Sunday, January 27, 2013

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!


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  1. Perhaps AA is referring to this

    They will all come to Vancouver ofcourse, duh!

  2. At first I thought Arnie was a rational realtor. I was wrong.

  3. So who wins with the lottery? No one except the government. Rather a bad analogy if you ask me.

  4. The odds of winning the lottery are likely higher than that of the HAM returning to Vancouver in droves. I guess as far as the realtors go, desperate times call for desperate measures.

    1. According to the Sydney Morning Herald of Jan. 22 "1,100 government officials had fled China during last year's national holidays in October and that 714 had been successful in getting away. In the United States, the National Association of Realtors said properties worth more than $US 7 billion had been bought by Chinese in the US last year. Some high-end homes were now built for rich Chinese, with ponds for koi carp and a second kitchen for pungent cooking."
      The choice for fleeing CCP bureaucrats - a vastly overpriced minimansion in Raincouver where prices are falling... or the same or larger in California where prices are on the upswing.

  5. Is the AA "Group" (alcoholism aside), really a "Group"? Or is it just Arnie trying to make himself look bigger than he really is?

  6. So real estate is now just a means to an end of winning a lottery. That's all this has ever been and now really is.

    We've been reduced to a society of gambling addicts to perpetuate ways. Legalized criminality. Maxed credit card lifestyles. Stealing from future generations.

    Homes have been turned into chips and life is now just a craps table. The question is, are you sure you know who the dealer is

    who the house is

    We already know a good chunk of Vancouver mortgage holders are technically underwater