BC, data, economy, prices, supply

The $100k price drop guarantee

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61 Comments

Last October a building in North Van offered a $100,000 price drop guarantee.

Yesterday a reader with the handle Not much of a name updated us on how that’s working out:

I just got an update from one of my favourite condo buildings in North Van, The Kimpton. This is the development that was offering the $100k “Price Drop Guarantee” back in October. Fast forward six months and a unit came through as a sale yesterday.

Original asking price – $750k
Listed price in Jan – $650k
Sale price – $575k

That’s $175k in six months.

If you’re looking to buy a condo these days would a ‘price drop guarantee’ soothe your worries about overpaying or would you rather just have a ‘free’ car?

Submitted by Nom

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rp1

A tip for investors:

http://www.cecm.sfu.ca/~rpearcea/investors.pdf

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Vote Down The Facts

“That’s for sure. You need to stick with spellchecking others’ posts and misquoting bond rates.”

I corrected myself on the bond thing, as well you know. But it’s OK, I forgive you – you’ve clearly had some bad trading days this week, hence the anger.

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WHO FUCKING CARES

“Wherever bubbles of this magnitude have collapsed it is the youth who have faced the blah, blah, blah.”

if they want jobs, they can go back to ontario, china, or where ever the fuck they came from. don’t let the door hit you on the way out.

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Anonymous

Sorry, that should read
‘House sold for $100k profit recently’

Maybe i’ll get some votes after that correction.. 🙂

NB

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Anonymous

while I enjoy Shortem’s analysis when its posted, #53 was spot on. #25 was a bit of a mess. you can’t compare the 3.8% return(which is an unleveraged return), to mortgage payments made because if you’re using an unlevered return, by definition you have no mortgage payments.

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Devore

“What makes me want to vomit, is this is a script written by the Lieberals, perpetuated by the Cons and will inevitably be blamed on the BCNDP. Mark my words.”

Just another day in politics.

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NoBid

#47 – at this point I would encourage you to look at the original post #19, start over and try and craft a logical response. I’ve read a few more of your posts today and they seem a little erratic ! I would have to agree with #35.
” the main problem is being on the hook for $440k in a declining market” – again, house bought in 2009, house sold for $100k recently – case closed.

My point is you hijacked a simple query and tried to make some sort of great bear case study out of it. The guy did well, admit the obvious.

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Lifetime Renter

Democrass, be careful what you wish for. Wherever bubbles of this magnitude have collapsed it is the youth who have faced the highest levels of unemployment and those who find jobs often face permanent insecurity, low wages and, as always happens with an extreme surplus of labour, inhuman levels of pressure to produce. Many working class boomers will face similar pressures. In my opinion this is not a generational but a class question. While many workers of all generations go to the wall, we will see the wealthiest Canadians who have massive investments in bank bonds and shares protected when CMHC money flows to the banks due to loan guarantees.

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Democrass

MOI is beginning to rise again. It looks like it will be all down hill for the real estate market until March 2014 when we’ll the a small seasonal bump. I’m looking forward to the evaporation of phantom wealth, foreclosures and bankrupt boomers.

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kabloona

#38 Short’em:

Your comment reminds me of the time I made a similar incredulous retort once when somebody told me a particular property was a “million dollar house”…

My (nearly) exact words were: “Would you rather have a million bucks or that piece of sh*t house? I’ll take the million, thanks…”

When people can access vast sums with easy credit, it seems price becomes almost meaningless…

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No Hope

Colby Zaph, the professor in that UBC article made $162,904 last year and he can’t afford to buy. Yep. Prices are totally normal…

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Bear! Bear! Bear!

@ Bull! Bull! Bull!

….how low will prices go?

You mean you don’t know how low they will go?

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Short'em High

#49. Nothing was said of what was put down but we know the notional value that was risked and the typical sort of mortgages of the era. 10% down is generous. If more or less no matter. The main problem is being on the hook for $440K with “NoBid” and rapidly declining prices. Hey, how about that. Isn’t that your handle?

So your point of view is it was a good trade when adjusted for risk? Please explain how you would calculate the risk. I already did. And yeah, “balls to the wall” is what I said. If you can risk going bankrupt on every trade you can make a hell of a lot of money.

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KBro

#45 NoBid

” this translates into a 64% return ”

Who gives a rats ass???

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NoBid

While I find the majority of posts here spot on, I do come acrross a few that make me wonder and then I see a 20-1 ( up vs. down vote) and I start to really wonder about all my bear friends. #19/#25 response The guy cleared $100k, and there are clearly lots of transaction costs, prop xfer tax isn’t cheap on the way in (6400). #25, You compute a return based on no mortgage and then you start calculating his mortgage costs in the next sentence? What’s it gonna be? Why don’t we assume he did the ‘right thing’ and put down 25% ($110k). This translates into a 64% return (tax-free) on his equity assuming he walked away with $70k. Not bad if you ask me.. Balls to the wall investing, making millions? You didn’t actually mean to write… Read more »

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Short'em High

#41. You’re quoting REBGV stats which are slightly lower because they don’t include empty residential lots. Have you put any thought into a reliable conversion formula between and REBGV? If you recall, based on the last three months, I posted the formula REBGV = 0.97* + 20 from linear regression of sales. Does this formula work on sales and listings longer term? What do you reckon?

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vangrl

thanks VHB, your stats really put it in perspective, appreciate it!

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chilled

Shesh Says:
April 17th, 2013 at 3:43 pm 29

“Families wondering if they have a place in Vancouver”

+++++++++++++++++++

What makes me want to vomit, is this is a script written by the Lieberals, perpetuated by the Cons and will inevitably be blamed on the BCNDP. Mark my words.

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VHB

April norms:

year sell list sell/list
2001 2253 3556 63.4%
2002 3785 5215 72.6%
2003 3095 4139 74.8%
2004 4106 5665 72.5%
2005 4043 5731 70.5%
2006 3345 4452 75.1%
2007 3490 5724 61.0%
2008 3218 7010 45.9%
2009 2963 4649 63.7%
2010 3512 7648 45.9%
2011 3225 5847 55.2%
2012 2799 6056 46.2%
Mean 3320 5474 62.2%
median 3285 5695 63.5%

On pace for worst sales since 2001. 2nd highest new listings at the same time. That sounds like a humdinger of an April.

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VHB

Total days 21
Days elapsed so far 12
Weekends / holidays 5
Days missing 0
Days remaining 9
7 Day Moving Average: Sales 120
7 Day Moving Average: Listings 279
SALES
Sales so far 1419
Projection for rest of month (using 7day MA) 1080
Projected month end total 2499
NEW LISTINGS
Listings so far 3598
Projection for rest of month (using 7day MA) 2507
Projected month end total 6105
Sell-list so far 39.4%
Projected month-end sell-list 40.9%
MONTHS OF INVENTORY
Inventory as of April 17th, 2013 17340
MoI at this sales pace 6.94

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paulb

New Listings 301
Price Changes 135
Sold Listings 143
TI:17340

http://www.paulboenisch.com

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Short'em High

@VDTF Says: “I’ve no idea what you’re talking about.” That’s for sure. You need to stick with spellchecking others’ posts and misquoting bond rates. @Curious. Here’s another riddle for your friend that flipped for a “profit”. If they had the $440K cash free and clear in their bank account in 2009, would they have bought that townhouse with it? That one usually settles the question of risk. It doesn’t seem like a risk when you can go bankrupt and make back your little equity in wages after a few years. But, when you really have the money, that townhouse looks a whole lot different. You think about how little your neighbors are putting up in cash compared to you and it doesn’t look like such a sure thing anymore. What it looks like is whole lot of risk that you… Read more »

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patriotz

What he’s talking about is that stocks were at or near bottom at the same time the person in question bought the townhouse (in 2009), so the buy stocks versus buy RE argument is not contingent on timing a stock market bottom.

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