Archive for December, 2008

Vancouver’s best real estate quotes

December 31, 2008

Congratulations, we’ve made it to the end of the biggest real estate rollercoaster year of the decade. In Metro Vancouver, real estate prices, after an astonishing seven-year run, finally hit the breaking point. The market is now seven months into a vicious downturn. The experts said it couldn’t happen, that the fundamentals were too strong, that this time it was different. In 2008, the market gave its answer…with a vengeance.

It would be wrong to end 2008 without some kind of recap of the year that was. Last night, I cracked a few beers and went over my files. I quickly realized that the best way to capture the irrational exuberance was to quote it. With lots of material and no scientific method, I let the booze and my sense of humour guide me.

And so here it is, my list of the year’s best quotes in Vancouver real estate:

10.) “We’re really bulletproof for our lifetimes and beyond.” –Realtor Alan Skinner, on the strength of North Vancouver’s housing market, August 15.

9.) “I’m not moving if I have to get arrested, do a hunger strike, or phone CTV news.” –Re/Max agent Holly Wood, on demanding her sales commission cheque from developer Holborn, October 29.

8.) “You’re talking about $100-million dollars. I’m not saying what’s going on.” –Mayoral candidate Peter Ladner, in response to questions about the secret Olympic Village loan, November 7.

7.) “It’s a private site, I own it. It’s a private enterprise. I don’t think I have an obligation to disclose what my private business plans are to you.” –Developer Simon Lim, on the halt of construction at the Ritz-Carlton Vancouver, October 29.

6.) “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, Rennie Marketing Systems, October 3.

5.) “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?” –Claus Sandhack, Surrey Quattro Condo Buyer, October 20.

4.) “If you’re holding off because ‘Why should I buy now if it’s going to drop 20 per cent next year?’ I think that’s a bit of a gamble. A person’s well within their right to do that, obviously, but just bear in mind the general view is there will still be a price increase this year and another next year.” –Helmut Pastrick, Economist, Credit Union Central of B.C., May 11.

3.) “There is no indication, at this point, of any kind of substantial decline in prices.” –Cameron Muir, Economist, B.C. Real Estate Association, July 11.

2.) “I do not accept this conclusion, not at all.” –Prime Minister Stephen Harper, on Merrill Lynch’s forecast of a Canadian real estate meltdown, September 24.

1.) “The Lower Mainland doesn’t appear likely to become a less expensive place to buy a home anytime soon.” –The Vancouver Sun, Editorial, April 19.

Like any top ten list, this list is best looked at as a celebration and remembrance than a definitive ranking. I know I’ve skipped many brilliant, jaw-dropping quotes. Like how could I come up with a list with no reference to the Sun’s “15 Myths” article? And only one from Cameron Muir? Where’s Tsur Somerville? The omissions are endless.

The one thing I’m certain about is my number one pick. It is the ultimate indictment of the Vancouver Sun — a beautiful, succinct declaration of their allegiance to the condo hype ideology. Bob Rennie couldn’t have said it better himself.

It’s been a hell of a year, dear readers. I hope this blog has been as much fun for you as it has for me. Please take the opportunity share your thoughts in the comments. All the best for 2009.

Photo credit: Ecstaticist

Rethinking MPC Intelligence, Part Two

December 30, 2008

“Great deals out there” is a 1,006-word commentary written by Jennifer Podmore Russell, the head of a Vancouver real estate market research firm. The stated goal of the article is to provide “simple facts” related to the Vancouver real estate market so consumers will be able to “sort through the fact and the fiction in the months ahead.”

The commentary is built around three “truths” about the housing market. In short, these truths are:

  1. Declining demand has led to purchase incentives;
  2. Buyers have more time to research and reflect;
  3. It’s impossible to predict the market bottom.

These truths aren’t controversial, though some may take exception to nuances like describing purchase incentives as “great deals” as the author does. While some may disagree on the greatness of “free” cars and improved finishings, it’s moot because of the larger, more urgent problems with the article.

The problems have to do with assertions put forward, without evidence or context, as facts. There are four assertions so unsubstantiated I dare to call them falsehoods. Quoted directly, they are:

  1. We also have to realize that this is a very different decline than in the past;
  2. As the financially motivated exit the market the aggressive pricing will settle;
  3. Most of us will only be affected by this correction psychologically as it is human nature to monitor the value of our homes;
  4. Perhaps the greatest advice one can receive is that there is never a bad time to start building equity into a home.

On the first point, Podmore Russell provides no evidence. The statement stands alone as its own paragraph. On what basis is this decline “very different” from other declines? Markets are a function of supply and demand. As demand decreases and supply increases, prices fall significantly. This is what is happening in Vancouver. How is this different?

The assertion that aggressive pricing will settle is also unsupported. Aside from the obvious question of what constitutes “aggressive pricing,” how can the author be sure prices won’t continue to fall? Again, it comes down to supply and demand.

More baffling is the assertion that the correction is mostly “psychological” with little external impact. By the industry’s own data, MLS residential sales in 2007 produced $1.3 billion in B.C. household income. This works out to around $13,000 in household income for every home sold, or one full-time job for every four sales. These figures were touted by the industry when times were good. Are they mythical now that the market is in decline?

The last point, on home equity, reads like something out of an Empire Strikes Back re-write penned by Bob Rennie. Rearrange the words and it’s Yoda. It’s extraordinary to think this is “the greatest advice one can receive” when the advice fails to mention risk tolerance, opportunity cost, price-to-rent ratios or the amortization period of the loan.

It’s one thing to get started on home equity when prices are in reasonable relation to local incomes, and you have a substantial downpayment. It’s quite another to buy at prices grossly inflated from historical norms, do so with little money down, and call it a successful step on the road to home equity. These are not irrelevant considerations, yet they are absent from the great advice.

But perhaps the final sentence is the most telling: “Chances like this only come around once each cycle.” The question I ask is whether a home purchase should be predicated on “chance” rather than a comprehensive assessment of the market and one’s situation. I prefer to leave chance at the casino.

To assert facts is to be able to substantiate them. Podmore Russell’s commentary fails the test. It purports to be factual when, in fact, its most important statements are speculative. Like the expert hype of the boom era, the commentary asserts its authority by virtue of the writer’s status as an industry official. Rather than separate fact from fiction, the article contributes to the noise.

Photo credit: Alfred Hermida

Rethinking MPC Intelligence, Part One

December 28, 2008

Yesterday, while taking the elevator to my condo, I chatted with a nice man who told me he was in the “import-export business.” Upon further conversation, he said he was a forklift operator. Moral of the story: Being vague can sound impressive. Personally, I admit to doing this all the time, especially when bumping into former partners. (Sarah, I’m involved in a number of key initiatives and things are going very well.)

To bring this back to real estate, MPC Intelligence is a “real estate market strategy consultancy.” This is a fancy-pants description for a company that basically sells expensive newsletters over email. The Vancouver-Lower Mainland subscription is $5,950. Subscribers get “unbiased, transparent” market information (their words) on everything from supply to absorption to project applications. Honey mustard not included.

There’s nothing wrong with publishing newsletters or running a forklift. (I’ve done both.) But how we describe things affects how we think about them. This is the place where hype is born.

Jennifer Podmore Russell is the managing partner of MPC. In her role, she often comments publicly on Vancouver real estate. In 2008, she bylined at least three commentaries in the Sun’s Westcoast Homes section. Her most recent column says today’s real estate market offers a better-than-ever opportunity for those wanting to buy in. I recommend you read it; I found it fascinating for what it says — and what it doesn’t say — about buying a home in Greater Vancouver.

On Tuesday, I’ll provide a full-scale deconstruction and analysis of the column. Stay tuned.

Photo credit: Shahzanrais

The Globe and Mail: “The bloggers had it right”

December 22, 2008

An excerpt from Timothy Taylor’s column “The City: A biweekly look at life in Vancouver” on page L5 of the B.C. edition of The Globe and Mail:

Gallows humour, but no denying it: The bubble has now burst. And in B.C. real estate, it’s almost certainly not finished deflating. In a December, 2008, economic update, Royal Bank of Canada described the B.C. real estate market as being in “full-blown correction mode” and “unravelling fast.”

Meanwhile, bloggers are gloating. I’m talking about those real estate death watch sites such as Vancouver (un) Real Estate and Condohype.

After the Real Estate Board of Greater Vancouver called off its 2009 conference and trade show two weeks ago because of the downturn, the blogger-in-chief of Condohype wrote, “Too bad the party’s canceled because that activity sounds awesome. In my book, it’s an invitation to show up in my ‘The Blogger Was Right’ T-shirt with my dogs Case and Shiller. I’m devastated this can’t happen now.”

The sarcasm is perhaps a little undignified, but you can hardly blame them for feeling satisfied. They diagnosed market madness. And, with varying degrees of insight and eloquence, they were correct.

[“The upside to the bubble bursting: Sanity returns,” The Globe and Mail, December 22, 2008]

For the record, I agree with Mr. Taylor’s assessment except for one thing: I’m not sure if seeing the collapse has left me feeling satisfied. At least not on a personal level. (Personally, I wish the whole bubble never happened.) Sure, my blogger persona has nothing but self-appreciation pumping through his veins, but that’s part of the joke.

From the first post, Condohype has offered exuberant criticism in response to irrational exuberance.

I encourage everyone to read Mr. Taylor’s column. He’s a fine writer.

Image: Adapted from a photo by kootenayvolcano

The lifestyle is 40% vacant

December 19, 2008

The Rise

Vancouver’s rental vacancy rate ranks up there with the career of Nicolas Cage as one of the great mysteries of the modern age. (Did you see Wicker Man? If you didn’t, don’t.) The Canada Mortgage and Housing people tell us the vacancy rate is 0.5 per cent. The CMHC are also the same folks who say it was “prudent” to introduce the 40-year mortgage.

Me, I have no idea what the real vacancy rate is but I’ll say it’s higher than 0.5 per cent. A walk in the West End or a search on Craigslist and you’ll discover a plethora of apartments for rent. Trust me, search “available now” and you have to be careful not to crash your browser.

The Rise is one of the few rentals in Vancouver advertised as if it were a condo. Unfortunately, the prices are owner-inspired rather than rental-inspired. To live “above it all” prepare yourself for at least $1,800 a month for a one-bedroom-and-den.  Be advised, by “above it all” I mean above the Cambie Street Home Depot. Granted, the green roof is cool. Still, what person would rent at that price when the same money can rent so much more?

As for the vacancy rate, The Rise is 60 per cent occupied. That’s a marketer’s way of saying it’s 40 per cent vacant. There’s also a free rent deal when you sign a one-year lease. Not exactly evidence we’re in a market of high demand.

But hey, what do I know? I’m just a renter.

REBGV cancels trade show website

December 16, 2008

The Real Estate Board of Greater Vancouver has taken my advice and pulled the plug on its trade show website. It’s now no longer possible to become a sponsor of an event that isn’t going to happen.

The image above is an artistic rendering of a Board official building up the courage to hit delete.

In other news, it’s cold outside. When I complained about this to my condo-marketer friend, he asked me not to talk about it. He said “negative speculation” will only make things worse. Bob and I soon parted ways.

Yes, I recognize that’s a soft joke. Keep in mind I spent the better part of an hour getting Lionel Hutz and the REBGV plaque into the picture. That’s all for today.

It’s Brooklyn because it’s “funky”

December 15, 2008

Vancouver condo marketing is in “prorogue” mode. Developers are holding on to ad dollars like banks holding on to bailout money. But much to my reading pleasure, the Sun has yet to retire Westcoast Homes. In fact, the latest installment takes a look at Brooklyn Abbotsford, a condo with a most unlikely name that we laughed about last month.

A question about the Abbotsford condo’s association to New York City leads the Sun’s coverage. Those looking for proof of creative bankruptcy in condo marketing should look no further than the “strategy” for this brand:

Sales representative Donna Lou Gilbert says she (sic) the marketing team came up with the name Brooklyn primarily because the interior of the main lobby “with all the granite and tile reminded us of a New York hotel lobby.”

“I just love the name. It just sounds funky. I thought it was very contemporary,” she says.

[“An offer of ‘affordable elegance'”, The Vancouver Sun, December 13 2008]

Stuff like this makes me embarrassed about the marketing industry. When people say marketing is full of hacks and point to something like this, it’s hard to prove them wrong. And I want to prove them wrong, because lots of smart people work in marketing. Where’s the strategy here? How does this even make sense? Come on, my peers, you can do better than this.

RBC compares housing to hangover

December 11, 2008

“The situation is unraveling fast in British Columbia….further price correction should be expected in the near term.” -RBC Economics Research, “Housing Trends and Affordability,” December 2008

A new report by RBC economist Robert Hogue says B.C. is in “full-blown correction mode” with more price declines expected in 2009. This isn’t breaking news now that “negative speculation” is all the rage but this report is notable for its colourful use of language. It’s not every day a bank economist writes about the Canadian housing market in the context of parties, hangovers and digestion.

The report is available here for your reading pleasure.

How to lose friends and alienate people

December 10, 2008

Being in the right is not what always counts when it comes to public relations; what matters is what the public comes to understand. From a PR strategy perspective, the Real Estate Board of Greater Vancouver exercised poor judgment in its minor dispute with Vancouver Condo Info.

Inherent in public relations is the notion of relationship. This implies a respectful engagement with your audience. Hence, when contacting a blogger, spam is not good PR, hate mail is not good PR, but maybe a short email with a fact sheet attachment is.

In the matter of the REBGV v. Vancouver Condo Info, the blogger posted a graph with a potentially confusing title — one that the board thought infringed on its trademark. But rather than have a staffer send a quick email suggesting a correction, the REBGV calls on lawyers to make demands of the blogger with the intent of issuing a cease-and-desist.

Sure, the REBGV was in the right to do this since it’s no crime to hire a lawyer to do anything, whether it’d be to fold your laundry or pen your email. But if public perception is relevant to an organization, one wonders how “bringing out the barristers” is the best first choice to take. It’s needlessly confrontational and disproportionate to the objective — a crow bar in lieu of a toothpick.

It’s like your neighbour parking his car in the wrong spot and rather than ask him to move the vehicle, you call the police. Then you wonder why everyone in the neighbourhood doesn’t like you. But hey, you were in the right…

Over 4,000 people read Condohype yesterday. Welcome to the neighbourhood.

The party’s over… literally

December 8, 2008

“The party’s over” is a popular expression to describe a real estate boom gone bust. It’s the market that follows a bubble boom — one of falling prices and declining demand. What it isn’t is a call to end all parties. Just because the party’s over doesn’t mean you cancel your party.

The REBGV didn’t get the memo. They’ve gone ahead and canceled their 2009 conference and trade show. Due to “economic conditions”, the industry can’t bring itself to have a good time. Yet in a move I call “pulling a V6A”, the REBGV isn’t notifying the public. If it weren’t for a news story by Derrick Penner, we’d know nothing about the conference shutdown.

At last check, the 2009 conference website is still running, complete with details on the “great benefits” of becoming a sponsor. There’s a full agenda including a three-and-a-half-hour activity labeled “Fun Night on the Trade Show Floor.” Too bad the party’s canceled because that activity sounds awesome. In my book, it’s an invitation to show up in my “The Blogger Was Right” t-shirt with my dogs Case and Shiller. I’m devastated this can’t happen now.

PR advice to the REBGV: It’s good to update your website and news releases when news goes public. Just a thought.

Hat tip to the now-defunct Vancouver Condo Info. Thanks for all your hard work, Pope. You will be missed.