What goes up must come down

I feel like I’m playing into the hand of the condo marketers but I’d be remiss not to bring up the “largest real estate liquidation event” in Vancouver’s history.  I put this in quotation marks because it’s impossible to verify.  It reminds me of when The Province’s dubbed itself “B.C.’s best-read newspaper.”  What the hell does that even mean?

Onni’s “three weeks after Boxing Day condo sale” is the latest extension of the real estate purchase incentive.  Instead of tossing in a Honda Fit or a discount pass to Chuck E. Cheese, Onni’s playing to consumer fears over falling prices by cutting them.  The press is reporting double-digit discounts.  But as UBC prof Tsur Somerville asks, “What if they were 20 per cent above the market and now they’re just gotten down to where the market was?”

It’s something to think about, as is the fact that Onni’s condo warehouse sale is the invention of Cameron McNeill from condo marketing über firm MAC Marketing Solutions.  Cam’s plan is to trim prices on 375 unsold units, take deposits now, and close deals on March 7.

There’s an old saying, I think it’s by Jimmy Pattison, about the earliest loss being the best loss.  Onni’s bet is they’ll beat the market to seize the best loss.  It’s the right move but they better price those units right.  (And have built them right, but that’s another matter.)  If the condo discounts are smoke and mirrors, buyers won’t eat them up.  And if they don’t, the market has one more sign that the bottom is far from being found.

44 Responses to “What goes up must come down”

  1. buff_butler Says:

    Two comments

    1. This seems more just marketing then a liquidation.

    2. Why is Tsur Somerville getting any press at all anymore 😛

  2. SurreyJoe Says:

    That’s a huge number of condo’s to try and move. By contrast in December according to NV Condos there were only 348 condo sales in Greater Vancouver. Also worth noting is that they are making a huge effort to promote to real estate agents see this – full seller commission, new unit, professional staging for many of the units and a significant discount. Its an easy sell for the agent if they have a client who wants/can afford a condo.

    This has got to have a huge domino effect:

    – individual’s owners trying to sell in these buildings (and competing buildings) at higher values will be under huge pressure to reduce;
    – other developers will be see sales stagnate as buyers wait for their fire sales;
    – more underwater condo owners which means their unsuccessful sales efforts will eventually result in foreclosure and true firesale pricing.

    I’d say the ‘dip’ will continue.

  3. The Urban Dweller Says:

    Yeah I read about some of the units and found they are in Richmond, New West and Surrey and other suburbs. No Vancouver properties, atleast I couldn’t see any but I was in a hurry and didn’t have time to investigate. People have laughed and think this is a dumb move, but I agree with you that they are first to liquidate slow moving assets.

    Thanks for the write up as I assured my readers yesterday you would keep us abreast and now you have, thank god.

  4. Panda Says:

    I wonder if they have a few condos priced 40% down as “loss leaders” and then once you give them your details they work on trying to sell you the condos which are not discounted by much at all.

    Even at 40% off, I have no interest to get involved with Onni or their product.

  5. The Urban Dweller Says:

    @Panda, yeah even at these prices, Onni condos are not the greatest. I might jump in at 75% off, might 😀

  6. Carioca Canuck Says:

    It will be interesting to see how much hyperbole is present in this event if it actually occurs. What if they get a low volume of registrations (who will undoubtably have to be prequalified) for the circus ? Will the perception of “discounts” turn out to be a fraud ? (That’s my bet).

    Personally, I predict next to no sales, only a few loss leaders at deep discounts (and they will be units no one wants anyways), and think that this event will slowly and rapidly dissappear from the media within 3 weeks as a result once the word gets out.

  7. Many Franks Says:

    Attention everyone! If you’ve been quietly building up a downpayment, waiting for the right time — act quickly! It’s not too late to snatch defeat from the jaws of victory!

  8. househuntvictoria Says:

    This reminds me of two things: the first is a too good to be true airline seat sale. You see the advertised $145 YVR to Cabo price, you go online only to find out the seats at those prices are sold out, but there are a few $249 and $279 seats available and you’ll have to pay full price on the way back. The second is one of those far-east rug shops that have a perpetual 70% off sale. You know the rug was never worth $5K. You know it’s not even worth $1500. And that’s why the store is usually empty when you walk past it on the way to lunch.

  9. sluggo Says:

    Whatever Onni’s product lacks in quality of construction, material, and design (consistently at the bottom of the list), they seem to make up for with innovative marketing.

    Sure it’s a big ploy, but it’s bound to break the stalemate, as other sellers will be forced to compete in their pursuit of the dwindling number of buyers.

    This could spark the biggest price plunge in our history.

  10. burning_money Says:

    I LOVE the Pattison quote. So true. I’m in that situation now, sitting on a few high-end, west side spec built houses that have got to go. A bit of a different price point than the condos discussed here but pricing on these homes is subject to the same laws of supply and demand.

    Last decent sale to go (that I looked at) was on W44th for a 4600SQF house that went for 2.7 down from an ask of 3.2. Huge ask but lucky to find a buyer. Still at that price ok money was made. It’s the guys sitting on 2400SQF specs in Pt. Grey, Kits, Dunbar that are going to be in trouble. Unless they were banking land 2 – 3 years ago current pricing is bumping up against realistic break even, with maybe a few bucks left over. Pricing on that inventory will have to drop – my guess is 20% of the current average ask of 1.6. Decent deal at that point for new build, desirable neighbourhood and assuming you’re buying as a home to live in and can swallow the monthly cost.

    I’m sure some of the more excitable will say I’m not buying until it hits 20% + X% and then have valid reasons. Great, there are always buyers for well priced, competitive product. And at the higher end, guys with money, are locking in losses in their portfolio’s and throwing what’s left into something they can enjoy – a home to live in.

    Happy to eat real losses to be in cash at this point. Made lots on the upside, will lose less on the downside and be ready to go again when the market looks right.

  11. The Pope Says:

    I think this quote from their marketing brochure FAQ is very interesting:

    Aggressive speculators lined up overnight at launches to scoop up prime units and then could not flip them before completion. Many could not afford to complete and lost 15% deposits. Much of the available inventory is made up of these homes.

    Anyone who’s been reading Vancouver housing bubble blogs for the past year or so saw many prediction of this happening – how many more presales are out there that buyers won’t be able to complete on, particularly since their value has dropped so much in the last six months?

  12. greg Says:

    Let’s be realistic, in developer speak

    can’t complete = won’t complete

    With prices down, savvy investors are certainly walking away, but better to spin the story and blame the credit crunch or a few insolvent indivuals.

    If you say, actually, these guys bought presales and didn’t want to realize bigger losses by completing, so they walked away, that sends a much chillier message to the local market, doesn’t it?

    I mean, there must be a few greater fools left out there, and we wouldn’t want to unequivocally steer them away from the kool-aid, not yet anyway….

  13. blueskies Says:

    i think the sale will be a bust….

    what could happen is the few buyers that do jump will become instant media darlings… 15 minutes of fame
    interviewed on the bill good show…complete with entourage pursued by the paparazzi and erstwhile reporters yelling “What were you thinking?!?”

    gotta love it!

  14. burning_money Says:

    In developer speak can’t complete or won’t complete = see your ass in court. You can certainly walk on a deposit that you put down on a pre-sale and the developer can certainly sue you for any loss that they then suffer. In this environment I’d be interested in learning about anybody that has found a sympathetic developer willing to tear up a CONTRACT.

    So walk on your 15%, have the developer fire sale the unit at prevailing market rates, go to court, pay the developer the difference between the price you agreed to buy, the price they had to sell at, plus cover off their legal expenses and any carry costs they had on the thing. Savvy indeed.

    Unless you’re declaring bankruptcy or own a single-engined Piper you plan on ghost-riding into the Pacific sack it ‘up, complete and eat the loss.

  15. bearette Says:


    Condohype and HA get Tyee props.

  16. Strataman Says:

    greg “With prices down, savvy investors are certainly walking away,” I tried to put myself in the place of the developer (sleazy of not) here is what I would do! 🙂 Have a real cheap sale on the ones that flippers are walking away from ( I believe a real auction would stand up in court as fair value), then chase them to court for the difference (right away), with the point being to scare the crap out of pre-sale buyers that haven’t had to complete YET. thus forcing them to complete or go bankrupt. Aren’t you all glad I’m not a developer? 🙂

  17. VancityAllie Says:

    Hurray! After months upon months of denying that we’re not in a recession, let’s completely change our marketing and use liquidation as our next strategy!

  18. Dale Says:

    Can’t complete might == “Can’t Complete”

    How many people that bought in the Downtown Eastside (Woodwards) planned on flipping and really couldn’t afford it? How many can still qualify for a mortgage based on 2009 values after “prequalifying” in 2006?

    I predict they recall the legislature for that one.

  19. burning_money Says:

    What would they legislate, stupidity? People have an option, bankruptcy. It sucks but if you’re speculating and wind up short you get screwed. No big deal, happens. I can’t see the government lining up to bail out individuals who entered into legally binding contracts with private developers through legislative means. Who then bails out the developers who will break their financing covenants, if X% of their deals collapse, and thus go into default on their mortgage?

    People will be forced to tap equity in their own homes and possibly short sale on their condo investments, assuming that prices continue to nose dive.

    And you can always qualify for a mortgage or ‘loan’ trust me, it just depends on how much you’re willing to pay. Interestingly as rates have sunk to their lowest ever the cost of getting hard money for seconds and the like has shot up. I’ve had 17-20% with the standard 4-5 points up front quoted whereas in the past you could get 10-12% no problem on virtually the same deal. The private money is valuing the risk differently, appropriately so, and demanding a greater spread. It sucks borrowing at that rate but its doable if you plan on as Pattison says taking the early loss. The other option is bankruptcy of course.

  20. Abbotsford Condos Says:

    Can you get the mortgage to complete the sale?
    How about vendor financing..

  21. Urban Dweller Says:

    Looks like Louie is in more hot water over this completion guarantee

  22. James T Says:

    The “largest” and “best-read” hyperboles make me think of a certain Vancouver recruitment company that styles itself as “Vancouver’s #1”. Based on what, exactly? Self-delusion?

    However, I think this is a really interesting strategy. Perhaps they are trying to establish a ‘bottom’ for falling real estate prices. But, indeed, those prices better be the right ones!

  23. J Says:


    First off, love the site. I’m just surprised that you didn’t have some smart a** comment about the NEW style of condohype advertising that MAC/Onni is pioneering. I *almost* miss the good ‘ol days of bagging the incredibly generic lifestyle+hipster+booze+recycled copy days.

    I mean, it looks like the new way of marketing is to make it look like you’re peddling cell phones (check out dubyoodubyoodubyoo fido dot ca).

  24. patriotz Says:

    Have a real cheap sale on the ones that flippers are walking away from ( I believe a real auction would stand up in court as fair value),

    Doesn’t have to actually, because the pre-sale contracts stipulate that on default the developer may liquidate the property without any duty to realize the highest possible price. Now the developer is going to try to get as much cash from the property as they can of course – a bird in the hand and all that – but this eliminates one defense by the buyer in a subsequent lawsuit for any deficiency.

  25. Jack's Miner Niners Says:

    I love to hack the kitsch condo marketing with the best of them, but I applaud Onni/Mac. In a market that’s completely frozen and devoid of any response to this turmoil (anyone heard from Condo Bob lately?), at least they are attempting a new approach to generate some activity.

    The real issue is what is the true discount and will it actually be below market (what’s required to make this work), not below “hopeful” pricing?

    At the end of the day this MAY work ONCE, but it’s risky. If it doesn’t work, Cam Mac and Rose ain’t gonna have anyone who will sit with them at the next UDI meeting. They will have successfully brought the whole market down without stimulating. Not a great way to make friends (clients) and influence people.


  26. jfk Says:

    No doubt that Onni can scare other developers into jumping on the band wagon, but I would’nt take these guys too serious.

    I know a couple of sub contractors who have been stung by Onni and are owed $thousands. They say these guys are the joke of the industry and most reputable subs want nothing to do with them.

    Buyer beware!

  27. Dale Says:

    I don’t think you can/should legislate against stupidity, but Ottawa is spending billions so a bunch of people in Ontario can build cars no one wants. I don’t like it, but there is a precident.

    I say it happens when Woodwards “completions” start evaporating in the spring.

    Going after people with good income/other assets is a no-brainer, but what do you do to the guy making $30k that borrowed $40k from his retired parents as DP on a condo he was never going to complete on, but didn’t flip in time? Not a lot of disposable income to go after and not a lot of pennies/dollar after bankruptcy.

    I honestly don’t believe this sales tactic will work. Buyers followed “news” reports of the neverending price increases before jumping in. People from offshore might still be buying discounted houses on the westside, but guys from Surrey aren’t going to beat a path to Escada until Ozzie Jurock tells them everything is going to be ok.

  28. patriotz Says:

    The real issue is what is the true discount and will it actually be below market (what’s required to make this work),

    No, what is required to make this work is a willingness to accept market price, just like for any seller. Market price is the price at which a property will sell, by definition.

    Yeah I know we’ve heard that before but it needs to be understood. Eat your vegetables.

  29. Many Franks Says:

    Here’s a good summary of what’s coming down the pipe from someone who’s on a different water supply: http://futronomics.blogspot.com/2009/01/olympic-sized-depression-hitting.html

  30. Jack's Miner Niners Says:

    “No, what is required to make this work is a willingness to accept market price, just like for any seller. Market price is the price at which a property will sell, by definition.”

    We’ll have to agree to disagree on this one. Biggest issue a buyer has today is not “what’s the market price”, it’s “will this be worth less tomorrow?” If Onni is prepared to provide insurance against 25% – 40% downside, they may be able to stimulate the market.

  31. patriotz Says:

    Biggest issue a buyer has today is not “what’s the market price”,

    The market price is what the buyer is willing to pay. It’s not something external to the buyer, it is determined by the buyer.

  32. Strataman Says:

    “If Onni is prepared to provide insurance against 25% – 40% downside, they may be able to stimulate the market.” True if you mean stimulate the market down, false if you mean stimulate the market up!

  33. alta vista Says:

    There will be no recession for lawyers in the next few years, nor collection agencies. The courts will be full of lawsuits against pre sale purchasers who are bailing. What is a 5 to 25% deposit loss compared to 50% after GST/PPT/legal fees are included ?There must be thousands of Woodward like scenarios on the horizon in the lower mainland alone. If you have a pre sale completing soon, start liquidating assets now!

  34. Matt Stiles Says:

    Many Franks,

    Thanks for the mention.

    Living somewhere else (Germany currently, but I’ve lived many places) is an eye opener when it comes to seeing societal economic decision making.

    Here, ‘debt’ really is a four letter word. 30% down payments are a standard requirement. Most mortgages have terms of 10-15 years. Naturally, there was no housing bubble in Germany. Germany has other problems, as I highlighted in another recent article. But ultimately, the average person will be less affected than those elsewhere, experiencing massive asset deflation.

    Matt Stiles

  35. Chilled Says:

    “”It reminds me of when The Province’s dubbed itself “B.C.’s best-read newspaper.” What the hell does that even mean?””

    Did you not notice that one page of The Province fits perfectly into the bottom of a standard size bird cage??

  36. bearette Says:

    For the love of God! Will the sheeple never learn?
    Word is there are line-ups in Richmond to sign up as bidders on the ONNI firesale (line-ups for registration today, actual sale April).
    Please make it stop.

  37. Strataman Says:

    bearette says; “Will the sheeple never learn?” Nope they won’t doesn’t happen will never happen. I know a senior property manager for a very large company who is going to buy, he agrees prices are high but hey Vancouver is now at WAY!!! below bottom and it is the time to get in and make scads!

  38. dg Says:

    Great idea buy a firesale condo. Talk about potential problems.

    – not getting the show suite instead the budget suite
    – developer has no cash – so if it starts to leak – no recourse.
    – try to get your deficiency list completed – contractor probably hasn’t been paid or he has been shafted by the last three projects in the downturn.
    Sounds like endless council meetings and EGMs.

    What a negative blackhole to be sucked into.
    I pity the fool who buys.

  39. The Urban Dweller Says:

    dg, thats what I was thinking. However, this is Vancouver and people tend to not know anything about what they are getting into, these are the same people who a year ago thought prices would see double digit increase up to the Olympics. Go figure.

  40. sallysmith Says:

    I’m sure lots of people will line up to buy, they still believe that this is the bottom. Reminds me of my stupid move with stocks a few months back. On the way down, I bought a few, intending to flip as soon as the market rebounded in just “a few short weeks” as everyone was saying. I suppose you can all guess how well that went down…oh well live and learn, at least I didn’t lose nearly as much as a would-be condo flipper will! Seems like the same mentality applies with these new buyers…like “it’s already bad, how much worse can it get?” Oh boy…you have no idea!

  41. Dale Says:

    Sounds like they figure this has legs.

    Info from my realtor:

    3. All buyers are guaranteed to receive a 25% discount immediately when they make an offer. Any additional discount to be added to the 25% they are already saving will depend on which home they choose and the size of the buying group – the more people involved the better!

    6. The offer will be subject to the buyer’s satisfaction with the final discount and final net price. There is no expiry date on this subject.

    7. The buyer will be provided with outstanding offers from lenders who can analyze their financial position and an independent appraisal of the selected home to inform them as to how much they are eligible to borrow.

    8. It will take approximately a week for the buyer group to form and for us to write a critical mass of offers. At that point, we will be able to finalize the buyer’s discount (again, based on the home chosen and the total size of the buying group).

    9. If the final discount is not as much as the buyer was hoping for, they may chose to not remove their subject. In this case, the Vendor can give 24 hours notice to the buyer forcing them to either remove their subject or cancel the deal.

    10. If the discount offered to the buyer is pleasing, which in most cases it will be, the buyer will remove their subject and the home will be theirs! We’re asking for 30 day closes but will be happy to consider special circumstances.

  42. patriotz Says:

    The above is, of course, a bidding war couched in terms to make it sound like it isn’t.

  43. pomonke Says:

    The sale includes condominiums in
    Richmond (Flo);
    Port Moody (Suter Brook – Aria 1 &2, Room Loft Living and Libra);
    New Westminster (Victoria Hill and The Point);
    Port Coquitlam (South Verde);
    Surrey (Escada).

    god.. they all suck, the condo version of last month’s suck boxing day sale

  44. torpesco Says:

    The hype is back!



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