Did MacLean's admit they were wrong?

As the Sochi Olympics come to end, Vancouver finds itself bathed in snow.  Four years ago we were, like Sochi, wearing shorts and T-shirts at this time of year. Maybe we are a winter city after all?

As we turn our attention back to all matter financial and real estate, we couldn't help but notice our blog being mentioned over on Alphabet Arnie's site.

AA headlines MacLeans Admits it has been wrong?!! and he writes:

Some time ago, around early 2012 when MacLeans magazine produced an issue with a cover story featuring a skyscraper and a house on fire as if the market WAS GOING to collapse, I lambasted them in one of our local blogs, where extracts of the article were reproduced. (see Whispersfromtheedgeoftherainforest.blogspot.com). Anyways, I was trolling another local site "vancouvercondo.info when I came across this extract (in or about Jan 21, 2014), from a MacLeans reporter addressing negative market chit chat warning of a market collapse. I must say, I really relished reading this extract:

"This is a well worn theme for many Canadian reporters. Here at Maclean’s we’ve reached the same conclusion several times going back to 2008, and, admittedly, we’ve been proven fully and completely wrong."

In promoting the column on his site, AA even sent out this tweet asking others to retweet "to help inform."

Not that we wish to pour ketchup on his 'relish' or his desire to 'inform' but we think Arnie may have his timelines a little bit off.

AA believes Macleans is repudiating their 2012 cover story with that extract quote.

Umm… hate to break it to you Arnie, but the MacLean's extract is actually a quote from an article published on June 1, 2011. Far from repudiating the 2012 cover story, the extract was written almost a year before the cover story was even published (click on image to enlarge and see blue hilighted text):

Not sure they have actually admitted they were wrong about their 2012 cover story yet.

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Are these the underwater home-owers mortgage broker Calla was targeting with her radio ads?

The other day we pondered if Underwater Mortgages were a Sign of the Times?

It was prompted by the fact that Angela Calla, mortgage broker and host of CKNW radio's 'The Mortgage Show', was running radio ads targeting home-owers who may currently find themselves in an underwater mortgage position at mortgage renewal.

Could it be that the market has entered this volatile condition already?

We've often talked about how some area's, Richmond in particular, have been hard hit the last couple of years. 

So are some owner's in underwater trouble?

We note a recent listing by one of our favourite Richmond realtors, Alphabet Arnie. It's for 222-7551 Minoru Blvd, a 2 bedroom condo in Richmond (click on image to enlarge).

Promoted as having just had it's asking price reduced, it's currently available for $309,800.

A deal?

The property is currently assessed at $291,700...

Even more interesting is that a quick google search turns up that this property was listed for sale back on Sept 14, 2009 for $340,000 and it subsequently sold.

Presumably whomever bought it then are the ones now selling.  Now we're not sure what this sold for in 2009.  $340,000 probably seemed like a steal at the time.

But as values in Richmond have plunged, and the current owner tries to hawk a $291,700 assessed condo for $309,800... you can't help but wonder if this is exactly the type of home-ower that Angela Calla was targeting with her ads.

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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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Sun Post #2: Alphabet Arnie says, "If you don't buy a lottery ticket, you won't be winning"

One of our favourite Richmond real estate agents, nicknamed 'Alphabet Arnie' by some our our faithful readers, has a message for all you real estate doubters out there.

Basically it's 'if you don't buy a real estate lottery ticket, you won't be winning.'

Arnold Shuchat make this point in one of his recent blog posts titled, House gets "Flipped" for 19.4% gross profit in 6 months!

A Single family residence built in 1986 was purchased for $720k in June of 2012 and was just sold for $860k in the Lackner area on Jaskow Dr. It looks from the listing that new flooring and some bathroom updates were added after the purchase. Estimating these updates to be around $15k and considering property purchase taxes and outgoing commissions, legal costs and carrying costs at prime +1%, I figure the seller netted around $80,000 on his investment of $720k or 11.1% in around 6 months.

What is noteworthy is that he did this at a time when the entire negative internet world had their collective tails between their legs crying about the market "BUBBLING" which just proves that some whine, and some act and that we can sit around here and pontificate about market direction and lottery winnings, but that if we don't buy a ticket, we won't be winning. Good work, and thank the lord, because it was on my street!

A.A. has been quite bullish recently. It was just the day before the above post, in an entry titled: Forecasting Vancouver Real Estate Prices, that Schuchat declared his belief that within 20 months all those Asian buyers should come flocking back to snap up local real estate

One cannot forecast this market without making a determination about immigration volumes from that side of the world. After consulting with one of Canada's foremost immigration lawyers and policiy analysts I have been lead to believe the following:

There are about 1.5 million millionaires in China and many of those people seek a safe haven for and expatriation of their capital to secure same. Our real estate and our local scene is such that we are relatively close to Asia and are seen as a gateway; we have a local demographic and infrstructure that in many ways can handle non-English speaking immigrants without culture shock, without tax consequences and with very little perceived risk to them. There is no doubt that were the gates to open wide with minimal restrictions, local prices would go through the roof. We simply do not have sufficient inventory to handle that demand. In financial terms, we are a tightly held penny stock.

Ottawa has seen to it that the housing market has cooled off in order to avoid being stuck with the bill for mortgage defaults as a result of insured mortgages having been issued at high prices. Immigration volume has been the singlemost effective way to attenuate local demand from the pressures of offshore buyers. I do not think that the pressure to establish a beachhead here has abated. I think that for the time being, the valves have been tightened, regulations to address income tax imbalances and residency loopholes are being debated and I think that with a change in government in China, money is being freed up to enhance liquidity where possible and there is a pause.

Market watchers would do well to spend some time watching immigration patterns and volumes as this is predominantly what got us to where we are today pricewise. We expect a return within the next 20 months of some of this immigration demand.

Attaboy Arnie, keep your sunny side up and spread the Good News!

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