It's been well reported by the media this last week that Vancouver is in the record book for what is thought to be the highest price paid for a single condo in Canada via MLS ($25,000,000). The CBC reported that a "Mystery buyer snags 14-room, two-floor penthouse condo"
That's a curious verb to use unless of course it is only the beginning of the blowoff phase of the real estate mania or if you prefer, the rational behaviour of investors betting on inflation?
I looked up "snag" and assumed the reporter used it to convey that the buyer wanted to "catch unexpectedly and quickly, ie: snag a bargain", and was not imagining a toothless grinning fisherman accidentally catching his prize other than by hook in mouth.
We don't know the buyer's motivation, but clearly the buyer has an excess of cash well beyond the sale price and it could very well be the unit was indeed "snagged" up as a trophy of sorts. It wasn't purchased as an investment unless the buyer believes that inflation will provide him with a capital gain at some point that will return the sale price of $25mm and the accumulating $10k monthly nut for strata fees, taxes and insurance with no allowance for maintenance and depreciation.
The seller on the other hand snagged the opportunity of a 47% capital gain, less 3 years of holding costs on his $17mm 2010 purchase. Wow.
The phrase "real estate tourist" identifies transient flippers; "accidental investor" works as well. "In Coal Harbour (where the $25mm unit is), about one in four condos are “non-resident occupied” (and vacant), said Andy Yan, a senior researcher with BTAworks, the research division of Bing Thom Architects." Coal Harbour is a sea level shelf of trophies in a rumpus room apparently not worth living in.
Click on the pink/green table image above and take a look at my back of the napkin comparison between two people with $25mm each wanting to go short cash and long concrete and steel. Both buildings are similar, both were built as hotels with dedicated residential floors.