Larry Yatkowsky, at his blog yattermatters.com, recently posted [In Ten Years, 13 Nov 2010] the remarkable (yet commonplace for Vancouver) story of a Dunbar house [3929 West 31st Street] that has been reno’ed once, rebuilt once, and sold 4 times in the last ten years. The 2010 price is fivefold the 2000 price; a 400% increase. The tale is noteworthy, as are the comments that follow. Try and spot the infinitely varied ways in which people are able to say “It’s Different This Time”.
We have reposted excerpts here, for the archives. Thanks go to Larry for the data. -
August 2000
3BR. 2,496 sqft. 50×130 lot. Same owner for prior 35 years.
Ask Price $539,000
Sale Price $548,000 (2d on market)
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December 2000
After some renos (“granite counters, shaker maple cabs, black appls, halogens, Kohler, alabaster.”)
2,538 sqft.
Ask Price $699,000
Sale Price $695,000 (3d on market)
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September 2006
“Totally upgraded 4 years ago [6years?]. New kitchen and bathrooms.”
4BR. 2,575 sqft.
Ask Price $1,289,000
Sale Price $1,275,000 (7d on market)
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October 2010
Re-built in 2008.
New 2nd floor. 3,437 sqft. 50×130 lot.
Ask Price $2,495,000
Sale Price $2,468,000 (28d on market)
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From the comments and discussion that followed:
“People in this city have become nuts. Completely nuts. The pain will be deep and prolonged for everybody. For the same price you can buy an apartment building in Seattle with 40 apartments with a cap rate of 8%, that is $200,000 year income.” – ‘french’
“Would this even be possible if interest rates were higher?” – ‘BBcoq’
“I’m sorry guys you have to take a deep breath and realize that the world you thought you knew is not as it appears.” – Larry Yatkowsky
“How could anyone buying this place at $2.47M expect this kind of appreciation to continue? Is this place going to sell for $5million EVER?” – ‘stats don’t lie’
“Buyers are bringing wealth to their purchase, not just incomes. The only pain experienced is from [for?] non-land owners. Don’t bet it won’t be worth 5M one day – and sooner than you think. One thing is certain, the future holds higher prices not lower.” – ‘L8erdude’
“As Larry says there are lot of people in this town making serious money.” – fish10
“This is insane. People are in for a huge disappointment. Trying to rationally justify such a purchase is a waste of time as there is no rationality involved.” – ‘french’
“I bet all the bears will say that all the buyers that bought that specific home the last 10 year have been nuts. Has there really been a good time to buy for you bears? NO! Keep complaining…10 years and counting.” – Sam
“It is an absurd assumption to impose limited horizons/perspective on others in light of the fact that the baseline for home prices in Vancouver has shifted. The market has done so with complete disregard for those who cannot afford these price levels. There is nothing new about this – it applies to any market. … You must understand and accept that there is untold wealth that exists within our city. So much so, that a paltry (to them) $2.5 mil is chump change. From my perspective, what we are experiencing now is only a beginning.” – Larry Yatkowsky
“Geez, you flip flop like a politician depending on the “market” winds. And you mince your words and imply in your statements even more than a bloody politician.When prices were going down, you were a believer that the market was going down and some correction was coming. When things were soft, it was a flat market. And now after a month of strong list sell ratios, we are off to the moon again!” – ‘Realist’
“I report on what’s happening or what might, could, would, should, maybe or really is happening. That it’s up, down or sideways is of no consequence to me other than to provide some experienced insight to those peoples who are trying to make a financial decision when buying or selling their home.” – Larry Yatkowsky
We’ll let ‘Jumbo’ have the last word:
“It is what it is and until it isn’t, it is.” – ‘Jumbo’
The last reno was massive in scale. It wouldn’t surprise me if the most recent owners dropped $500K on it, possibly even more.
Larry’s comments are archival gold.
jesse -> Agree re the precious and invaluable nature of the comments.
Regarding the latest reno… possibly significantly less than 500K… looks like a ‘pop-up’ second floor on the left, plus a purely cosmetic archway over the front door, plus back-deck, plus ‘landscaping’.
Anybody else know the range of what this could have cost?
Don’t forget the addition at the back – ergo the extra square footage. Jesse is quite right in thinking it approaches $500K.
BTW Love writing your posts for yah. You owe me a beer.
Larry -> I did fully cite you, and offer thanks. You’ll have to accept a virtual beer.
So, why do we so generously excerpt a post like this one? … I think you get the gist of the archives.
As jesse says, some of this stuff is pure gold, it’s an integral part of the Vancouver RE landscape, and we wouldn’t want it to be lost in years to come.
The comments are just too funny. Pure delusion in my opinion.
The number that came into my head for the entire 10-year, 3-reno period, was also around $500K. It depends what “totally upgraded” and “re-built” mean. If all systems were replaced (plumbing, electrical, gas, heating, perhaps with the addition of mechanical ventilation, or air conditioning), and foundation and drainage work done, that could be $75K to $100K right there, on things that aren’t readily apparent from a street shot. A second storey addition or re-build can be $100K. If the new windows are wood, that could be $30K or more. The new stucco and rainscreening job, which includes the cost of the labour-intensive removal of the old stucco, could be $30K or more. Fancy kitchen with two or three fancy bathrooms, if they all included higher end fixtures and higher end custom cabinetry — perhaps a $100K in total. Good quality cedar fencing, if it goes around the entire backyard, could be $10K. Landscaping costs I’m less familiar with, but I know they’re not cheap.
Somewhat obscured by the spectacular escalation in house prices over the past decade has been the spectacular escalation in renovation and construction costs. There’s a reason all the general contractors and tradespeople have been driving around in big, new $50K pickup trucks. In the case of this particular house, price appreciation has been supercharged by serial renovation. (Sounds kind of dirty, doesn’t it?) If the house hadn’t been touched since 2000, perhaps the recent asking price would have been around $1.5M. But of course many houses haven’t been left untouched. And that’s an interesting point. The boom/bubble has made large amounts of home-equity-secured debt available, which many homeowners have poured into renovations, which further inflates house prices when those renovated properties go on the market. One of the self-feeding aspects of the bubble we’ve discussed previously on VREAA.
As for where it all might go — who knows? Maybe Larry’s right, although I personally wouldn’t bet the house on it, which is why our own renos are currently in pause mode while we do some aggressive deleveraging. Sure there’s money in Vancouver, and money coming in to Vancouver, but does it constitute an infinite supply?
Yes, people making serious money everywhere. California comes to mind. Vancouver’s GDP is in the range of 96 billion, San Fran around 300 billion, NY 1,1 trillion. Economically speaking, Vancouver does not exist on the map.
Well I didn’t view the house’s interior so I’m only guessing but… if it was a truly “luxury” reno, the finishing costs add up fast. The structural/envelope stuff may not be the lion’s share of the costs.
Yeah, it all costs. If you decide to get into exotic hardwoods for flooring and extensive built-in cabinetry, natural stone flooring, and the like, finishing costs for a larger house, just surfaces, can amount to what a modest house might have cost in total 20 years ago. This Dunbar place looks like it might be more of a mid-high reno, rather than out-and-out luxury. Even on the West Side you don’t want to overdo things in comparison to the rest of the neighbourhood. Despite Larry’s “shifted . . . baseline,” I still find the amount of money being thrown around a bit surreal. It’s not chump change for the vast majority of Metro Vancouverites, and I suspect it’s that vast majority who will dictate where the market eventually goes, rather than the affluent or the rich.
I admire you guys trying to cost out the renos but does it really matter? The place doubled in price in four years.
You guys are really now at the mercy of international forces. If something spooks that Asian money, look out below. If it keeps coming, enjoy renting from them.
Knowing Vancouver’s average income, I still don’t quite understand how at least 50% of recent (local) buyers can even cover their mortgage payment. You’re just a resort town for rich outsiders now.
It does matter if you’re the one paying for them.
Our place has doubled in value too, although its current market value is perhaps only a third of what that Dunbar place is, so the equity gain is significantly less. Someone commenting here on VREAA a few months back, regarding a couple in the Fraser area who had reno’d a character house and were using it to leverage up and build a dream home, made the key point that these renos costing hundreds of thousands only seem to be paying off because of the rapid rate of price appreciation this past decade. For now anyway, the price appreciation, and the chance to sell the reno’d houses at current prices, is protecting owners who undertake pricey renovations from considerable financial exposure and risk. It’s one of the types of hidden speculation that vreaa has written about, and for the last few years it has paid off, sometimes handsomely, but that doesn’t mean it will continue to do so. Even a flat market of a couple years’ duration would change the reno game significantly, I suspect.
Regarding rich Asians, and resort towns, and all that — one has to keep in mind that a lot of the hype and fear-mongering uses the West Side (where this Dunbar house is located), Coal Harbour, False Creek, Richmond, and a few other pricey parts of Metro Vancouver for its ‘evidence’, an anecdotal approach that ignores the great hinterland of the Lower Mainland, which probably starts around Fraser Street, and goes east and south-east from there. Treating West Side prices (currently about double East Side prices, and three times some suburban prices) and anecdotes as if they’re representative of the entire Lower Mainland is a distortion, although it’s tempting because the West Side numbers are the most dramatic. It’s like the CBC trolling the back alleys of the Downtown Eastside for verité footage of drug addiction, and people back in Toronto responding, “Oh my god, Vancouver’s nothing but crack and heroin addicts!” If you think about it, how can these two vapid generalizations even co-exist? Which is it, Dubai West, or Needle Park?
Speaking of rich foreigners turning Vancouver into a resort town:
http://www.ctvbc.ctv.ca/servlet/an/local/CTVNews/20101117/bc_olympic_village_receivership_101117/20101117?hub=BritishColumbiaHome&utm_source=ctvbc.ca
This changes things.
Na, doesn’t change a thing, it’s a mere flesh wound.
Okay, less fun, more serious. It won’t change anything because if the city of Vancouver “falls” then certain areas in town will still believe they are “different”.
Froogle Scott: Well spoken.
The gap between East and West is not just about housing price. It is a social engineering in the making. When VSB decided to close/cut schools, all the schools on chopping board are in East Vancouver. Does East has less kids than before? I don’t think so. Our city just decided Eastside kids do not need an education anymore, and we can let them rot.
I don’t know, maybe Vancouver could become like some 3rd world countries when only extreme wealth and the extreme poverty live side by side.
We just need to build a fence along Cambie street to prevent Eastside parents busing their kids to school to the west of Cambie.
Wow, Froogle, your analysis is especially impressive to me because you’ve got skin in the game. I don’t know if I would be so clear eyed after putting so much sweat and research into the very foundations of my house.
Thinking the entire market can be propped up by willing and able westside buyers is a great anecdote in itself. It’s worth doing a mental exercise how much money these westside sales need to generate to keep all other sales prices elevated.
The comment seems very ‘out-of-character’ for Larry.
@vreaa cc @village whisperer
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“BTW Love writing your posts for yah. You owe me a beer.
Sorry guys , I thought the funny face would have been the hint.
To be more explicit – I was just ‘razzin’ the boss around here, I don’t mind at all.
Off to drink my virtual beer.