MAC-gate helps expose the myth of HAM (Hot Asian Money). Early stats show Chinese New Year a sales disaster

One of the side bonuses to the MAC-gate scandal has been the exposing of the myth of HAM as something that is going to keep our housing bubble afloat.

The media has been quick to identify the main reason for MAC's media lie - perpetuating the import of the Chinese property buyer.

From Friday's story in the South China Morning Post newspaper titled: Bogus buyers exposed in scam to boost property market in Vancouver - Deception aimed to create the impression that Chinese buyers are still flocking to buy into Vancouver's housing market, where prices are falling

The deception was intended to create the impression that Chinese buyers were still queuing up to buy into Vancouver's teetering real estate market, which has long been fuelled by money from China and is now rated as the second least-affordable city in the world, behind Hong Kong, according to the Demographia consultancy.

(Note: the google translation incorrectly translates the figure as a 7% drop. The news article does actually use the number 70%.  Not sure why google turns a 70 into a 7).

... to an article in yesterday's Globe and Mail newspaper titled: There’s scant evidence behind the myth about foreign buyers of Vancouver real estate.

While the stunt was roundly slammed, it also reignited a debate among real estate observers: Just how much truth is in the long-standing narrative that foreign money is driving the local market? Anecdotes abound about foreign investors scooping up Metro Vancouver real estate, driving up prices and creating anxiety among locals – a bogeyman haunting the dream of home ownership – but evidence to support such a claim is scant.

... the word it out.

Don't get it wrong, all rumours have some basis in fact and the myth of HAM is no different.

But the excessive manipulation of this myth has been a criticism of the online community for years.

Garth Turner has spoken about it lots beforeand railed against the deceptive media ploys that have been used:

As many people now know, Amanda is a young administrative marketing assistant at MAC Marketing Solutions in Vancouver, a company developers hire to flog condos to the rabble. She crossed the ethical line last week when the company tried to (once again) milk the incredibly lazy, gullible and bush-league Van television media...

Of course, this is not the first time. In 2011 you might recall Cam Good, head of The Key – another house-flogging, Van-based professional pumping outfit – hiring a yellow helicopter to ferry around “Chinese investors” with three TV crews stuffed into the back of the chopper. The intentional buzzing of defenceless places like White Rock was intended to goose the myth of HAM – Hot Asian Money – and feed the meme that legions of oriental Donald Trumps were about to gobble up the region, pricing the locals out forever.

But as this blog pointed out days after Global and CBC ran their yellow peril stories, the Chinese dudes were actually Canadian realtors from the burbs, posing as rich vultures from Guangdong. Mr. Good’s company also tried to pass off an employee as a consumer in a weird scheme that brought the Groupon concept to selling condos.

And there have been many condo marketing ploys besides these. How about the fake condo sale line ups to create the media and buying frenzy?  As Turner notes:

People (Asians, preferably) were offered money, plus lawn chairs, portable heaters, food and porta-potties to camp out in from of a sales centre for 24 hours prior to opening. TV news crews were invited to come and witness the spontaneous news event and the stories they ran begat longer lines, people being the lemmings they are.

Turner originally covered this story in Feb, 2011 and we followed up on February 17, 2011 (with citations from numerous craigslist ads by VREAA).

The selling period associated with Chinese New Year (CNY) for 2013 is now coming to an end and statistics are proving the fabricated hype is once again just that: a fabrication.

The dedicated contributors to the comments section of Vancouver Condo Info show us the reality.

In the supposed HAM hotbed of Richmond there are 399 homes on the market with an asking price of over $1.4 million. That's a MOI (months of inventory) of 28 months!  There are 65 homes on the market asking over $2.4 million.  Only 15 such homes have sold in the past 12 months meaning there is a stunning 52 MOI!

Contributor VMD shares with us this translated Chinese news article revealing that there has been a 70% Drop in Home Sales Since Chinese New Year.

Contrary to what the condo marketers were telling us, there actually was no rush of buyers coming into the market this Spring. The CNY sales period has been a disaster.

As Garth Turner observes, there have been lots of high-end houses bought by people who made their money in Mainland China, and that will continue. But many of the realtor shenanigans portrayed in our local media as 'news' are nothing more that the work of shrewd marketers out to create anxiety and competition amongst local buyers.

This time one of those marketers got caught.

In the coming weeks it's crucial that the governing bodies that oversee the integrity of the real estate industry take severe and strong action to ensure these "dishonest tactics" aren't used again.

The people of Vancouver deserve nothing less.

(hat tip: yvr2zhr, VHB, VMD, VREA, Vancouver Condo Info)

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

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

Please read disclaimer at bottom of blog.

A Tale of Two Predictions: Part (b)

Mainstream media often provides Real Estate 'insight' from builders, bankers, developers and realtors. For years this Real Estate ‘cabal’ has insisted that the Vancouver market was not in a bubble. Now that prices have started to decline, they insist this drop in prices is only a ‘momentary dip’ attributal to a ‘lack of consumer confidence’. Their prognosis: price declines are relatively muted and upward momentum will return in short order.

For several years now, the Vancouver Housing Blogger has been a counterpoint to this view. Recently VHB offered his prediction for the immediate future of Vancouver Real Estate on Housing Analysis ; a blog whose stated objective is ‘providing thoughtful analysis on the housing market’.

Noting that current Canadian labour market statistics predict a very bleak picture for 2009 and that the prognosis for BC in the coming few years is for extremely hard times; VHB points out that circumstances are, in reality, far worse than the predictions. January statistics already show BC is down 35,000 jobs - a pace that will blow most economist’s predictions for 2009 job losses right out of the water. And one week into February, the torrid pace of corporate layoff notices has continued unabated.

More importantly, BC’s labour market boom has been based on construction and as that construction boom continues to collapse, massive job losses will continue to mount. A situation which cannot help but mortally damage BC’s housing market.

“When the bubble started to burst in Spring 2008 in the midst of a strong economy, it burst mostly because there was a psychological change--people stopped wanting to pay the inflated prices because they didn't have confidence that they could find a greater fool to whom to unload their property in the future. We've seen 15% or so come off prices, but the main effect really has been that properties have just sat around not getting sold. Aside from a few flips gone bad, there hasn't been a lot of urgency on the sell side. So it didn't sell in 2008--just rent it or try again in 2009,” said VHB.

“What will be different going forward is this. As unemployment approaches double digits in BC (we'll get there shortly after the Olympics--if not earlier), there will be thousands of people who cannot make their mortgage payments on their primary residence--not to mention their inability to feed the monthly bleed from their condo 'investments.' These properties will be thrown back on the market first by themselves, and later by banks as foreclosures.”

VHB goes on to note, "When will this happen? When people lose their job, it takes some time before they get irreversibly behind on their bills. It then takes some time for the bank to foreclose and get the thing on the market. So, the 'have to sells' are not going to seriously start hitting the market until late 2009. But in 2010, this will be a dominant part of the housing picture."

VHB paints a very compelling picture. Record new housing inventory on the way and a cascade of 'have-to-sell' people driven by job losses.

Meanwhile speculators have vanished from a collapsing market, home ownership rates are at record level (with those owners unable or unwilling to upgrade and no new customers coming into the picture) and the evaporation of U.S. and Asian buyers due to the world wide economic collapse

It’s a toxic mix: exploding inventory with no customers to fill the void.

The end result? VHB predicts 2009-2010 will provide a tremendous amount of pain for those who are overexposed to Vancouver real estate because we have the creation of a perfect storm which will send real estate values into a downward spiral: rising unemployment levels leaving many local Vancouverties unable or afraid to commit to real estate purchases for themselves, the evaporation of speculators who cannot turn a guarenteed profit and the evaporation of U.S. and Asian buyers - buyers who have always kept the market artificially high.

VHB - along with a ‘mohican’ - post their statistical case on a regular basis on the Housing Analysis blog. Its worth you while to check it out.

Meanwhile the coming two years will play out as a tale of two predictions: the CREA's or VHB's.

Who are you inclined to believe?

Even for Karnac the Magnificent, this would be a 'gimmie'.

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

Send your comments via email to village_whisperer@live.ca

A Tale of Two Predictions: Part 2 (a)

Back in the heady bull run real estate market days of 2005, when virtually everyone seemed to be proclaiming that the BC Real Estate market was in a permanent "bull" market, an anonymous internet real estate blogger(known by his moniker: the Vancouver Housing Blogger or VHB) openly questioned whether or not the Vancouver market was in a bubble.

He was one of the few locals to do so.

So popular were his posts that he was getting over 25,000 unique visitors a week to his site.

The VHB would post daily entries that warned that Vancouver and Victoria were in a massive speculative bubble. And it wasn’t just editorial commentary. He would link to reports from the Real Estate Board of Greater Vancouver, Statistics Canada, expert opinions, other cities' real estate blogs, and to media reports to make his case. All available information was interwoven to prove his point.

The thoroughness of the VHB was such that even Bob Rennie, BC’s Condo King, was drawn into debates on his site. Rennie, regularly quoted in the media at the time as saying the real estate market would continue to be strong and wouldn’t suffer a downturn, chided VHB at one point by refering to one of his highly successful condo pre-sales and saying, "If the blogger is right...1,000 people are wrong."

Well it turns out both Rennie and those 1,000 condo pre-saler's were wrong and the Blogger was right.

That infamous quote is now used as a tagline by the VHB whenever he posts on the local Real Estate Talks messageboard.

VHB told a reporter that he started his blog because, "I was following the housing market and wondered if others shared my more unorthodox views. I was making some graphs on my own. I thought some others might like to see them too. [The mainstream media] doesn't point out the inherent conflict of interest in always asking builders, bankers, developers and realtors about the housing market."

VHB used his blog to serve as a counterweight to thosed biased positions.

In February, 2007 the VHB closed down his blog saying, “Things have changed on the off-line front. I have to go now. It has been a lot of fun. I might be back sometime in the future, but I need to stop for a while anyway. Ta Ta For Now.”

Well... the VHB has returned and while he has not re-started a blog of his own, he makes regular contributions to a number of Vancouver R/E sites.

Recently he made his own predictions for the current market.

His thoughts tomorrow in Part 2(B).

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

Send your comments via email to village_whisperer@live.ca