As we noted yesterday, the mainstream media is now openly telling us that the Vancouver Real Estate Market is in "full retreat".
The 'average' single family house is now down 15.7% from the highs of February 2012 and the writing is on the wall.
But will those property owners who bought years ago (and with room to move on price to close a sale in this dismal market) recognize the market for what it is?
Will they cut price and run?
We may be starting to see that happen.
Check out 2785 Chelsea CS, Chelsea Park, in West Vancouver. (hat tip G says)
Here is a screen shot of the link for posterity:
2785 Chelsea is a huge 35,153 sqft property with spectacular panoramic ocean views. On it sits a 4,888 square foot 5 bedroom, 5 bathroom split 3 level home.
Originally the property was listed for $2.48 million.
The assessed value of the property is $2.15 million.
The asking price was cut several times, and recently fell to $1.99 million.
The property finally sold... for $1.61 million. That’s 25% off the assessed value of the property and 35% off the original asking price!
As we read yesterday the 'average' SFH has dropped 15.7%.
But that drop is nothing compared to what owners of high level homes need to do if they want to sell their homes in the current market.
By the end of summer, slashing 35% off some of the outlandish asking prices of Greater Vancouver properties may only be just the start of the cutting required to sell.
It will be interesting.
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This fall could be quite distressing for a lot of property owners returning from summer holidays. I suspect we will see plenty of fresh listings. Anyone who bails out at below market will drive down prices for all neighborhood comparables.
ReplyDeleteYes, Whisperer, the writing is on the wall. As has been discussed many times here and elsewhere, most homeowners will never get the opportunity to enjoy the theoretical paper gains they built up during the frenzy. Except insofar as they used their equity to fund a lifestyle that is.
There is just no satisfaction in any of this. We have all known for a long time this was coming. Despite some very vocal warnings from the crowd who follows R/E closely, most people failed to take heed. Now that the bust is here nobody sane will be able to keep up the facade of denial.
My own family refused to acknowledge my concerns despite being presented with very damning evidence of the risks. What the hell else can you do? Sister just shrugged and called me a worrier. Her contractor husband assured her that there would not be a slowdown in building or buying. Houses are secure.
I said "he has a ticket in construction and building trades but I studied business and economics. Who do you really think is going to be right about this"?
She said she preferred if I didn't keep talking about stuff that was stressing her out for nothing. So they held. And now they will go right back down to the bottom like everyone else because soon enough (if not already) they will be underwater on the debts.
Just proves that even smart, educated people can get it wrong. Damn fools will learn when they are broke but what a terrible way to get an education.
With the government insurance stripped away, we finally see what the banks really think houses are worth in Vancouver.
ReplyDeleteAnd when we hit bottom in a few years, that WV property will probably be "worth" under a million.
ReplyDeleteIt could well be, but you know, it is a 200 x 175 lot in West Van with ocean views. It's definitely worth something. If I had to desperately cling to declining real estate in a crashing market, I'd rather cling to that than to some penthouse above Rogers Centre in a crumbling building with a strata council of cementheads and half the suites subleased to hookers.
DeleteJust sayin'.
It is worth what someone is willing and able to pay for it. I can still recall raw lots in WV for under 200k. Decent sizes too. They almost all had a view. It was really not all that long ago. The ex wanted one in the worst way but I did not want to be saddled with payments on land where we could not live without building a house.....
DeleteI should have listened to her! Damn.
I am a bear on VA real estate, however, I won't get excited until I see prices for SFH that "average Vancouverites" can afford and are actually buying, i.e. the sub-$1M, reduce by 20%. We just aren't seeing that. The price reductions are in the absurdly over-priced high-end market that was a speculative mania catering to HAM. Hopefully, a reduction at the top will have a ripple effect to the bottom. I suspect that there are a lot of buyers sitting on the sidelines waiting for these sub-$1M properties to reduce and once we see that, there may be some capitulation and sales could pick up. I read a lot of these bear blogs and it appears that a lot of us are sitting on the sidelines waiting for prices to come down. While I don't put much stock in the HPI, I do believe for the average SFH, it is a valid measure, since we just aren't seeing reductions in the lower end SFH stock. I have been following New West and East Van for years and prices continue to increase for those "sweet spot" properties in the $600K - $900K range, much to my dismay.
ReplyDeleteIt takes time to play out and work its way through all levels of properties. When all is said and done, prices will have dropped 70-80% from these bubble prices.
DeleteOur economy is driven by credit. But any boom created by excessive credit will ALWAYS bust.
CMHC went from $100 billion in 2006 to $600 Billion in 2012.
This real estate boom has been solely driven by excess credit, plain and simple.
And the lives of thousands of families have been thrown into turmoil because of this credit bubble. Many will eventually be economically devastated.
ReplyDeleteIt would be nice to think the world wide housing/heloc credit fiasco is the last bubble but I am sure the banksters will find something to inflate.
ReplyDeleteCan you say carbon credits?