Westside Couple Do An ‘Isaac Newton’ – “This afternoon we are putting in an offer on a 1979 boxy Vancouver Special in the same neighbourhood as where we sold. I can’t believe we are doing this, never did I think I would get caught in this frenzy of bidding wars. I’m scared and confused about our decision.”

Anna’s story as told by Garth Turner at greaterfool.ca 20 Apr 2011 –
“Two years ago Anna and her husband decided to sell their house on the west side of Vancouver. “At the time it seemed like a good idea,” she says, “because interest rates were forecast to rise and we were seeing a housing recovery here after the global recession. Our goal was sell high and buy low, anticipating a decline in the market.” The five-year-old house went for $1.2 million. They were ecstatic. That was $1.1 million more than they had the day before. But joy has turned into gut-wrenching, debilitating stress.
The same house today sells for $1.4 million. Meanwhile Anna, her husband and 15-month-old daughter have been living in a 500 square foot suite for $1,100 a month – with $1.2 million sitting in cash in the bank. Idling. Coiled. Waiting to pounce. In their minds only one asset class exists – a house.
“We are getting very claustrophobic. My husband is getting anxious and wants to re-enter the housing market.  I want to wait.  However I am also very scared because it seems the market keeps rising.  There seems to be no end in sight for increased prices.”
The ‘buy now, or buy never’ fear has etched their minds and strained their lives. The clear logic they felt before – sell high, buy low – has been replaced with an icy, pervasive terror that real estate will rise forever, and a confused couple with only $1.2 million in cash will be locked eternally in a basement suite. Deprived. Wanting.
Yesterday Anna wrote: “This afternoon we are putting in an offer on a 1979 boxy Vancouver Special listed for $1,328,000, in the same neighbourhood as where we sold. We already have the inspection lined up before the offers are presented.  I can’t believe we are doing this, never did I think I would get caught in this frenzy of bidding wars.  I’m scared and confused about our decision.  Not able to sleep, so here I am writing my thoughts to you.  I’m really confused what to do. And how long will we have to wait before the market comes down.  Any ideas?   We are already at a loss of $200,000,000 and can’t afford any bigger loss. Anna.”

Isaac Newton held shares early in the South Sea Company Bubble. In April 1720, seeing and understanding the nature of the bubble, he sold his £7,000 holding of shares. The bubble continued to inflate. Newton couldn’t resist, he bought back in, heavily. The bubble collapsed. When all was said and done, he had lost £20,000.
Anna and her husband made a wise decision two years ago. They are about to reverse that. They are buying out of fear of being ‘priced out forever’. They are, also, speculating on ongoing rising prices, even though most would not label their buying ‘speculative’.  -vreaa

Private Moment: Vancouver RE; World Events – “The Contrast Is Astonishing”

We’re sure ‘painted turtle’ [vancouvercondo.info 15 Mar 2011 9:46am] is not alone in having this kind of experience in recent days – “I am sitting in a coffee shop right now. The TV shows the nuclear troubles in Japan, stocks going down, and turmoil in the Middle East. Right below the TV set, 4 men talking real estate: the lower mainland will continue to see price increase, forever, an express train will be built to Squamish and Mission, I am going to buy a rental property there, etc… The contrast is astonishing.”

Animal Spirits, Primitive Superstitions – “Address numbers could hold key to fortune”

From CBC news article (online and video), 9 Mar 2011 [hat-tip Nemesis] –

“Leah Hendry now with how changing your house number, could help you get lucky. An increasing number of Vancouver homeowners are changing the numbers in their property addresses — to attract either good luck or Chinese homebuyers. For $676 you can apply to change your address.”

“The number four may seem innocuous, but for some cultures the word sounds similar to the word for death. “In Chinese, it is pronounced as sssss, and the Chinese [word for] death is zssss,” said Vancouver realtor Alec Zhang. “That is why people do not like the four.” A number ending in four is especially avoided, he said.”

Linda Wener had her home on the market for five weeks before it sold for well below her asking price. Her house number was 3364. “I just never even thought of it,” said Wener. “Somebody said it was ‘bad.’ I said, ‘It’s what it is.'”

The number could have been a factor in how the sale went. “If you keep this number, it may reduce your house value by two, three, even five per cent. If you can change the number to 3468 or 3466, that would be a perfect number for Chinese buyers. “

Vancouver realtor Wayne Hamill says spending $676 to change his house number was a good investment. “8s tend to get a little more attention than houses that don’t, they get a lot more attention than houses with 4s in them”

“We’ve had 8 (address change requests) just in the first week of March.” [That’s gotta be a good sign! -ed.]
—

Comment: We’ll call this what it is: Primitive superstition; magical thinking; false belief.
Just the kind of lunacy one would expect to make the news and alter behaviour when the herd is running crazy. Animal spirits are pulsing.
Next up: Exorcise your basement. -vreaa

Exquisite Malevolence – Vancouver RE Bull Uses ‘It’s A Wonderful Life’ Quotes To Torture Bears On Xmas Day

For at least five years, there has been fluctuating online animosity between Vancouver RE bulls and bears. The intensity ebbs and flows. High emotion is an inevitable component in a market as distorted as ours.
The Christmas Day post below, initiating a thread at at a largely bullish local blog, reaches such an exquisite point of malevolence that even other bulls admonish the poster.
Archived here to record the sentiment; it will also be referenced in the ongoing ‘Bull Hubris’ sidebar collection.

eyesthebye at RE Talks 25 Dec 2010 11:59pm –
“It’s A Wonderful Life
Thought these quotes were appropriate – given the holiday season and on topic for this site.
– “They had to wait and save their money before they even ought to think of a decent home. Wait! Wait for what? Until their children grow up and leave them? Until they’re so old and broken-down that they . . .”
– “Fifteen years ago, a half-dozen houses stuck here and there. There’s the old cemetery, squirrels, buttercups, daisies. Dozens of the prettiest little homes you ever saw. Ninety per cent owned by suckers who used to pay rent to you.”
– “You know, George, I feel that in a small way we are doing something important. Satisfying a fundamental urge. It’s deep in the race for a man to want his own roof and walls and fireplace…”
Hope you bears fulfill your fundamental urge for the coming year..
Merry Christmas and all the best for 2011.”
[image above was inserted into the post here]

—

geezer responds 26 Dec 2010 2:39am –
“Keep up the petty and inappropriate gloating ETB, you are going to look sooooo dumb if the market has a major correction. How will you feel if [the bears are] right? I am beginning to understand [their] hostility to bullish sentiment, it is probably caused by people like you.
What if your old house drops to $100k below your purchase price and mortgage rates hit 12%, then you discover you need a new roof or foundations, or both? Any one of those events is well within the bounds of possibility.
I’m a long term bull on Vancouver but I’ve lived through huge price reversals before, if you believe in karma you are begging for a collapse.”

Mainstream Crash Concern Rising – “A Softer Demand Environment For Housing Will Be Unleashed”

You drive over this patch of road daily, oblivious of the risk, until bingo!… who could have known? [Sinkhole photo from Vancouver Sun 12 Dec 2010]
I’m sure you all get the metaphor.
Well, a growing number in the mainstream are coming around to ‘getting it’, too.
The following extracts from articles in the G&M 12 Dec 2010; G&M 13 Dec 2010a

The ratio of household credit market debt-to-personal disposable income hit a record 148.1 per cent in the third quarter.
Bank of Canada Governor Mark Carney said last week that the growth of household debt, which has outpaced incomes, has deepened the vulnerability of the household sector.
The ratio of debt to assets is the second-highest in the G7.
“The trend is still that debt accumulation is faster than disposable income – and that is a worrisome trend over the long haul,” said Pascal Gauthier, senior economist at TD Bank Group. “We should look at this before we reach extreme levels, but the question is, what are extreme levels?”
78 per cent of respondents said they think they have the capacity to borrow even more.

Home ownership rate in Canada is at a record high of about 70 per cent – that’s a bit more than at the peak in the United States.
Home prices are also at record levels and the market is overvalued.

Economists Derek Holt and Gorica Djeric want the central bank chief to update markets on the outlook for housing:
“We still subscribe to the view that house prices face downside risks although the exact timing is uncertain.”
“In our view, low rates for a long time translate into concerns about transferring even greater volumes of homebuyers out of the future into the present.”
“[In future] a softer demand environment for housing will be unleashed.”

Interesting mix of euphemism and metaphor.
You don’t ‘unleash’ ‘softer demand’, you unleash the ‘hounds of hell’.
We’re not heading for a soft landing, we’re heading for a crash.
More are doing the math and realizing this. -vreaa

And from a second G&M article today (G&M 13 Dec 2010b) –
The Bank of Canada has kept borrowing rates low for longer than many economists had expected, offering a steady stream of fuel to the housing market and consumer spending. But in the process, Canadian debt levels have risen to troubling heights.
Gordon Nixon, chief executive officer of the Royal Bank of Canada, the country’s largest bank, said “We are clearly at the limit”; “You do not want significant growth in consumer debt.”
The average debt per household, including mortgage and credit card debt, hit a high this year of $96,100.
Fairfax Financial CEO Prem Watsa is among the influential voices pointing to the impact of soaring debt on the broader economy. Not only are Canadians overleveraged, primarily with mortgage debt, low interest rates have prompted speculative buying that is artificially inflating housing prices, he said.

In February, 2010, Finance Minister Jim Flaherty announced measures designed to make it harder for mortgage borrowers to get in over their head.
But those measures fell short of what some bankers wanted, namely a significant reduction in the maximum allowable amortization period of new mortgages or a substantial broad increase in down payments.
[ Yeah, as we wished for and predicted HERE. -vreaa]

[Probably Fabricated Market Timer Emotional Capitulation Anecdote] – “I sold my westside home for around $950K in 2004. Now I can’t afford to buy back. You have to believe the incredible pressure I get from my family to buy. They are ashamed of me. I am severely depressed I will never be able to buy what I once had again. The bulls are right, I am priced out for ever.”

.
Yes, the markets can be a bitch. Yes, it is demoralizing to get the general picture right yet get the timing wrong. And, yes, to be down a lot on paper can be excruciating, moreso when you’re playing with your own accommodation and are vilified by your family and community for doing so.
Markets can go from ditzy to completely-bigtime-insane before they sober up.
This poster [** see postscript] was correct, the Vancouver market was already overvalued in 2004. It hit the insanity jets in 2006 and then the free-money magic-blow-off after-burners in 2009. It was going to roll over and die in 2008 but star-dust bailed it out. This poster was mentally short in a mother of a virtual-short squeeze. We say ‘mentally’ and ‘virtual’ because he wasn’t really short, but he felt like he was short.
This poster’s current mind-frame represents a form of mental capitulation, but it doesn’t show real capitulation. Real capitulation would involve action, it would involve this poster buying back into the market for $1M+; a far lesser house for far more money. Thus a bear would become the last of the bulls. Students of the markets all know what happens when the last bear who is going to capitulate does so.
We still estimate that it is highly probable that individuals in this poster’s situation will have the opportunity, in future, to buy back the 2004-$940K westside property, now selling at far more than $1.5M, for 2004 prices or less. We also suspect that many prior market participants will be so gun-shy that they will not step up to the plate, and that, once falling, prices will fall well below 2004 levels. Yes, this may seem crazy to many at this point. Insanity is a common ingredient in Vancouver RE market moves. -vreaa

‘Chinese renter’ at vancouvercondo.info December 1st, 2010 at 5:41 pm – “I am Chinese Canadian, not recent immigrant, previous home owner, presently renting. Sold my westside home for around $950K in 2004 after it’s price had recovered from a drop in value in the late 90′s. I haven’t brought since. That same house is now worth minimum 1.5 million. Sure renting is not costing me as much than to buy right now but I loss an asset that is now worth 1.5 million by not re-buying back in 2004,2005 or even 2006.
I was influenced by bloggers like VHB and Garth [Turner] not to buy, thinking it was a bubble. I have lost all confidence Vancouver real estate is a bubble. Not on the westside where the Asians like to buy and the builders and flippers buy so they can resell to the Asians. My invested equity from sold house can no way keep up with price appreciation of Vancouver real estate, not with fixed income interest rates this low. Now just to buy back what I had I can’t afford. I can buy above 1 mil but not 1.5 and above.
The place I am renting now was just brought earlier this year as an investment by a Chinese family for 1.6 million. Sure my rent they receive doesn’t justify the cost per month to own on a monthly bases but it has appreciated $100K already. The landlord can easily sell and there will be a bidding war. Check out the dump V858532, 5069 Ash St, ask was 1.49 million. Sold in 7 day over asking 1.528 million. Why does the sold price have numbers 28 in it. One guess, you are right, Chinese buyers. it was open house Saturday Nov 18, multiple offers Monday, sold Wednesday Nov 22. The house is practically a tear down and that part of Ash St is awful, narrow and full of parked cars.
You have to believe the incredible pressure I get from my family to buy. They are ashamed of me. Seriously they don’t mention to friends and relatives I am renting. Asians, Chinese have to buy, it is low class to rent.
To rent a nicer home on the westside may cost less than buying but eviction is real. Happened three times already to us, not because we are bad renters, we are great renters. But twice after one year lease, landlords claim place back for own use. Not fun having to look for new place and moving after only one year, just settled in. Not fun especially with young children and changing of schools. So I do eventually want to buy for stability, we want to live in a house, not a build for rent condo. At the rate of Vancouver price appreciation I am severely depressed I will never be able to buy what I once had again. The bulls are right, I am priced out for ever.”

**postscript – We are fully aware that this poster may be a fabrication by a bull poster, an emotional sketch making a case against being bearish. The handle, the pat phrases, blaming the bear bloggers, etc.
Regardless, there are likely some individuals in this situation (although very few trade out of primary residences during a bubble expecting to buy back in cheaper later). And the numbers are in the right ballpark. So, we dealt with the anecdote as though it came from an actual individual. ‘Chinese renter’, if you’re reading this and you are an actual individual, apologies for the voiced whiff of doubt. Drop us an e-mail. And keep us informed of your future circumstances. -vreaa

Overextended Owners – “There are now three housewives commiserating about how they don’t know how much longer they can hold on.”

buffates at vancouvercondo.info 21 Sep 2010 10:24am – “A while ago [4 May 2010] I posted about my wife’s friend who confessed that she was crying every night about their home budget and how the house was killing them. Well, apparently she found some company. There are now three housewives commiserating about how they don’t know how much longer they can hold on. This is the case and two of those families have a tenant! Roof, furnace, plumbing, tenant vacancy. Any of these very common issues would bury these people. Did I mention they already have a line of credit and credit cards maxed out?”

National Media Reporter – “I bought a house a year ago here in Vancouver. Now I’m frightened… My down payment was about 40% of the purchase price, but still, that’s my investment savings at risk.”

Here’s an individual who is at risk of losing every penny of their investment savings in the coming bust. -vreaa

From Garth Turner at greaterfool.ca 17 Aug 2010 – After I finished a national media interview, I received an email from the reporter. Apparently he lives in Vancouver, a fact I did not know. Said he: “I was going to mention that I bought a house a year ago here in Vancouver. Now I’m frightened… My down payment was about 40% of the purchase price, but still, that’s my investment savings at risk… I hope it’s not too late to sell, if I start to think that way!”

“I got sucked in to an argument on RE. God, I’m so sick of even talking about it. This new homeowner was telling me that it never goes down, it’s never a bad time to buy etc…etc… He sounded like he was reading from a script.”

Vansanity at vancouvercondo.info 6 Jul 2010 7:10 am –

“I got sucked in to an argument on RE. God, I’m so sick of even talking about it. This dude was telling me that it never goes down, it’s never a bad time to buy etc…etc… He sounded like he was reading from a script. I’m not even making up the fact he said “everyone wants to live here”. There were more too. When I talked about interest rates and how they affect prices he said I was thinking too far ahead… WTF??? Unbelievable. It was okay to think 5 years down the road as long as I’m also factoring that prices will be higher, much higher, but not okay to think 5 years ahead about where interest rates are. It was mind boggling. Here’s what I discovered upon some reflection. This dude, a new homeowner, wanted me to buy a place so badly it was a bit disturbing. If I’m wasting my money renting, why does it concern him? It’s my money. The only reason I can think of is that he’s insecure about his new purchase.”

A Different Kind of ‘Bidding War’ – “Us sellers are sucking each other’s prices down in a bidding war of our own…a race to sell before the buyers go elsewhere.”

Jane, from Vancouver, as quoted by Garth Turner at greaterfool.ca 5 Jul 2010 –

“I did as you and the realtor suggested…reduced my price.  In order to be at the lowest price of all comparable condos in my neighborhood, I went from 498K to 439K.  That is matching the lowest of the condos, and beating all others.  Us sellers are sucking each other’s prices down in bidding war of our own…a race to sell before the buyers go elsewhere or wait any longer.  It’s just money, right?  How long is it going to take to make that back in those preferreds?!!!  The price was dropped this morning and presto – there were 4 requests for showings today.  Maybe we’ll get lucky and have a bidding war and recoup a few thousand that we dropped.  Maybe we’ll get lucky and simply be able to sell before having to drop the price any more.”

Asking Prices Dropping – April 11th, $2.14M; June 3rd, $1.98M; June 23rd, $1.85M

Inventory growth rate has slowed slightly, but price drops continue apace. -vreaa

MLS V822260, 4006 West 38th Ave, Southlands/Dunbar, 53 x 167 lot (8851 sqft), 2,016 sqft house (blurb implies knock-down).

Asking Price: April 11th, 2010 $2.14M; June 3rd, $1.98M; June 23rd, $1.85M. That’s about 15% drop in asking price over 10 weeks.

“At a party tonight a lady was cribbing about her neighbor who has panicked and put his condo on sale for 60K less than hers. “This is totally unacceptable, it is worth much more”

As prices drop, sellers discover that they’re not competing with buyers, they’re competing with all the other sellers. -vreaa

paulb fan at vancouvercondo.info 7 Jun 2010 8:52 pm –

“At a party tonight a lady was cribbing about her neighbor who has panicked and put his condo on sale for 60K less than hers. “This is totally unacceptable, it is worth much more” – was her exact remarks. She was upset at his stupidity.”

Buyers Getting The Upper Hand; ‘Lowballing’ Commences – “Home for sale $830,000; reduced recently to $790,000; offer given $710,000.”

Vansanity at vancouvercondo.info 2 Jun 2010 3:46 pm –

“Overheard a conversation at lunch. Buyer of a home “lowballing”. Here’s the figures: Home for sale $830,000 reduced recently to $790,000 offer given – $710,000. The buyer doesn’t think they’ll get it for that but figures for $750,000 might get it done. If so, that’s a 10% drop from the initial asking price. Timberrrrrr!”

“They said they were so happy they timed it just right, and they were so lucky to have found this place in the last minute, as they would no longer qualify for the mortgage as of this week. The place was a run down shack, with a dingy looking basement suite, they bought for $750,000.”

White Payer at vancouvercondo.info 22 Apr 2010 9:52 am –

“I saw a news bit on CBC couple of days ago (Monday [19 Apr 2010], when the new rules started) and they were showing a young couple in Vancouver (she was pregnant with their first child) who just made it getting “into the market” before the new mortgage kicked in. They said they were so happy they timed it just right, and they were so lucky to have found this place in the last minute, as they would no longer qualify for the mortgage as of this week. The place was a run down shack, with a dingy looking basement suite, they bought for $750,000. These people were genuinely happy and excited. They think they managed to “beat the system” or something.”

Buyer Panic – “It was pandemonium! A friend of my mother’s listed her small 3 bedroom rancher in Richmond last Thursday for $799K. The open house was Sunday, people lined up to get in. There were 12 offers and it went for $910K. One guy even offered the agent $25K “extra” in her pocket if she’d sell to him.”

McLovin at robchipman.net 12 Apr 2010 4:33 pm –

“Can someone say the market is stupid hot? If you ever need a speculative blow off top example here it is:
This story is absolutely true (no, I do not have the MLS number). It was a friend of my mother’s house. She listed it in Richmond Thursday for $799K for a 3 bedroom rancher (small).
The open house was Sunday they had people lined up to get in. There were 12 offers and it went for $910K. One guy even offered the agent $25K “extra” in her pocket if she’d sell to him. It was pandemonium there!
I must admit, even as a long term investor in real estate, I am stunned by this. This is going to end even worse than I thought. I wonder how the person who “won” the bidding war is going to feel in a year? Do people believe this sort of behaviour is normal? I can’t wait for the days like in the late 80’s where I was the only person who had made an offer since it was put on the market 103 days ago.”

“Dream House” Urgency; Overextended Buyers; Grow-op Jeopardy; Unaffordable Renos; Price:Rent Ratio 400:1 – All in a Single Anecdote

We are in agreement with oldtimer at VREAA 8 Apr 2010 9:22 am –

“Sometimes people are willing to ruin their lives on a whim. Case in point, a couple who were determined to buy their “dream house” before they were forty. They purchased the house next door to mine in Arbutus [Vancouver Westside] for $834,000 three and a half years ago [2006]. It was superficially updated but, as I told them, it had been a massive grow-op, plumbing removed, vents put in weird places, wiring screwed with. They checked with the police who verified the grow-op status but bought the place anyways. After spending over $100,000 to remediate (and that didn’t include a new kitchen) they finally went bust and the house was sold last summer for about $950,000. The new owner tried for three months to rent the place out and didn’t succeed until December (rent – $2,500). This is what I consider to be a sign of the insanity of Vancouver’s real estate market.”

“I just spent a weekend consoling my better half because I didn’t want to buy a foreclosed monster home on Musqueam land.”

ulsterman at vancouvercondo.info 3 Apr 2010 8:27 am –

“I just spent a weekend consoling my better half because I didn’t want to buy a foreclosed monster home on Musqueam land. Her best friend lives 2 minutes from the house and they are also on Musqueam land, hence the sudden desire to relocate – plus she hates renting.
The house was 268k and sold for 238k – abandoned.
I never actually visited the property. Lease about 12k and taxes 9k according to realtor site. It was 5700sqft with swimming pool etc. The lease, tax & mortgage was about $2600, same as I pay in rent. This was my partner’s argument – it’s the same as rent etc etc and we would have our “own place”, “build equity” etc etc.
Repair-wise it would have been a Froogle Scott on steriods -she has a father and step-father who are handymen so she had visions of them “doing the work for us.”
Obviously I dodged this bullet, but what do people think about the concept of buying on lease land if as my partner says, “we will never be able to afford our own house to live in otherwise and ALL my friends now own (please add in much wailing and gnashing of teeth that we are poor renters!).”

Fear and Ignorance in Vancouver – 34yr Old FTB Overpays For Condo; Inadvertently Becomes A Landlord – “It’s a learning process that’s so scary. No one can ever tell you what it’s going to be like. At least I’m in the market and I’m learning.”

Fear and ignorance can only drive a market for a finite amount of time. Over the next 5 years there will be a whole lotta learnin’ going on. -vreaa

This anecdote extracted from a Canadian Press story, ‘Homebuyers’ pain, mortgage brokers’ gain as tighter rules come into place’, by Derek Scott, 2 Apr 2010 –

“Buyer Leslie Urquhart said buying her first home was a horrifying ordeal. Urquhart, 34, began her six-month home shopping odyssey with one goal – to get into the market. But she quickly realized that was easier said than done. Increasing budgets, pressure from her realtor to commit to a place and finding a mortgage made her wonder what she had got herself into. Urquhart’s realtor urged her to use a broker, saying a broker could find a better interest rate than her bank. The broker did find a cheaper rate, but it was still too high for her to manage. Urquart was left somewhat cold by the experience with her broker. She said she was left in the uncomfortable position of putting her trust in someone she had only spoken with over the phone. “I never met with him, it was very impersonal,” she said. Although she eventually found a condo for $60,000 more than her original budget, she advised other first-timers to do their homework and prepare themselves for changes. “It’s a learning process that’s so scary,” she said. “No one can ever tell you what it’s going to be like.” In the end, Urquhart accomplished her goal of getting into the housing market, but she won’t be living in her new place as she had hoped. Instead, she will become a landlord, renting the place out while living in a basement suite at her parent’s house where rent is cheap. “At least I’m in the market and I’m learning,” she said.”

“I’ve been talking about selling my house for a couple of years in anticipation of the bubble bursting. Next week I’ll have it on the MLS. My timing is interesting. Yesterday had the feeling that it has definitely started. Perhaps I have missed the boat.”

This poster gives us the first taste of the opposite of the fear of being priced out forever, namely, the fear of missing out on profits by selling too late. -vreaa

Bailing in B.C. at greaterfool.ca 30 Mar 2010 10:11 am –

“I’ve been talking about selling my house for a couple of years in anticipation of the bubble bursting, finally about 3 weeks ago I started talking to a realtor and decluttering the house. Tomorrow I have a handyman coming over to do some exterior clean up. But I couldn’t wait. Yesterday afternoon I went outside and put a for sale by owner sign up. By next week I’ll have it on the MLS. My timing is interesting. Yesterday had the feeling that it has definitely started. Perhaps I have missed the boat. Oh well, hopefully there is still a couple of greater fools floating around. I’m just glad the house is paid off and I have a basement suite.”

Underwater At A Market Top?

poco at greaterfool.ca 18 Mar 2010 1:25 am –

“I spoke with a realtor friend and asked (jokingly) if any of the properties with downward price changes I had been noticing were underwater. He emailed me the following –

mls#v811945
bought sept 08–333.9k
listed oct 08–375k
down to 349k –now dropped to329k–underwater–duh

mls#v815120
bought nov 08–356.8k
listed12mar2010–367.999k
dropped 17 mar2010–366.995–desperate — no kidding

mls#v807996
bought may07–580k
listed feb 2010–605k
dropped feb 2010–595k
dropped again mar 2010–579.9k another underwater

There are more, many more, of similar properties bought before or during the downturn that are now underwater or close to it given realtor fees and mortgage penalties–if these owners don’t sell and sell quickly where are they going to be in a few months if the market is saturated with listings ( a quote from a realtors flyer i received in the mail) and everything slows down? And where are these owners 20 to 30% appreciation in the last year that all the real estate boards rant about. If these owners lose in a so called “hot” market, I’d be very fearful if I was planning to sell in the near future.”

Do buyers in a market show “urgency” at a top or a bottom?

Question: Do buyers in a market show “urgency” at a top or a bottom? -vreaa

Excerpts from ‘Canadians fret over mortgage rates, prices’, Globe and Mail, 24 Mar 2010 –

More Canadians are looking to enter the housing market ahead of higher interest rates and home prices that are expected to arrive later this year. [Huh? Wouldn’t increased interest rates put downward pressure on prices? Oh, Nevermind. -vreaa]

“There’s definitely a sense of urgency among home buyers,” said Lynne Kilpatrick, senior vice-president of personal banking at BMO.

71 per cent of current and future homeowners think house prices are too high. It also found about 33 per cent of respondents complained they have lost sleep due to the stress of trying to buy a new home.

“I have a young family and I seriously doubt there will be anything left for them. Boomers will drain the system. Homeowners will be trapped. I’ll keep my liquidity and mobility and get the hell out of here at the first whiff of serious trouble.”

Unfortunately, we share some of this poster’s concerns. -vreaa

rp at vancouvercondo.info 23 mar 2010 6:33 pm –

“The road to boomer wealth absolutely has been based on other peoples’ debt. They are in their years of maximum income and wealth, and they’re collectively putting the squeeze on younger generations. They’ll do it again as they retire and completely drain the system. I have a young family and I seriously doubt there will be anything for them. We are getting a nice preview from the US of what happens when governments have absolutely no money. They simply close schools, disband the police, etc. Meanwhile there are tons of administrators and what not who will or do make far more from their pensions than I can from working. I expect all resources to be devoted to the baby boomer generation and the median tax rate to approach 75% before it all simply collapses. The poor bastards who bought a house will be trapped. I’ll keep my liquidity and mobility and get the hell out of here at the first whiff of serious trouble.”

Wife Of Renting Realtor – “A Vancouver Special, 2 blocks west of MAIN STREET, and for for 1.5 million??!!! That’s plain laughable. If it sells I’ll shake my head and move to Tucson.”

Garth Turner, at his blog greaterfool.ca, headlined this anecdote in a 15 Mar 2010 post. It is of interest from many perspectives: the ‘it’s-beyond-crazy’ sentiment, the passing mention of value in US markets, and, not least of all, because it describes a renting realtor. -vreaa

“I am a new mom and I am obsessed with owning a house on the westside of Vancouver, where I grew up. My husband is a realtor (an ethical, good one, for the record, not a slimy semi-retarded liar like most of them out there). We did a search for anything under a million dollars from Dunbar (very west) to Fraser street (east side). There were SIX LISTINGS. 5 were total dumps and the 6th was a super cute cottage 2 blocks west of the east border (that would have been considered by my circles as ‘ghetto town’ about 4 years ago). I would say 100 people viewed it yesterday (and it had been open the day before as well so I’m sure it was just as many people then). It will definitely go for over asking, probably a multiple offer situation. I’m pretty good at predicting these things, it’s on for $848K…I’ll bet it goes for $915K…I’ll post later to say if I was right. Despite my stress and anxiety about getting ‘into’ the market, there was one listing that actually made me laugh. If you are from Vancouver you may know the term “Vancouver Special”. Vancouver Specials are homes that were built in the 70’s and 80’s and are cheaply built eye sores that are littered around Vancouver, mostly in the lower income neighbourhoods. Well, a “renovated” Vancouver Special went on the market last week for 1.5million dollars. They slapped some paint on it, put in a new kitchen, bathrooms and big deck on the back, but the house next door is the identical twin of the original house before reno’s and if you look at them side by side they have the exact same roofline, window placement, EVERYTHING but the paint. Sorry, you couldn’t pay me to live in a Vancouver Special, 2 blocks west of MAIN STREET, and for for 1.5 million??!!! That’s plain laughable. If it sells I’ll shake my head and move to Tucson. It’s really ridiculous. I can’t understand where people are getting the money for these down payments and monthly payments. They can’t all be that stupid, can they? I am stressing out about it so much. My brain tells me this is crazy, but my emotions are nagging at me that if we don’t ‘get in now’ we won’t get in at all. My husband isn’t stressed at all, he is very happy that we are renting and keeps telling me to be patient.”

The Trials Of Trying To Trade Your Vancouver Home For Profit

It is not easy to trade markets for profit, and even more difficult if you are trying to do that by trading the Vancouver RE market with your personal residence. If you make a bad trade in stocks, you lose money. If you make a bad trade with your home, you literally have to live with your error each and every day. In normal RE markets, people do not think of  their homes as potential trading vehicles, but in Vancouver we continue to live under very abnormal market conditions. The following story comes from someone who tried to profit by selling their Vancouver home during the drop from the summer 2008 peak. Essentially they were trading using a trailing stop: “when the market drops by ‘x’, I’ll get out”. They ended up being ‘whipsawed’, in that, almost immediately after their sale, the local RE markets turned around and rallied through 2009, purely (and with perverse irony) because of the free money brought in to rescue the world’s stock-markets. Now, with housing at a second peak (a likely ‘double top’), our protagonist is in the depths of remorse; they are very despondent about having traded out. Yet, note that their assessment still seems to be that the market is overheated. In vreaa’s opinion, if they simply hold steady with their renting, they will see properties like their original home drop back through the Jan 2009 trough and plummet down further. Their trade will end up being a profitable one, even though they will have been sorely tested by market volatility along the way. To realize their ultimate profit, they have to have courage to hold with their original conviction that housing in Vancouver is very overvalued and is set for a fall. And that conviction is tested when you are living in sub-optimal digs, with the reminders of your bad trade around you every day. Of course, the classic trading error in this situation is for ‘badkitty’ and her partner to panic and buy back into the market just in time for the second price descent, the ‘crash’ proper. Don’t do it, ‘badkitty’! -vreaa

This from badkitty at greaterfool.ca 12 Mar 2010 3:01 am, in response to someone wrestling with the owning or renting dilemma –

“We, sadly, listened to the contrarians in November 2008, sold our home in Vancouver when the market crashed and lost 30% of equity. That pathetically amounts to at least $300,000 of tax free money. We are renting right now and it sucks large. You want to make sure you are on the same page as [RE contrarians]. They make you feel like you are some sort of leper for wanting to nest and make a home for yourself – insisting that you are yuppie scum who have bought the lies of HGTV instead of recognizing that you just want what your parents wanted and their parents wanted..a home… They tell you to that you are a fool to want to live somewhere with a pulse like Toronto or Vancouver and you should be content with living in RR#5 Newfoundland or Jacksonville Florida for 1/100 of the price. Sorry guys, Life is too short to live in the burbs and the city comes with a price because everyone wants to live there (and the fact that eveyone wants to live there raises AND sustains prices). So, selling our house was the WORSE thing we ever did – once you are in the market, DO not leave it, hedge your bets if you must and move to a more affordable property in case things go south. Who cares if prices come down 20% when they already went up 30%? you need a place to live for heavens sake- real estate is cyclical it goes up, it goes down…follow history. However, the damage is done.. we know we screwed up with selling. However, I think we would be fools to buy in this sellers market..we have no choice but to wait for awhile…Like you, however, I just hope it is not the wrong choice. It is the supply/demand thing that speaks the most volumes for buying now – if there is no supply how can there be this monumental crash about to happen? A correction yes, but bollocks to a crash. Don’t look at a home as an investment, look at it as a place to live.”

badkitty added the next day, 13 Mar 2010 8:51 pm –

“I saw my house as an investment which is the dumbest mistake a person can make -then, because I saw the house as an investment, I acted out of fear and greed when I sold it (the second dumbest mistake a person can make). So, I alone have knocked myself out of the ability to ever own again in Vancouver.”

Kitsilano Sale; $335,000 Over Ask: “The bidding was frantic and the look in the eyes of the buyers at the open house was desperate.”

Panic buying in Vancouver’s Westside. -vreaa

This exchange at RE Talks 19 Jan 2010 –

eyesthebye 10:24 am –“I have a friend that just lost out on a Kits house.
Assessed 1.175M; Asking price 1.475M; Bid 1.65M; Selling price 1.81M.
The bidding was frantic and the look in the eyes of the buyers at the open house was desperate. Total of 6 offers. No subjects. The high bidder was Chinese, as was the buyer for another property in Kits a couple weeks ago; [where there was] also bidding 300K-400K above asking.”

gse36 1:26 pm – “Given the market, 1.488M was quite well priced. 2758 sqft, old house completely redone, so its almost like new. With a suite. A new house like that would go for 2M+, so 1.8M for a rebuilt one, with suite, is about right. Assessed value is 1.1M-1.2M, but of course that is mainly land value — it doesn’t account for the fact the house is very usable.”

Taipan 2:11pm – “Great to hear the desperation entering the market once again. No need to think, just make sure you out bid everybody else. I love these anecdotes. I’d even grab a coffee and hang around watching to see that sort market psychology.”

“The agent told my cousin she would try to squeeze the people that made the first offer by telling them there was another offer “out there”. The implication was clear, it must have been higher.”

Here’s a story of buyers who probably paid at least $30,000 more for a Yaletown condo than was  necessary to seal the deal. -vreaa

From Cynic at vancouvercondo.info 10 Jan 2010 9:46 pm –

“My cousin recently listed her apartment in Yaletown (Marinaside) for $739,000. She was offered $710,00 the first day and decided to think about it when the agent called with another offer, but only $685,000 this time. The agent told my cousin she would try to squeeze the people that made the first offer by telling them there was another offer “out there”. Of course, agents can’t divulge the offer but the implication was clear, it must have been higher. Long story short, the first buyers offered $740,000 and my cousin had a sale. She stills feel somewhat sleazy about it but, hey, that’s Vancouver.”

“I am beginning to think there is no end to the upside in Vancouver. People are RE mad!”

Yes, this is a sign of the end of a bubble. -vreaa.

This from Freaked in Vancouver at greaterfool.ca 31 Dec 2009 10:47 pm –

“In the Greater Van area prices are, as of the month of December [2009], going through the roof. Taking a steep spike upwards, no question about it. Is this a sign of the end of the bubble, as my financial advisor told me? (Not that I trust him!) Properties that were listed for $750,000 3 months ago, are now being listed for $900,000. Check out the MLS listings for Richmond. Tear-down properties for just under one mil. Unfortunately, I sold a property 4 months ago, thinking I was very smart, and am now kicking myself. Could have listed now for $50,000 – $100,000 more than in August. Real estate markets go up and go down, but I am beginning to think there is no end to the upside in Vancouver. People are RE mad!!!! There doesn’t seem to be a limit to what they will pay.”

“It’s a matter of you being on the boat or not…whether you have the funds or the balls or confidence or whatever to make that next step..”

Bulls continue to use variations of “Buy Now Or Be Priced Out Forever” to justify their own positions, or to strike fear into the few non-owners who are still prospective buyers left in the region. -vreaa

This from instigator at RE Talks 30 Dec 2009 6:13 pm –

“It’s a matter of you being on the boat or not…whether you have the funds or the balls or confidence or whatever to make that next step..
I have an older co-worker. He moved to Mission years ago…back then he didn’t want to pay the prices around metro Vancouver, I guess. Well, now he regrets it, and feels he missed the boat…The difference in value of the metro Vancouver areas grew way higher in value [compared with Mission] than the difference in price 20 or so years ago just due to the appeal of the metropolitan area… It will take a long time for Mission to ever reach that level, if ever…If a person with riches comes to town they aren’t moving to Mission. There are also a lot of movie industry people living around town, too, adding to the rental pressure.. Housing demand whether for rental or PR is still housing demand. This for me means that there will be demand for as long as people are coming here…That is why I don’t want to miss this boat like my older coworker..”

This from eyesthebye at RE Talks 30 Dec 2009 6:34 pm –

“I have a friend that moved away from Vancouver in ’99 because he and his wife couldn’t justify the high cost of owning a single family home. They are dual income professionals. If he bought 10 years ago he’d be a 6-700K richer just on the appreciation, then add the equity. The fundamentals didn’t make sense to him in 1999 and now they never will. This move remains one of his life’s biggest regrets. Yes, fundamentals do matter…just make sure you focus on the correct ones.” … [ This poster ends each post with: “The cure for higher prices is moving to a destination with lower prices”.]