If you recall yellow helos full of lusty Chinese drooling over Vancouver from six thousand feet, you remember Cam Good. More than any one person, he was responsible for the Yellow Peril attack of two years ago. He’s the guy (through his Key Marketing Group) who stuffed a bunch of local suburban real estate agents of Asian heritage into a helicopter and told the media (he invited them, too) they were actually HAM scouting for properties.
Then Cam placed two employees of Chinese ancestry in a condo sales centre at the Lunar New Year and told them to pose as sister-buyers from the old country, scooping a condo for their Mainland folks. So they did. And gullible reporters from CTV and CBC bought it. More Yellow Peril.
Then he went to China and sent this message back to Vancouverites, now whipped into a jingoistic frenzy over foreign buyers: “If you don’t want to live in a city that beautiful, with that much demand, then maybe you should live somewhere else, because in any city, no matter where it is, if there is international demand you are going to have these concerns, so either you want to live there or you don’t.”
So, some people see Cam Good as a pricky little self-lubricating, manipulating, fabricating flogger whose tools of choice are fear and fiction.
Now he’s at it again. But this time, since HAM is a spent force, Mr. Good has turned his glint to the next thing on the local hate list: cars. In a great example of how condo developers are increasingly desperate, the guy is now marketing a new downtown project (“InGastown”) to clueless virgins who would like to ‘trade a car for a condo.’ This is useful, not just because InGastown will have no parking when it’s built in two or three years, but because it gives him a new opportunity to massage the truth.
In chart form, here’s the pitch:
Hipsters with a beater worth $5,400 can buy a condo, the marketer says, because 2% downpayments will be processed through Vancity. Of course, buyers have to somehow save the full 5% by the time a unit closes, but that’s in the small print. And while Camenomics is correct that cars always depreciate and real estate normally appreciates, InGastown really, really, really hopes none of their buyers get a calculator or read this blog in the next two years before the building goes up.
Because if they do, they’ll clearly see losses are headed their way. Those could be little, or they couple be epic. But they will not resemble anything on the promotional chart.
First, let’s take the best-case scenario. A metrosexual urban latte-sucker trades the Fiat and a bundle of cash for a $280,000 condo that actually appreciates steadily and is worth $311,000 in five years. Selling it (the only way to collect a profit) leaves about $297,000 after commission. The mortgage (which included the CMHC premium) needs to be paid off, so $41,458 remains. Deduct the $15,000 downpayment, and the profit is $26,450. Yes, baby! Cam for mayor!
Of course life doesn’t work that way.
The mortgage monthly (at the developer’s 3.89% rate) is $1,550, and with strata fees and property taxes the total amount to carry the 650-footer is $2,100. To rent a similar (actually larger), new one-bedroom condo downtown costs $1,495. So after five years the ‘owner’ has forked out $36,000 more than the renter, in order to secure a $26,450 profit. Plus the renter could have invested the $15,000 and turned it into $22,000. Or driven it around.
That’s it. Best case.
Now imagine a modest 15% correction in condo prices. In that scenario the ‘owner’ loses $27,300 (including the downpayment). Add in the $36,000 premium the hapless owner paid to live there, surplus to rent, and the damage jumps to more than $63,000.
As Cam says to the virgins, “First-time homebuyers: if you can rent, you can own InGastown.”
But why would you possibly want to?
The pattern continues.