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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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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The repeal of the HST has only spawned failed expectations

Yesterday we  made the observation that real estate sales continue to lag and it is becoming apparent that the removal of the HST is not going to trigger a house buying frenzy.

Today Alphabet Arnie Shuchat is out with some brutal statistics from Richmond that clearly support that claim.

If you look at new homes for sale in Richmond (homes less than 2 years old) there are 196 homes on the market. The 'cheapest' is listed at $898,000. The median price from the 196 listings is $1,905,000.

Since Feb 1, 2013, only 34 'new' homes have sold. Since March 1, 2013, only 21 have sold.

The myth (read: rationalization) for the declining sales over the past few months is that people were holding off making purchases as they waited for the repeal of the HST.

Well the HST is now history and since April 1, when the HST was repealed in BC, has there been a spike in sales in Richmond?

Since April 1, 2013 there have been a grand total of three 'new' homes sold!!!

This is a stunning collapse in sales and deals a brutal blow to expectations that the market would take off after the repeal of the HST. Says Shuchat:

It is now April 17! So far, I don't see the hoped for impact of the HST elimination. I am hoping that this is a data reporting issue, although I don't imagine the data being that far behind.

Rather than triggering a buying frenzy, sales appear to be falling to levels dramatically lower than pre-HST.

Here is the statistical information on the units that sold:

• The average selling price per square foot was: $467.63.
• Property #1 (Garden City) entered the market in July 2012 priced at $2,188,000 and sold for $1,588,785
• Property #2 (Garden City) entered the market in September of 2012 priced at $2,180,000 and sold for $1,760,000.
• Property #3 (Granville) entered the market on January of 2013 priced at $2,188,000 and sold for $1,830,000.

Shuchat observes:

For arguments sake, and all this would change when examining a particular property in detail, given that the average listing price across the board on these 196 homes is: $2,060,416 and the average sale price per square foot is $467.63, sellers must start to discount their new homes by at least 15% more to move them if they are of average build quality in an average site location. And, that assumes that they don't all do it at once, in order to get them to move.

Why?

Because the current asking price per square foot is at $556. Something has to give barring no change in demand, and I'm saying on average, that it will be about $300,000, depending upon how fast builders get their numbers there. It could be more!

One more thing: Of the 196 houses on the table listed for sale (the new stuff), 96 or 49% of them are vacant!

Pretty brutal, eh?

It's a scenario that will only exacerbate itself as those who had been holding off listing while waiting for the HST to be removed, now begin to enter the market.

Builders will be battling the burgeoning inventory.  Those who cut first - and deepest - will probably sell.  The rest will merely join the herd chasing the market down.

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House Price Drop Porn: Richmond/Vancouver

Yesterday we talked about how declining sales were leading to declining prices despite the Hopium being spewed by the real estate industry.

So today we give you a little house price drop porn to counter the 'asset protection' mantra.  Today's offerings are from Richmond and Vancouver courtesy of faithful reader 'HAM'.

5940 No. 1 Road, Richmond

Assessed at $831,000 the house last sold in January 2011 when it was listed for $758,000 but an intrepid flipper picked it up for $735,000.

The 'flip' was attempted several times but the writing was on the wall for this speculator.  It recently sold for $699,000 and the speculator walked away for over $100,000 in losses after all costs are factored in.

11060 Bamfield Gate, Richmond

2,950 square foot home, 5 bedroom 3 bathroom on a 5,312 sq ft lot.

Listed for 699,000. Assessed at $649,000.  It sold for $599,000.

Unit 10-8433 Bennett Road, Richmond

2 bedroom, 2 bathroom, 1,134 sq ft Townhouse.

It was purchased on September 10th, 2012 for $423,000 (which was below the listed price of $428,000).  It's assessed at $427,000.

But it appears to be another case of failed speculative fever.  Recently listed for $450,000, it was reduced to $436,000 and it finally just sold for $405,000.

Ouch!

4063 W. 16th Ave, Vancouver

Another failed flipping venture.

Bought for $1,375,000 in May 2011.  It's currently assessed at $1,370,000.

Re-listed for 1,488,000.  Reduced first to $1,450,000 then to $1,399,000.

It sold a few weeks back for $1,300,000.

2300 Kingsway, Vancouver

Our last offering for you is the condo development at 2300 Kingsway.  This is the site of the old Eldorado Hotel and Mulhern's Irish Pub.

Ya gotta feel for the Mulhern's, the simply waited too long to make the real estate play here.

The townhouse at 4858 Nanaimo (1228 square feet) was listed for $499,000 and sold for $395,000.  

Another at 4878 Nanaimo (40 square feet smaller) listed for $499,000, reduced to $449,000 and sold for $401,000.

With over 50 units left to clear out in this development, it's fire sale time.

Meanwhile some tidbits from our friend, real estate agent Alphabet Arnie Shuchat.

First up are the largest price declines in Richmond for the first week of March (click on image to enlarge):

As well as the top 57 price declines in the Lower Mainland: 

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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)

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