanks Nick. -ed.]

[For those readers unfamiliar with the “Mac Marketing scandal”, see VREAA 13 Feb 2013.]

Interesting that a realtor would make this kind of comment after such a scandal.
It strongly suggests that he sees deceit in marketing as simply being part of the game.
– vreaa

“Talked to a Vancouver man who sold all his assets in Vancouver. He told me he bought a newer house in Arizona for $105K that has a renter that pays $850 a month.”

“I went to a real estate seminar in Phoenix and the prices to rent ratios were awesome for investors. Talked to a Vancouver man who sold all his assets in Vancouver. He told me he bought a newer house in Surprise Arizona for $105,000 that has a renter that pays $850 a month. I guess Canadians have higher incomes for higher price real estate.”
– happy renter at greaterfool.ca 4 Mar 2013

“There’s a townhouse up for rent in a new(ish) development near my place that is owned by a realtor. After several unsuccessful attempts to sell he gave up and is offering it for a long term lease.”

“There’s a townhouse for rent in a new(ish) development near my place that is owned by a realtor and after several unsuccessful attempts to sell he gave up and is offering it for a long term lease.
The place is fairly expensive to rent, but still a fraction of what it would cost to buy.
Now get this – when I inquired about it, the reply I got stated that “the owner will pay property taxes, but I would be responsible for maintenance and strata fees” at around $350 a month on top of the rent.
OMFG, I still cannot stop laughing…”
– vanpire at VCI 2 Mar 2013 2:05pm

The owner was unsuccessful in their attempt to sell.
This simply means that the owner has an overinflated idea of the value of the property.
Drop the price steadily until it hits a bid. That’s the market value.
And, yes, the statement regarding the addition of the strata fee is indeed laughable.
Trying to make a high rent sound lower. Unlikely to draw anything other than laughs.
– vreaa

Fitch Ratings – Canadian RE 20% Overvalued; BC 26% Overvalued

“American-based agency Fitch says house prices are overvalued by approximately 20 per cent in real terms across Canada, with regional variations.
But in releasing its ratings on Monday, it said Alberta’s market is overvalued by 15 per cent.
“Because of the effects of inflation and price momentum, it is not expected that prices would drop by this amount,” said the Fitch report. “If growth halted and prices began to drop, it would be expected to take several years for home prices to revert to their sustainable values, depending on a number of factors such as government support and credit availability. With this time frame, the actual observed decline in prices could be as low as 10 per cent.”
It said rises in prices have continued with small corrections since 1996, and specifically since 2008 have risen when underlying fundamentals suggest that growth is unsupportable.
It said the Ontario market is overvalued by 21 per cent, Alberta by 15 per cent, British Columbia by 26 per cent and Quebec by 26 per cent.”
– from ‘Canadian housing prices overvalued by 20%: Fitch Ratings’, Calgary Herald, 4 Mar 2013 [hat-tip Nemesis]

“There are up to 40,000 illegal suites in the city of Surrey — nearly double the 20,000 previously reported.”

“The appraiser stands at the foot of the empty lot, asked to assess its value — as if the home to be is already built.
He comes armed with floor plans sent to the city for approval.
In his eight years on the job in Surrey, he’s now seen thousands just like this.
The plans show an outlying deck and a basement with rec rooms, kids rooms, sewing rooms — “all these rooms that make no sense,” he tells The Province.
He is then handed another set of floor plans, either by the builder or homeowner.
“The revised floor plan? They show secondary suites going in,” says the appraiser, who estimates there are up to 40,000 illegal suites in the city — nearly double the 20,000 previously reported.
“The day (homeowners) get their final occupancy, the day it’s done — they enclose the rear patio and now you’ve just added another 1,000 square metres to your house.”
Not only are thousands of Surrey’s homeowners collecting undeclared income, he says, they are also saving on taxes when the suites are popped into place after city approval.
The owner of an in-demand design firm in Surrey says he’s aware of the illegal suite issue, but insists his company creates plans in accordance with zoning requirements.
“We discuss with the homeowners/ home builders as to their requirements and then prepare house plans,” he said.
“Our design company plays no role during or in the construction of the homes.”

“Of the nearly 4,000 residences developed in Surrey in 2012, 1,500 were single family units, namely in Newton and South Surrey.
The city issued permits for 427 secondary suites at 67 coach houses in 2012.
Surrey’s manager of bylaw enforcement, Jas Rehal, says his staff and the city’s building department communicate their bylaws and policies to developers.
“Generally, they’re abiding,” he said.
“These suites in Surrey, they’re all over the city,’ said Rehal. “When brought to our attention, we go out there, state the fee … once a suite is identified, we start billing.”
Annual fees for a secondary suite range between $500 and $1,300, which includes infrastructure costs such as garbage pickup and water use.
It can cost a homeowner up to $10,000 to properly outfit a home with separate piping, wiring and a firewall to make a suite legal.”

– from ‘Surrey’s illegal suites look like an epidemic to some’, Mike raptis, The Province, 4 Mar 2013

Jesse (YVRHousing) calls these suites ‘townhouses rotated 90 degrees’, and we think that’s spot on.
They are products of high prices: owners build and manage them to allow themselves to over-reach on price in the hope of further price increases.
This is an inefficient, clumsy and ugly way for a city to increase density.
– vreaa

Overreach For The Stars – “We didn’t just buy a conference, we didn’t just lure a conference to Vancouver”; “This shows we’re breaking through in thought leadership.”

[image G&M]

“When the TED Talks people came knocking at Vancouver’s door last December looking for a new home for their signature event, the city’s tourism officials didn’t just see another small conference on the horizon.
Instead, they viewed the visit as their chance to promote a kind of intellectual Olympic Games for the next two years, where they could sell Vancouver to the world via an international elite of thought leaders.
In return, the organizers of TED – which stands for technology, entertainment and design and brings together innovators of assorted stripes – saw Vancouver as a city whose ethos matched that of the TED Talks: future-focused, green, creative.
“I think the spirit of the city is wonderful for TED. We’ve met so many people who are dreaming big here,” TED “curator” and owner Chris Anderson said Monday from New York, where he announced the signature event would move from Long Beach, Calif., to Vancouver for 2014 and 2015 – and possibly beyond.
…
“None of us see this as a simple convention coming to town. It’s an opportunity to tell our own story through TED,” said Greg Klassen, a senior vice-president with the Canadian Tourism Commission. “We’ve negotiated the rights to leverage their brand, using the kinds of things we learned from the Olympics.”
So Vancouver will be able to market itself as the TED host city and Canada as the TED host country. And tourism planners are looking at ways to spin off other city events and draw top companies to Vancouver for meetings, using attractions such asextra speeches from some TED presenters.
They hope the strategy will make Vancouver synonymous with creative thinking, the way Austin is now the city of independent music as a result of South by Southwest, and Davos means serious talk about international finance because of its association with the World Economic Forum.
The Monday announcement caused a visible bubble of euphoria among city officials. “This is a game-changer for Vancouver. We’re known as a world-class tourism destination but this shows we’re breaking through in thought leadership,” Mayor Gregor Robertson said. “I’d like to explore how we can best leverage the opportunity to vault Vancouver into the spotlight and endear us to the leading thinkers who come here.”
– from ‘TED Talks choose Vancouver as host’, Frances Bula, The Globe and Mail, 4 Feb 2013

“Watching over and participating in these proceedings at the Long Beach Convention and Entertainment Center is a small vanguard of Canadians preparing to help TED’S once-improbable exodus from a state considered both the bedrock of American technological innovation and the birthplace of TED’S innovative brand for putting ideas in front of the people with the power to make them happen.
There are folks here from the Canadian Tourism Commission, Tourism Vancouver, the Vancouver Convention Centre, Mayor Gregor Robertson’s office, even hoteliers whose ringside five-star hotels will host attendees whose names are synonymous with power, influence and change. Over the next five days these visitors will try to figure out how to capture the magic of an intimate theatre setting TED concocted to make that idea transfer happen.
“Our relationship with TED is a partnership. We didn’t just buy a conference, we didn’t just lure a conference to Vancouver, we developed an alignment of our brand of Vancouver and Canada with the brand called TED,” said Greg Klassen, senior vice-president of marketing for the Canadian Tourism Commission.”
– from ‘Canada gets ready to host global tourism leaders. TED head to Long Beach to find ways of replicating success in Vancouver’, Jeff Lee, Vancouver Sun, 24 Feb 2013
—

Years ago, we liked much of TED a lot.
Since its size and offerings have ballooned, its content has altered, such that we now like bits of it a lot, and lots of it a bit or not at all.
Regardless, it is not a bad thing for Vancouver to host a conference/convention such as this one (provided the price hasn’t been outrageous.. more about that below).
The attempt to link the announcement with claims that Vancouver is “breaking through in thought leadership” are laughably funny, but at the same time, familiar to those who have noted the hopeful (embarrassing?, desperate?) over-reaching that is characteristic of recent Vancouver rhetoric. (Example: Eco-friendly city? Green Leader? – Despite our bike lane preoccupation, just 1.8% of trips taken in Vancouver last year were by bicycle. Also see: Garbage per capita; Airline flights per capita; etc.)
And, bringing the discussion home, this over-reaching is, of course, manifest in our home prices, and we see a relationship there. “Dreaming big”; Talk vs Walk.
Regarding the TED conference funding: Do any readers have access to details of the exact deal struck between TED and Vancouver/BC/Canadian representatives? How much is this going to cost us?
When the CTC representative says: “We’ve negotiated the rights to leverage their brand”, what were the details of the negotiation?
When they say “We didn’t just buy a conference, we didn’t just lure a conference to Vancouver”.. Okay, fine, but we’re curious as to how much it’ll cost us, anyway.
– vreaa

—
Thoughts from TED critics:

“According to a Financial Times story last fall, Mr. Wurman [architect and urban designer Richard Saul Wurman started TED in 1984] thinks the TED concept has become too orchestrated and too slick. Other critics have complained that the talks have become intellectually pretentious and almost industrialized in their production. A recent New Yorker article described them as appealing to “college-educated adults who want to close the gap between academic thought and the lives they live now.” But that hasn’t made a dint in their phenomenal popularity, with over 1,200 cities having hosted spinoff TEDx talks.”
– from the same G&M article above.

“Strip away the hype and you’re left with a reasonably good video podcast with delusions of grandeur. For most of the millions of people who watch TED videos at the office, it’s a middlebrow diversion and a source of factoids to use on your friends.” – from ‘Don’t mention income inequality please, we’re entrepreneurs, Why TED Is a Massive, Money-Soaked Orgy of Self-Congratulatory Futurism’, Alex Pareene, Salon, 21 May 2012
—

[image Salon]

From Prices Soaring Towards The ‘Stratosphere’, To The Limits Of A ‘High-Water Mark’ – “Could these maps be a snapshot of the real estate market’s high-water mark?”

“For the last three years, Andy Yan, a researcher and urban planner with Bing Thom Architects, has been mapping the assessed values of single-family residences in the city of Vancouver.
You see his latest efforts here today. …
The question is, could these maps of Yan’s be a snapshot of the real estate market’s high-water mark?”
– from ‘Pete McMartin: The high-water mark of Vancouver real estate?’, Pete McMartin, Vancouver Sun, 2 Mar 2013

Perhaps of interest because this is the same Vancouver Sun columnist who just one year ago wrote:

“Vancouver, of course, will always be the centre of things in the Metro area. It has history and critical mass on its side. And by its very nature, it is going to attract people who want to come here and live in the city.
… the market will propel any kind of property here into the stratosphere.”
– from ‘Short commutes and easy access to an Ethiopian restaurant are not the natural order of things’, Peter McMartin, Vancouver Sun, 22 Mar 2012, as headlined at VREAA 23 Mar 2012

“Vancouver Island real estate is crashing.”

“Mid Vancouver Island real estate is crashing.
So many listings have been reduced 4-5 times and over $100,000 in price reductions, and still no greater fools buying.
Nanaimo to Courtney is kapoot!
Someone turn out the lights and end their misery.
This is not ending well!”
– unbelieveable at greater fool.ca 1 Mar 2013 10:13pm

“Central Vancouver Island is kaput is almost an understatement. Comox Valley: MLS Inventory, 874. February sales, 36. MOI, 24.4. This is a total wipe out.”
– Ford prefect at greaterfool.ca 1 Mar 2013 11:13pm

“I train automotive dealership employees how to use my employer’s software for a living.
Yesterday, one of my clients was a woman who used to be a realtor for 6 years on Vancouver Island……and last week I had another ex-realtor on Vancouver Island with 20 years of experience. Both left the RE industry recently, and just entered the car business.
That’s about 4 of them I have encountered in the last month alone.”
– Carioca Canuck at VCI 2 Mar 2013 10:35am

The Blast Radius moves closer to the epicentre.
(cue Jaws theme)
– vreaa

Canadian In Hong Kong Aims To Buy In Vancouver – “I plan to be another guy coming from Hong Kong buying your property and renting it out to you, even though I’m a white Canadian guy.”

“Let me share my story. I moved to Vancouver with my family when I was a teen from Eastern Canada. I went to UBC and graduated with a science degree. The jobs available to me were $12/h lab work on temporary contracts or sales at small supply companies, which at least had the potential for a career. How am I supposed to build up any substantial net worth $12/h? I opted for the latter; 100 applicants for every position. Needless to say, I did not make it to the 2nd round of interviews; a few interviewers asked to photograph me (kind of illegal) because it was hard to remember who’s resume belonged to whom.
I did some research and found work online that required my degree. I thought it’d be a side job until I found a “real” job. That ended up being a modest but living income. All of that money was from East Asia; not a dime from Canada.
Yesterday, I got a job offer in Hong Kong, and I’m going to take it. I’m going to make several times more here than I could in Vancouver. I’ll make incredible connections. Interestingly, although I’m not Chinese, many of my peers from UBC born in HK have returned for work because there’s simply more opportunity here. Yes HK is crazily expensive; it’s rents are easily double those of Vancouver! However, I can actually afford to live here without squeezing by. I’m going to be able to save a lot of money, which I hope to use towards a property in Vancouver. Ironically, I plan to be another guy coming from Hong Kong buying your property and renting it out to you, even though I’m a white Canadian guy.
I love Vancouver and do not want to settle down anywhere else. I see the huge appeal of living there from the perspective of Hong Kongers and Mainland Chinese. However, there’s just far fewer opportunities to grow in Vancouver; combine that with high costs, and you’ve got a losing combination. It’s good to end your career in Vancouver, not start it. I really feel Canadian employers treat young employees like trash in the name of economics and wonder why we jump ship at the next opportunity that comes along.”
– twelvis commenting on a reddit thread ‘Some Vancouver workers have been priced right out of the country’, 22 Feb 2013 [hat-tip proteus]

“It was a chance conversation with a seasoned realtor that tipped me off to the whole bubble back in 2004.”

“It was a chance conversation with a seasoned realtor that tipped me off to the whole bubble back in 2004. When I met my wife she had just purchased a condo in Surrey for $135k. We moved into it and met a tough-as-nails older woman who had been a realtor for 30 years and lived in the building. She shared the history of the building with us. Units had originally sold for $170k but a leaky condo adventure had dropped the value down to $70k, many lost their homes but those that were left were holding out for the prices to return to $170k. I asked her how long that would take. She pondered it, referred back to her 30 years of experience and said. “Probably 10 years.”

Almost exactly one year later in mid 2005 she came to us to tell us she could get $160k for our unit if we wanted to sell and move to a larger unit. We took her up on it and bought a larger unit in the same building. We got an over ask offer of $164k and bought a bigger unit for $170k. A year later and I was now working in Burnaby, a crappy commute. The condo needed a new roof and we had an assessment of $5000 that we had to take HELOC to pay for. We got a call to check out a place in a co-op in Burnaby near my work. It was perfect for the family we wanted to start. When we returned from checking out the co-op there was a flyer under our door. Our friendly realtor had just sold a comparable unit to ours for $240k.

Our families told us we were nuts to sell and rent. I smelled a rat, this experienced realtor had predicted 10 years to appreciate from $135k to $170k. And two years later the value had skyrocketed to $240k. My sister explained that I didn’t understand because I didn’t have kids yet how important it was for us to have real estate holdings to leave them. I decided that when I did have kids, they would be better served having me home for the two hours I would have been commuting then having a condo in Surrey 50 years from now. We pulled the trigger, the realtor actually sold the place to the same people who had bought our previous unit and we are now renters in Burnaby.

I knew nothing about real estate when I met my wife, she had bought into the market with an inheritence and had a bit of trouble walking away from ownership. But strata drama had shown her that she didn’t really own much of anything, she couldn’t rent her place out, she couldn’t decorate the way she wanted, she could have the pets she wanted, it was really a lot like living in a co-op. Except your crazy neighbours are toying with a massive chunk of your equity when they make silly rules. (They tried to make the building a 55+ while we lived there).

But ultimately it was that chance conversation with the realtor when she genuinely predicted a slow, steady increase in value that paced with inflation that tipped me off to the anomaly that was this price increase. I watched it shoot up and I was not prepared to sit back and watch it drop back down, taking my windfall with it. My wife is glad we made the move too, now she tries in vain to explain to her friends and family that they are headed for financial ruin if they continue their real estate delusions. But we all know how that goes.”

– lexlimo at VREAA 27 Feb 2013 9:42am

Thanks for your story, and for all your other comments on the blog, lexlimo.
– vreaa

“He had friends who wanted to sell, but who ‘couldn’t afford to sell’. They had withdrawn their properties from the market.”

“I was talking to a young professional who rents in Vancouver. He said he had friends who had purchased in the last few years and, given the soft market, he expressed genuine concern – fear even – for their financial well-being. More interesting, he talked of people he knew who owned RE in Vancouver, who wanted to sell, but who he said “couldn’t afford to sell”. Consequently, they had withdrawn their properties from the market. He seemed to think this made sense, and he didn’t see how the market could possibly drop by enough to put them at risk, or to force them to sell.”
– from ‘westsidefrank’, by e-mail to VREAA, 25 Feb 2013

See: ‘The Myth of the Discretionary Seller‘ sidebar.
– vreaa

Housing Makes Up 20% Of Canadian GDP – “This heavy reliance is not healthy. We basically borrowed our way out of this recession. Now, it’s payback time.”

“If the city is any indication of what’s going on in the country, it’s over-reliant on its housing sector.” – Herbert Crockett, a retired World Health Organization executive who lives in France says of Toronto.

“We basically borrowed our way out of this recession. Now, it’s payback time. We will be in for a period of long, slow growth.” – Benjamin Tal, deputy chief economist at the investment-banking unit of Canadian Imperial Bank of Commerce.

“It did seem a little unusual to have every policy maker in Ottawa hectoring Canadians about their excessive debt levels and yet the economic incentive for the average Canadian was completely slanted to taking on debt and not saving. The realist in me would admit it was the only tool the Bank of Canada had. The reality was, they really could not lift interest rates.” – Douglas Porter, chief economist at Bank of Montreal.

“As an economist working for a Canadian bank, I can’t go into a client meeting and have someone not ask me about housing in Canada. For U.S. investors, they are still a little gun-shy about what happened in the U.S., and I think they worry the same fate will happen to Canada.” – Tom Porcelli, chief U.S. economist at RBC Capital Markets LLC, Royal Bank of Canada’s investment-banking unit, in New York.

Meantime, the share of GDP linked to housing, including construction and renovation, soared to more than 20 percent. A similar U.S. measure peaked at 18 percent in 2005. Canada’s share of construction jobs in total employment was 7.3 percent in January, above the 4.3 percent in the U.S.
“This heavy reliance is not healthy,” CIBC’s Tal says. “I expect to see some softening.”

– excerpts from ‘Canada Losing Debt Halo as Bull Market Housing Peaks With Carney’, Bloomberg, 26 Feb 2013 [hat-tip Nemesis]
—

As we have been saying here for years.
What percentage of Vancouver’s GDP is linked to housing?
– vreaa

‘CMHC seeking to hide foreclosure information from home buyers’ – “CMHC just told us that pricing will stay strong and now they want to keep information about foreclosure secret. Where there is smoke there is fire.”

“Canada Mortgage and Housing Corp. has been asking realtors for months to keep consumers in the dark about whether the properties it sells are part of a foreclosure, according to a document obtained by The Financial Post.
The move, said to be part of CMHC national policy, upset Quebec realtors who refused to play ball, worried about an ethical breach. …
Some real estate industry insiders wonder whether the Crown corporation is simply being prudent, not letting potential buyers know a property is part of a distressed sell so they can put in a low-ball bid.
Others question whether the Crown corporation is just getting things in order in case home prices collapse and they are forced to sell properties that are backed by government insurance. …
“Look at what is going on right now in financial institutions and everybody is ratcheting up their loan-loss provisions,” said Ben Rabidoux, a Canadian analyst for California-based Hanson Advisors, a market research firm whose clients are institutional investors. “Everybody expects loan losses to rise. I can’t imagine CMHC is in the dark on that. My suspicion is they want to limit any loss on that hits their books.”
By limiting the information on whether a property is part of foreclosure, the Crown corporation would potentially avoid a situation in which a buyer knows it has to sell. In the United States, foreclosed properties have sold at huge discounts.
“CMHC is trying to get the better price,” said Don Lawby, chief executive of Century 21 Canada, who had not heard of the new policy. “You know something is repossessed, you low-ball the offer. You know you are not dealing with a homeowner but an investor.”
– from ‘CMHC seeking to hide foreclosure information from home buyers’, Financial Post, 27 Feb 2013
[hat-tip Reader #4]

“If the price of a house is good or someone is putting a low ball price and the seller is ok with that…I call it the market. CMHC just told us that pricing will stay strong and now they want to keep information about foreclosure secret….When you have smoke…fire is not very far…” – ‘luckyluc’, commenting on the above article at the FP site
—

Is it within the CMHC mandate to take active measures to hide information from the public?
Aside from that, the need for deception is massively telling – the market is at risk from normal price discovery processes, and the CMHC obviously now sees that.
– vreaa

Realtor Tries To Sell Own Home But Can’t – “Buyers are very skeptical, very hesitant because they think prices may go down.”

Hoda Seraji is experiencing Vancouver’s housing slowdown firsthand. A real estate agent, she took her own family’s two- story house in Canada’s third-largest city off the market after failing to get a single bite for the C$2.39 million home overlooking the Pacific. Cutting the price for the five-bedroom, four-bathroom residence didn’t help.
“Buyers are very skeptical, very hesitant because they think prices may go down,” she says.
Seraji blames fading interest from foreign investors, especially in China. Changes to Canada’s mortgage rules designed to cool the market have accelerated the sales drop, she says.
– from ‘Canada Losing Debt Halo as Bull Market Housing Peaks With Carney’, Bloomberg, 26 Feb 2013 [hat-tip Nemesis]

Agreed, “buyers are hesitant because they anticipate prices are going to drop”.
The problem is not with the buyers, but with prices that are still very, very overinflated.
What was that “C$2.39 million home” selling for just ten years ago? Less than $500K, most likely.
Because of the very large speculative component to price in Vancouver, price drops will not draw in demand, but rather beget further drops.
– vreaa

Failing Westside SFH Flip

Before $200K Upgrade

After $200K Upgrade

3175 39TH AVE W, Vancouver Westside (Kerrisdale)
3,650 sqft SFH; built 2005; 50×130 lot

Listed 8 Feb 2012 Ask Price $2,799,000
Sold 14 Mar 2012 $2,528,000

Listed 23 Sep 2012 Ask Price $3,080,000
Price Change 13 Nov 2012 As Price $2,980,000
Price Change 25 Feb 2013 Ask Price $2,798,000

Latest promo blurb: “Owner spent over $200k to upgrade outside & inside, with City Permit.”
—

Of course, in Vancouver, people have only been buying properties for personal use. (/sarcasm).
This reno-flip is on the brink of being underwater, probably already there.
Imagine what’ll happen when buyers collectively realize that houses like this are worth about a million bucks and change, tops.
This is just one example that jumped out. View many other descending ask prices on VancouverPriceDrop. Check that site out if you haven’t yet seen it.
– vreaa

“For almost 20 years, I have had close friends who are realtors. In the past month, I have seen serious changes in behaviour indicative of desperation. Commissions are down 50%, and for those on the fringes, this is pretty much poverty.”

“I’ve been following this market for a long time. Also, for almost 20 years, I have had some close friends who are realtors (and did it in the years when real estate was just something that people needed to live in – – without all the BS hype).
In the past month, I have seen serious changes in behaviour indicative of desperation. There was also a quote that “Everyone in my office has had to take a second job to ensure steady cash flow.”
I don’t think we are here to gloat in the misery of others but with sales numbers like we have now, commissions are down 50% in the past 2 years and for those on the fringes, this is pretty much poverty. . .
Quick tidbit – – Attached is showing listings declines with some areas even failing to have rising inventory. SFH however is very slow with the high end of the market completely stopped . . . .”
– yvr2zrh at VCI 25 Feb 2013 10:36pm

Vancouver Reddit Boards – ‘Paid Shills In Our Midst?’ – “Does anybody else find there are too many real estate/property development posts on the /r/vancouver sub-reddit?”

“Does anybody else find there are too many real estate/property development posts on the /r/vancouver sub-reddit?
Moderators, and fellow /r/vancouver-ites: Can we consider banning/pruning the number of real estate submissions as a new rule? It’s rather frequent that I can come to /r/vancouver and see 4-5 posts on the page that certain individuals have posted.” – pfak at reddit.com 16

From the comment exchanges on that thread:

“I’d say the number of posts are in perfect proportion to the frequency Vancouver real estate comes up in conversation and the local media… “– [nutty buddy]
—

“The price of real estate in Vancouver is too high. This isn’t controversial, I don’t know why you are suggesting it is, everyone I know down here agrees about this, and some of my buddies overseas, the ones who are familiar with real estate/finance, agree completely.” – [MyFavouriteAxe]

“The fact that it’s subjectively “too high” might not be controversial, but this notion (that almost all of OP’s articles are pushing) that the housing market is about to crash any day now is a complete fabrication, and it’s one we’ve been hearing for at least a decade now.” – [Niyeaux]

“Obviously not everyone agrees the prices are too high, there are people buying houses for those prices, and there are others desperate to join them if the prices drop. Supply and demand my friend.” – [idspispopd]
—

“In a community as small, as easily accessible, and as geographically centralized as this one, it would be pretty surprising if there wasn’t at last a few paid shills in our midst. I’ve always assumed the aforementioned user /u/derpaderpe (formerly /u/proudbedwetter) is one of them.” – [Niyeaux]

“Paid by whom to sell what?” – [Smallpaul]

“Either the shitty “news” outlets who are peddling these crappy real estate articles, or someone with an interest in making people think the price of real estate in Vancouver is too high. I imagine the list of people who fit the latter description is quite lengthy.” – [Niyeaux]

“Oh, really? Like who exactly?
Agents want people to believe their property is valuable, worth it, and selling well. Developers want to charge as much as possible and make everyone think demand is high. Construction people want as much development as possible. Governments want high assessments so they can charge owners as much tax as possible. Banks want to collect as much interest as they can get on long-term mortgages. Owners want reassurance that their property isn’t losing value…
So, I guess you’re referring to mid to low-income renters and young people who don’t work in a field related to real estate. Yeah, they’ve got a lot of clout. Damn propagandists.” – [FellSwoop]

“Or, y’know, any prospective investor who is waiting for the market to crash so they can pick properties up for cheap.” – [Niyeaux]
—

Real Estate infiltrates every discussion about Vancouver, so it certainly won’t surprise any of us here that the subject comes up frequently on the Vancouver reddit boards.
We don’t know whether there actually are any “paid shills” on Vancouver sites (other than the recently publicized OlympicVillage/VancouverIsAwesome ‘arrangement’, of course).
The idea that there are “prospective investor[s] who [are] waiting for the market to crash so they can pick properties up for cheap” is relatively new to the Vancouver RE discussion. It’s an interesting idea to ponder. These ‘vultures’ would have to be people who consider Vancouver RE to currently be appropriately priced, and who are hoping for ‘bargains’ at prices lower than this, such that when the properties recovered what they see as fair price levels, they would profit. We don’t ourselves know any prospective buyers of that stripe; we would certainly be interested to hear about any. All the prospective buyers we know (and there aren’t many of them) see prices as currently being far above fundamental values, and simply have a desire to buy themselves a stable shelter arrangement at a vaguely reasonable price.
– vreaa

High Paid Vancouver Workers Choosing To Live In The U.S. – “The cost of housing is four to five times what they are accustomed to; He did not want to move because he can have his $400,000 mansion in the U.S., versus getting a little home for $1-million in Vancouver; There are other really pretty places out there.”

Eric Murray is chief executive officer of growing clean-tech company Tantalus Systems, based in Burnaby, B.C. Mr. Murray, however, lives in Raleigh, N.C., where he owns a 3,500-square-foot house and puts his three kids through private school.

He is a Canadian, with several family members in Vancouver. But when his career trajectory sent him to Raleigh, he decided to stay put. Mr. Murray is one of a growing number of workers in the Lower Mainland who live in the U.S. You could call them cross-border jobbers.

“My father’s entire family is in Vancouver, so for our relationship, it would be great if I lived there,” he says in a phone interview. “But for me to pick up and move from Raleigh, where I have a fully wooded lot, and a very nice home, and I can send my kids to private school, this sort of stuff – to do that in Vancouver, I just can’t swing it economically. When we looked at this whole thing, we knew we would have to compromise on housing.

“Absolutely, I would live in Vancouver if I could afford it.”

Technology is the third-largest contributor to B.C.’s gross domestic product, says Bill Tam, president of the B.C. Technology Industry Association. He says there is demand for about 4,000 more employees in the industry, and the majority of qualified people come from the U.S.

“Especially in the Vancouver area, technology has been one of the faster growing industries,” he says. “So when companies have had to expand and recruit managers to come here from the U.S., some have relocated to places like Blaine, Wash., close enough to commute on a daily basis. That’s the level of creativity they’ve had to resort to.”

Others, he says, fly in from more distant U.S. locations, like Mr. Murray. Mr. Murray used to fly into Vancouver every other week. These days, he’s flying in every third week.

“When they come across and recognize the cost of housing is four to five times what they are accustomed to, they end up being commuters,” says Mr. Tam.

Sierra Wireless CEO Jason Cohenour, who was travelling and couldn’t be reached for comment, works in Burnaby and lives in the U.S. Tom Ligocki, CEO of Richmond-based Clevest, says he has several employees who live in a golf course community at Semiahmoo Resort, near Blaine. One of his engineers, Jeremy Westbrook, commutes from his home near Blaine to work in Richmond. It takes them about 30 to 40 minutes to make the drive.

“None of the folks in the U.S. want to move to Vancouver,” he says. “The simple example that I heard from one gentleman is that he did not want to move because he can have his $400,000 mansion in the U.S., versus getting a little home for $1-million in Vancouver.” …

“There’s no point in even talking about the Vancouver market. We are just talking to them about directly moving to the Semiahmoo resort,” he says, on the phone from a conference in New Orleans. “If you can’t bring them to Vancouver, that’s the only option we have.

“And they do certainly make very good wages,” he adds. “These are high-end experts that we are hiring.

“But all these folks are used to living in a house. They are used to American comforts, and they are well paid, and they can afford to have a nice luxury home wherever in the U.S.”
…

“I get into this discussion all the time with guys. Vancouver is great. The mountains and ocean are super. I get that. I would love to live there. I have a lot of family there. But I don’t see how the economics would work for a young person trying to do both of those things, unless they had a similar opportunity in another really pretty place.

“And I have been in a bunch of different countries and there are other really pretty places out there.”

– from ‘Some Vancouver workers have been priced right out of the country’, Kerry Gold, Globe and Mail, 22 Feb 2013 [hat-tip Aldus Huxtable]
—

Smart business people know: Vancouver RE is woefully overpriced.
– vreaa

“Where in the world would you pay $888,000 to live in this beauty?”

242 E 48th Ave, East Vancouver
2619 sqft [really? -ed] Old-timer SFH, 33×140 lot
For Sale: Ask price $888,000
MLS®: V988743. Blurb: ‘Amazing property including legal basement suite. Some updating to electrical, and plumbing. Over 2600 sq ft of living space. Some hardwood floors, wood burning fireplace, newer deck, garage, 9 bedrooms [surely not! -ed.], 5 baths on 3 levels. ***close to all amenities and all levels of school including Langara College. All these on a great southern exposed, oversized lot. Well Priced,ASSESSED VALUE $865K.GREAT INVESTMENT WITH REVENUE POTENTIAL****NEEDS A LITTLE TLC’

Hat-tip to ‘Pretzels…thirsty’ for popping this example up in a recent thread and who added: “I think there should be an open web survey for this.
“Where in the world would you pay $888,000 to live in this beauty?”
—

This entire house looks like a bad basement.
One can only imagine the threat to one’s morale if you ended up an occupant of one of those 9 bedrooms.
– vreaa

Realtor Stories – “A close friend of our family has been a Westside realtor for nearly 20 years. A few weeks ago, he suddenly asked if we knew anyone who might be interested in his $2 million listing. Never before has he done this.”

“A close friend of our family has been a Westside realtor for nearly 20 years. A few weeks ago, while talking about a completely unrelated matter, he suddenly asked if we knew anyone who might be interested in his $2 million listing. Never before in 20 years has he tried to drum up business from us. We know a total of zero people with a spare $2 million, so this was completely ridiculous and seemed rather telling.”
– Sheesh at VREAA 19 Feb 2013 11:16am

“A friend of mine 3 years ago quit a well paying full-time job to dabble in RE. When the slowdown started about a year ago, she was lucky to get her old job back.”
– Real Estate Tsunami at VREAA 19 Feb 2013 9:25am

“My land-lady who is a very good friend of [a Vancouver realtor] tells me that there are no buyers coming – she says market is very bad… very obvious to anyone who actually uses their brain… but quite an admission from someone who has been a part of this giant scam.”
– vancouverbubbleman at VREAA 14 Feb 2013 3:30pm

South China Morning Post Headlines MAC Marketing Deceit – “Bogus Buyers”; “Scam”; “Teetering Market”; “Steadily Falling Prices”.

Supposed homebuyers Chris and Amanda Lee were exposed as employees of MAC Marketing Solutions in Vancouver [image and caption accompanying the SCMP article]

“A senior executive at a Vancouver marketing firm was forced to resign after employees of the company were caught posing as the daughters of rich Chinese property buyers in interviews with TV reporters.
The deception was intended to create the impression that Chinese buyers were still queuing up to buy into Vancouver’s teetering real estate market, which has long been fuelled by money from China and is now rated as the second least-affordable city in the world, behind Hong Kong, according to the Demographia consultancy.”
…
“The scandal erupted after a series of news reports this month, sourced to MAC Marketing, suggested that an influx of Chinese buyers would give the Vancouver property market a boost over the Lunar New Year period. That would have been in contrast to statistics from the local real estate board showing that prices have been steadily falling in Vancouver for the past eight months.”
…
“TV news crews at an open house for the new Maddox apartments in downtown Vancouver on February 9 were introduced to two buyers supposedly from China to support the notion of a Lunar New Year boost, who identified themselves as sisters Chris and Amanda Lee. In an interview with CTV, Chris Lee said: “I’m from China, and that is my sister, Amanda. So, we are looking for a place together.”
She told the reporter their parents were visiting Vancouver for Lunar New Year and were bankrolling the sisters’ purchase of an apartment. “So, if we like this place, we have to tell them and they make the decision. Yes, really, Chinese people like to buy at this time [Lunar New Year].”
A similar story was carried by CBC, featuring Chinese house hunters Chris and Amanda Lee.
Two days earlier, a story predicting a Lunar New Year boost in property sales was carried by The Vancouver Sun newspaper, quoting McNeill.
However, an anonymous local real estate blogger known as the Rainforest Whisperer last week questioned whether the sisters were authentic Chinese buyers, after another internet posting showed that an “Amanda Lee” worked for MAC on the Maddox project.”
…
“MAC was eventually forced to admit that both the “Lee sisters” were its employees, and that they weren’t even sisters. MAC hasn’t revealed the true identity of “Chris Lee”.
“We regret we did not do a better job at ensuring full transparency with those interviewed and apologise for any misunderstanding this may have caused,” MAC said last week.
McNeill told the newspaper : “I don’t know if it was an overzealous employee or if this happened in a formalised way.”
In announcing the resignation on Wednesday, McNeill refused to reveal the identity of the executive who quit.
“McNeill owes an explanation to the media [whom MAC duped], to the broader real estate community [whose reputation MAC has irrevocably damaged], and to the general public [the ultimate targets of this fraud],” the Rainforest Whisperer wrote.”
…
“The average price of a detached house in the core district of Vancouver West topped out at C$2.25 million (HK$17.13 million) last May. It has since fallen by more than 11 per cent.”
…
– from ‘Bogus buyers exposed in scam to boost property market in Vancouver’, South China Morning Post, 22 Feb 2013 [hat tip to numerous readers who alerted us to this via comments or e-mails]

The SCMP article carries some big messages, regardless of veracity:
1. The Vancouver RE market is falling.
2. Sellers are desperate enough to attempt subterfuge.
3. Buyer beware (moreso than usual).
This fiasco is turning out to be a spectacular back-fire for MAC Marketing and will quite probably have deleterious effects on the entire Vancouver RE industry.
Ongoing kudos to Whisperer for detecting the blatant deceit.
Regular readers know that we have always maintained that off-shore buyers of Vancouver RE, along with the vast majority of local buyers, have been buying on the premise of ever rising prices.
Now news is getting out that prices are falling.
And the knowledge of the seller desperation implied by this marketing deceit could have a more profound negative effect on buyer sentiment than any of us had initially guessed.
Do you see why we maintain that falling prices will beget falling prices?
– vreaa

Original story covered here:
CTV TV News Featured ‘Condo Buyers’ Actually Marketers Of Very Same Condos!
VREAA 13 Feb 2013

Crazy Rubs Off – “At that time, strangely, I recognized this was expensive, but did not consider it absurd. My expectations had been subconsciously adjusted to account for the fantastic/abnormal circumstances.”

“Just started reading your blog, after a brief foray into the 1-bedroom condo market.
I’m 28, a professional, and earn a high 5 figure salary. I moved to the city 3 years ago.
My anecdote is viewing condos on Fraser, considerably south of broadway in a new building. The building is nice but the street and surrounding area looks awful, particularly at night. Grimy, damp, rundown. Nondescript small business with algae growing on vinyl awnings. Saw a series of small single bedrooms (350k) and one slightly larger single bedroom (375k). At that time, strangely, I recognized this was expensive, but not absurd. My expectations had been subconsciously adjusted to account for otherwise fantastic/ abnormal circumstances. Crazy rubs off.
I started reading more and I havn’t looked at ‘property’ since. I don’t intend to buy in this city at anywhere close to current asking price. I’ll move before I do. That’s not said in a righteous or defensive way, its just true. Two weeks after the viewing I was contacted by the real estate agent with an adjusted price list. 350k was reduced to ~340k, 375k was reduced to 350k.”
– Poorprofessional, via e-mail to VREAA, 21 Feb 2013

I have no doubt that we have all been ‘conditioned’ by the absurd prices.
Even the most ardent and insightful bear has been desensitized to the actual meaning of the large figures.
How long does it take a Canadian to save $400K?
– vreaa

“Just came back from Miami. Quite shocked when I saw ok-looking houses go for $150K-$300K. I used to be the kind of guy who would not stop talking about BPOE, but my mindset has definitely changed recently.”

“Just came back from Miami, Florida, I was quite shocked when I saw ok-looking houses in Coral Gables that resembled what you see Commercial Dr to go for $150K-$300K. It’s 30 C degrees in February, city is not as nearly congested as Vancovuer is (hello North Shore), and in all honesty, there were much less signs of homelessness and poverty that you’ll see in your average lower mainland neighbourhood. … I used to be the kind of guy who would not stop talking about BPOE, but my mindset has definitely changed recently…”
– Knight at VREAA 22 Feb 2013 9:02am

Thanks, Knight, for the story. If you like, tell us more about the mindset change.
Why should it change now? First time in Miami? Traveling changed your perspective? Economic comparisons?
Or something changing for you here in Vancouver? Has the stalling market influenced you?
– vreaa

Home Inspector Oversight – “It’s been a nightmare, like I wish I’d never set foot in this house. I just wanted a place to live.”

“Buyers like Lindsay Denton, a 39-year-old single mother, are finding out the hard way they have little recourse if they believe a home inspector misses an obvious, visible defect. Complaints to the inspectors’ association might cost an inspector the loss of his or her license for a week, but financial settlements are only awarded through the courts.
Denton was battling breast cancer when she bought a $750,000 home in East Vancouver after an inspector’s report found no structural defects.
“It’s been a nightmare, like I wish I’d never set foot in this house. I just wanted a place to live,” Denton said.
“It doesn’t mean anything that they have a license or that they have errors and omissions insurance.”
Denton has filed a lawsuit against inspector Christopher Stockdale, who used to be the president of the Canadian Association of Home and Property Inspectors of B.C.
In her notice of civil claim, she alleges Stockdale failed to follow the standard practices of his association.
Denton claims he missed the fact that her home was structurally unsound, with extensive water damage, a hole in the roof, asbestos in the air ducts, and visibly rotten sill plates and posts.
She also claims Stockdale examined her one-storey roof with binoculars instead of climbing up with a ladder and failed to carry a tool to prod any potentially rotten wood.
Denton said she discovered some rot in the structure after the tenants in her basement suite moved out.
“I went downstairs to paint and I touched the wall and it was wet and soft and the wood on top of the foundation was rotten,” she said. “It was crumbling away.”
The crumbling wood Denton refers to is the sill plate, which sits underneath the posts that hold up the structure. She said the inspector should have seen rotten posts next to the furnace he inspected.
Inspections ‘do not constitute a guarantee’
In her claim, Denton says Stockdale of Home Sweet Home Inspections returned to her house, looked at the problems and offered to refund her the $565 inspection fee.
She claims she told Stockdale he also should have seen rot on the side of her house.
“I’ve borrowed $40,000 and I’ve spent more, and I’m looking for another $100,000 to fix my suite because it’s been 18 months without being rented.”
Denton says she’s struggling to make her mortgage payments and is waiting for another inspector’s report to assess the defects allegedly missed in her home, a report which will go before a judge in her civil case.
…
It’s almost impossible for homeowners to get compensation if something is missed during a home inspection, despite new regulations introduced by the B.C. government in 2009 requiring all home inspectors to be licenced and insured.”
– from ‘Buyers left with big bills when home inspectors miss defects’, CBC News, 21 Feb 2013[hat-tip 4SliceofCheese]
…

During a speculative mania, construction and inspection standards drop, as the abnormal pace of price gains paper over shoddy work. People are forgiving of all sorts of deficits as long as they know they are accumulating equity at a rapid pace. When the tide goes out, they look for people to blame. Ironically, that often leads to standards being tightened at the very time when such measures are least needed.
As an aside: If you “just want a place to live”, why buy a house where you need to rent out your basement to make the mortgage payments?
– vreaa

New High – “Inventory is now at the highest point it has been in the last 8 years for this time of year.”

“Inventory is now at the highest point it has been in the last 8 years for this time of year.”
– chart and observation care of b5baxter at vancouverpeak.com 21 Feb 2013, created with numbers from PaulB.

West Side Property Example – Resold Feb 2013 At 9% Below 2011 Sale Price

“Just though I would pass along this info as I had the history of the
property at 2662 W KING EDWARD AV because I was watching it:

Sold May 2002 – $495,700 (5 days on market, $27K over ask)
Sold Nov 2009 – $1,230,000 (2 days on market, $41K over ask)
Sold May 2011 – $1,810,000 (25 days on market, $8K under ask)

Oct 2011
New Listing – $2,100,000

July 23, 2012
Price Reduced! – $1,999,000

Listing expired

September 19, 2012
New Listing – $1,830,000

Listing expired

February 18, 2013
New Listing – $1,830,000

Sold Feb 2013 – $1,650,000 (17 months on market, $450K under ask)”

– Many thanks to ‘NSR’ who sent this along by e-mail to VREAA 21 Feb 2013

If this was a flip, and there is a high chance of that given that it was bought in May 2011 and put back on the market in Oct 2011, then the loss is $160K plus transfer/commission costs plus carrying costs.
– vreaa

“Sitting at YVR waiting for my flight to Calgary tonight. Had a pleasant ride with a taxi to the Nanaimo airport with a driver who has sold real estate in the Nanaimo/Parksville area for 29 years. This is the 3rd downturn in his career and the first time he has had to find another income stream. “

“Sitting at YVR waiting for my flight to Calgary tonight. Had a pleasant ride with a taxi to the Nanaimo airport with a driver who tells me that he has sold real estate in the Nanaimo/Parksville area for 29 years.
He is driving cab to supplement his income. Says he had plans to retire and bought a house 5 years ago on one of the islands. Ready to retire and move in and he ends up with his granddaughter on his doorstep 4 years ago. She is now 14 with no sign of leaving until she graduates. Gotta take care of family, he says, but I miss my island property which he gets to once a month without his wife who hasn’t quite accepted their present personal financial state.
He says this is the 3rd downturn in his career and the first time he has had to find another income stream. Says he’s not sure when this slide will end….. here’s my card he says, just in case you decide to buy anytime in the future.”
– Anonymous at whispersfromtheedgeoftherainforest.blogspot.ca at 2:34am [hat-tip Whisperer]

RE Mentions In Popular Culture – Realtor Wins Canucks 50/50 Draw – “The last quarter of real estate was the toughest in 24 years, there were periods where we spent more than we made.”

“Phil Moore was in the stands on October 9, 2008, and when Candice, joined by Roberto Luongo and Alex Burrows, presented the Bourdon family with Luc’s jersey, he came up with a plan.
When – not if – but when I win the Canucks For Kids Fund 50/50, I’ll give back.
“I just knew I was going to win sooner or later,” said Moore, a real estate agent and Canucks season ticket holder. “I visualized it over and over again, winning and handing out this big cheque.
“If you’re in the shootout and you’re skating down the ice, you have to visualize your move and visualize scoring. If you visualize something over and over again, it just happens.”
And, wouldn’t you know it, it happened.”…
“The last quarter of real estate was the toughest in 24 years, there were periods where we spent more than we made,” explained Moore. “The majority of the winnings will go to pay bills, but it was a unanimous decision within the family that we didn’t want a vacation or anything, we’d rather give a chunk back to help out as much as possible.”
– from ‘Giver’s gain’, canucks.nhl.com, Derek Jory, 19 Feb 2013 [hat-tip rob]

Nice of him to give some back.
Interesting word from the trenches regarding market conditions.
Also, noteworthy for the magical thinking, something common to a good percentage of market participants.
– vreaa

Large Abandoned Richmond SFH Construction Site For Sale – “Assessed value is $2,300,000. Asking $1,888,888 for quick sale.”

“Ad posted in Richmond News Feb 15.
10111 Sidaway Road, Richmond
4 Acre Estate Property, located in area of multi million dollar mansions and is adjacent to Mylora Golf Course.
The property was under construction in 2011 but construction was stopped.
House plans currently include a permit to build a 16,000 square foot house, but buyer can change the plans and build on the Engineer approved foundation that is on site.
Value of foundation is in excess of $300,000 and the assessed value of the property is $2,300,000.
Asking firm price of $1,888,888 for quick sale.
Call 604-abc-defgh.”
– posted by ‘Real Estate Tsunami’ at VREAA 18 Feb 2013 7:41pm

Filed under ‘Misallocation of Resources’; the central tragedy of a speculative mania.
– vreaa

Peter Ladner – “While sphincters are tightening in some parts of town over a softening in the real estate market, a lot of people are praying for prices to come down. Housing prices are around 10 times median income. Five times is “severely unaffordable”.”

“While sphincters are tightening in some parts of town over a softening in the real estate market, a lot of people are praying for prices to come down.
They are not impressed that we consistently place in the top three in the world’s unaffordable housing race. They include young wannabe homeowners, of course, but also private and public employers desperate to attract out-of-town skilled workers and senior executives or to retain valuable workers who insist on owning their own homes. Because our housing prices are around 10 times median income (with five times being “severely unaffordable”), the potential newcomers stay away and the valuable workers move away.
Businesses suffer. Families suffer. The city suffers. Homeowner debt piles up to ridiculous heights. The Bank of Canada has the jitters.”
– from ‘Fiscal reality continues to elude Vancouver real estate market’, Peter Ladner, Business In Vancouver, 12 Feb 2013

Everything Peter Ladner says here is true.
A large part of the answer to Vancouver’s dilemma is for housing prices to return to about 5 times local incomes, and that will not occur via a real increase in incomes. It’ll resolve with a 50%-plus drop in RE prices, precisely the kind of outcome to the speculative mania that we are anticipating.
– vreaa

“Canadians shouldn’t count on home prices to be their main source of wealth gains. Real wealth is built through innovation, and hard work. Not through some magical asset inflation.”

“The correction underway in Canadian house prices is likely to persist for another two years, warns Bank of Canada Governor Mark Carney.
“We’ve seen the adjustment in the housing market. We think there’s a bit more to come over the next couple of years,” Mr. Carney told CTV’s Question Period in an interview broadcast Sunday.
Mr. Carney said rapidly rising prices experienced in Canada over the past decade are “certainly not normal” and Canadians shouldn’t count on home prices to be their main source of wealth gains.
“Real wealth is built through innovation, and it’s gained through hard work,” Mr. Carney explained in an interview taped before this weekend’s G20 finance ministers and central bankers meeting in Moscow. “It’s not through some magical asset inflation.” …
Ottawa has tightened mortgage rules several times since 2008 to cool the market. But interest rates still remain at rock-bottom levels, as do borrowing costs.
Mr. Carney said the pace of debt accumulation has slowed to about 3 per cent a year from 10 per cent.”
– from ‘More adjustment to come in home prices: Carney’, G&M, 17 Feb 2013

“We’ve previously felt tied to Vancouver because of my six-figure salary, but lately we decided that we might just move anyway. Given the cheaper housing elsewhere, it might pay to take a pay cut.”

“It’s nice to see prices finally dropping, but at this point my wife and I don’t give a rats. We’ve decided to keep renting and stay mobile regardless of further drops.
We’ve previously felt tied to Vancouver because of my six-figure salary, but lately we decided that we might just move anyway. Given the cheaper housing elsewhere, it might pay to take a pay cut and live somewhere where it doesn’t rain most of the time. It won’t happen for a year or two until we get all our ducks in order, but we’re no longer committed to living in a sub-arctic rainforest. Life’s short, money isn’t everything, and there’s better places to live.”
– betamax at greaterfool.ca 16 Feb 2013 5:43am

‘Vancouver Is Awesome’ “Community-Based Social-Venture” Blog Actually A Stealth Paid Promoter Of Olympic Village

Above from a 12 Feb 2013 post on the ‘Vancouver Is Awesome’ site

“Marketers of the in-receivership Olympic Village are paying the editor of well-known local culture webzine VancouverIsAwesome.com to blog about the joys of life in the village – but it does not say on the website that he is being paid to do so.
Rennie Marketing Systems awarded the deal after receiving a single pitch from VancouverIsAwesome.com editor Bob Kronbauer, who says feels like he won a contest to be paid to flog the Village in False Creek – much like the public contests held by Vancouver International Airport and Tourism Richmond to find paid bloggers to promote them.
“I was visiting the Village a lot as a resident of Mount Pleasant before we moved in and fell in love with it and wanted to share the stories of all the positive things that make it great,” Kronbauer said.
“Beyond the budget and all this stuff I really have no idea about as an average citizen, (I wanted) to sort of expose stories about what it’s like to actually live there.”
Kronbauer lives in a market rental unit at the $1.1 billion complex, marketed by Rennie Marketing Systems, but declined to disclose his rental rate. He began a $2,475 per-month, six-month contract in May 2012 that was renewed in November. The year-long gig is worth a total $29,700.
“Beyond this, beyond my contract to promote the Village, we’ll be staying there in our suite because we love it so much, that was the intention to move there,” Kronbauer said.”
– from ‘Life in the Village pays off for local webzine editor’, Bob Mackin, Business in Vancouver, 14 Feb 2013

Elsewhere in the same BIV edition, Glen Korstrom suggests this is part of a broader trend of media manipulation by the real estate industry:
“Such tactics seem to be part of a trend of real-estate marketers manipulating media perception to sell condos.
Business in Vancouver has learned that VancouverIsAwesome.com editor Bob Kronbauer is being paid by the in-receivership Village on False Creek, formerly the Olympic Village, to promote life in the village – even though nowhere on his website does it make it clear that he is being paid to do so.”

“Vancouver Is Awesome, and we are dedicated to everything that makes it that way.
A community-based social venture sharing positive stories of arts, culture, lifestyle, and everything awesome about Vancouver. No bad news.
If you want to read ugly, bad news about this beautiful city of ours, you’re going to have to look to traditional media and other blogs; V.I.A. promotes everything that makes our city awesome, from old to new and everything inbetween. We’re like the human interest piece on the news… only different.”
– vancouverisawesome.com
—

We’ve previously tried reading the V.I.A. blog, but each time we break out in a terrible rash and can’t continue.
Advertising is irritating enough when it’s clearly advertising; when it’s in a stealth ‘product-placement’ form, far more so. And the ‘trend’ of media manipulation by the Vancouver RE industry is something that has been going on for years, it’s only coming to light now because the current state of the market makes people ‘ripe’ for the realization.
For the record, we ourselves aren’t paid anything, by anybody, for anything we archive, post, or say on this blog; it’s a labour of love and morbid fascination. We actually pay a small fee to wordpress each year to keep ads off the blog.
When news is “bad”, we call it “bad”; when something is “ugly”, we call it “ugly”; and that’s precisely how the RE market here looks to us right now – ugly.
A grand spectacle is playing out in our town, and we’re keeping notes.
– vreaa

If you are interested in developing your own ideas about the truth of the Vancouver RE market, and whether it is ugly or otherwise, read as broadly as you can about the market. If you don’t already do so, make sure you also consider the opinions expressed in posts and discussion on the following sites:
Vancouver Condo Info
Whispers From The Village On The Edge Of The Rain Forest
Vancouver Price Drop
Vancouver RE And Then Some
Housing Analysis
The Economic Analyst
and, of course,
Vancouver Real Estate Anecdote Archive

Bring On The Soft Landing Predictions

“It looks, at this point, like it’s a soft landing. … The IMF said that Canadian homes are overpriced by 10%. … BMO Nesbitt Burns says that in each case after mortgage tightening it took about 7 months for the market to adjust. We’re now seven months in from Mr Flaherty’s latest move. Given 5 yr fixed mortgages below 3%, BMO says we shouldn’t be shocked if we find a floor here.”
– Michael Babad, journalist, Globe and Mail video commentary ‘Don’t be ‘shocked’ if home prices find floor again: BMO’, 15 Feb 2013

“We’ve seen the adjustment in the housing market. We think there’s a bit more to come over the next couple of years.” – Mark Carney, Governor of the BOC, quoted in G&M, 17 Feb 2013

“In a report last week, the International Monetary Fund estimated that Canadian home prices are overvalued by an average of 10 per cent and predicted an “adjustment” over the next five years.”
– from ‘More adjustment to come in home prices: Carney’, G&M, 17 Feb 2013

“The January reading suggests that the housing market may be stabilizing after the cool-down witnessed since tighter mortgage rules took effect in July 2012, writes TD’s Derek Burleton. According to the bank’s research, the impact of new mortgage insurance rules tends to wear out after six to nine months. Burleton expects this to be the case for the latest round of tightening as well, especially since a relatively healthy labour market and interest rates at historic lows should encourage home-buying.”
– from ‘Is the housing cool-down already over?’, Macleans, 15 Feb 2013

—
This commentator acknowledges uncertainty:

“Whether house prices fell a little in January, or a lot, sort of misses the point… the bigger issue here is how far this market will fall, and how long.” – David Berman, journalist, Globe and Mail video commentary ‘What’s ahead for the housing market?’, 17 Feb 2013

—

Regular readers know to anticipate cries of “it’s only a flesh wound” and premature ‘bottom calls’ from many quarters all the way through the coming price deflation.
After a run up of 200% to 300%, a 10% pullback is noise; a rounding error.
There is absolutely no way that the speculative mania in Vancouver housing will resolve itself with such a minor price pullback.
– vreaa

“My friends who are westside realtors are cutting spending budgets and dipping into savings now to keep things going.”

“My conversations with friends who are westside realtors over the past few months (I know a few – hey everyone wanted to be a RE agent for a while, it seems) [reveal that things] are not good (for them). Telling me they are cutting spending budgets and dipping into savings now to keep things going.”
– Girlbear at VCI 11 Feb 2013 2:51pm

Spot The Speculators #99 – ‘Canada Don’t Let Your Retirees Grow Up To Be Real Estate Cowboys’ – Alberta Couple Late 50’s; Net-worth $196K; RE Holdings $1,850K

“Alberta couple, Edward, 58, and Sue, 56, earn gross income of $247,200 per year from working in two great jobs — his in transportation management, hers in health care. Yet they are almost broke.
The problem is they are shelling out $47,514 per year just in interest charges on liabilities that amount to 6.7 times their annual pre-tax income. Their assets add up to $1.85-million, leaving them with a net worth of only $150,000 as the end of their careers comes into view.
The problem will get worse if not fixed, because they are not making a dent in the principal they owe. When interest rates rise, their debts will become ever more costly to carry. Unless they act, they will not be able to retire as planned. They may not even be able to avoid eventual insolvency. “Should we be selling off investments, some at a loss?” Edward asks. “We are working hard to keep our heads above water, but we feel that it is a losing battle. Our goal is to quit when I am 64. Question is: Can we do it with our heads above water?”
The numbers don’t look good: Their debt is about nine times their equity and their investment income is negative.”
– from ‘High-income couple has to deal with some real estate headaches’, Andrew Allentuck, Financial Post, 11 Feb 2013 [hat-tip kansai]

Breakdown of their assets and debt:

Assets (market value where applicable):
House: $950K
BC ‘income-generating’ property #1: $540K
BC ‘income-generating’ property #2: $240K
Arizona Condo: $120K
Total assets: $1.85M

Debt
House mortgage: $758K
BC property #1 mortgage: $446K
BC property #2 mortgage: $329K
Business Loan: $75K
CC Debt: $32.7K
Car loan: $13.2K
Total debt: $1.654M

Net-worth: $196K
RE holdings: $1,850K
Ratio of net-worth to RE: 1:9.4
—

By sensible estimates, one should hold no more than (90 minus your age)% of your net-worth in RE.
By that measure, this couple should have 33% or less of their net-worth in properties; the actual number for them is 944% (yes, not a typo – nine hundred and forty four percent).
If RE blinks, these guys are underwater. In fact, given the current market, they very likely are already underwater in that they’d probably have to drop prices by at least 10% to liquidate their holdings.
If prices drop by 30% or 40% or 50%, or even more, their retirement plans will be completely destroyed.
This is a more extreme example, but the fact remains that a very substantial percentage of Canadian ‘boomers’ are overdependent on the health of the RE market for their future financial health. And, like the couple in this example, they will likely be advised, or forced to the conclusion, that they have to lighten up their RE holdings.
– vreaa

Update – Westside Old Favourite Sells For Same Price As In Feb 2011

Here’s an update on a Westside SFH we’ve featured here before:

4411 W 11th; 4,696 sqft SFH; 63×121 lot (7,623 sqft; 0.175 acres)
(Old Timer; Backs onto alleyway behind 10th Avenue stores.)
Listed 9 Oct 2010 $2,980,000
Price change 6 Dec 2010 $2,890,000
Sold 15 Feb 2011 $2,830,000

Listed August 2012 with $3,180,000 ask price
Remained on market for rest of 2012, unsold

Relisted 24 Jan 2013 with $2,998,00 ask price
Sold 24 Jan 2013 $2,850,000

Anybody care to calculate carrying and transaction costs over the last 2 years?
We can’t verify this, but we are told that nobody has lived there over this period.
Will this property now be utilized as a residence, knocked down for a new build, or is it being purchased to sell again later at a hoped-for higher price?
– vreaa

—
This house was first featured at VREAA 6 Dec 2010 when we noted that, at an “Ask Price of $2,890,000”, “10% downpayment ($289K); 4% rate; 25yr amortization” would result in “Monthly mortgage payments: $13,681.79”
In a later post, 5 Jan 2010, we cited it as the kind of house that would sell for less than $1M in the coming trough.
This house was also featured representing our fair city in ‘Unashamed House Porn: Seattle Vs Vancouver’, VREAA, 11 Aug 2011.

No Bad Hair Jokes, Please – “A high-rise hotel and condo project on Vancouver’s West Georgia Street is being rebranded as the city’s first Trump tower.”

Sorry; impossible to resist…

“A high-rise hotel and condo project on Vancouver’s West Georgia Street is being rebranded as the city’s first Trump tower, CBC News has learned.
Developer Holborn Group is relaunching its Arthur Erickson inspired twisting tower under the Trump brand with condos priced around $1,600 a square foot.
When the project was originally launched before the global economic meltdown, the 60-storey tower, which will twist 45 degrees as it rises, was to feature a high-end Ritz-Carlton hotel on the lower floors.
Another 123 luxury condos were planned for the upper floors, priced between $2.5 million and $10 million, with the penthouse priced at $28 million.
But when the recession hit in 2008 the luxury market collapsed. The project was halted and early buyers were refunded their money.
The project was restarted in April 2012, with 290 condo units aimed at a lower price point, at the location on the 1100-block of West Georgia.”
– from ‘Trump Tower brand coming to Vancouver project’, CBC News, 15 Feb 2013 [hat-tip Nemesis]

Top rated comments on the CBC site:

“When overdevelopment has hit the point where the likes of Trump are drawn to town to bless us with their “brand”, you know we’re heading into the trash bin. It used to be such a classy city.” – JimBev [547 thumbs up; 27 thumbs down]

“How embarrassing.” – Michael.Wolf [492 thumbs up; 18 thumbs down]

“So according to this article, we are told that the Toronto development was a smashing success (sub-heading “Toronto success moving west”, article says “Trump International Hotel and Tower has put its stamp on that city”) and there is no reason why it won’t be just as successful here in Vancouver.
Yet, in the December 26, 2012 issue of the Financial Post, an article appeared titled “Trump Tower woes signal Toronto’s condo market ‘on thin ice’.”
One investor feels he’s been ripped off and sold something that was misrepresented. “We bought into the Trump name and what we were being told was a hot real estate market in Toronto for this kind of project,” [the man] said in an interview. “It turns out that the hotel had nothing to do with him and that it isn’t a good investment after all.”
Things are clearly not what they seem and the CBC should correct THIS article immediately. A little Googling would have gone a long way, instead you chose to be lazy and, clearly, parrot what the developer is telling you. Shame.” – Fox in a Hole [368 thumbs up; 8 thumbs down]
—

We’ll add the Trump Branding as another candidate for the Vancouver RE market’s ‘Jump The Shark’ moment. – vreaa

“J.J. Miller and his brother William made their fortunes in real estate, and built giant houses in East Vancouver in 1908. They then lost everything in the crash of 1913.”

“It’s a natural that the conversion of big old mansions into multiple-unit housing can boost density and protect our heritage in the process.
As one of Vancouver’s developers found out the hard way, one of the biggest sticking points is if the neighbourhood will allow it.
Developer James Evans and architect Timothy Ankenman, who are old friends, are also responsible for two recent conversions: one in the hotbed of community activism, Commercial Drive, and the other in the polar opposite prestigious hood that is Kerrisdale.
Anybody who’s lived around Commercial knows the Jeffs Residence at 1240 Salsbury Dr. It’s a hulking three-and-a-half-storey, 1907 house that’s provided rental housing to the area since the 1920s. It was built as both residence and doctor’s office for Dr. Thomas Jeffs and his wife Minnie and their kids. The popular doctor, also a city council alderman and police commissioner, moved out of the house shortly before he died in 1923. It may be considered an old working-class neighbourhood now, but in the early part of the 20th century the Commercial Drive area was a rich person’s enclave, and the Jeffs Residence was surrounded by many other Queen Anne Revival grand houses with turrets, pitched pyramid roofs and hipped dormers.
Mr. Evans lives about a block away, so he’d walk by the house all the time and think about restoring it. One day, he contacted the owner.
“We put together a deal and went through a rather painful approvals process, ended up buying the site, and here we are today,” says Mr. Evans, standing on the job site.
The painful process he is referring to is community reaction against the loss of rental stock.
“It’s a pretty reactionary neighbourhood with anything that smells like development, so here I am, getting launched in the middle of the thing,” he says, sounding dismayed at the memory. “A lot of people in the neighbourhood know who I am, and so I was walking around the neighbourhood with a bull’s-eye on my back over the course of the year I went through it.
“Loss of rental continues to be a sensitive issue,” he adds. “And I looked into trying to use this as rental and I figured the only way I could do it was to spend $1-million on the site, which would have bumped everybody’s rents by about 30 per cent, and that’s not affordable housing anymore.”
Instead, he and Mr. Ankenman went through the process of getting the house added to the heritage registry in exchange for density and other variances. The result is a seven-unit house comprised of mostly two-bedroom units, except for the top unit, which will be one bedroom, with an amazing view from the turret. The price starts at $400,000 for a 750-square-foot condo, and Mr. Evans says he’s already pre-sold three of the units. It’s about two months away from completion.”
…
I ask him if he would do the Jeffs Residence project over again, having gone through a year under the hot spotlight of contention. He pauses.
“This one is unique,” he finally says. “There’s only one of these in Vancouver. And I’ll be able to walk past this thing in 10 years and it will look great and continue to look great, and I will get some personal satisfaction out of that.
“Will I make any money out of it? I don’t know yet. Time will tell.”
– from ‘Vancouver developers of heritage properties convert homes and hearts’, Kerry Gold, Globe and Mail, 10 Feb 2013

Thanks for the link to the above article goes to regular reader and commenter Aldus Huxtable, who adds:
“I used to live right by this development and have watched it for some time.
It’s a fun story we can watch play out over the next few years.
Down the block is J. J. Miller’s Kurrajong, a heritage house [photo below].
It’s also really important to read the heritage waymarker [see below].
J.J. Miller and his brother William made their fortunes in real estate, and built this giant house on Salsbury in 1908. They then lost everything in the crash of 1913.”

Brent Toderian, Former COV Director Of Planning – “The competition between external demand and local demand is one of the reasons that barring a collapse and a crash, we are going to remain a very expensive city to own in.”

Question (woman at microphone): “I would like to hear your comments on limiting foreign ownership as it addresses local affordability.”
Brent Toderian [Brent Toderian, former Director of City Planning, COV]: “Great question.”
Other male panelist: “I call that the elephant in the room.”
Toderian: “I’m really glad you brought it up because I had it on my list. That is the elephant crushing the table. It’s not under it, it’s not on top of it. It’s something the Mayor’s Task Force on Housing Affordability dropped the ball on. The competition between external demand and local demand — that’s the nicest way I can put it — is one of the reasons that barring a collapse and a crash, we are going to remain a very expensive city to own in.”
– from exchange at a keynote panel discussion on “Living Affordably in Greater Vancouver” at BUILDEX (convention on designing, building and managing real estate), Vancouver Convention Centre, 13-14 Feb 2013. Quoted in comment by ‘urbanizta’ at their own blog ‘CityHallWatch’, 15 Feb 2013 at 12:01am

To say “barring a collapse and a crash, we are going to remain a very expensive city to own in” is a tautology; it’s like saying “if prices don’t go down, they will stay up”. In other words, to say this is to say nothing at all.
That aside, this exchange, and the article above the comment, does demonstrate how people are continuing to wrestle with the issue of ‘foreign ownership’ and how it may effect the Vancouver market. The discussion is hobbled by a number of things: lack of actual data, lack of political will to gather pertinent data, the mixing-up of local and foreign buyers, and a lack of understanding of what constitutes speculation. We anticipate that this issue will continue to be ineffectively churned over in many similar discussions while prices begin to collapse. Once the price collapse is convincingly underway, we won’t hear much about ‘foreign ownership’ for quite some time. Firstly, because foreign buyers, like local speculators, will disappear in a falling market; they are momentum players and hate any asset falling in price. Secondly, many locals will be dearly wishing for buyers – any buyer – to rescue them from their real estate holdings. Once prices have ground down into a trough (likely over years); once speculation has been wrung out of the market and the dust settles; – then there will likely be a meaningful place for civic discussion about the wisdom of regulation of foreign ownership.
Currently, the far, far larger ‘elephant in the room’ is a speculative mania that has yet to unwind.
– vreaa

“A friend of mine was looking to move up but he was not able to find a buyer.”

“Just came back from a Chinese New Year vacation in Vancouver. From folks I talked to, Vancouver’s market has been falling quick. My cousin’s house near Boundary Road was assessed at 1.1x million last year. Last month he received a reassessment from the city and it is now valued at 850k. A friend of mine was looking to move up but he was not able to find a buyer. The seller of the house my friend was looking to buy also delisted his property because he couldn’t find a buyer.”
– Reader 66 at greaterfool.ca 16 Feb 2013 12:06am

CRTC Chairman Likens Cell-Phone Company Profiteering To Banks Promoting Excessive Mortgage Debt – “It reminds me a lot of when the banks are trying to get people to over-pay for housing, above what their salaries determine.”

“Mr. Jean-Pierre Blais [Chairman of the Canadian Radio-television and Telecommunications Commission] also questioned whether Telus was fully apprising consumers of their eligibility for a discounted rate: “Do you push that? It is fine to say it is on the website. Are you actually encouraging people to keep their devices? … Why do I get the feeling that that’s not what you want customers to do, to actually go out and maybe invest and keep the device? It reminds me a lot of when the car salesman wanted everybody to be on long-term leasing or banks right now that are trying to get people to over pay for housing above what their salaries should be – and therefore all kinds of regulators have to come in to control that market so that people don’t buy above their means.”
– image and text from ‘CRTC grills Telus on pricing’, The Globe and Mail, 12 Feb 2013 [hat-tip CM]

Housing and related concepts have become go-to metaphors; yet more clear evidence of the speculative mania. Also noteworthy in that it appears to have become common knowledge that shady stuff goes on in mortgage financing and that borrowers are overextended.
Not quite completely an example of a ‘pop culture’ reference, but filed under our ‘RE References In Popular Culture‘ category nonetheless.
– vreaa

CTV TV News Featured ‘Condo Buyers’ Actually Marketers Of Very Same Condos!

Village Whisperer, over at ‘Whispers from the Village on the Edge of the Rainforest’ has unearthed a remarkable story of RE-marketing shenanigans.

Sisters Amanda (left) and Chris Lee (right) are scouting for condos before their parents visit from China to help them buy one. (CTV photo)

“The CTV-TV story [CTV 9 Feb 2013] featured two sisters who were looking to buy a condo at the Maddox condo development in downtown Vancouver: Chris and Amanda Lee.
Curiously MAC Marketing Solutions has an Administrative Assistant named Amanda Lee who not only works for MAC Marketing Solutions – but her current background says she’s attached to the Maddox Downtown condo development profiled in the CTV-TV story. ..
It wasn’t just CTV-BC that ran coverage of the MAC photo op. So did CBC-TV.”
– Whisperer, 13 Feb 2013

MAC Marketing Solutions, once caught out in this subterfuge, on Wednesday [13 Feb 2013] published an apology for the ‘misunderstanding’, in the form of a facebook page comment:

– facebook screencapture, posted by Whisperer, 13 Feb 2013

Whisperer has followed up with a review of the entire incident:
‘MAC Marketing admits they mislead CBC-TV, BC-CTV and all their viewers/customers’
Whispers from the Village on the Edge of the Rainforest, 14 Feb 2013
—

Clearly this represents far more than a ‘misunderstanding’, but the exposure of this deceit will barely cause a ripple. We have, sadly, come to expect ridiculously poor standards from local media regarding the coverage of the local RE market.
Well done, ‘Whisperer’, many thanks for the uncovering.
The episode is very reminiscent of similar deceit that we ourselves spotted in April 2012, where a ‘sales representative’ selling condos for Cam Good’s ‘The Key’ was presented by Global TV news as a ‘White Rock Investor’ and apparently interested buyer.
– vreaa
—

UPDATE 14 Feb 2013:

“MAC president Cam McNeill later confirmed that both women filmed in the segment are in fact MAC employees – and aren’t even sisters.
“I don’t have a full explanation of how things went down, I deeply regret for the fact that it didn’t make it more clear to you that the two women in the story were MAC employees,” McNeill told CTV News.”
– CTV News, 14 Feb 2013

Of course, as the two women in the story are MAC employees, and aren’t even sisters, the story itself doesn’t even exist!
– vreaa
—

UPDATE 15 Feb 2013:

The story of the deceit has now been covered by various ‘media outlets’:

‘Vancouver real-estate firm admits faking investor for TV news’
Sam Cooper, The Province, 14 Feb 2013

‘Real estate marketing firm apologizes after employees posed as apartment shoppers from China’
Tracy Sherlock, The Vancouver Sun, 15 Feb 2013

‘MAC Marketing Solutions Exposed For Fake Vancouver Real Estate Investors’
The Huffington Post B.C., 14 Feb 2013

‘Real estate firm apologizes after employees pose as buyers in news stories’
Andrea Woo, The Globe and Mail, 14 Feb 2013
excerpt:
“This is the latest in a number of questionable marketing tactics to be exposed within Metro Vancouver’s real estate community. During a media blitz announcing the Groupon-style sale of units at a Surrey condo development last year, one woman identified to a television news crew as an eager local investor was in fact a sales manager for Key Marketing, the company behind the scheme.
That same company has also taken groups of Chinese buyers on helicopter tours of Metro Vancouver properties, and at least one of those trips was believed to be misleading. Garth Turner, a business journalist and former politician, reported the Chinese buyers on a Feburary, 2011, trip – on which several media outlets were invited – were in fact local real-estate agents and brokers and the trip was meant to promote a new condo development. Cam Good, president of The Key, which includes Key Marketing, was a partner at MAC Marketing Solutions from 2004 to 2009, according to his LinkedIn page.
According to 2011 data by the Landcor Data Corporation, 75 per cent of those who purchased Metro Vancouver condos as investment properties are from Metro Vancouver. About 3 per cent are from the U.S. and 2 per cent are from other countries.
The Real Estate Council of B.C will be investigating the matter.”

‘Condo marketing company admits it duped media’
CTV British Columbia, 14 Feb 2013
excerpt:
“We’re trying to understand how this happened right now, and so I’m just trying my best to be open with you and just say that I’m very sorry that it happened,” said MAC president Cam McNeill.
McNeill maintained that the theme of the story – that Lower Mainland condo sites saw a spike in Chinese buyers around Lunar New Year – was completely true.
“I think that the ladies probably fit the profile of the story,” he said. “At the moment I don’t know whose idea that was; I don’t even know if they took it upon themselves to make that up.”

– image from CTV News

‘Real estate marketer admits to deceiving Vancouver reporters’
CBC News, 14 Feb 2013
excerpt from News clip:
“The owner of a Vancouver real estate marketing company admits his employees misled media over the weekend, including the CBC. … MACs owner admitted the story was entirely false. Two MAC Marketing workers presented themselves as sisters from China in Vancouver looking to buy a condo over the Lunar New Year.” …
“Some say that irreparable damage has been done to the real estate marketing industry, that future claims of sold out success stories will be viewed with scepticism.”
—

– Annotated image linked by Canadian Watchdog at greaterfool.ca 14 Feb 2013 10:32pm

Living In Van-Couver – “There’s no way they can afford a mortgage in Vancouver. I know one emergency first-responder who lived in his van to save enough money to afford a downpayment.”

Mathew Arthur, a Vancouver-based designer, checks email in his converted 1987 Dodge Ram Prospector.

“Mathew Arthur ditched a renovated laneway house he shared with his two brothers to live in a cheap 45-sq. foot 1987 Dodge Ram Prospector for the next year. He’s part of the growing “van dweller” community in Vancouver, where sky-high housing costs have forced many to get creative.
The contemporary nomadic community describes itself as an “island of misfits, a family, a tribe” on a popular Yahoo! forum. Some have embraced mobile living out of necessity, while others like Arthur are doing it to challenge themselves.
“I had a good design job, but in no way found engagement in my life,” Arthur told The Huffington Post B.C.
The 30-year-old wanted to challenge his notion of comfort by engineering a personalized living space that would test his creativity.
“I iterated through ideas about living in a tent, a shipping container or a commercial space with no household amenities until I arrived at the idea of living in a van,” said Arthur in a blog he’s keeping to document his year-long nomadic venture.
In early December, Arthur bought a $500 used van off Craigslist from a farmer in the B.C. Interior. With the help of his family, the vehicle was gutted, cleaned of mice feces and rebuilt with $400 worth of furniture, wiring and insulation.
In the small space, the van has four main areas: the kitchen and sink, work space, storage and bed. Without a personal toilet or shower, he has a daily excuse to go to yoga for exercise and to use the studio’s facilities.
The difference has shown in his savings: his monthly rent has reduced from $850 to a $200 parking fee plus $50 for hydro.
The tiny living space has forced Arthur to be mindful of his use of resources; he’s producing less garbage by preparing simple, fresh foods, and is using less water and electricity overall.
“The one thing that I took for granted was the freedom to move room to room,” said Arthur of living in a house. However, the shift from a 700-sq. foot house to a van parked in an East Vancouver alley has its quirks.
More people go through the alleyway than he anticipated. He’s befriended a middle-aged woman named Edie who periodically strolls through collecting bottles from the neighbourhood’s recycle bins. The occasional drunk lovers’ midnight fight is also easily audible through the van’s walls.”
– from ‘Mobile Living: Vancouver Van Dwellers’ Nomadic Lives’, Zi-Ann Lum, Huffington Post BC, 27 Jan 2013. All photos Mathew Arthur.

“They’re a merry band of vagabonds, living in their vehicles not so much because they can’t afford rent or a mortgage — though that’s part of it — but to cast off the chains of mainstream consumer living.
They’re van-dwellers and RV gypsies, free as birds and believing that your possessions in the end wind up possessing you.
“I had all of this stuff,” said 30-year-old Shawn Linley, sitting in his Econoline RV in North Vancouver. “Stuff, stuff, stuff, so much stuff.
“I don’t want a gas-powered weed-eater any more. I don’t want a huge flatscreen TV. I don’t need ’em.
“I’m never going to live in an apartment again or buy another house.”
Linley, like many vehicle-dwellers in B.C., is a journeyman tradesman. There are no official numbers of how many people live in their vehicles in Metro Vancouver, but it’s probably more than people think.
There are little mobile squatters’ camps all over the Lower Mainland — beside treed North Shore creeks, in industrial zones, beside East Van and Burnaby parks and SkyTrain stations, and along the beaches of Kitsilano and Point Grey
It is a sub-culture that is by definition discreet and shadowy, moving every so often to avoid drawing attention.
“Basically, they’re untraceable, people who are good at flying under the radar,” said Judy Graves, advocate for the homeless with the City of Vancouver.
For the most part they have jobs, she said, at least seasonally.
“And some people just do not believe in paying rent, and there’s no way they can afford a mortgage in Vancouver,” Graves said. “In fact, I know one emergency first-responder in Vancouver who lived in his van to save enough money to afford a downpayment.”
– from Living in a vehicle confers freedom from ‘stuff’, Gordon McIntyre, The Province, 11 Feb 2013 [hat-tip Aldus Huxtable]