No luxury for sold men

The worst kept secret in condo land is the death of the Ritz-Carlton Vancouver.  Naysayers called it six months ago when the developer halted construction for a “parkade redesign.”  Today, Bob Rennie and the developer declared the project dead.

The Ritz-Carlton has a special place in my heart and not just because the condo looks like Robocop’s penis.  The original ads ooze with the best of high-society fatuity.  “I summer in the Hamptons… I winter in Aspen… My home, the Ritz-Carlton, Vancouver.”

The developer blames the worldwide economy — a perfect boogeyman given today’s headlines.  This casts a fog over the specific factors that killed the Carlton, namely insanely high prices.  Is anyone really surprised  condos at $2,000 a square foot can’t sell?  This is Vancouver, not Manhattan.

In defence of Cameron Muir

A real estate economist, let’s call him Cameron, tells a reporter, let’s call him Brian, that it’s not his role to say “whether or not it’s a good time to buy.”  Brian writes his article.  The editor readies it for print.  The article claims the economist says “it just might be” a good time to buy real estate.  Huh?

It’s a true story.  Read it and believe it:

With home sales — and prices — dropping in B.C., is now a good time to invest in real estate?

The B.C. Real Estate Association says it just might be, pointing to a large drop in carrying costs for an investment property today compared to a year ago.

“It doesn’t matter what the market is doing, I don’t say whether or not it’s a good time to buy,” association chief economist Cameron Muir said in an interview Monday. “That being said, I would suspect investors are actively looking in the marketplace for bargains. If you compare today vs. a year ago, investing in real estate is more attractive than it was then.”

[The Vancouver Sun, February 16, 2009]

Friends, today I write a post in defense of Cameron Muir.  It may be the most controversial I’ve ever typed.  If you think this is heretical, remember why you read this blog.  You come here for fresh perspective, so-so jokes, and the hope that I went easy on your chosen profession.

Muir says a lot of things in the interview.  What I don’t see is a recommendation to buy.  His talking points say buying is “more attractive” now than it was last year, but there’s no call to action.  None.  The Sun hyped him.

Photo credit: uzhik via Flickr

Gorillas in the myths

What is it with the local media and real estate myths?  A little less than a year ago — actually, it was at the peak of the market — the Sun took on 15 myths in a front-page article that drew hundreds of complaints for its bullishness.  Last week, The Tyee came up with five myths of its own. Like the Sun story, The Tyee is coming under heavy blogger fire.

When I first read the new article, I had to take a long bath.  Progressive media gone wrong sends me right to the tub.  The Tyee piece has a good heart but it doesn’t make much sense.  It’s strange because outside of the local real estate blogs, The Tyee seems to have the best grasp of the real estate issue.  It hurts to say but they blew it on this one.  Among their head-scratcher assertions:

1.) Supply and demand doesn’t function in the B.C. housing market.

2.) Landlords will raise rents to match ownership costs so they can break even.

3.) A drop in housing prices will drive down family incomes and widen the affordability gap.

Supply-and-demand markets may not achieve desired social outcomes but it cannot be said they don’t function.  By their nature, they function.  If we look at the market in Metro Vancouver, prices are declining rapidly as a result of falling demand and growing supply.

Similar principles apply to the rental market.  It’s not possible for landlords to raise rents to anything higher than what renters are willing to pay.  A rental priced too high is a rental without a tenant.  For proof, see this.

The relationship between local incomes and housing prices is relevant.  But in a market driven by speculation, housing prices are divorced from incomes until the bubble bursts and settles.  Just as average incomes didn’t double on the way up, they won’t divide by two on the way down.

This is my take.  Am I missing something?  Please read the article and post your comments.  If you have to take a bath first, I’ll understand.

The torture of condo living

Those hoping for their regular dose of condo negativism may be disappointed by this post.  I’m gonna say something nice about a real estate marketing campaign.  No, I haven’t been paid off.  (If anyone wants to buy my goodwill, email me and I’ll give instructions on where to send the money.)

The Block is a townhouse project near Kingsway and East 12th.  As sales campaigns go, theirs at least tries to be rooted in strategy.  This is unusual in Vancouver condo marketing.  For many years, the captains of consciousness couldn’t escape coffee cups and spelling mistakes. The Block’s print ad, with a professional couple cramped over pasta dinner, is not only cute and coffee cup-free, it also speaks to a target audience: condo owners looking to upgrade.

As a bonus, the written copy is kept to a minimum.  No “feel the aura of the urban virtuosity” nonsense here.  The website copy isn’t as modest, sometimes drifting into high stink (i.e. “we’re offering awesome townhomes in the high $500,000s, it’s a huge value story already”) but some of it’s tongue in cheek.  One line describes those who miss out risk “a life tortured with regret.”  Torture in a condo ad? I like it.

With the current down market, I don’t expect these units to sell in the short term.  Because The Block has an RSS feed, a Twitter account and a Flickr page, the marketer has set themselves up to be a regular content creator.  Are they up to the test of keeping things fresh?  Nothing says suck like a blog with no updates.  Early evidence is promising — well, compared to other condo websites — given that they have four posts in four days.  I’ll be keeping an eye on this one.

Liquidate this

The marketing firm behind the Onni’s “liquidation sale” has sent an email to local realtors praising their campaign as a success.  The message includes a link to a “pre-drafted email” for realtors to personalize and send to clients.

If the email is to be believed, Onni has sold 250 condos since the launch of its so-called liquidation.  Here’s an excerpt from the note, which started circulating a few days ago:

Everyone has been wondering if this liquidation sale is really offering good deals or if it is just a really great marketing effort. The fact is, Onni has sold over 250 homes in 18 days! This is good proof that the deals they are offering are real! I have also confirmed that all homes currently selling are offering at least 25% discounts.

The most recent update I received from the Sales Director of the Mac Bulk program, Cam Good, informed me that there are still upwards of 100 deals left for sale in Port Moody, Port Coquitlam, Richmond and New Westminster.

For the value-oriented buyer, the marketer’s standard of proof isn’t really proof at all.  So what if all units are at least 25 per cent off if we have no clue as to the prices the discounts are applied against.

Is it the peak pricing of 2008?  Last year’s projected pricing for 2009?  Or maybe it’s $1,000 a square foot.  You know,  because that’s an easy figure to work with.

But wait, didn’t Rennie say something about $2,010 in 2010?

It’s cavalier to buy a condo

“Through four downturns over the last 25 years, I’ve learned that the market always comes back. Hold on for the next boom.” –Bob Ransford, former real estate developer

This morning, with the weather being nice, I hit the balcony for a read of Westcoast Homes.  While perusing the fine literature — by fine I mean lack of thickness — I came across a “lessons learned” column by Bob Ransford.

Mr. Ransford’s commentary is probably the closest we can expect for a balanced real estate column in the Sun.  He warns against speculation.  He urges a close look at the fine print before signing a deal.  But like other expert commentaries, much is said about buying opportunities “disappearing” for those who wait.

This is an unfortunate piece of advice.  It plays upon emotion rather than rational assessment.  Buy today or miss your chance!  Don’t let one of the 15,000 active listings disappear! It’s balderdash.

Look, it’s not enough that condo prices are “reduced” from peak levels.  A reduced price doesn’t mean a good price or good value.  A 1991 Chevy Cavalier at 40 per cent off is still a 1991 Chevy Cavalier.

I’ll say it again, the predictable direction of prices in a declining market is in line with rents and local incomes.  To those who want to buy today and “hold on for the next boom,” there will be blood.  I urge you to consider the numbers.

Remember, Chevy Cavalier.

Three strikes and you’re out

“[The Hills] is a flagship development by a reputable team, at the heart of an area rich in diversity and opportunity.  You don’t want to miss it.” –Bob Rennie, 2008

“We have been informed by the developer that they will no longer be proceeding with this project as planned.” –Email notice from Rennie Marketing Systems, February 4, 2009

Condos are his castles but it’s not all easy being king.  Royal realtor Bob Rennie, Vancouver’s original billion-dollar baby, is losing his crown jewels.  Dead as of today is The Hills Vancouver.

Pitched with the tagline “Nanaimo is the new Main” — never mind that Kingsway’s still Kingsway — The Hills is the third Rennie-marketed condo to flop since Halloween.  It joins Jameson House and The Ritz-Carlton Vancouver in the rapidly expanding Rennie condo graveyard.  (This is to say nothing of Millennium Water, which is on life-support thanks to our publicly funded real-estate healthcare system.)

The Hills website is still afloat but expect a scrubbing soon.   I’m sure Rennie’s staff hasn’t looked at it since they made it — that’s usually how these things go.  The news-and-events section conveniently ends at September 15th [screen grab] with a news clipping on B.C.’s “immunity” to the financial crisis.  There’s also a Sun article with a big photo of Jim Flaherty saying there’s no housing bubble.

You can’t make this stuff up.

Dude, where’s my home equity?

“A continuing imbalance between supply and demand will put some additional downward pressure on home prices in 2009.” –B.C. Real Estate Association, Housing Forecast, February 2009

Blame it on the recession.  Blame it on high prices.  Blame it on Liam Neeson being a total badass.  The thing is, it doesn’t matter who you blame because at least we’re on the same page.  According to the B.C. Real Estate Association, real estate prices will continue to fall in 2009.  Experts and renters unite?!

The BCREA forecasts a 13 per cent price dip across the province.  In Greater Vancouver, the projected dive is 14 per cent.  While this may seem modest, even optimistic, give the pumpers points for making it to the party.  Their forecast report refers to the collapse as “some additional downward pressure.”  You have to laugh at the language.  Downward pressure?  What is this, a back massage?

Here’s the spin-free version: The BCREA expects the average home value in Greater Vancouver to decrease $7,147 a month, every month, in 2009.

Photo credit: Duncan Rawlinson

Liquidation comes to Yaletown

Bowra Group is throwing in the towel on H+H Yaletown after 15 “buyers” refused to complete on their deals. In true buyer’s-market fashion, Bowra’s leaving it to new buyers to name their price… so long as offers are subject free.  Hmmm.  Deal or no deal?

Open house is today.  No appointment necessary.  Might be worth dropping by if only for entertainment value.  Unconfirmed reports have Howie Mandel on site to mediate deals.  After that, he hits the River Rock to open for Air Supply.

The inventory toilet flush continues.

Prices aren’t the only thing falling

Owners at a Concord Pacific downtown condo are commencing legal action after concrete was discovered falling off balconies, Condohype has learned.

A routine maintenance survey at The Aquarius (1199 Marinaside Crescent, Vancouver) detected the spalling of concrete from balconies on the 01 elevation posing a serious risk to pedestrians.  The issue was so urgent the strata council ordered emergency repairs to prevent liability and possible harm to the public.

The value of the emergency repairs is estimated at $140,000.  An additional $71,000 will be spent to investigate if similar  problems exist on other balconies in the complex.

In a presentation to condo owners, strata council vice-president Michael Alexander explained that “during original construction, the reinforcing steel bars had been placed too close to the edge and some had rusted from water infiltrating the surrounding concrete, causing pieces of the concrete edge to loosen or fall off.”

On January 13, owners passed a resolution to fund building defect proceedings against developer Concord Pacific and all other relevant parties.  The law firm Lesperance Mendes is representing the owners.  The case hinges on proving the spalling is the result of “a structural defect attributable to faulty design, workmanship or materials provided by any party involved in the construction of the project.”

The Aquarius is one of Yaletown’s elite waterfront condos.  Completed in 1999, the development sits at the foot of Davie Street atop a Starbucks, the Urban Fare grocery store and the Provence restaurant.  In 2000, the condo gained notoriety when former Vancouver Canucks forward Donald Brashear was charged with assault following an incident in the Aquarius fitness room.

Photo credit: Payton Chung