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!

==================

Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.

More on the $1 Condo for sale in Richmond and other realtor gimmicks

Yesterday we told you about a Richmond condo that had slashed it's asking price from $355,000 to $1.

Hoax?  Data entry error?

Adding to the mystery was the fact that various sites and realtors had updates with the 'new price'. Richmond realtor Arnold Shuchat  even commented on his blog about the listing.

Shuchat said:

I've just uploaded this listing for a condo at the Laguna in Richmond. And I always thought 1% Realty referred to some commission arrangement! This ranks as one of the largest price reductions ever: From $355,000 down to $1!

We asked if anyone knew what this was all about?

Was it an error? Or was it legit?

In case you missed it, Arnold Shuchat posted a reply to our comments section on that post.

(the post came minus the academic credentials after his name in his google blog signature. Does that mean we should stop referring to him as 'Alphabet Arnie' ?).

Shuchat tells us: 

Well, after getting a few calls on this one, I checked in with the listing realtor. It turns out the one of the owners is a Toronto based realtor and there has been a trend there to list properties for $1 to create some attention. They have no intention of selling for $1 but expect to have offers presented on Sunday night....etc. 

Based on a lot of negativity on some of these blogs, it would be an interesting wager as to whether a multiple offer scenario will materialize.

It will get sold because I think the owners will do what has to be done to sell it. 

I also predict a post-sale advertisement claiming "Sold $315,000 over asking price"!

We thank Arnie for the info and look forward to hearing from him with what the outcome on this little bit of realtor games is.

And Shuchat is right, you can almost see the press release sent out by the selling agent trumpeting just as Shuchat joking predicts: "Sold $315,000 over asking price!"

But let's face it, if it draws attention and the bids come in... it is a creative advertising gimmick to list the property for $1 and set a deadline to sell to the highest bidder.

And there's nothing wrong with that (providing they actually sell to the highest bidder).

Which is more than I can say for this next example.

As everyone is well aware, the federal government moved last year to eliminate the various ways banks had been helping home buyers skirt the 5% down payment requirement (ie. up to 7% cash-back offers).

We also know, all to well, that the biggest lament in the real estate industry right now is how significantly the new mortgage regulations have impacted entry-level buyers... effectively cutting the knees out from those looking to climb the 'property ladder.'

Check out the latest weasel manoeuvre to circumvent the new mortgage regulations.

(although I'm sure they would prefer the more politically correct analysis of 'creative accounting').

The latest ploy comes to us via this pamphlet for a Langley condo development.

The pamphlet outlines how first-time buyers can receive, from the provincial government, a $10,000 first-time home buyer grant.

Their suggestion (as you can see the the third picture above - click on image to enlarge): "Borrow the down payment from your favourite Uncle and pay him back when you get the $10,000."

The key to that $10,000 can be seen here:

With units starting at $179,900... the $10,000 would cover your 5% down payment to buy in this Langley development.

Nothing like watching some elements of the real estate industry actively encouraging home buyers to evade regulations eliminating those derisive 'zero-down' lending practices.

Who says we're all that different from the Americans?

(hat tip Tom)

Of course aren't liar loans, zero down, government R/E handouts and an industry that relentlessly pumps these options how we ended up at this apex where living in a van becomes a lifestyle choice?:

(hat tip GreenhornRET for video)

==================

Email: village_whisperer@live.ca Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.

Tues Post #1: Richmond Condo has asking price slashed from $355,000 to $1?

Not too sure what exactly is the gimmick here (hopes of a bidding war?) but the condo at #117-8189 Jones Road in Richmond has had their asking price slashed from $355,000 to $1.

From the description:

Call to View! Owner Says 'SELL'. Please Bring Offers!

When posting it on his site, real estate agent Arnold Shuchat said:

I've just uploaded this listing for a condo at the Laguna in Richmond. And I always thought 1% Realty referred to some commission arrangement! This ranks as one of the largest price reductions ever: From $355,000 down to $1!

Anyone know what this is all about? The listing for $1 is popping up on real estate sites everywhere.

(hat tip Arnold Shuchat)

==================

Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.

Sat Post #2: The view from Richmond for 2013 - one realtor sees a glass half full, the other sees a glass half empty

A couple of days ago we brought you a market analysis from Richmond realtor Arnold Shuchat MBA, LL.B., B.C.L.

Dubbed 'Alphabet Arnie' by our cadre of faithful readers, Shuchat had this take on the real estate market in Richmond for 2013:

The average observer may have had his head in the sand in Vancouver, but the market has already moved down some 25% depending upon the particular sector.

Being right in the middle of it, I detect a renewed vigor among buyers as of the end of November. Many listed properties in our market are owned by sellers who do not have to sell and skew the sales to active listing statistical ratio. I see prices holding firm and buyers coming back in. The effect of all this now, is that garbage will not sell as fast as it would have and properties will have to be better prepared for the sale. 

Frankly, from the inside of this industry, I think MacLeans missed their call by about 8-11 months in the west coast market, and, short of producing additional fear into the market by their article, signals to me that additional opportunities can be reaped in the existing climate by betting against broad brush articles with incendiary pictures produced by newsmaking press.

As we mentioned in our previous post, Shuchat is a real estate agent who has been very proactive in advising clients about properties that have declined and where the market is going. His website blog posts have tracked the Richmond market very closely in this regard (and well worth checking on a regular basis if this information appeals to you).

So it is interesting that he appears to be calling a bottom to the market slide and the end to the collapse in prices.

Regulars to this blog know we have come to respect the view of another Richmond real estate agent and regularly profile his views.

And as luck would have it, James Wong is out with his January report and prognostications for the coming year.

Right off the bat, Wong zero's in on the huge number of listings that expired at the end of 2012:

The drop in active listings in the last month of 2012 was dramatic. From around 17,700 at the end of October, active listings dropped to around 12,000 at the end of December, 2012. One-third of the listings disappeared from the MLS system, mostly due to expiry and some of these listings were terminated.

But rather than join the chorus of R/E insiders who see this as a bullish piece of news, Wong focus on a disturbing counter-trend: sales.

The chart below showed a clear trend of declining sales as far back as 2005. The decline in sales could be attributed to high home prices getting out of reach by home buyers. A smaller pool of buyers sustained the housing market and home prices until sometime around mid 2011.

It was clear that the housing market in Greater Vancouver was in decline. With just around 25,000 homes sold during the year, 2012 was not much better than 2008 when a seizure of the financial markets around the world caused a major drop in home sales in Greater Vancouver.

Although the trend-line projection for home sales in Greater Vancouver for 2013 is showing a sale level around 29,000 units. This will not likely to happen due to the fact that there are major forces affecting the market for 2013. Tightened lending standards and negative market sentiment will likely result in home buyers staying on the side-line for some time. The probability of home sales for 2013 staying at current level around 25,000 units cannot be ruled out. 

So Wong thinks conditions are going to lead to another year of abysmal sales. Judging by what we have seen in the first week of January, he is correct so far.

So what will this bearish outlook mean for real estate prices in 2013? Will the slide be halted, as Shuchat suggests?

With weak sales and declining prices already in motion, further price decline is expected to continue. Home prices for condos have already declined and now hovering just above the 2007 price level. Some major news can be expected later this year on presale condo buyers not able or willing to complete their purchases.

Hmm. More price declines and a wave of pre-sale buyers attempting to bail come their completion dates?

Anything else?

The decline in home prices will likely to continue as the real estate down cycle is in motion. The market rally in home prices from 2001 to 2007 was extended due to massive cash injection by the Governments in early 2009. The current Government credit policy to engineer a soft landing is working to reverse the run-away and over-speculative housing market. If the complete cycle takes 6 to 7 years to play out, we could be in for another few years of price decline and low sale level.

Home prices are dictated by buyers, and in a buyer market price decline will continue until a large enough number of buyers are available to absorb the excess supply. A good indicator to watch is the supply/demand ratio or the MOI (months of inventory). When there are less buying interest and a high level of supply, home prices will continue to decline, until confidence returns to the market. We could be facing a 10% or more decline for the next 18 months.

So rather than holding firm Wong see's market prices dropping at least another 10%, if not more.

Wow.

Add that 10% plus drop to the 25% that Shuchat says the market has already endured and you have quite the drop in the cards for Richmond.

It makes for an interesting contrast from two players who are "inside the industry".

We will check back later in the year to see which one is reading the tea leaves correctly.

==================

Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.

Is Macleans correct? Is Vancouver already crashing?

Saturday's post about Maclean's magazine's cover story is clearly the hot topic in real estate circles right now.

Besides bringing the collapsing housing bubble issue front and centre, the real estate industry is all a tither about the defacto way in which Macleans presents it's argument.

The angst is best summed up by this tweet from the website Canadian Mortgage Trends (click image to enlarge):

The industry is pissed Maclean's didn't allow access to their spin.

Local Richmond realtor, Arnold Shuchat even popped by our little corner of the internet and offered the following response to the article in our comments section:

As usual, the general press when trying to get into the specifics of a particular industry without any detailed knowledge of same creates eye popping headlines which are of more relevance to its business than to the target of its supposed study.

Faithful readers have been jumping all over 'Alphabet Arnie' (a moniker one commentator dubbed him with for using his education credentials after his google ID), but it is worthwhile noting that Mr. Shuchat is one of our local real estate agents who has been very upfront about the evolving maket conditions during the past year.

Shuchat regularly provides copious market data about price declines.

Every week Shuchat will post the top 10 price declines for properties in Richmond as well as keeping track of notable price declines in various neighbourhoods around Richmond.

As he notes:

The average observer may have had his head in the sand in Vancouver, but the market has already moved down some 25% depending upon the particular sector.

When was the last time you saw a realtor come out and tell you the market has already dropped 25% in places?  Instead all we hear from most is that the market is 'flat'.

Shuchat is from Richmond and as we know all too well, Richmond has been ground zero for last year's implosion ever since the images of the Japan Tsunami spread around the globe.  

[One wonders how Friday night's Tsunami warning might jar memories for prospective buyers considering the delta lands in the coming months, but that's a topic for another post]

Notwithstanding, Shuchat acknowledges he is in the eye of the current collapse.  But going forward he see's things starting to turn around:

Being right in the middle of it, I detect a renewed vigor among buyers as of the end of November... I see prices holding firm and buyers coming back in. The effect of all this now, is that garbage will not sell as fast as it would have and properties will have to be better prepared for the sale.

Shuchat says many Richmond properties are owned by people who "do not have to sell."

Finally Shuchat notes:

Frankly, from the inside of this industry, I think MacLeans missed their call by about 8-11 months in the west coast market, and, short of producing additional fear into the market by their article, signals to me that additional opportunities can be reaped in the existing climate by betting against broad brush articles with incendiary pictures produced by newsmaking press.

The incendiary pictures being painted by the newsmaking press are their attempt to capture what is actually happening.  With that in mind, I can't help but focus on a key point Shuchat makes: that Macleans has missed their call by about 8-11 months.

Has the market been 'flat' the last half year or has it been crashing for about 8-11 months?

Fellow blogger Observer, at his blog Vancouver Price Drop, brings this question to the forefront  in his latest post and offers a stunning comparison between Vancouver  (at our current stage of our collapse) and with what has happened in the United States.

How does Vancouver compare with other US cities at the same stage of the popping of their real estate bubble?

In Vancouver, the peak looks to have been May 2012.  

If we look at the westside of Vancouver, 6 month into the unwinding we are down -8.6%.  

After 8 months we are down -11.1%. 

At this rate it's not a stretch to believe it will be down 15% after 12 months. 

Using the Case-Shiller data for single family homes, how does this drop stack up against our US counterparts? (click on image to enlarge):

6 months into our drop, Vancouver's westside had dropped 50% faster than ANY AMERICAN CITY! And we are on track to be ahead of all cities, except Miami, after 12 months.

As Observer notes, this is not a "flat housing market" nor is it a "soft landing."

Maclean's is really the first mainstream media to report on what is happening.  Given the dynamics of the recent mortgage rule changes, current evolving economic conditions and levels of Canadian household debt... they don't see the conditions that will put the brakes on this slide.

How can you blame them for forecasting anything but a crash?

It will be interesting to see their cover six months from now.

==================

Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.

Wed Post #2: Lower total inventory doesn't mean improving market conditions

As we noted earlier today, yesterday was an interesting day in our Inventory watch on the side bar.

As the Inventory scroll states, "Inventory has probably now peaked for 2012 and we will see more and more listings pulled off the market in hopes the market will recover in the Spring. The main watch now is to see if we will have any days in the final two months where sales surpass the number of new listings for that day."

Yesterday almost achieved that historic first for 2012.  We came in with 114 new listings and 114 sales.

The broader story, however, is total inventory.

All month long inventory has been contracting. Some have fretted/rejoiced that this indicates the market is turning around.

Huh?

Consider that at the beginning of 2012, inventory sat at 10,671.  Current inventory is more than 65% above that level right now.

The fact of the matter is that inventory historically contracts in October and carries on through to January, when listings begin to surge again back into the market.

Larry Yatkowsky tackled this issue on his blog and created the graph you see above.

As you can see, inventory is currently sitting at incredibly lofty levels, equal to where it was at the heights of the peak summer season in 2011 and 2010.

That's right... the inventory on the market right now is at the same level as we would normally see during the busy summer season in other years. As Yatkowsky notes:

The current decline seems like a slow slide. At its current pace it is not moving quickly enough to realign this market’s active listings with previous years.

Exactly.

Despite the traditional listings decline as we head into winter, Inventory is still at extraordinarily high levels.

These conditions recently prompted Richmond real estate agent Arnold Shuchat to observe conditions at the end of November are such that:

In house sales, volume is down 68.5% relative to last year and the median price is down 3%.  

In townhouse sales, volume is down 74.6% relative to last year and the median price is down 9.6%.

In apartment sales, volume is down 58.7% relative to last year and the mdeian price is down 16.5%

A continued erosion of price support and diminishing volume of sales will provide terrific buying opportunities for home shoppers.

Inventory, although lower, is still massively high for this time of year.

And it's effect on the market remains the same.

==================

Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.

Richmond "definitely a buyer's market"

Been a busy weekend, so a quick late night Sunday post for you.

It's midway through the month of November and we have some nteresting statistics from yet another Richmond real estate agent, Arnold Shurchat:

Over the last week in Richmond, there has been 75 new listings for real estate for sale, 74 price changes and 28 sold properties. All 74 prices changes were declines. The total number of listings for both detached singled family homes, condos and townhouses was 2,252 excluding multi-family units. In essence then, excluding new listings that keep hitting the market, it wold take almost 1.5 years to sell just what is out there right now for sale, at the rate things were last week. It is still definitely a buyer's market.

1.5 years of inventory for all real estate in Richmond right now and 74 price changes last week, all of which were declines.

In short... those that hoped the increase in sales in October over September were a sign the market was improving are about to be sorely disappointed. It's shaping up to be another brutal month in Richmond.

==================

Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.