An update on a property in Richmond: House that sold for 33% below assessed value in 2012 now in foreclosure.

Faithful reader will recall 6691 Gibbons Drive in Richmond.

Back in Oct/Nov 2012 we made a couple of posts about this property. The hook?  The property was listed - and sold - for 33% less than it's assessed value. Assessed at $1,258,600, it went for $845,000.

Pretty good deal, eh? Well… apparently it wasn't for that particular buyer.

Word comes from Richmond realtor Arnold Shuchat that the property is now a foreclosure sale.  From Shuchat's blog:

Another Court ordered sale (foreclosure sale) hit the market today at 6691 Gibbons-see MLS# V1054760. This property was listed back in March 2012 for $1,258,000 and eventually sold for under $850k in November of 2012. It is just listed for sale at $1,049,000 and is assessed for property tax purposes at $1,112,000.

Foreclosures usually mean that mortgage commitments are not being honoured. Often the owner stands to lose some equity in this process as well as costs for legal fees. Many times the lender will also lose depending upon the loan to value of the property

The listing says: "Excellent building lot or investment property in a prime location surrounded by new Million Dollar homes. Wide 84' frontage with a total of 7834 sq ft allows you to build a 3600 sq ft home plus a 3 car garage. Solid 2 level 2550 sq ft 4 bedroom + den home. Excellent location within walking distance to Thompson Elementary, Burnett Secondary & Terra Nova Shopping Mall"

Ya gotta love how it's being listed at the current assessed value and not for what it sold for.  It will be interesting to see what it sells for this time.

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Monday Post #1: Richmond Vancouver a seller's market? Realtor responds "whoaaa…"

UPDATE: The data in Richmond Realtor Shuchat's post is about Vancouver, not Richmond, as originally posted on this blog. The reference to Richmond has been removed (hat tip A. Shuchat).

Yesterday we told you how Realtor Alphabet Arnie Shuchat had declared Vancouver "a seller's market"

But before we break out in a chorus of 'happy days are here again', AA would like to clarify:

Thanks for the post and quote... but whoaaa..... Whisperer, easy on my conclusions. I pointed out a trend using just one simple metric. Obviously there are others. A "Seller's Delusion Ratio" of 71% is still not the 29% of February 2011. It is 3 times worse. The noteworthy point here is the trend.

It was certainly a seller's market at 29% and it was certainly a buyer's market at 244%. 

I am not aware of anybody else who has used this metric to define a market as a buyer or seller's market and I cannot say for sure at what point in the SDR ratio the market is a buyer or a seller's market.

It is the recent trend to lower ratios which caused the observation. Obviously other metrics need to be examined as well.

Guess we will have to hold off on the string of bullish real estate posts we had planned.

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Alphabet Arnie declares that the Richmond Vancouver Real Estate market is now a 'sellers market' - UPDATED

UPDATE: The data in Richmond Realtor Shuchat's post is about Vancouver, not Richmond, as originally posted on this blog. The reference to Richmond has been removed (hat tip A. Shuchat).

Local Richmond realtor, Arnold Shuchat,  is out with his latest market analysis and he declares the Vancouver market has turned.  Now it's a seller's market:

If one wanted a weather vane to see where the real estate market winds are blowing, this would be as close to it as one could get. I designed the Seller's Delusion Index to track sellers' frustration over time, with the hypotheses being that the more expired and terminated listings there are as a ratio to sales, the greater the downward pressure on real estate prices. A seller has two options: cut his price or take it off the market. One results in a sale and the other a terminated listing.

As an historical measure, (Terminated + Expired listings) divided by number of sales in or about February of 2011 an accepted market high point, were running close to historic lows of about 27% depending on property type. At the worst recent time since then, they were running around 244%. That is akin to saying that when things are "hot" sellers had a 1 in 3 chance of being frustrated, whereas when things cooled down, they were 9 times more likely to be frustrated.

As one can see from the chart below, sellers' expectation are being more fully met now and the trend is leaning towards a seller's market once again. This table supercedes all previous ones as the sufficient time lapse following the months' end assures a more accurate set of numbers to allow for complete reporting of sales, terminated and expired listings.

Hopefully a turning market will keep this real estate agent busy enough so that he doesn't have time to do any more video's…

Hat tip: Son of Ponzi and crash cow

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Re-listing and hiding price reductions. Realtor examines data and "results yield completely different story."

For those who follow the real estate bear blogs, it is a well known practice.

In an attempt to hide seller desperation, property listings are pulled and re-listed with a new MLS number.  It helps hide the number of days a property has been on the market, not to mention some of the price drops a property has had. Because let's face it, when buyer's sell desperation, the lowballing intensifies.

Vancouver Observer noticed this practice over a year ago on his excellent site, Vancouver Price Drop. So prominent is the practice that Observer now tracks all old MLS listings for a property to give us a true insight into the selling history of a property.

In this weeks Vancouver West detached spotlight, the top property for price reductions is at 1010 West 57th:

1010 West 57th pulled it's listing on January 16th, 2013 and relisted with a new MLS number on January 25th, 2013.  This move helps hide 291 days of market availability as well as $1,000,000 in price reductions.

This property, however, is a very minor example of the relisting phenomenon.  Observer has made several interesting posts in the past charting relisting champions.

Interestingly realtor Arnold Shuchat also touched on this phenomenon in a post on his blog today charting this week's biggest price declines in Richmond.

Publishing these price reduction blogs on a regular basis is time consuming. But this week's Price Reduction report was even more so. I have observed that for almost every week that the price reductions are published, the average reduction is between 4-5% regardless of property type, give or take 1%. Under a hypothesis that those averages do not really tell the whole story, I conducted a search of every price reduction listing to review the price history from the time it was first listed. The results yield a completely different story as I suspected. I am not going to undertake this every week, but as an eye opener and to make a point of what's really going on I did it this week. The numbers speak for themselves and here is the summary:

The average price reduction since originally listed is 11% instead of the most recent 5%. But, if we take the top 10 price reductions since listed, the average is approximately 20%! And, the properties are not yet sold!

The real estate industry official line is that price reductions are minimal and that sellers are holding firm with their prices. The industry insists any price declines are only minimal.

But anyone conducting a proper, detailed analysis is uncovering quite a different story.

Surprised?

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Sellers "living off hope of a turnaround"

Richmond realtor Arnold Shuchat is out with with Richmond real estate market report for May and an interesting quote comes with the data:

I draw a few conclusions from this and other data that I have published recently in this blog:

1. There are less buyers for more expensive single family homes and relatively more for attached properties; 

2. Many of the frustrated listings are ones that have been purchased since 2010 and had high original purchase prices. Those sellers can't bring themselves to realize a loss. Hence the stagnant listings, expireds and terminateds. They live off hope of a turnaround.

Stagnant listings and sellers living off hope of a turnaround.

Poignant words that summarize the real estate market right now.

Vancouver Realtor Larry Yatkowsky described it this way:

Tumultuous changes to real estate occurred last year and in the first days of June Active listings hovered near 27,000. It was a temporary! Active listings rocketed to an unprecedented 28,000 units by the end of the month.

This year June’s early Active Totals reveal a barely perceptible difference as the total active listing count hovers around 26,500 units. Uncertain is what the crystal ball will deliver in the weeks ahead. We anticipate that Active listings will continue to... climb to equally bloated totals in the latter part of June 2013.

What will it take for the market to move? Shuchat thinks that:

Once sellers get it in their heads that their properties are only worth what buyers will pay regardless of what they paid for their properties, the ratio will start to descend further. I believe that time is coming although it will take time for the required volume of sales to diminish the outstanding inventory.

Is the market about to break downward?  Interesting how the stagnating market is now spawning news articles like this one in the Toronto Star: 7 reasons your house may not be selling.

Hmmm.

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Underwater

On Tuesday we brought you Richmond realtor James Wong's musings that "sales are expected to continue to languish due to the lack of buying interest."

Fellow Richmond realtor Alphabet Arnie Shuchat follows that bleak news up with the following market analysis:

Primarily in Richmond, most people who bought in the last 3 years are technically under water. What I mean is that they are for sure going to be unable to sell their property for more than they purchased it; they are definitely likely to have a selling price net of commissions yield proceeds of disposition less than the amount owing on their mortgage.

I say this because in our previously expensive real estate market, buyers were throwing everything they could at the down payment and they would be lucky for a house purchase to be able to do so with a conventional mortgage at 20% down. The market being down some 25-30% depending upon neighbourhood, means that they are 40% through their 5 year fixed mortgages and in the event they were at term today, the discussion at the bank would most likely revolve around them coming up with sufficient equity in the form of a new 20% equity payment to finance a conventional loan, or CMHC insurance for a non-conventional one. Both scenarios are grim and place yet another purchase of the next house phase in jeopardy.

So we have all niches of home ownership who got in over the last 3 years looking at negative equity and all of the chilling effects on spending, renovating, moving up etc... that go with that. It is the inverse of the wealth effect that happens when asset prices move up and people feel good.

Shuchat's analysis is a shocking bit of news for anyone who believed the bunk that the real estate always goes up.

This is the very scenario that started the dominos falling in the United States, a condition the real estate industry here has always insisted simply cannot happen in Canada.

Say it isn't so.

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A dreamer, a realist and the scammers still scamming...

Interesting to watch reality to set in for some sellers.

3294 Wellington is a 5 bedroom 4 bathroom mixed use dwelling that contains 3 suites above a convenience store.  Originally listed for $1,390,000, it was Vancouver's biggest price cut last week as the seller trimmed 28% off the asking price bringing it down to $998,000.

Even so, it's still way over the assessed value of $658,200 as sellers struggle with what's going on.

Other's, particularly in Richmond, can see the writing on the wall.

This is 5542 Cornwall Drive in the upscale Terra Nova neighbourhood:

As one of our faithful readers pointed out, it's assessed at $1,417,000.  Originally listed for $1,338,000 it has languished on the market since April 2012.  It sold on April 3rd, 2013 for $1,095,000... 23% below assessed value.

We are told the seller was a realtor.  Given the timing of the sale (right after the HST ended), it's clear he was simply happy to dump the property and wasn't waiting around for the phantom surge the removal of the HST was supposed to represent.

Over on Garth Turner's blog, we have the latest example of real estate media manipulation.  It's almost a sport now for the online community to ferret out this ridiculous BS.

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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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Information: three real estate agents who are stepping up to the plate

Have you ever noticed how so much of the real estate industry seems geared towards sellers? 

When it comes to buyers, the industry (on the whole) seems to obsess with whipping them into a frenzy and urging them to snap up property at going rates (or higher).

Who is there to guide their interests and provide them with the data they need to make critical decisions?

This is why critics the frankenumber HPI.  As Garth Turner recently said, "the HPI is to houses what moving averages are to stocks. Instead of telling you what properties sell for now, it tells you what they averaged over time. Realtors love this since it filters out peaks and valleys, making markets seem serene and predictable. But the HPI is as useless to a serious buyer as a four-month-old stock quote is to a trader."

As credit tightens and the easy marriage of sellers with hyped up buyers becomes a distant memory, there are astute realtors who realize buyers need quality information about what is going on in the market today. 

And there is nothing more important than information that gives them both an accurate view of current pricing and information which reflects current market momentum – elements critical to an informed home-buying decision.

On Thursday we showed you how realtor Larry Yatkowsky is now providing median prices of Vancouver homes which, while imperfect, is a tremendous asset for buyers.

Yesterday we profiled the latest market report from realtor James Wong who gives a frank, upfront assessment of the current market conditions.

And today we bring you two of  'Alphabet Arnie' Shuchat's latest contributions.  The first is the Top Price Reductions on Homes for Sale in Richmond.

(make sure you click on the link to see the full list. Screen shot only shows part of the list)

And the second it AA's Biggest Price Declines for Homes in Greater Vancouver. From Arnie's narrative:

A list of every price reduction in the Greater Vancouver market within the Real Estate board of Greater Vancouver (not Fraser Valley) within the last 7 days. I have included the addresses of every price reduction in excess of 5%. To be honest, the current number may only be an indicator of original delusion and may not "yet" reflect a "deal". The property could well have started off too high. I would have to look at each property specifically to see if it could be called a "deal". But the list is a starting point for interested shoppers. You can search the details of the addresses of interest by going to the "Properties" tab on our homepage and clicking on "address" search. I appologize if you are unable to determine what the selling areas are, but they are all encoded. If you are interested further, do not hesitate to call. Shockingly, the total list for the last 7 days for all price changes amounted to 244 properties of which 149 were in Richmond!

Information.  

It's the buyer's biggest ally and there is tremendous opportunity ahead for agents who go out of their way to service this need.

(Note: we would be remiss to overlook a shout-out to Realtor Paul Boenisch who provides the daily inventory stats we use on the right of this blog and whose motto is "knowledge is power")

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The market looks "very ripe for a meaningful correction"

Last Saturday we profiled this tidbit from 'Alphabet Arnie'

AA told us that:

Terra Nova is like a microcosm for Richmond... and it isn't great.

Well it seems that our other favourite Richmond real estate, James Wong, has also been analyzing the Terra Nova barometer.

On January 21st, Wong blogged about 'the market standoff' in Richmond.

Like in other parts of Greater Vancouver, the real estate market in Richmond can be described as “a stand off” between home sellers and buyers. A typical area to track home prices is Terra Nova, a newer housing sub-division located to the north west corner of Richmond. Terra Nova is a better known by the local residents as one of the most prestigious and expansive neighborhood in Richmond.

And how have Terra Nova home prices done the past few years?

The chart below tracked the home prices for single detached homes with built-up area between 2,600 to 2,900 sq ft. These homes are generally consisted of 5 bedrooms and 3 to 4 full baths, and the lot sizes are from 5,000 to 6,000 sq ft.

Impressive gains to be sure.

At this point Wong gazes into his crystal ball.  What does he see?

The housing market in Richmond the past 8 years had been supported by wealth from new immigrants, not income.

A lot of this is wealth from newly arrived immigrants, although it is difficult to quantify it. Many of these purchases by home buyers the past few years don’t need a mortgage because they have the cash and can buy a house outright. But, with a sharp drop off in buyers, and amble supply of homes for sale, sellers are under pressure to cut their prices.

The possibility of a prostrated decline is real as declining home prices, tightened lending and high prices deter buyers to enter the market.

The supply of rich new residents to Canada is now diminishing, due to the changes happening in the immigration policy for new immigrants. There is a slowing down in people coming to Vancouver, especially foreign residents with a lot of money.

With lack of buying activities, the market looks very ripe for a meaningful correction.

Very ripe for a meaningful correction, eh?

Clearly Wong, an Asian realtor, is not placing much hope in the belief the market will see a Chinese New Year resurgence.

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Richmond Update - "it isn't great" and Rick Mercer explains the housing market in 77 seconds

Recently we have profiled a few contributions from 'Alphabet Arnie', aka Richmond real estate agent Arnold Shuchat.

Shuchat has made a number of bullish statements recently, but what you have to admire is that he does tell it like it is when talking about specific market conditions on his blog.

The latest is his update from the Terra Nova neighbourhood:

Terra Nova is like a microcosm for Richmond Real Estate. And Richmond real estate is a microcosm for immigration. If Terra Nova is doing well, then Richmond will do well. So here is a snapshot of Terra Nova Real Estate over the last couple of weeks; and it isn't great.

Says it all right there.

You can see the full update on Terra Nova at the link above.

Meanwhile Rick Mercer and the Mercer Report comment on the housing market in a skit that says it all in only 77 seconds.

(hat tip Rob):

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Six Canadian Banks Downgraded by ratings service Moody's

Flip over (on the internet, of course) to the Financial Post website and you will find this article: Six Canadian banks downgraded by Moody’s

Most of Canada’s biggest banks have been downgraded by Moody’s Investor Services, one of the world’s major credit rating agencies.

Moody’s says it took the step because of concerns over the banks’ exposure to heavily indebted consumers and elevated housing prices.

As mortgage lenders, Canada’s banks have benefited over the past few years from lending to home buyers.

The six financial institutions — five banks and a Quebec-based credit union — are being downgraded by one notch to either double-A one, two or three.

The ratings affect Toronto-Dominion Bank (TSX:TD), Scotiabank (TSX:BNS), Bank of Montreal (TSX:BMO), Canadian Imperial Bank of Commerce, (TSX:CM), National Bank (TSX:NA) and the Desjardins caisse populaire.

A downgrade by a credit rating agency usually means investors will demand a higher interest rate when a company goes to raise cash by issuing bonds or other debt.

Last October, Moody’s warned it was placing the long-term ratings of those six banks under review for a possible downgrade.

Royal Bank was not included on the list.

This follows Friday's Financial Post article where Theresa Tedesco wrote: Canada’s banking giants headed for earnings iceberg.

If you want to read it from Moody's yourself, you can see their press release here.

But this is information on 'the internet.' And you will recall from yesterday's post that the internet is where Alphabet Arnie says:

the entire negative internet world (has) 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.

Well it seems that the folks at Moody's (with their own collection of ivory tower letters after their names) just whined, acted and pontificated on the internet... all at the same time.

Imagine that.

(hat tip Canadian Watchdog)

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