Friends-with-benefits as condo ownership model

Vancouver housing is overpriced. That’s the word from UBC’s Tsur Somerville in a new report so shocking to the local media they don’t know what to do with themselves. For most of us regular folk, this is old hat. We’ve known about high prices for years. The incomes in this town make ownership impossible. Unless, of course, you like the idea of sharing a studio suite with three of your closest friends. Hey, do you smell a marketing concept?

Richmond’s Remy condos may be the first development in the region to overtly promote the ménage-à-quatre as a lifestyle benefit of condo living. (I won’t speculate on what the gentleman on the left of the ad is looking at.) All told, this “joy of sex and home ownership” thing is brilliant. I’m surprised it hasn’t been done before. What’s the old saying? Oh yes: Two’s company, three’s a crowd and four’s a mortgage paid off in 35 years.

If this is for you, you need to get your sexually liberated self down to the Remy sales office today.

17 Responses to “Friends-with-benefits as condo ownership model”

  1. mk-kids Says:

    Gotta love the inclusive aspect too – the black guy, the asian, and the italian hanging with the bleach blond white girl. ugh stereotypes.

  2. Chilled Says:

    We all interpret this marketing photo differently. I see an estatic strata council after they realize there is $50 in the contingency fund and after one year only a few minor leaks have been found.

  3. jo-jo Says:

    Condohype, always good for a giggle.

  4. VancouverGuy Says:

    I might buy a sh*tty condo at current prices if they came with the chick…

  5. RVW_0824 Says:

    Somerville’s study is not even close to reality and his analysis is completely flawed. In their formula used to calculate market equilibrium they incorrectly reduce the Cost of Capital by the Long Run Expected House Price Appreciation (which includes that massive run up period of 2001 to 2008 and assumes that real estate prices will increase in perpetuity by 5.4% per year – which if you do the math is impossible). Just because it has gone up that much, on average, in the last number of years…does not mean it will do it again. There are also a number of other significant flaws in their analysis.

    A simple cap-rate analysis would tell you that Vancouver’s real estate market is over valued by 30% to 50% depending on location and type (single family, multi-family, downtown condo, etc.).

    Here is the link to his study. http://cuer.sauder.ubc.ca/download/research/working/ownercost.pdf

    Lets use the West side of Vancouver as an example as you just can’t look at the Greater Vancouver average. $1.5MM homes there rent for $2,500 to $3,500 and they are in dismal states. Might cover half of interest and other costs – if you’re lucky. I pay $2,200/month for my Coal Harbour apartment. Would have cost me close to $1MM to buy at the peak. I calculate it provides a 2.3% cap rate. The rent I pay does not even cover half the interest expense+property taxes+maintenance fees/capex. To be cash flow neutral – it would have to drop below $500K (still under a 5% cap rate)…and that’s at 6% interest rates….what happens it that goes to 7% or 8%? Rents can only go so high. Short and simple – prices are coming down in a very material way.

    The Vancouver Sun is a disgrace as a news source when it comes to Vancouver real estate. God forbid they lose all the revenues from the West Coast Homes section and all the other advertising from developers and Bob Rennie and the like.

    I have been saying for the last few years that we will look back at this in the same way we did after the tech bubble. That one never made sense to me either. Buy an asset or a stock that is cash flow negative and pays no dividends. The only way to make a return is to find someone foolish enough to pay you more that you paid for it. Problem is that someone is going to be left standing in this game of musical chairs and that time is now. If you divide the purchase price by the annual net rental income – that number comes to a ~40x multiple in Vancouver. How many companies trade at those types of multiples? Only supercharged growth technology or biotech companies with proprietary technologies that are defendable. Real estate is a simple asset….the market can bear a certain amount of rent that grows by 2 to 4% a year. Build a cash flow model…its not rocket science.

    I predict a 30% to 40% drop by 2012 followed by a period similar to 1992 to 2002…stagnant for a long time.

    Rob

  6. Larry Yatkowsky Says:

    The dynamic of having the visually projected number of people sharing in the purchase of a condo would be an interesting study.

    I see too many cats in a jar.
    I see lawyers busy drafting new communal shotgun buy outs.
    I see the young lady getting cranky that 4 guys never put the lid down.

    just sayin….. :>)

  7. Skye Says:

    Interesting, I wonder if the Chinese is a direct translation. If so, seems aimed squarely at unmarried Chinese in their 30s many of who live at home with their parents (freedom!)

  8. INFUNK Says:

    3 guys 1 gal..UNFAIR… make it 2 guys 2 gals at least.. or this model of ownership won’t work:)…

  9. Panda Says:

    When I see this ad I think the guys should watch “A Beautiful Mind.”

  10. jesse Says:

    I count menage a six. Une fille, cinq hommes.

  11. ds7777 Says:

    looks like an orgy. i wonder if they are wearing pants..

  12. Elaine Says:

    I like how in the Sun story, the notion that homes might become affordable for average people is framed as a “calamity in the housing market.”

  13. paulb Says:

    “Oh yes: Two’s company, three’s a crowd and four’s a mortgage paid off in 35 years.” LOL! I love it.

  14. blueskies Says:

    ahh!
    the joy of a negative pregnancy test!

  15. anon Says:

    Cool. The first tired 1980’s “United Colors of Benneton” condo ad.

    How quaint. Just needs some Culture Club or Thompson Twins or Adam Ant “music” to be complete.

    Plus the blond needs a Dutch cap and pigtails.

    Look Maude… all the folks who WON’T EVER be living here….

  16. Johnny33 Says:

    I’ll give them props for bringing affordable condos to the market… Apparently 40% of the homes are under $250k.. and prices start at $150k.

    The problem? The $150k studio suite is 390 sq feet. Slightly more expensive 1-bedroom is 433 sq feet. Look up their site for the floor plans. The 433 sq foot condo actually has a bedroom (which won’t fit more than a bed, really.

  17. Yeohlee Says:

    Group-living might be the only way to afford home ownership in the Lower Mainland in the near future. These swingers hopefully have a large enough bed.

    I wonder what the Chinese translation says? It might provide insight into what is ‘really’ happening in this ad 😉

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