Archive for the ‘Media’ Category

Condohype meets Mansbridge

March 18, 2009

The National

There’s a possibility of a Condohype appearance on tonight’s edition of The National.  Fewer things in life are better than Peter Mansbridge, and this is coming from a guy who owns a stainless-steel fridge.

Tonight, Peter and the gang are doing a special feature on Vancouver real estate.   The mothership is already linking here so you know their coverage is gonna be hipper than most.  Should this blog get an on-air mention, this writer would experience such extraordinary delight, it could spell an end to my curmudgeonly ways for good.

The National airs at 6pm on Newsworld, 10pm on the main network, and about 14 other times in between.  If you miss it, Rex Murphy will hit you with a devastating cutting remark.  He’s a Rhodes scholar.  Don’t mess with him.

Beneath the Burrard Street Bridge

March 8, 2009

Photo by Dylan Yee

This weekend it was sunny and it snowed, and Oprah didn’t buy the penthouse.  Vancouver is a crazy place.  I love it to death, never mind my occasional mad rant.  Isn’t being a curmudgeon is part of who we are?  Whether it’s Kerrisdale NIMBYs, Bus Riders’ Unionists, or anyone perched on the steps of the art gallery, Vancouver people find purpose in a constant state of upset.

I once attended a lecture at the VPL about the future of newspapers.  On the panel were media people like Charlie Smith from the Georgia Straight. When the mic came to the audience, everyone had something to whine about.  One guy even laid into the press for not reporting the “connection” between Osama bin Laden and a “secret base” under the Burrard Street Bridge.

The conspiracy theorist’s rant is a classic Vancouver moment.  Nothing about real estate prices is going to change this.  Same goes for your marble countertop or Miele range.  A city isn’t the sum of its glossy appliances.  Whether things go boom or bust, whether you’re a renter or buyer, Vancouver is Vancouver.  Always.

Photo credit: Dylan Yee

Realtors and the magic of PR math

March 5, 2009

Why rent?

In the business, we joke about PR math. This is when marketers use real data to create an unreal impression. The beauty of PR math is its supposed ethical soundness. Real numbers don’t lie. Similarly, President Clinton “did not have sexual relations with that woman, Ms. Lewinsky.”

Realtors gladly use PR math. Today’s post shows an example from a westside agent. Because many realtors are running ads like this, I’ve concealed the realtor’s identity so that she’s not unduly singled out. The ad asks “why rent?” and compares rental prices to mortgage payments for an average downtown condo.

I threw the numbers over to Mohican at Housing Analysis, who kindly responded that they are correct. But there’s a caveat and it’s a biggie: You have to factor out taxes and strata fees and have interest rates remain at record lows. Here’s the word:

Thirty-five years amortization is the short answer. One-year mortgages are now at 3.5 per cent and a payment of $1,275 can get on the hook for a cool $310,000. Sounds like a bad idea to me but what do I know, I’m only a financial planner.

I rent downtown, at a place assessed around $300,000, and my rent is very close to the realtor’s example. But my landlord pays the strata, taxes and insurance out of my rent. It’s probably $500 a month. The ad does not mention these costs and for good reason. It’s bad PR math! Own for the price of rent plus 40 per cent or more. Yikes.

In defence of Cameron Muir

February 17, 2009

Photo by uzhik

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

February 16, 2009

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.

Liquidate this

February 10, 2009

liquidation

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

February 7, 2009

“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.

Nobody saw this coming?

January 18, 2009

Publicity still for "The Zone"

In the early days of Condohype — which I’ve now renamed with a capital “c” as a sign of blogger puberty — every post was a dissection of a condo ad. In the marketing I found clues of a meltdown in the making.  I put it under the microscope to make it easier to see, and for the possibility of a few laughs.

The ads are more or less gone, a victim of a real estate market bust that “nobody saw coming.” Across the League of Extraordinary Economic Gentlemen — in the world of “experts,” sadly, it’s mostly men — almost all opined the market was headed for the heavens.

The experts were wrong. This we know. But the problem isn’t so much that they were wrong, but that they had no basis upon which to be right.  The chorus of opinion that prices would keep rising was informed by the chorus of opinion that prices would keep rising.  It was a feedback loop.

Today, the key message of the elite is that “no one” predicted the Vancouver real estate collapse.  Some quotes, all from the last seven days:

  • “No one would have imagined the market would have changed as drastically as it did.” –Chris Evans, Executive Vice-President, Onni Group of Companies
  • “No one was able to predict the unprecedented real estate market meltdown…” –Peter Ladner, Former NPA Mayoral Candidate
  • “Everyone thought that in three years, prices would be up. Absolutely. We knew there might be a dip, but nothing like this.”  –Austin Gangur, North Vancouver Realtor

The quotes are laughable but also scary.  They remind us of how potent the hype ideology is.  It’s not for lack of prediction that we find ourselves in this mess; many sounded the alarm bells of the crash.  In 2005, the world’s leading real estate academic declared Vancouver “the most bubbly city in the world.”

So what is it?  The problem is psychological.  No matter how convincing the evidence, people will not waiver in their conviction.  They want to believe, maybe even need to believe, that their one “investment” condo is worth more than the GDP of Spain.   Real estate is Vancouver’s religion.  You do not question God.

What goes up must come down

January 16, 2009

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.

Hip deep in the deep dip

January 7, 2009

http://flickr.com/photos/seabamirum/3120629689

In the ongoing struggle to curb negative speculation, a new word is taking hold as the preferred term of the real estate intelligentsia. I’m talking about dip.  As in Vancouver housing prices are expected to “dip” until 2010.

The press seized on the dip in October. Our first big taste of dip came on October 24 with the Sun headline “Housing may dip until 2010.” In November, another headline: “Bank adds to opinions on shallow housing dip.” Yesterday, this one: “Metro Vancouver to see deepest property-price dip nationally.”

For perspective, the dip is 14.8 per cent deep, which amounts to $84,000 in lost value for the benchmark home. This is a correction, not a crash, says Royal LePage.

Whatever this is, a dip this isn’t. Correction, crash, whatever. But to say it’s a dip is to imply it’s temporary, that the highest prices constitute the baseline. This thinking is backwards. Let’s talk about dips when prices return to historical norms.

Photo credit: Seabamirum