pity the fool

From the comments section:
"Pity the fool who bought this... Buying an asset which doubled in 3 years is nothing short of idocy..."(sic)

5164 Madeira Court
Asking price: $1,090,000
Selling price: $870,000
Previous selling price: $389,750 (2005)
Taxes: $5,240 (2007)
Days on the market: 36
Listing agent: Betsy Carstairs, Park Georgia Realty Ltd.

Even though this 1,972-square-foot house...sold for $220,000 under asking, the selling price was still $480,000 above what (was) paid for it about three years ago.

"Unlike financial markets, real estate is always a good investment," agent Carstairs says. What else is she going to say? The place has shed value in the week passed since it was sold.

...built in 1971, is in need of some (major) updating — brown carpets aren't for everyone — but it has attractive features...it's on a dead-end street... It is fitting that it is on a dead end street, it is a dead end investment.

The new owners are "excited about the idea of giving this '70s-style home a facelift," ...Carstairs says. "They can't wait to roll up their sleeves and work together to create the home of their dreams."

(italics mine)

Now, that is just crazy. They were asking 3 times what they paid for this house three years ago, and got double - without doing anything to the place. The new "owners" will need to put $100K into the place while it is dropping in value. Will it go back to 2005 value? Oh, yeah. Will it go back to 2003? Oh, yeah. How low will she go?

Just imagine paying $500/month in property taxes on top of the mortgage payments, new furnace and windows, new roof, new kitchen, new everything. This place has a great view, but is a bad deal, IMHO. The ones who bought it in 2005 hit the jackpot though...

the more things change...

The Vancouver real estate market does not seem to be pricing in the new realities yet. This place on E. 39TH AV, Fraser, is one of the 24 places in all of East Vancouver that is priced under $500K It's for sale at $499,000.00. Are they freaking serious? The blurb says;

This existing 3 level home offers more square footage than can be re-built on this 2947 sq. ft. lot. House is in need of structural work & updating. However, character features such as original staircase, doors, window casings, & floor mouldings could be highlighted after renovation.

Character features? Floor mouldings can be highlighted? Wow. Hold me back. I still have a few days to get a 0%/40. Building codes won't even let you build something of this modest size. And, can it really be called "three level" with a straight face?

Somebody ought to tell the vendor that the TSX is down over 40% since July, and that it lost 16% in the last week alone. People have lost 30% of their retirement funds. Cut the price on this disaster to $250K, and get the bleeding over with. The MSM described today as a "bloodbath". The pigs are being slaughtered. Don't be a pig.

Then there is this beauty for $508K. note: it's a 3 level, 3 bedroom palazzio too.

Good starter, renovate or build your home. CD1 Zoning. This 3 level 3 Bedroom, 2 Bath solid home is situated in desirable Renfrew Height Area, South facing with view potential. Quiet neighbourhood, central location.

You will get an 800 sq' bigger lot than the one above, and this one in is the desirable Renfrew Height Area (sic).

This is no sport at all. Van. RE is frozen in time like so much ABCP. Somebody complained about my pictures, and posts the other day, and suggested that I was becoming deranged. If all of this madness seems "normal" to everyone else, then I am truly unhinged. I must be suffering some kind of Joan of Arc, or Nostradamus delusion. Is this some kind of reality TV show? Like that Jim Carrey film where he lives in a TV set?

It was weird switching channels. Somehow, looking at RE right now seems more of a madness than looking at national, and world events.

...the more they stay the same.

fud (edited for accuracy)

I can't make any sense of anything anymore. Everything that I read says something different. Over at Rob Chipman's, there are some claiming that prices are down 15%, while The Financial Post says "The result was Vancouver home prices actually fell 1% in July from a year earlier...with an average price of $575,256.".

So, varying numbers, depending on what one reads. The only number I pay attention to is an MLS search for houses between $300K-$400K in all of East Vancouver. There is still only one, which I reported last week - V726309 - $335K on a 55 x 37.22 lot. Rented out at $945/month, an investor only stands to subsidise the rent by $1505/month (with 5% down). Wow! What a deal. I don't really plan on spending that much money when I do buy a place, but $400K was my drop-out level on the way up, and I won't be grabbing at any knives on the way down. When I can buy a renovated Craftsman bungalow in the Commercial Dr. area for $300K, I will be thinking we are near bottom. Unless, of course, there is a cataclysmic meltdown of some type, and then, none of us will be thinking much of buying anything.

I have been thinking of physical gold and silver lately, and that is kind of weird, as I am pretty leery of commodities. Maybe I'm just fatigued by it all. Gold is down some 20% since Rubberbladder was pumping it a while ago, and the US$ is inexplicably up. I read an interesting article on the subject of the US$,

Economists who now see American troubles spreading around the world are predicting that foreign central banks will ignore the gathering inflation threat and follow the Fed down the rate cutting path. Similarly, they argue that since the downturn began here, the U.S. recovery will likely be underway while the rest of world is still decelerating. These assumptions have prompted a rally in the dollar, a sell-off in gold, commodities and foreign stocks, and have cast doubts on the ability of foreign economies to “decouple” from the United States. Investors should not take the bait.

Read the whole thing if you are interested. This article on gold was interesting, stating that the US Mint has suspended gold coin sales. From the article;

The suspension is overwhelming evidence that the futures contract price of gold on the commodities exchanges is substantially below the physical market price and that, indeed, the commodities exchanges are being used as GATA long has maintained -- as part of a massive scheme of manipulation of the precious metals, currency, and bond markets.

I just can't make any sense of all of this gobbledy-gook. It is just FUD, to me.

the view from here

Things still look stoopid out there. Prices and quality are all over the place. I gave up on trying to keep track of asking prices for comparison a while ago, I just don't care that much. My new criteria for judging how things are going is to do a search in the whole of East Vancouver for places under $400K. I found one today; MLS V726307 It's a crack shack on a 55' x 37.22' lot for $335,000. Monthly payment (with 5% down) is $ 2,450, Household Income Required $ 91,866. Great deal for that high school principal. The adjacent lot is for sale as well, and I presume for much the same price, so a 110' x 75' lot will cost you less than $700K! Don't worry about the dubious address, something good will happen.

I have noticed that I don't get the flyers in my door telling me that such and such agent has a buyer for my house (whether it's for sale, or not), and I don't get the free note pads from William Wat and his cohorts anymore. The heady days of lots of paper for shopping lists are over. A free note pad to whomever can guess what the picture above is!

My neighbour had her flipper house for sale for the high $800's, for a couple of months with no bites. She cannot sell it for less without losing money. It doesn't show up on MLS anymore, though the "For Sale" sign is still up. It is now some kind of rooming house that violates the zoning. I am not a jerk enough to complain to the city, and it's kind of cool living next to a rabbit warren anyhow.

It is getting easier to spot flipper houses, the prices don't seem to drop, and they sit empty. People are reporting serious price drops over at the cool blogs like the pope's and Rob Chipman's, but I don't follow individual places closely enough to comment. I still see some old favourites on MLS, but I can't make comparisons to 3 months, or 6 months, or longer ago. Could be a slow bleed. We will have to wait for the economy to worsen. Or, not!

It sure looks like down from here. I heard it on the news!

UPDATE


The picture is of the interior of a plastic watering can with the setting sun high-lighting the tulip pattern embossed on the side. I dunno, there is something poignant about the setting sun, black holes, tulips, RE... I just played with it a bit.

tony danza and blue skies came closest in the contest (the only ones! sheesh!), in that their conjectures involved aqueous solutions.

Unfortunately, the contest is now over, and no note pad prizes were awarded.

strange fruit

I was out wandering with li'l solipsist today, and noticed a lot of strange new fruit (depicted below) amongst the flowers and trees that he demands identification of.

Joe Chan (in the first picture) has had that place for sale for months. Ellie Chan joined him next door, and Winnie Lam is next to her. Two doors down, a house struggling to be completed will soon be for sale (I photoshopped its sign). Half the damn block is for sale! The Joe Chan, and the Winnie Lam both appeared to be vacant. On the block behind me, at least two places were for sale - one of which is vacant.

The new crop continued to flourish, and I could only take so many pictures. I ended with the Wong consortium when I noticed that the wee gaffer had fallen asleep in boredom. Yawn.





There is something wong with this picture (sorry, I could not resist that) - it is starting to look like the pictures we were seeing from California, etc., where everything looked to be for sale - and no buyers.

Strange fruit, come early. I predict a bitter harvest by the time the Harvest Moon rolls through the sky. Especially with the October 15th !Surprise! of revised qualification requirements for mortgages.

It is finally over.

888 state

Yesterday I was out and about, and noticed more "For Sale" signs than I have seen for a while. It seems that there are 4 or so on every block. It seems that it is sinking in that it is over.

My neighbour has had open houses the last three week-ends in a row. It seemed that it was mostly Chinese looking (I can tell the difference between Chinese, Japanese, Korean, etc. 19 times out of 20 +/- 3%). No Mercedes, Lexus, BMW, mostly small, less expensive vehicles. Maybe that indicates they are more frugal, and can afford a $900K house on a smallish lot in East Van.? Maybe not. I enjoyed doing yard work while my stereo pumped the Sex Pistols, The Ramones, Forgotten Rebels, etc., out my window. Hey! fore-warned is fore-armed. Right? The asking price is 20% higher than it was bought for last year. And the defects are starting to show. Good luck with that.

So, I was all juiced up, and did some MLS searching. Still no houses in East Van. under $400K. I guess we will have to wait for fall for things to sink in. Prices and quality are all over the map, with tear-downs listed in the same price range as new construction, and big lots in the same range as small lots. A little price compression before the price depression sinks in, me thinks.

What I found interesting was all of the houses listed with a bunch of eights. I counted 10 places (out of 160 or so) that were listed for $888K. That is kind of blatant, and if I were Chinese, I would be somewhat offended. Do the listing agents think that they (Chinese) are that stupid/naive/superstitious? You would not want to mess with over/under bids on a place that was listed for $888,888.00 would you? I'll give you $888,888.88 plus my lucky rabbit foot. No Deal? I'll throw in a four-leaf clover!

Sadly, many who over-extended themselves to buy in the last couple of years - with the hopes of insane appreciation - did not see the credit crisis, doubling of energy costs, accelerating property taxes to pay for Olympic cost over-runs, food inflation of 30%, etc., coming when they factored their top line.

Why don't we just start bidding $300K with a bunch of conditions on these $800K places? Let us bring it down!

There are deals ahead. Keep your powder dry.

in other words

I checked the listings today to see what's up, and detected a change. There is not a single house in East Vancouver for $2m! For that matter, the highest price was in the $800k range. There are even a couple of places for less than $400K. That and a book of matches will get you a new home in a sketchy area!

Speaking of sketchy, there are some pretty sketchy descriptors in some of the features write-ups on the MLS. Some laughable descriptions of Heritage Style, such as the Pink Manse below. I have used words found in the blurbs in italics.

v690817 this great old timer has many features of a heritage home

I guess post-war salt boxes are heritage now.



v694512 Don't be fooled by it's exterior

I'll do my best. But don't try to fool me with that $799K price tag. Kay?



v695689 Renfrew Heights. Italian style

Not everybody here is a hick, you know. Some people have seen pictures of Italy, and they did not look like this!

By the way, watch what you say about Italians... Capiche?



v693086 This lovely 1912 home

This is indeed a lovely 1912 home - it has HERITAGE writ large all over it. I featured it in "curb appeal" last June. It was not for sale then. I love this place, so when it came on the market (maybe a month ago), I checked it out, and it was asking well over $800k. It's asking $759k today. Note that the foolish exterior above is asking $799k on a 32x110 lot, while this gem is on a 40 foot lot. So things are still whacky as help.