Is reality starting to creep into the Greater Vancouver real estate market? - Updated

As sales continue to lag and it becomes apparent that the removal of the HST is not going to trigger a house buying frenzy, is some semblance of reality finally creeping into the Lower Mainland real estate market?

Realtor Arnold Shuchat is out with his latest price drops for Vancouver and Richmond. Leading the Vancouver price cuts is #208-1001 Richards Street.

This 1 bedroom, 1 bathroom condo in downtown Vancouver is currently assessed at $331,000.  Up until this week the owners had been asking an insane $629,000.  They have now slashed their asking price to $366,900 - a 42% drop.

It's still priced too high but at least it's more realistic and a sign sellers are starting to accept the reality of the market.

Another such sign comes from our perennial favourite at 3390 The Crescent:

We first profiled this 6 bedroom, 8 bathroom 10,516 square foot mansion (which sits on over an acre of land in the heart of Vancouver's toniest neighbourhood) back on November 22, 2011.

The current owners bought this home in April 2004 for $6 million.

In 2010 the home was listed for sale for $17.9 million, but there were no takers at that 'bargain' price.

After looking at the high prices mansions were commanding in Shaughnessy (a house that sold in 2010 on Angus Drive for $5.7 million was assessed in 2011 at $9 million), the owners jacked their asking price from $17.9 million to $31.9 million.

That's right... the home failed to sell so they doubled the asking price.

(For reference the house is currently assessed at $16,076,000)

In September 2012 the asking price was slashed to $22,000,000. This week it was cut again, this time back down to $17,800,000.

Still over assessed value, but another insane asking price has been trimmed to just over assessed value.

(hat tip UBC in crisis mode)

Finally there is the infamous Fake Mansion in West Vancouver.

This was the West Vancouver waterfront tear down assessed at $6,768,500 whose chief selling feature was the fact the property could be subdivided into 3 lots.

The seller was asking $28 million but when there were no takers, the agent listing the property gained world wide attention when the house was portrayed as Canada's most expensive listing (asking price raised to $38 million).

To help drive attention, images of a mansion that doesn't even exist were posted with the the listing and the property went viral on the internet.

When the dust settled from the resultant brouhaha, the asking price was cut back to $28 million.

Now the seller has ditched the original realtor, listed with a new agent, and the asking price has been dropped to $19,888,000, that's 48% slashed from that ridiculous February asking price.

(hat tip Observer)

As Observer notes, this property might well now lay claim to the biggest price drop in Canadian history - $18 million and counting. Chop another $10 million from the price and it just might sell.

Observer is now out with his top 10 price drops of the week and the list provides more evidence that sellers are begrudgingly accepting reality. You don't even make this week's list of price drops unless you have chopped $4 million from your asking price! A statistic which, in and of itself, is just too bizarre for words.

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Tues Post #1: From the outrageous down to the merely obscene; the continuing saga of 3390 The Crescent - amended

Last year, on November 22, 2011, we told you about this house at 3390 The Crescent in Vancouver's Shaughnessy neighbourhood.

Profiled in the Vancouver Sun newspaper, the mansion had gone on the market for $31.9 million.

The Crescent lies at the heart of one of Vancouver's most upscale neighbourhood's. The street itself is a  circular road with a lovely park in the middle and 3390 is a palatial white house that sits on an acre sized lot where The Crescent meets Osler Street.

The house is 10,516 sq. ft spread over three storeys. There are six bedrooms, eight bathrooms and five fireplaces, along with a wine cellar, a games room, a gym and staff quarters. With a backyard pool, a koi pond, a greenhouse, and large, beautifully landscaped grounds; the home is 'palatial' in every sense of the word.

What makes this mansion stand out is it's selling history.

The current owners bought the home in April 2004 for $6 million.

Last year they listed it for sale for $17.9 million... but there were no takers at that 'bargain' price.

And we say 'bargain' because after casting an eye at the high prices mansions were commanding in area in 2011 (for example: a house had sold in 2010 on Angus Drive for $5.7 million. It was assessed in October 2011 at $9 million, a reflection of our extreme bubble condition), the owners of 3390 The Crescent decided to raise the asking price from $17.9 million to $31.9 million.

That's right.

The home they bought for $6 million had failed to sell for $17.9 million... so they doubled the asking price to $31.9 million.

Who says there's a disconnect in our real estate market?

Well it seems something resembling reality (if you can call it that) is starting to enter our market.

Yes... the outrageous has morphed to the merely obscene.

As Observer (from the blog Vancouver Price Drop) notes the sellers revoked their $31.9 million listing on September 25th, 2012 and have relisted the property on September 27th for $22.8 million.

That's a reduction of 29%.

Will this become the City's largest price drop vis-a-vis price reductions from highest listing price by the time all is said and done?

Chop 60% off that original asking price and you would come down to $13.3 million. An amount that  would still be more than twice what they paid for it in 2004.

Slash a further 75% from that and, in my opinion, $4 million would still be overpriced.

Such is the current state of the market.

More on this later this week.

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Tues Post #2: Metro Vancouver Real Estate achieves a 'New Paradigm'

If you have followed the topic of real estate bubbles, you have seen the above graph (click image to enlarge).

Titled 'The Main Stages of a Bubble', it is a representation of the stages that all bubbles (real estate or otherwise) travel through.

As we watch our Real Estate bubble in Vancouver, one has to wonder if we are now approaching the end of the third stage of the bubble process; the Mania Stage.

The Mania Stage has four basic phases: Enthusiasm, Greed, Delusion and New Paradigm.

Many real estate bears, salivating in 2008/2009 that the bubble might have been bursting, thought we had seen the end of the Mania Phase.

But watching events over the past 18 months, many will surely say the current market qualifies as delusion bordering on a new paradigm.

Have we indeed made that transformation?

How else to describe the belief by some economist's that the 'threat' of a bubble forming in Metro Vancouver has dissipated?

A Conference Board of Canada report released today quotes senior economist Robin Wiebe as saying not only has “the threat of a bubble largely dissipated” in Metro Vancouver “but, really, there never was one.”

See? There never was a bubble. Our market has achieved a New Paradigm.

Perhaps this explains why, in the current mania, we see the asking price of this Shaughnessy Mansion almost double from $17 million to $31 million.

Or why we see this downtown Penthouse condominium, which sold last year for $18.1 million recently relisted for a stunning $28.8 million (click on image below to enlarge MLS screenshot of listing).

The chutzpah for these types of increases is emboldened by the belief we have achieved that 'New Paradigm'. And the new paradigm viewpoint has been further reinforced with the proliferation of articles, like this one, explaining why the influx of Chinese money won't dissipate.

For those who study Bubbles, it has always been difficult to truly appreciate how pervasive and engulfing the Mania Phase can be.

People still look back at Holland's tulip mania in the 1600's with a sense of bewilderment. Long considered the first recorded speculative bubble, the peak of tulip mania saw single tulip bulbs selling for more than 10 times the annual income of a skilled craftsman.

Peering back across the gossamer waves of time, it's often difficult to comprehend how the enthusiasm for tulip bulbs could beget the all-consuming greed that leads to the delusional prices which then entrap a nation into believing that somehow a new paradigm could be created in the price of tulips.

By the time our current situation bursts, residents of the Village on the Edge of the Rainforest will be experts on just how a inexplicable Mania can completely grip a populace.

People will say "it's just real estate" the same way we now look at them as "just tulip bulbs."

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If at first your house doesn't sell... double the asking price!

Time for another tale from the Bubble Zone.

As noted last week in the Vancouver Sun newspaper, a house has just gone on the market at 3390 The Crescent for $31.9 million.

The Crescent lies at the heart of one of Vancouver's most upscale neighbourhood's: Shaughnessy. The street itself is a  circular road with a lovely park in the middle. And 3390 is a palatial white house that sits on an acre sized lot where The Crescent meets Osler Street.

The house itself contains 10,516 sq. ft of space spread over three storeys. There are six bedrooms, eight bathrooms and five fireplaces, along with a wine cellar, a games room, a gym and staff quarters.

With a backyard pool, a koi pond, a greenhouse, and large, beautifully landscaped grounds; the home is 'palatial' in every sense of the word.

But what makes this mansion stand out is it's selling history. The current owners bought the home in April 2004 for $6 million.

Last year the home was listed for sale for $17.9 million, but there were no takers at that 'bargain' price.

And we say 'bargain' price because after looking at the high prices mansions are commanding in Shaughnessy (a house that sold last year on Angus Drive for $5.7 million was recently assessed at $9 million), the owners decided to raise the asking price from $17.9 million to $31.9 million.

That's right... the home failed to sell so they doubled the asking price.

Who says there's a disconnect in our real estate market?

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Email: village_whisperer@live.ca
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Please read disclaimer at bottom of blog.