"First salvo" fired in condo price undercutting war in Richmond

Yesterday's realtor shills may be insisting that nothing has changed in the real estate market in Point Grey, but a glance southward across the muddy Fraser reveals a very different story.

This is Parc Riviera, a riverfront project in north-east Richmond. It's a 20-acre master planned community with five acres of parks and riverfront trails.

Richmond realtor James Wong tells us that 2013 will be a challenging year for local home sellers because the Vancouver suburb currently has over 10 months supply of homes on the market... with more listings expected in the next few months. 

Wong's assessment is that buyers are in no hurry to buy in spite of all-time-low interest rates at 3.0% or less for 5-year fixed mortgages. Many resale homes are languishing on the market due to lack of buying interest and Wong says this is because home buyers are simply not willing to pay the prices expected by sellers.

Wong suggests that this milieu is what has lead Parc Riviera to fire the "first salvo" in what will be  a serious price undercutting war in the condo market in Richmond.

The developer is now offering pre-construction sale of condos starting from the mid $200,000’s. The selling prices for the first phase of condos and townhouses at Parc Riviera could set the stage for Richmond home prices to come down.

The developer’s ad placed in Vancouver 24 Hrs and Richmond News advertised townhouses selling from $369 per sq ft, and condos from $386 per sq ft. Current selling price per sq ft for resale wood-frame condo in Richmond is around $405 to $420 per sq ft. The pricing trend for new developments in Richmond can be expected to follow similar offers as competing projects are forced to adjust their selling prices. Resale homes will be under pressure to compete for buyers.

Home prices at Parc Riviera are priced some 10% to 15% lower than current selling prices of resale condos and townhouses in Richmond. Current resale lowrise wood-frame condos and townhouses are priced from $435 to $475 per sq ft. Recent sales of condos and townhouses in Richmond were found to be between $400 to $450 per sq ft. The overhang of too many homes chasing too few buyers could only mean lower selling prices for home sellers. Motivated sellers taking low-ball offers are setting the trend for lower prices in the coming months.

It will be interesting to see how other new condo developments respond.

More significantly what will be the reaction from all those condo owners with overpriced units languishing on the market right now? Who will pay those high asking prices when new development's are coming in significantly lower?

Realtor Arnold Shuchat's description of an underwater market in Richmond for SFH's may be about to intensify by spreading to the condo market too.

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Realtors, developers... do you ever wonder exactly how many are one and the same?

Meet Sue Johnson (L) and Sarah Thompson of Dexter Realty.

They're the latest realtor's to demonstrate that the print media is nothing more than the real estate industry's playtoy for disguising news as advertising, this time courtesy of the Vancouver Courier.

In a self-promotion puff piece, this duo uses the Courier to broadcast the following 'news' for us:

The most expensive West Point Grey home on Realitylink.org is listed at a cool $17.5 million.

The 2,900-foot-home on a 52,000-square-foot lot overlooks the sea from Belmont Avenue and was designed by Geoff Massey, who worked with the late Arthur Erickson.

Fifteen homes in the area that stretches from West 16th Avenue to English Bay, Alma Street to Blanca are listed at more than $5 million.

Sue Johnson, a resident of and realtor in West Point Grey for 24 years, uses the opportunity to reassure all and sundry that home values in Point Grey have held their value over the years "probably more than any other area. Markets always ebb and flow. They go up and down. That area goes down the least and goes up the most."

Presumably this reassurance is necessary because the sale price of a typical detached home on the West Side in March was down 9.1% from 2012. A figure Johnson is quick to spin as "up 28.2% from five years ago."

Sarah Thompson, Johnson's real estate partner, says the market is becoming more balanced for buyers and sellers, and that "accurately" priced homes are moving. Thompson claims the spring market just started to blossom and lately she’s even seen multiple offers and properties selling within a week.

In an interesting revelation Johnson reveals she's personally built three of her homes in Point Grey.

Interesting because realtors revealed as developers is something of a common theme on the West side in media stories over the past year. You have to wonder how many are dabbling in both roles at the moment.

Johnson insists everything is basically okay on the West Side for real estate. She says West Point Grey has historically attracted local and international buyers and that "nothing has changed" on that front.

In the midsts of a Provincial election, this is what the Courier fills it's newspaper pages with? ... at least those pages of the community paper that aren't already laden with real estate ads.

So if 'nothing has changed', how is any of this news?

Isn't amazing how some in the industry feel the need to repeat this message over and over again?

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Underwater

On Tuesday we brought you Richmond realtor James Wong's musings that "sales are expected to continue to languish due to the lack of buying interest."

Fellow Richmond realtor Alphabet Arnie Shuchat follows that bleak news up with the following market analysis:

Primarily in Richmond, most people who bought in the last 3 years are technically under water. What I mean is that they are for sure going to be unable to sell their property for more than they purchased it; they are definitely likely to have a selling price net of commissions yield proceeds of disposition less than the amount owing on their mortgage.

I say this because in our previously expensive real estate market, buyers were throwing everything they could at the down payment and they would be lucky for a house purchase to be able to do so with a conventional mortgage at 20% down. The market being down some 25-30% depending upon neighbourhood, means that they are 40% through their 5 year fixed mortgages and in the event they were at term today, the discussion at the bank would most likely revolve around them coming up with sufficient equity in the form of a new 20% equity payment to finance a conventional loan, or CMHC insurance for a non-conventional one. Both scenarios are grim and place yet another purchase of the next house phase in jeopardy.

So we have all niches of home ownership who got in over the last 3 years looking at negative equity and all of the chilling effects on spending, renovating, moving up etc... that go with that. It is the inverse of the wealth effect that happens when asset prices move up and people feel good.

Shuchat's analysis is a shocking bit of news for anyone who believed the bunk that the real estate always goes up.

This is the very scenario that started the dominos falling in the United States, a condition the real estate industry here has always insisted simply cannot happen in Canada.

Say it isn't so.

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An Unsustainable Proposition

"Over the last years, the Vancouver Sun and The Province have seen alarming and unprecedented revenue declines... the business is unsustainable... we must take immediate steps to stop the bleeding."

Ever heard of Newspaper Death Watch? It's an intriguing US-based website that tracks the dying newspaper industry in the United States.

In each case a predictable chain of events usually precedes the death of a paper: Journalists are sacked, newsgathering budgets are cut, pagination is reduced, and potential consumers are excluded by price rises – there are survivors, but for how long?

That's a question that will now be asked locally. 

Staff at The Vancouver Sun and The Province newspapers have been told to expect another round of layoffs because the current business is unsustainable.

In a message to staff issued on Wednesday, Pacific Newspaper Group president and publisher Gordon Fisher said the papers are facing alarming declines in revenue from print advertising and if the trend continues the businesses are unsustainable.

"I would be less than honest if I failed to point out that, as an example, our productions costs are dramatically higher than those of our peers. As one small but enlightening example, we are not in the insert business because it is impossible to profitably compete due to our costs."

It's sad to watch the major dailies go the way of the video rental store. And it's not just the Vancouver papers.  As Garth Turner noted today:

Postmedia, owners of the BC papers and slew of others, is bleeding $1 million per week. Advertising has fallen another 14% in the past year. Meanwhile the nation’s largest newspaper, the Star, has just announced its own ‘please-quit’ program for employees and is actually farming out production of its pages. The Globe, as you know, erected a paywall around its web site, as it also jettisoned staff.

CTV has recently laid off on-air people, camera operators and radio hosts. The CBC’s been punting 650 employees for the past year. And Rogers, with a massive cable monopoly, shocked workers months ago with hundreds of layoffs.

The point is that revenue models no longer work for traditional media organizations because they’re based on eyeballs. As readership and viewership wither, so do the ad dollars. Gone are the days when everybody in town had the same morning paper tossed on their doorstep, or tuned in to the same supperhour newscast.

Part of the reason is the proliferation of new vehicles... Another reason: print and TV newsrooms are whoring themselves. As media turns from useful, original content to the delivery of advertising messages, it gets irrelevant and annoying. If a paper wants to succeed, the last person shown the door should be a reporter. These days they lead the exodus.

And that's the crux of it.

People want news.  They want reliable news.  And they aren't getting it from a medium that has spent the last 20 years cutting back on the 'news' part of their publications in favour of 'newsvertainment' cum 'newsvertizing'.

The industry has also failed to keep pace with changes in technology, a revolution that has meant that readers accustomed to waiting for a daily newspaper can now receive up-to-the-minute updates from web portals, bloggers and services such as Twitter.

There is still a vibrant, profitable role for news in today's society.  

But can the daily papers seize on it?

Are these layoffs the first steps in a move to re-organize and capitalize on this need or will the Sun and Province be going the way of Blockbuster?

Continuing to shovel out 'newsvertizing' in place of actual news guarantees it will be the latter.

Instead of real estate, maybe one of the Vancouver Sun's last photo gallery's will contain these types of photos.

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A dreamer, a realist and the scammers still scamming...

Interesting to watch reality to set in for some sellers.

3294 Wellington is a 5 bedroom 4 bathroom mixed use dwelling that contains 3 suites above a convenience store.  Originally listed for $1,390,000, it was Vancouver's biggest price cut last week as the seller trimmed 28% off the asking price bringing it down to $998,000.

Even so, it's still way over the assessed value of $658,200 as sellers struggle with what's going on.

Other's, particularly in Richmond, can see the writing on the wall.

This is 5542 Cornwall Drive in the upscale Terra Nova neighbourhood:

As one of our faithful readers pointed out, it's assessed at $1,417,000.  Originally listed for $1,338,000 it has languished on the market since April 2012.  It sold on April 3rd, 2013 for $1,095,000... 23% below assessed value.

We are told the seller was a realtor.  Given the timing of the sale (right after the HST ended), it's clear he was simply happy to dump the property and wasn't waiting around for the phantom surge the removal of the HST was supposed to represent.

Over on Garth Turner's blog, we have the latest example of real estate media manipulation.  It's almost a sport now for the online community to ferret out this ridiculous BS.

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The latest from Richmond: sales expected to continue to languish due to "lack of buying interest"

Yesterday we shared with you realtor Larry Yatkowsky's stats which show inventory is hitting highs not seen in years, a pattern which Yatkowsky suggests might be "the hint of the century" about what's going to happen to the market.

Meanwhile, in Richmond, realtor James Wong is out with his latest monthly report on real estate. Wong regularly gives blunt market analysis for his readers and his latest mid-month report is no different.

Wong notes March had a much better sales performance than expected, but his prognosis is still bleak:

Richmond Home sales for March, 2013 at 280 units were 28% higher than the previous month sales of 219 homes. The much better sale performance was expected as seasonally the spring market upswing began in March. It came as a surprise that the total active listings in March, 2013 was about the same number of homes for sale in February. The overall months-of-inventory (MOI) at 9.74 was a slight improvement compared to 10.24 months in February. The drop in MOI was due to the improvement in the average 3-month sales for detached homes, townhouses and condos.

Richmond Real Estate Market Outlook:

The Months-of-inventory (MOI) in Richmond at 9.74 continues to favor buyers. 

Overall, the market sentiment is subdued, while home prices are expected to continue drifting lower due to the lack of buying interest.

Home sellers can take consolation that the pace at which new listings coming into the market in the first quarter of 2013 was more tempered than the same period for 2012. The current negative market sentiment will dampen buying interest, while the over supply of homes will drive home prices lower.

Richmond detached homes are expected to continue languishing due to the lack of buying interest.

There are currently 608 detached homes for sale in Richmond at prices above $1,000,000. With average past 3 months sale around 31 homes, the MOI is at 28.8 months. And for homes above $1,500,000, there are 350 homes available for sale. At an average past 3-month sale of 11 homes a month, there are 31.8 months of supply for homes over $1,500,000.

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Listings slowing? Look at the overall inventory picture. The message is unmistakable.

When the total number of listings dropped in December, the real estate industry trumpeted that homeowners were pulling their houses off the market rather than cut their asking prices in a slowing market.

Proof, we were told, that buyers needed to buy now because prices weren't coming down.

Of course what the cartel press releases failed to mention was the fact that a large number of homeowners always pull their homes off the market over the holidays.  Who wants to deal with open houses at Christmas time?

They also failed to mention that total listings were in December/January were actually at record highs.

As the Spring market rolled around, the Industry chortled at how the pace of listings at slowed compared to previous years - more proof homeowners refused to bow to pressures to cut prices.

But while there have been far fewer 300+ listing days this Spring, the reality is that sales have plummeted.

So what does the overall all total inventory picture look like?

Again it is Larry Yatkowsky with a statistical snapshot that tells all.

Total listings in the lower mainland now exceed 25,092. This surpasses the previous highs for this time of year seen in 2011 [22,323] and 2012 [23,087].

Yatkowsky notes that this Inventory apex occurs at a time when sales reported by the various real estate boards are below 10 year averages.

It makes him wonder if:

the reality of the numbers... might be the “hint of the century”

For all but the most diehard, the message is unmistakable.

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How will the result of the BC election affect Lower Mainland real estate?

As everyone knows, the provincial election campaign is underway.

The reigning BC Liberal party has been plunging in the polls and faces a daunting, if not unlikely, task in the coming weeks.

And given the importance of real estate to the provincial economy, the prospect of a change in government is front and centre on the minds of many in the industry.

The website REW.CA, a real-estate listings site for the Lower Mainland, is watching the election with keen interest.

They're asking people who follow the Lower Mainland real estate market for their opinions on the effects of a possible change in the BC government.

The question: "How will the result of the BC election affect Lower Mainland real estate?"

They've asked for a comment from this blog. 

Partisan politics aside, what do you think?

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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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Is reality starting to creep into the Greater Vancouver real estate market? - Updated

As sales continue to lag and it becomes apparent that the removal of the HST is not going to trigger a house buying frenzy, is some semblance of reality finally creeping into the Lower Mainland real estate market?

Realtor Arnold Shuchat is out with his latest price drops for Vancouver and Richmond. Leading the Vancouver price cuts is #208-1001 Richards Street.

This 1 bedroom, 1 bathroom condo in downtown Vancouver is currently assessed at $331,000.  Up until this week the owners had been asking an insane $629,000.  They have now slashed their asking price to $366,900 - a 42% drop.

It's still priced too high but at least it's more realistic and a sign sellers are starting to accept the reality of the market.

Another such sign comes from our perennial favourite at 3390 The Crescent:

We first profiled this 6 bedroom, 8 bathroom 10,516 square foot mansion (which sits on over an acre of land in the heart of Vancouver's toniest neighbourhood) back on November 22, 2011.

The current owners bought this home in April 2004 for $6 million.

In 2010 the home was listed for sale for $17.9 million, but there were no takers at that 'bargain' price.

After looking at the high prices mansions were commanding in Shaughnessy (a house that sold in 2010 on Angus Drive for $5.7 million was assessed in 2011 at $9 million), the owners jacked their asking price from $17.9 million to $31.9 million.

That's right... the home failed to sell so they doubled the asking price.

(For reference the house is currently assessed at $16,076,000)

In September 2012 the asking price was slashed to $22,000,000. This week it was cut again, this time back down to $17,800,000.

Still over assessed value, but another insane asking price has been trimmed to just over assessed value.

(hat tip UBC in crisis mode)

Finally there is the infamous Fake Mansion in West Vancouver.

This was the West Vancouver waterfront tear down assessed at $6,768,500 whose chief selling feature was the fact the property could be subdivided into 3 lots.

The seller was asking $28 million but when there were no takers, the agent listing the property gained world wide attention when the house was portrayed as Canada's most expensive listing (asking price raised to $38 million).

To help drive attention, images of a mansion that doesn't even exist were posted with the the listing and the property went viral on the internet.

When the dust settled from the resultant brouhaha, the asking price was cut back to $28 million.

Now the seller has ditched the original realtor, listed with a new agent, and the asking price has been dropped to $19,888,000, that's 48% slashed from that ridiculous February asking price.

(hat tip Observer)

As Observer notes, this property might well now lay claim to the biggest price drop in Canadian history - $18 million and counting. Chop another $10 million from the price and it just might sell.

Observer is now out with his top 10 price drops of the week and the list provides more evidence that sellers are begrudgingly accepting reality. You don't even make this week's list of price drops unless you have chopped $4 million from your asking price! A statistic which, in and of itself, is just too bizarre for words.

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So what's the status of the RECBC investigation into MAC Marketing's media manipulation stunt?

Yesterday we told you how it appears the infamous 'Chris Lee' has resurfaced as a sales agent at another MAC Marketing project: MThree in Coquitlam.

'Chris Lee' is fake name for the MAC Marketing sales assistant who, along with MAC administrative assistant Amanda Lee, presented themselves as house-hunting sisters to CBC-TV and CTV-BC. They claimed their parents would be in town from China for the Lunar New Year to help them purchase a condo.

It was, as we now know, an orchestrated lie undertaken by a number of MAC Marketing employees to deceive the media and the public.

There are still many unanswered questions about what happened that day.  All the public was ever told about the fiasco was this Facebook posting by MAC Marketing Solutions president Cameron McNeill...

...that and a short email sent out to media outlets by MAC. When he received a copy of that email, CBC-TV reporter Matthew Black tweeted:

In an email to CBC, MAC Marketing owner Cameron McNeill writes he implemented "appropriate actions" vs employees who duped media and that he accepted the resignation of a "MAC senior manager." But, McNeill won't comment on specifics, citing privacy concerns. Statement from MAC Marketing doesn't elaborate on what "decisive actions" it took, or who was fired/resigned after duping media.

It's disconcerting because there were a number of MAC Marketing employees involved in the whole media sham and no one knows the actual extent of their roles. 

In addition to the fictitious 'Chris Lee' there was her 'sister' Amanda Lee:

there was Nic Jensen:

there was the MAC sales rep who quarterbacked the fake couple through the display suite to deceive the TV cameras:

and, finally there was the MAC sales director who possibly set up the photo shoot, Melanie Briggs. CBC-TV reporter Matthew Black advises Briggs was supposed to be in attendance at the media op but was a no-show. Was she involved in the pre-planning of this deception?

All the players in attendance before the TV cameras that day purposefully lied to and deceived the media/public.  This raises huge questions about their character and ability to carry out their jobs in the real estate industry. According to the British Columbia edition of the Canadian Real Estate Association's Realtor Code of Ethics:

The REALTOR® Code of Ethics of The Canadian Real Estate Association (CREA) is universally recognized by real estate professionals and consumers alike as the measure of professionalism in real estate. The REALTOR® Code is intended to define the high standard of performance the public has a right to expect from those licensed to display the REALTOR® trademark.

As REALTORS®, we accept a personal obligation to the public and to our profession. The Code of Ethics of The Canadian Real Estate Association embodies these obligations.

As REALTORS®, we are committed to:

• Professional competent service
• Absolute honesty and integrity in business dealings

• Co-operation with and fairness to all

• Personal accountability through compliance with CREA's Standards of Business Practice

To meet their obligations, REALTORS® pledge to observe the spirit of the Code in all of their activities and conduct their business in accordance with the Standards of Business Practice and the Golden Rule — Do unto others as you would have them do unto you.

Article 15: Advertising Claims

Claims or offerings in Advertising must be accurate, clear and understandable.

The actions of all the MAC employees at the media op that day were in clear violation of the real estate industry's Code of Ethics.  They blatantly acted to deceive the media/public. Based on this how can the public have faith or confidence in future real estate transactions with them?

When the story about MAC's deceptions originally broke, the Real Estate Council of BC (RECBC) announced that they were investigating MAC Marketing for false/misleading advertising for which  MAC faced fines of up to $20,000 and the individuals involved faced having their licences to sell real estate suspended.

So what's the status of that investigation? CBC-TV reporter Matthew Black tells us that he:

"wrote RECBC last week and was told their investigation is still ongoing. They couldn't say when it would conclude saying it depends on 'the volume of complaints' being looked into and 'how involved' the investigation needs to be."

Which brings us back to the promotional photo which shows MAC's sales team for the upcoming MThree development in Coquitlam. The photo caption doesn't list names but it sure looks like the sales team includes the MAC employee we know as the fictitious 'Chris Lee' and MAC sales director Melanie Briggs:

If this is actually 'Chris Lee', how can she be allowed to return to work while under investigation by the RECBC?

And what of Melanie Briggs?  We still don't know the extent of her involvement, if any, in this debacle.

MAC Marketing president Cameron McNeill has declined to hold a press conference to fully explain what transpired in this fiasco. Because of that the public still has numerous unanswered questions.

In any other field, employees would be placed on administrative leave while under investigation for breaches of a code of conduct.  Apparently this standard doesn't exist in the real estate industry.

Doesn't the public have a right to know if they may be dealing with RECBC members who are under investigation for misleading the public, especially when they may be purchasing thousands of dollars of real estate from them?

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MAC's infamous 'Chris Lee' appears to resurface on another MAC Marketing project

You all recall the infamous MAC-gate story, don't you?

That's the scandal where condo marketers MAC Marketing Solutions was forced to admit that two of it's employees had posed as prospective homebuyers in televised news segments on a supposed spike in sales around the Lunar New Year.

MAC Marketing Solutions president Cameron McNeill confirmed to media outlets that the two young women – presented as house-hunting sisters, whose parents would be in town from China for the New Year to help them purchase a condo – are in fact an administrative assistant and a sales assistant with MAC Marketing Solutions.

That sales assistant in question gained a certain amount of notoriety with her performance under the fake name, 'Chris Lee':

So how damaging do you think it would be to have a sales associate - who would go on television and deceive potential buyers - continue to sell condos for you? As a prospective buyer, would you trust her or her company?

We ask this in light of the fact a sharp eyed contributor to VCI has noted that 'Chris Lee' has apparently resurfaced on another MAC project: the MThree development in Coquitlam.

(hat tip BWilson - comment #116)

Profiled on MAC's facebook page, the development is showcased with several pictures:

One of those pictures (bottom right) presents the MAC marketing sales team and the caption says that this is "the MThree sales team ready to help you! Feel free to get in touch with your questions: phone 604.472.9555 or email info@liveatMThree.com" 

But look at who's front and centre in the photo.  Is that not the infamous 'Chris Lee', the MAC sales associate who so brazenly lied to us on the evening TV news in the MAC-gate affair? (click on image to enlarge). Someone on Facebook has apparently already posed that question to the MAC Marketing Facebook staff:

If that's the same individual, this presumably means Cameron McNeill's investigation into the MAC-gate affair is complete.  At the time he said:

When asked if the ploy may lead to terminations at the company, Mr. McNeill said it would depend on the depth of responsibility. “If it was blatant and on the hands of one person, then I think there might be some severe repercussions, but it’s hard for me to answer that without knowing all the details surrounding it.”

So what were the results of that investigation?

Based on what you saw on TV two months ago, would you have faith in buying a condo from this team if 'Chris Lee' is back to work without any accounting or explanation for what she did?

We're sure potential customers at MThree would want to have any concerns assuaged before engaging in any business deals with a sales associate who appears to be the one who so willing lied to the public last February.

How can potential customers not ponder, "if she lied to me on TV to sell condos, how do I know she won't lie to me now to close a sale?"

And what of the investigation by the Real Estate Council of BC? What assurances do we have they have looked into her role fully and have absolved her of responsibility for her actions? How is it she could so blatantly lie and misrepresent herself on TV and there not be any sanctions?

And our local media... do they not have an obligation to inform the public about what was really behind her performance on that evening newscast two month ago, especially if she is back selling condos again?

'Chris Lee's' apparent re-emergence to sell condos demands these questions be answered in the public interest.

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Richmond Realtor says Lower Mainland houses overpriced by at least 30% in terms of viable economic investments

Our last post documenting Toronto condo king Brad Lamb's incredulous investment advice ("If you’d rather not eat cat food in your retirement, you’d better invest in condos") generated significant debate with numerous pro-side comments from some industry players.

With that in mind, we offer you Richmond realtor James Wong's most recent take on real estate as an investment.

Wong starts out by comparing Metro Vancouver with Seattle (click on image to enlarge):

Says Wong:

The factors affecting Metro Vancouver detached home prices are not the same as those in Seattle. The graph above illustrates the relative price gains for Metro Vancouver and Seattle from 1994 to 2012. Seattle gained 2 times, while Metro Vancouver gained almost 3 times in value over the same period.

Metro Vancouver suffered short one year drop in home sales and prices during the credit crunch of 2008. Home sales and prices recovered within a year, and moved higher when interest rates were slashed and kept at ultra-low level around 3% until today.

Wong then asks 'what's the future for Vancouver home prices?"

Average older detached homes in Richmond, Burnaby and East Vancouver are currently selling between $740,000 to $850,000.

The current rental income from a older detached home with around 2,300 sq ft living area is approximately $2,300 a month. With a mortgage of $400,000 at 3.15%, amortized over 25 years, an investor is at beak-even point with his/her real estate investment paying $1,925 a month principal and interest. The balance $375 a month from the rent barely covers property tax and routine repairs. Any big ticket item repairs will have to be met with the investor’s own savings.

Wong lays it all out and states emphatically that current home prices in Metro Vancouver are out of whack with rental returns.

In the above example, an investor after providing $135,000 (25%) down payment, and financing his purchase with $400,000 mortgage, his investment will break-even at a purchase price of $535,000. Current home prices are way higher than the above figure. 

Home prices in Metro Vancouver are reversing the gains made the past 6 years. A drop in price of 30% is required before a home in the above areas is economically viable for long term investment.

So Wong's advice to you is that houses have to collapse at least 30% in price before they are economically viable to buy for long-term investment purposes.

Guess he missed out on Lamb's seminar. Either that or he's smart enough to see it for what it is.

Are you?

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Words fail us... Toronto's Condo King Brian Lamb's latest sales pitch.

"If you’d rather not eat cat food in your retirement, you’d better invest in condos."

- Developer Brad J. Lamb.

Toronto condo developer Brad Lamb says inadequately funded pension plans and limp RRSP returns will not meet Canadians’ retirement needs. So unless you want to eat cat food in your retirement, you'd better invest in condo's.

Yes, we're not making this up. This is the message Toronto's Condo King has for the masses as he presented a free workshop on real estate investing to some 340 people at The Westin Saturday in Ottawa, as reported in the Ottawa Citizen.

Of course Lamb's development company is constructing the Gotham and SoBa condo towers in Ottawa, which is what brings him there to hold the "free workshop".

His investment advice?

Factoring in inflation, he says that someone retiring 30 years hence will need $2.1 million for a pension of $50,000 a year in today’s dollars.

To get there he recommends you buy, rent and re-sell urban condos in a market that, based on the past 30 years of real estate performance in Ottawa, Lamb believes has nowhere to go over the long term but up.

Lamb’s strategy?

Scrape together $20,000 (that’s your down payment on a small condo that is also your own residence) and using what he called conservative projections of 4% annual growth in real estate values, Lamb says you’re soon able to use the equity in your unit to buy a second one. You rent that out for enough to cover its mortgage, condo fees and other costs and eventually sell it for a profit.

You continue buying, renting and re-selling units — all the while upgrading the one you live in — until you have a portfolio of five rental condos.

Lamb figures it will take you 12 years to do this.

Once you have achieved this nirvana, you then sit on the properties, with your tenants paying off your mortgages, for another 13 years. Twenty-five years after making your initial investment, you have enough assets to retire.  At least according to Lamb.

After the workshop he confided to the Ottawa Citizen newspaper that it annoys him that:

“our education system doesn’t teach (retirement planning)."

Which, presumably, is why Lamb was holding the 'free workshop.' Of course Lamb added:

"Also, it doesn’t hurt that I own properties, and some people (here) will buy some units."

What is that phrase, "past performance is not an indication of future results." Isn't there a valid reason that securities law requires that disclaimer?

You have to wonder if each workshop attendee also received a free bottle of snake oil as they left the seminar with Gotham and SoBa condo brochure in hand?

(hat tip Ben Rabidoux)

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