How things used to be

Do you remember when Metro Vancouver real estate could be advertised like this? A few colours here, an upward arrow there, a splash of urban alcoholism and voilà! You’re a professional condo marketer.

This ad, promoting a Chilliwack condo called Vibe, ran in the rags in 2006. In real estate time, that’s decades ago. This project is long past the sales stage. Today, a trip to the website www.yourvibe.ca takes you to a page titled “10 main reasons why the person needs life insurance.”

Interesting.

“Yes, the boom cycle is definitely over”

In Metro Vancouver, The Vancouver Sun is the authority of truth. For better or for worse, their coverage of real estate sets the boundaries of the everyday opinion. I know this not because of any survey or analysis. It comes from a simple test. The test is to ask my father his opinion and see how it compares to what’s in the Sun.

On Friday, I got the call. “Yes, the boom cycle is definitely over.” It was dad telling me what he had come to know. Sure enough, the Sun had made the call too. Right there on the front page, above the fold. It wasn’t in the headline, but down below near the graph. For the headline, the editors used kid gloves. (Really, a double-digit price decline is a “dip”? Gosh, I’d hate to see a crash.)

I should be clear that the Sun did not decide dad’s opinion, much like it doesn’t decide mine and doesn’t decide yours. What it does do is set the limits of debate. For 88 months since the start of the boom, the Sun’s examination of real estate hasn’t made much room for critical perspectives. Blogs like mine and others have flourished because of their omissions. I take no joy in this circumstance. That this is a successful blog is comment on the range of opinion that’s been missing from the Sun to the detriment of the public.

So here we are. The boom is over, and it’s not a fringe idea anymore. Remember this edition of the Sun: October 24, 2008. Cherish the moment while you can. Smile but don’t get too excited. The mess is as real as it’s always been. We will not escape unscathed.

V6A: No condo for this postal code

The winds of change are upon us. CTV News hit hard last night with an explosive report on the Vancouver condo bust. Their reveal is that Onni’s V6A, the “There-is-life-outside-of-Yaletown” condo, is postponed indefinitely.

This might not seem like big news with all the projects stalled in recent weeks. Like Cosmo, Sky Towers and the Ritz-Carlton Vancouver, V6A is yet another victim of condo market excess. What makes V6A’s story spectacular is the attitude of the developer. Despite telling CTV News the project is on hold without a completion date, Onni is keeping the sales centre open to unsuspecting buyers. Here’s how Onni vice-president Beau Jarvis describes his rationale in an interview with reporter Shannon Paterson:

Jarvis: We’re postponing the project until the market changes. We’re not going to go build a project and have no one to sell it to.

Paterson: Why is the pre-sale office still open and still selling?

Jarvis: Well, uh, is that against the law? We’re still testing the market I guess, right?

Paterson: So someone who would’ve walked in there today would have no idea that what they were buying into has been put on hold?

Jarvis: That could’ve been the case, yeah.

Paterson: Is that going to change?

Jarvis: It probably will change.

Outside of saying “Don’t buy this condo, it’s garbage” I don’t know what else Onni could’ve said to so undermine its interests. What’s a prospective buyer to make of this confession? ‘Hi, we’re Onni. Let us take your deposit but fail to mention we have no plan to build anything. Have a great day.’

If Onni is interested in submitting a response, I’d be willing to post it.

Condo burns, buyers happy?

The media firestorm over the Surrey Quattro is burning hot. The local rags gave it major front-page treatment. Metro Vancouver — that “other” McPaper you read to avoid being social on the bus — used its headline to ask the only question that counts: Will buyers be getting their money back?

The answer is no, but this didn’t stop wishful thinking on the part of the speculators. Quattro buyer Claus Sandhack says it best:

The realtor who sold it to us phoned us up and told us the unit was on fire. We were happy. We thought we’re going to be able to get out. It cost me $308,000. In two years is it going to be worth $200,000? A $150,000?

As much as this comment is sad — really, Claus, you were “happy” the building was burning? — it’s an accurate reflection of what many pre-sale owners were probably thinking when they saw the flames. This is the nature of speculative markets. Nobody cares so long as money’s being made. Now that the party’s over, everybody’s looking for an exit.

Expect more of this.

Vancouver’s real estate hangover

A condo boom can be compared to a night of heavy drinking. (Or as I call it, “Thursday.”) When you’re in the thick of it, it’s the best fun you’ve ever had. It’s easy to make conversation. Things you wouldn’t normally be interested in start to look pretty good. Money in your pocket is fast to disappear. The thought of the hangover doesn’t cross your mind.

But the hangover always arrives. When it does, you hate it. You wonder how you could be so stupid to drink so hard. You open your eyes to find yourself in a foreign apartment. White walls with no art. There’s a Malm dresser in the corner. Next to that, a Poang. Below, laminate “wood” floors. Down the hall, a chaise. It’s a condo. You vomit.

With real estate, the hangover doesn’t go away with a day in bed. You’re stuck with the anguish until the market decides it’s done. Already, Vancouver real estate prices are down eight per cent year-over-year. Developers are halting projects. Creditors are pulling out. Arson is a growth business.

Friends, the hype era is over. The hangover is here.

Cosmo is a no-go

West Georgia never looked so chic. Honestly, I have no idea what this means. I’ve lived in Vancouver my whole adult life and never once have I heard West Georgia called chic, let alone so chic. I’d wager it’s the most boring street in all of Downtown Vancouver. At least Dunsmuir has character and Alberni has a liquor store and a Timmy-Wendy’s. What’s West Georgia other than a commuter corridor?

If you’re expecting Concord Pacific’s Cosmo condo to make the difference, this will break your heart — Vancouver’s collapsing real estate market has put Cosmo into limbo. The entire project is stalled, says the Globe and Mail, pending an evaluation of market conditions. I know, it’s devastating news. Somebody pass me a tissue.

But please, only a chic tissue.

We’re all buyers now

I’m not much of a fan of the Vancouver dinner party. I love my friends, especially my older ones, but I can’t stand the real estate talk at the table. Why we can’t we just enjoy eye contact and the fine flavours of chicken teriyaki? There’s no need for an exchange like this:

“What you do you mean you’re not gonna buy?”
“The numbers don’t make sense. I’m ahead by renting.”
“What? Prices can only go up.”
“Prices go up and down. It’s OK, I’m fine with renting.”
“You don’t know what you’re talking about. You need to get into the market.”
“Really, it’s alright. Can you pass the hot sauce?”
“Don’t change the topic. This is important.”

And so on. Fortunately this talk is less common now that local real estate is crumbling harder and faster than a Sarah Palin TV interview. I should give credit to my friend though. He went on to say that I would be buying whether I liked it or not. With taxpayers on the hook for the completion of the Olympic Village — which is part of the Millennium Water super development — I’m finally poised to “own” a piece of the condo action. Now that’s what I call Rennie Green!

The fundamentals of the condo economy

“To sell real estate now, we have to look at fundamentals. And one of those fundamentals is how much product is really out there…. We’re at a time when everybody is looking for fundamentals and nobody has better fundamentals than downtown, for the investor or the homeowner.” –Bob Rennie, October 3 2008

When the history of Vancouver real estate is written, it’s quotes like this that will make for the best reading. It even makes for good reading now but in a few years, once all the havoc plays it out, it will read even better. Because in a few years, all we’ll have to go on are the numbers. We have the numbers today but many of us still look at them with emotion. “Sales are slow, but the Olympics are coming so things should turn around, right?”

Wrong. The numbers are indisputable. Inventory is at record highs. Sales are almost non-existent. Rents need to double or even triple to be in line with the cost of ownership. Buy today and you get the pleasure of a condo that costs you $3,600 a month that you can rent out for $1,600. It’s a heck of a deal, if by deal you mean endlessly losing money.

Bob Rennie is the best. Nobody’s better. And the quote he gave the Globe about being a “very, very, very high paid consultant” — it’s beyond beautiful. He should share it with everyone who walks through the Richards sales centre.