Like this was a surprise. Thursday 10:30 pm, thirty-four and a half hours before the doors open to an engineered condo riot, vacant-looking people queue in the night between lengths of rope. This is a line-up for the right to spend a few hundred thousand dollars in a few minutes on an unbuilt condo in an unproven building. The developer’s provided heat lamps and a portable bathroom. Dignity, however, is in short supply.
Blog dog Michael snapped a few pix. “Why would anyone line up to buy a 400-square-foot condo,” he asks. “Beats me. Crazy times we’re in.”
I told you yesterday how real estate promoter Bob Rennie was hoping for a mass crush of people, all desperate to buy a south Vancouver condo in mere moments. This is just what will happen Saturday morning at nine. As planned. It’s what you get when 11,000 people are signed up, all believing they’re ‘pre-registered’ and special as snowflakes, with only 418 units for sale.
This is the marketing psychology of competitive herding. Make people feel like they have a stake in the project as registrants, then force them to climb over each other in a small physical location, foster an air of confused desperation, invite Global TV, watch the mayhem as panic buying ensues, then go back to the office and invoice the developer.
This is how it all ends. And it’s definitely ending in Vancouver. We’re in the final stages of the real estate game, when tulip mania abounds. And standing in the garden are housing pimps like Mr. Rennie, who went on city-wide radio Friday to say the best neighbourhoods, “are not for locals any more. They’re for foreigners.”
Buy now or buy never. They’re coming for our houses…
Tina isn’t buying it, but for Brent, it’s too late. And for a growing number of experts, what is happening on Canada’s house-horny west coast is little less than frightening.
By the way, blog dog Bogdan just sent me this listing. “1924 built house, 2000 sq ft, no renos. The price?…..only 2 million bucks. We’re entering the twilight zone.”
Now here’s Brent, who also comes to drink from this bloggy swamp. He makes $130,000, rents a nice house in Kamloops and is married to a pregnant woman with aspirations. “I cannot go 10 minutes without hearing something from her about buying a house. She’s got the house hornies big time!” he says.
“I’ve been reading your blog for a couple of years now and agree with what you have been telling people, we’re screwed! Anyways I guess I’m writing to you to make me feel less guilty about the retarded decision we’re about make, I’m telling on myself! I’m going to give you some numbers and I’m hoping you will say “It’s ok for you to buy!”. I am being pushed into buying a house for around the $435K range with about $40K down payment. We can afford it I just don’t want to. Hopefully in 10 yrs we’ve paid enough of the principle down with the low rate that we will be able to afford to renew at a much higher rate. Garth be like Trump here but instead of telling me “You’re fired!”, tell me “You’re screwed!”. Say a prayer for me!”
Buy a house with 90% financing in a backwater market when prices have never been higher and rates can only increase? Of course you’re screwed, assuming forty grand is all the cash you’ve got. And, worse, I hear children cost money.
Now let’s contrast this sad case with Tina. She’s a doctor. She makes $350,000 a year. She also reads this pathetic blog.
“The last 2 blogs have been significant for me because it really describes the anger and bitterness I had towards the unaffordable market. Last year, I was one of those “house horny” individuals looking to get into the market. After losing out on 4 bidding wars and building up a hatred for lying, arrogant RE agents on the Westside, my husband and I decided to stop looking. It was ruining our lives! I didn’t know who was on the other side of the bidding wars but whether or not it was an Asian immigrant with a million cash or some other crazy westsider like me, it didn’t matter. Thank goodness we found your blog. For those who comment on the fact that prices are not dropping, maybe they need to see the daily “red sheet” for the Westside that I still receive every day.”
Tina and her husband live in a $3 million house which they rent for $4,000 a month, and that’s cool with them.
“As a physician that earns approx $350k per year, this rent is affordable and still allows us to save, invest and be able to retire in 25 years. But the discrepancy in what I can rent compared to what it would cost me to buy the same house is huge! Of course all my doctor colleagues think I’m nuts to continue renting, but quite frankly Garth, if I get a big fat mortgage and a nice fancy “doctor house” as I like to call it, I won’t be able to retire….”
Smart girl. She is ahead of her city, and her time. No herd for Tina.
I was going to devote a lot of this post to three new warnings about the inevitability of a Canadian real estate correction, with the potential to be a Titanic event, but here we are already at the bottom of the page. Just know this: TD Bank Friday bluntly said our housing market poses “a clear and present danger” to the entire economy. Queen’s University prof Louis Gagnon says we could have a housing panic, if the borrowing does not stop. “It would be a classic case of everybody dropping their asset at the same time just to make ends meet.” And a new research paper from Pacifica Partners concludes. “Our outlook on Canadian real-estate remains negative and we believe Canadian housing will begin an extended contraction phase.”
Now, go back and look at the people Bob Rennie squeezed out in the middle of the night. By the morning they’ll be zombies, clawing for condos. The moment should remind us the only astonishment in life is that we never learn.