BC real estate marketers getting desperate
The city of Vancouver is still showing relative strength in sales with most recent data suggesting sales to new listings maintaining a steady 50% reading. We won’t know how sales levels will be affected after the March 18 rule changes, but we do know that there will be a reduction in available credit and potential buyers after that date.
Regardless, it’s the periphery that is currently rotting, and I’d suggest the gangrene will reach the core before too long. We know that January data on Victoria was very weak, but how is the rest of the Vancouver periphery doing? We’ll look at months of inventory which is essentially a measure of how long it would take to clear out all available housing stock given the most recent month of sales. For perspective, a balanced market is typically considered to have 5-6 months of inventory.
Victoria: 10.4 MOI
Whistler: 16 MOI
Central Okanagan: 20 MOI
North Okanagan: 25 MOI
Amid drying demand, we’re finding marketers resorting to increasingly desperate/unscrupulous measures.
“Condo prices at the troubled Olympic village project will be reduced by an average of 30 per cent from May 2010 levels”
Pity the poor fools who bought pre-construction. And where are all those rich Asian speculators? Well, the answer is quite simple: The illusion of price increase has now disappeared. The reality is that any investor and even most people buying residential properties in Vancouver are momentum chasers. Once that momentum vanishes, so will the sales, ironically enough.
Exhibit 2: Realtors take to the sky in Vancouver; Media spin at its finest
Last week an air tour was organized for several Vancouver realtors. The tour was organized by The Key, a real estate marketing organization. According to their own blog, the specific purpose of tour was as follows:
“The tour was designed to showcase AVRA, the soon-to-be built 17-storey concrete tower, located in the heart of downtown White Rock. One of the city’s few highrises…”
It was a bit of marketing. But being the clever people they are, they invited the local media to attend the helicopter boarding. The result was the following story which ran on Global BC the next day. The link includes the video clip:
Of course the main point of the Global clip was to highlight mainland Chinese buyers’ insatiable appetite for Vancouver real estate. I have no doubt that there is money coming in off of the Chinese mainland into Vancouver. However, we know from the stats that this influx of wealthy Chinese immigrants accounts for less than 10% and likely less than 5% of total MLS sales in the Greater Vancouver Area.
But the ‘It’s different here’ mentality dies hard. According to the following articles, the rich Chinese buyer story is alive and well all over the world….and even out of this world (thanks to Bubbly over at Vancouvercondo.info). Rich Chinese investors are buying homes in:
So ravenous are those Chinese investors that they are even purchasing real estate on the moon. But of all the global destinations, they evidently have a particular fancy for Vancouver given its sunny weather and ‘cheap real estate‘.
Exhibit #3: Get paid to stand in a line!
Ever wonder how new condo developments manage to have long lineups of eager buyers at times when the broad resale market is acutely slumping? Wonder no more!
Thanks to JV for emailing this to me yesterday, though I see that Garth Turner has beaten me to it by posting this gem over on his blog. Here is a link to a Vancouver Craigslist ad looking for people to…..wait for it……stand in line outside a new condo development before the sales department opens:
“People needed to line up for new condo project
Just as the title says, we need people to hold spots and line up for a new condo project located in Burnaby (Kingsway/Willingdon Ave). Line up may start as early as weds/thurs night. Grand opening is Saturday February 19, 2011.
Warm beverages and washrooms will be provided by the developer.
Shifts are determined on how long you would like to stay. (preferably 8hours+)
Get paid cash quickly for sitting in a line up!”
The sad part is that it no doubt works. I’ve noted before that people are a lot like lemmings…..following the crowd always seems like a great idea to most.
Obama vows deficit cuts
On to other matters. I wrote yesterday about the necessities of austerity for most western nations. Today we get news that Obama’s 2012 budget will contain some ‘hefty’ spending cuts:
President Barack Obama said the $3.7 trillion 2012 budget that he sent to Congress today would cut scores of government programs….“The only way we can make these investments in the future is if our government starts living within our means,” Obama said.
I’m still not sure that Obama understands what he means when he talks about living with one’s means. As John in Ottawa noted in the comments section of yesterday’s post,
“There are 307,000,000 people in the United States of which 42% pay taxes. Median income is $34,140. If the US wishes to “pay as you go” then they must tax each and every tax payer $28,700, leaving roughly $5,450 to live on…..(after which) the state, municipality and school board will want a slice.
When a budget reaches 84% of gross median income, can the debt ever be paid off?
This is the question on everyone’s mind during this financial crisis. What does “full faith and credit” mean with numbers like these?”