Thursday, December 6, 2012

Thurs Post #2: Holy Asset Depreciation, Batman

How low will it go?

Last Friday we told you about #204-3411 Springfield Drive in Richmond. Today we have a significant update.

When we brought it to your attention, it was one of our newest entries in the 30% below assessment assessment club. Here is the screenshot we showed you last week - provided by the blog Vancouver Price Drop

(click on image to enlarge)

The condo is a foreclosure sale.

Listed as a spacious 3 bedroom, 2 bath, end unit condo overlooking the courtyard, it has languished on the market since May.

It has a huge private enclosed balcony off the living room, generous-sized bedrooms, a walk-in closet and 2 piece ensuite bathroom in the master bedroom.

Complex amenities include: sauna, outdoor pool and 2 guest suites. It's locate within walking distance  of the Steveston Public Market, Richmond dyke's, a park, public transit, Manoah Steves Elementary  School and Huge Boyd Secondary School. 

Assessment value: $265,900.

The asking price last week: $185,000... 30% below assessed value.

Well, that asking price has been slashed again - big time. Chop another $45,100 off that price and the current asking price is now $139,900:

That's right, from $185,000 down to $139,900.

It's now $126,000 below assessed value or 47% under that last assessed value.

Will this be the first property in Richmond that sells for 50% below 2012's assessed value?

This complex was originally built in 1972. With weekly drops like the last one, we'll be down to the original selling price before long.

Even if you don't go back that far, the past decade has already been a wild ride for the 'value' of this unit.

(hat tip bopeep @ Vancouver Price Drop)


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  1. Replies
    1. So far I haven't found evidence of one, but maybe others could share some insight?

    2. The special assessment is for the Delorian to go back in time to live in it.

      If you look at all properties and sort by low price all of the units in these buildings are priced pretty low. The difference is the other units are more modern.

      The lender either has some equity to offset to authorize the lower price or they know they need to exit the market quickly.

    3. LOL... perhaps the green carpet was a shag carpet back when it was new, just worn down now?

      A classic example of properties that never should have been 'valued' that high to begin with.

  2. No special assessments pending.

    1. Which means we are left with a massively overvalued property which - in the harsh reality of a stagnating market - is rapidly decreasing in value because there were no justifications for the insane run up to begin with.

      Voila - I think we have a poster child for the collapsing bubble.

    2. I think few people actually understand the ramifications of the collapsing condo market. I'm not sure if there are the numbers out there to support this, but my guess is most new home buyers previously had a condo. As people's equity collapses and find themselves underwater, their ability to afford a downpayment for a home vanishes. Lending is only going to get tighter as the slide continues.

      I've talked to a lot of condo owners recently, many who understand the market is in the dumps, and two misconceptions of theirs stick out:
      1. They believe the market will recover in a year, and
      2. Many believe that they will be able to rent it out and buy a house if it doesn't.

    3. What we have is a huge reference point that buyers will remember and look to replicate. This type of move is what drives a market.

  3. The sellers are saying that they will unlist their property and wait until times are better(spring time or later?). The issue now is that the buyers know that prices are going down and will demand lower pricing.

    If a house is over valued - there are 15,863 listings (today's numbers) available to consider. Lot's of pre-sales coming up.
    Could this figure double come springtime?
    30,000 listings?

  4. I'm not sure that a property like this will be trendsetter for the collapse of housing prices.

    As far as I understand (I was half interested in a forced sale property a year back) - when the case goes to court, one of the responsibilities that a judge has to assume, is that of guardian of the seller's rights, and that the deal is representative of the property's market value (or close to). To aid this a purchaser would be submitting market comparables etc.

    On that principle, especially as I've seen a few foreclosure properties leading the way in offering heavy discounts in asking price - would a price cut such as this get approved for sale by the court, or would a sale like this have to wait until a private seller (i.e. not a court ordered sale) sold a comparable property, for a comparable price - rather than using a foreclosure listing as a trendsetter for an obviously low-sale housing environment.

    Thoughts/experiences anyone?

    1. The judge will consider that this property has been on the market for a considerable amount of time and that there has not been any offers. Therefore, the market conditions dictate the price.

      The Seller is using this strategy to bring in a huge amount of interest and hope that multiple bids will bring in a sale over-asking price. The court date has been set, and they have an accepted offer at under the asking price. Let's see if there are multiple offers at the 11th hour. Interesting...

    2. Let us know how it turns out. When is the court date?

  5. Assumption from investors: a huge pool of renters available to rent when the property can't sell .....thoughts...

  6. The yearly tax is $1,175.00 / 2011 that is pretty steep. I live in a 1975 New West condo and just got a new levy $7,000 and the last one was 5 years ago $6,500, that is what i worry about in these older apts now. And the tax on this one is quite high it's based on the assessed value $264,900 by the city right ? That'd be a deal breaker for me .. But interesting to see what happens. Something smells fishy tho :)