Hidden price drops now called ‘incentives’

Looking for a new condo?

If you are it looks like you’re getting to be a rarer species and to catch your eye marketers are trying all sorts of things short of just dropping the price.

How about a ‘free’ car or $1000 off your monthly payments for a year?

Or if you’re a believer in the power of a good sales person, then a $5000 bonus to the realtor might do it.

These are just a few of the incentives that developers and marketers are using to get attention or avoid going directly to the price drop.

But are these hard sell techniques working? And will they help kick start a sagging industry?

“We have to be careful before saying ‘the sky is falling,’” says Diana McMeekin of real estate marketing firm Artemis. “What we’re seeing in the market today is a response to the shift from speculators to long-term investors. The kinds of people that are buying now are owner-occupiers as opposed to ‘flippers.’”

For that demographic, real estate is “less of a commodity and more of a home. Their decisions are often more measured,” she says, and they are more likely to be enticed by deals. “Their decisions are more emotional and less about dollars and cents.”

While Ms. McMeekin says our condo market is not as glutted as Toronto’s, she still advises clients that in a competitive market, especially in areas such as Metrotown and Richmond, “you need to have a promotion or special offer every day – just like in the retail business.”

Read the full article in the Globe and Mail.

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frank
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frank

How about just reducing the price, Mrs McMarketter?

Naked Official Returns
Guest
Naked Official Returns

so condos are cheap lingerie

DeeplySaddenedwithYankeeRoots
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DeeplySaddenedwithYankeeRoots
Not directly relevant to the posted subject (but directly relevant to the quality of all of our lives, so I make no apologies), but I just wanted to ask, how is a background in “real estate investment” relevant experience for an ambassadorship to a European country? ““It is an outrage. It is an abuse. It is a violation of the conventions and agreements of international air transportation,” Saavedra said. Bolivian Vice President Alvaro Garcia went so far as to say Morales had been “kidnapped by imperialism.” … The report in Die Presse is the only report to name Eacho as responsible for the false claim. It, however, has not been denied in any news reports either. President Barack Obama nominated Eacho to be ambassador in June 2009. Prior to that, he had not served in any diplomatic position. He had… Read more »
kabloona
Member
kabloona

So what…? Our PM recently appointed some dude named Bruno – his his ex-bodyguard – as Ambassador to Jordan.

http://www.thestar.com/news/canada/2013/04/19/rcmp_bodyguard_for_stephen_harper_to_be_ambassador_to_jordan.html

Next, I believe he’s naming his hairdresser as Ambassador to Liechtenstein….

🙂

Low Rates
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Low Rates
Incentives and outright fraud. When factual returns on all types of investments are very low, and central banks follow suit, enterprises involved with return of investor capital spring up like mushrooms in manure. By return of investor capital I’m talking about the continuum of ponzi schemes from the illegal to the not yet illegal – like overpaying for real estate with taxpayer insured loans which will result in decades of outlays higher than equivalent rent. The answer is to have higher interest rates that drive out the ponzi element. Only enterprises that can provide factual returns will have any investors in a high interest rate environment. This point is never acknowledged by central bankers. Central bankers think regulation works the same no matter how interest rates are set. Unfortunately the regulations we have were developed when much higher interest rates… Read more »
Joe Mainlander
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Joe Mainlander

@ frank #1 “How about just reducing the price, Mrs McMarketter?”

You’d think that would make sense. Perhaps, it’s so the closing prices are higher and the stats won’t show any RE price drops.

Or, as developers need to pre-sell a certain % of the project to get financing, perhaps the higher closing costs keep the banks happy, and instead they have to use these gift back/cash back deals.

elvince
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elvince

real estate is “less of a commodity and more of a home. Their decisions are often more measured,” she says, and they are more likely to be enticed by deals. “Their decisions are more emotional and less about dollars and cents.”

How does she even reconciles these statements? How can someone make measured decisions enticed by deals but have these decisions be more emotional and less about the dollar?

Do these would-be journalists at the G&M even read their articles before publishing them? Every newspaper has bad papers from time to time, but this one quote is a bottomless pit of stupidity.

There is anothe “gem”:George Wong, for one, believes there is no crisis – “just an explosion of supply in certain areas that has created a buyer’s market.”

in one word: POP!

Low Rates
Guest
Low Rates

http://globalnews.ca/news/700634/end-of-the-line-for-kelowna-pacific-railway/

More layoffs. Central bankers don’t like that but it is inevitable. Putting off the inevitable closure of obsolete enterprises makes everyone poorer. Soviet Russia had all sorts of factories producing out of fashion stuff that nobody wanted and their system eventually collaped.

Bernanke, Carney, and the rest keeping brain dead enterprises alive on low interest rates are dooming everyone living today to a lower standard of living for the rest of their lives.

elvince
Guest
elvince

And I think someone at CNN.com is reading this blog:
http://money.cnn.com/2013/07/08/real_estate/chinese-homebuyers/index.html

Most of her Chinese clients are wealthy industrialists or real estate tycoons, many of whom spend less than half the year in the States.

Getting visas on the cheap seems to be easy in the US too!

Many Chinese buy homes through the U.S. government’s EB-5 Immigrant Investor program, which is considered a fast-track to getting a green card. To qualify, foreigners must invest at least $500,000 in a business that provides or preserves 10 jobs. This could be a home that is part of a bigger business project, such as a condo complex. Nearly 80% of all EB-5 visas went to Chinese nationals in 2012, according to the government.

Low Rates
Guest
Low Rates
US EB-5: “invest at least $500,000 in a business that provides or preserves 10 jobs” True, but unlike Canada, if the US EB visa business goes belly up the investor loses all their money. The stupid system we have in Canada has the investment guaranteed by the government and paid back in full no matter what. The same 500k is often recycled to friends of those immigrants who use the same funds again to create more investor visas. As well, these so called “investors” in Canada are little more that economic social climbers who create no jobs for anyone else except perhaps Philipino slaves they bring with them from China to tend to their property and children. It’s a disgrace really. These people should be rounded up, revoked, and put on the next plane back to China.
Serene
Guest
Serene

I noticed that huge yacht in North Van as well. Why are Billionaire yachts coming to Vancouver. That one is big as a freakin cruise ship.

439 feet long. 2 helicopter pads.

Apparently the Russian Tycoons are in town to buy RE. I kid you not!

Serene
Guest
Serene

Canada’s Investor Immigration program is a joke. Th money can even be lent from a bank and they just charge you interest at 3-4% per year. There is a 7 year backlog in Investor applications. So another 150,000 more families in the pipeline.

Son of Ponzi
Guest
Son of Ponzi

“in the pipeline”
I understand that they are shipping them now in rail cars.

VMD
Member

Fraser Valley RE Stats:

Sales: (3 out of 22 business days)
July 2013: 152 (-46%)
July 2012: 279

– This seems a little dramatic, will update once more stats available in a week or two..

Son of Ponzi
Guest
Son of Ponzi

Was at The Flying Beaver Bar and Grill this weekend.
Great place right on the Fraser.
At one point, the conversation on our table turned to how high the water level of the Fraser was.
It seems that a surge of about 2 feet would break the dyke and flood the airport.

chilled
Member
chilled

Son of Ponzi Says:
July 8th, 2013 at 10:45 am 15

Was at The Flying Beaver Bar and Grill this weekend.
Great place right on the Fraser.
At one point, the conversation on our table turned to how high the water level of the Fraser was.
It seems that a surge of about 2 feet would break the dyke and flood the airport.

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

It won’t be a surge, but a parked van packed with fertilizer and diesel fuel.

Son of Ponzi
Guest
Son of Ponzi

Serene # 11.
2 helicopter pads. What color were the helicopters?

Manna from heaven
Guest
Manna from heaven

Sounds like NZ officials are burying their heads in the sand just like they are here in Canada. Lots of similarities between Canada’s and NZ’s RE market, particularly Auckland and Vancouver. RE in Canada and NZ are the third and fourth, respectively, most over-valued in the world, according to the OECD.

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10895526

Is anybody out there listening?

Joe Mainlander
Guest
Joe Mainlander

@ Manna: Yes… the 35% who don’t own are listening. The 65% who own are covering there ears and saying “nya nya nya I can’t hear you, I’m a millionaire”

BulbsForSale
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BulbsForSale

#7 Elvince. I also thought that was a weird blatant conflict of common sense, then I ran it through the real estate market translator:

real estate is “less of a commodity and more of a home. Their decisions are often more measured,” she says, and they are more likely to be enticed by deals. “Their decisions are more emotional and less about dollars and cents.”

English:

There are few buyers available and they are in less of a panic to buy so their buying decision is slower. They are however not too bright and can still be enticed by marketing tricks. So rather than dropping your price $50k buy a $15k car and give it away for ‘free’ with a purchase.

barb rennie
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barb rennie

The listing prices are really coming down in Richmond. I have noticed much more lower priced listings this past week. This may indicate the start to a downward price trend. Yet, buyers still aren’t jumping with offers. I don’t think it is due to buyers not wanting to buy, but local buyers just don’t have the cash.

Devore
Member
Devore

@elvince: I too was thinking wtf. But I am sure it makes perfect sense when you’re a true believer.

Also this “What we’re seeing in the market today is a response to the shift from speculators to long-term investors.” It’s only a “shift” when the speculator buyers are replaced with long term and owner buyers, who supposedly make measured decisions while being emotional. But what we have today is just a shift to fewer buyers.

Hibernating Renter
Guest
Hibernating Renter

“What we’re seeing in the market today is a response to the shift from speculators to long-term investors. The kinds of people that are buying now are owner-occupiers as opposed to ‘flippers.’”

My, my. Not so long ago we were told that there is no bubble because the market is made up entirely of long-term investors. How the past has changed.

Son of Ponzi
Guest
Son of Ponzi

b.Renie,
The prices are really coming down in Richmond.
I noticed the same thing. Nothing over a 1 million is selling.
There are a few nice houses in prestigious Westwind for around 800k which have cost 1.2 mill just a year ago.

BulbsForSale
Guest
BulbsForSale

I don’t want to jinx it, but whatever changes happened to the comment system here seems to have really helped the signal to noise ratio since yesterday.

On the incentives, is ‘$1000 a month for the first year’ really a way to get buyers? Are there any buyers that wouldn’t say ‘just give me $xx off the price’?

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