Sunday, May 20, 2012

HAM exit stage left?

Faithful readers know we have pondered about what might happened when the Hot Asian Money (HAM) that has flowed into Vancouver suddenly needs to depart.

A lot of money has been parked here are as China experiences it's own real estate bubble, a bubble driven by more stimulus money, per capita, being injected into their economy that has been injected in the USA.

But as we discussed on Thursday, a real estate crash is underway in China. 

As margin calls come due for many mainland Chinese who have invested here, the impact of the need for liquidity cannot be underestimated.

The very first signs of this starting to happen are evident in the absence of HAM in the Vancouver spring real estate market. It is, basically, non-existent.

And as the year moves from early Spring to the end of Spring... is the HAM trend ready to move to the next phase?

At the top of this post is the video promo from a realtor for 3243 W. 33rd Avenue. The asking price is $2,480,000 and here is how it is being promoted (click on image to enlarge):

Mackenzie Heights House for Sale! BRAND NEW high-end custom-built house selling now at the well sough after Mackenzie Height area. This is a dream house that comes with high-end Kitchen Aid stainless steel appliances, HRV, air-conditioning, two gas fireplaces, centralvacuum cleaner, crystal chandeliers, electronic door lock, security system with intercom speakers and monitor, jacuzzi tub in master bedroom, granite counter-tops throughout house and granite tiles at the entry foyer. This house comes with just almost everything you need. Possession is AVAILABLE NOW. Open house Saturdays. Will you be this brand new house's FIRST homeowner?
A professional video and coherent write up.

But is there desperation behind the signs by the seller?

A curious craigslist ad has appeared regarding this house - you can click on the image below to enlarge it. (hat tip to Patiently Waiting on Vancouver Condo Info):

It says, in broken english:
"Note: the owner because of a urgent to return China, so the asking price there are a lot of room for negotiation, coupled with the distribution of the total value of 80000 full set of aristocratic furniture, piano, plus on the government’s home purchase cash back, buyers will get a total of nearly 200 000 discounts, which in the vancouver west very expensive premium real estate is very difficult to find such a cheap price, welcome to the OPEN HOUSE to look at the new luxury house just completed! NEAR TO U.B.C!”
Seems odd to have a craigslist posting written like this by a realtor. Is the owner desperate to explore additional advertising options because he is desperate to sell the property?

Let's face it, how many realtors would openly advertise a seller's weak hand and tell you he 'urgently returned to China' and that there is 'lots of room for negotiation?'


It's a good thing a lack of sales and burgeoning inventory doesn't mean housing prices will be coming down, eh?


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  1. I used to live at the apt complex (soon to be condos!) at 57th and granville. When I'd jog in the area, you'd see this process going on:

    1) Buy a 2000 sq ft house in a 'desirable' hood for $800,000-$1,000,000.
    2) Tear it down.
    3) Replace it with a 4000 sq ft monstrosity.

    If you wanna see a textbook example of this, check out the southwest corner of 57th and Oak. Still unsold, after a few months, btw. It's the kind of place that a recent lottery winner would look at and say "hey, that's too gawdy..."

    The reason this is happening, is not because of the huge demand for 7-bedroom, 4-bathroom homes. Even newcomers to canada aren't planning on having 6 kids, at least not by the 2nd generation.

    The math is simple. If you paid $800K for the land, by the time you build something else after a tear down (as a retired builder friend of mine explained), the finished product has to sell for at least 1.5 mil. So they make these horrible huge houses that have no reason to exist in a country with a falling birthrate, because of the economics of the builder's profit margin, not because of any consumer demand.

    I'm just amazed to see it happening east of Main Street...

  2. Future rooming house?
    Went by my favorite spec house in Brentwood Bay, on Sunday,first went on market 3 years ago for 1.2!!!
    There was an open house sign and a very lonely looking used house salesperson sitting in the driveway.Didn't see anyone dropping in.
    don't know what they are asking now but Victoria's average household income is $77,000.
    I would not pay a quarter mil for it.

  3. I'm sorry...I meant new house has not been lived in except technically for the first year by the contractor/flipper.
    Now the particle board structure has had a few years to "season" that the word when things start falling apart?
    I wanted to ask her what the new price was but I didn't want to encourage her.