928 RICHARDS ST. NO. 1906, YALETOWN, VANCOUVER
11 yr old highrise; 750 sqft; maintenance $321/month
ASKING PRICE $499,900
SELLING PRICE $491,000
PREVIOUS SELLING PRICES $445,000 (2008); $242,000 (2002); $185,681 (2000)
TAXES $1,954 (2010)
DAYS ON THE MARKET 14
The Action: When this two-bedroom-plus-den corner suite at the Savoy was listed earlier this year, there was a surplus of properties that lingered on the market as buyers took their time to make a selection and negotiate on price. About a dozen buyers promptly viewed this condominium and one eventually made a proposal just shy of the asking price to seal the deal.
The Agent’s Take: “The average price per square foot for units in that building over the last year was $652, so we were a bit concerned that given the … market conditions for condos, we might have to go below this average. However … [this] sold higher than the average price per square footage, [so] clearly location and quality of building is still key, and of course, pricing sharply ensures the condos don’t sit on the market too long and become stale.”
- above ran as ‘Oversupply cuts price for Yaletown condo’, by Syndia Yu, G&M, 3 Oct 2011
Archived here for the longer term record.
This sold for over average price per sqft, so there was no ‘cut price’ involved.
The $9K off ask (2%) is a rounding error, not a price cut.
Keep the long view perspective: condos like these will sell for $200K-$250K in the trough. That’s a price cut.
- vreaa
750 sq ft box in the sky for a cool half mil. This will not end well.
Not to mention the maintenance fees and taxes are pretty ridiculous for a shoebox. $1954 for property tax!! times that by how many units just in that building and the city is or should be awash in cash.
Anybody care to do the rent vs own math on this?
No! Buy vs rent confuses things because of financing. Looks like price-rent of around 200. That is generously a cap rate of about 4.4% if the owner can squeeze $2500/month out of a tenant.
Mortgage Term 30
Purchase Price 491,000
Mortgage 441,000
Annual Interest Rate 3.4%
Years 5
Increase in Property Value 0.00%
Monthly Rent 2,500
Monthly Strata Fees/Maintenance 321
Annual Property Taxes 1,954
Transactional Costs (Buy) 2,000
Transactional Fees (Sell) 20,000
Savings Interest (Annual) 1.7%
Benefit of Buying $51,034
If you are going to be squeezed to the tune of $2500 for rent while it will only cost 3.4% to rent the money and buy… absent >10% depreciation in five years, this seems like a clear case of “buy”. Just shoot me like a lame horse if rents actually get this high.
and yes, I have a calculator and am not afraid to use it
@Jesse Why does it confuse the issue? Joe six pack doesn’t consider cap rates.
Fixed it.
Monthly Rent 1,800
Benefit of Buying -$34,771
Thanks, TPFKAA
My oh my, where do I sign? Rent is a function of income and, fortunately, not subject to speculation — so why speculate here? No one will (can?) pay $2500/mo to live in this place.
I would like to see a sensitivity analysis on the interest rate vs. ‘benefit of buying’ as above. At today’s rates, a small nominal change in rates will change the game totally. This ‘cash flow risk’ is more painful than an underwater mortgage as it cannot be mitigated with patience.
Annual Interest Rate 4.0%
Benefit of Buying -$61,099
Annual Interest Rate 4.5%
Benefit of Buying -$83,188
or try
Annual Interest Rate 4.0%
Increase in Property Value -15.00%
Benefit of Buying -$134,749 !!
(over the same 5 yr period as above)
and so on. There are many variables involved. Of course, rent may be a little higher than 1800, the closing fees can be avoided if you’re a realtor, and so forth… OTOH special assessments, vacancy time, renovations, and insurance and/or furnishings etc. go into the negative side of the ledger if you’re a landlord. So many variables; a real investor would only accept above a certain cap rate to cover all that crap. As a cash investment, it may not be so bad given the markets today; if financing, you would be a speculator, not an investor.
But if planning to live there, the risk from interest rate hikes, special assessments, and some good old fashioned reversions to fundamental valuations make it a shitty deal at that price, EVEN IF the rent WAS 2500 IMHO. You’d still be lucky to break even over the period you hold it for. May be worth the ownership premium for some. (But like Armourb I also don’t believe you could rent it out for 2500).
grrrrrrr i can’t stand it! vreaa, you know i heart you, and vhb, pope, condohype, the whole gang (esp nemesis – you’re no chopped liver to me!) but i am so done with real estate & advertising and mortgage brokers and bankers and debt and free money and the whole insanity overpriced overindebted media-sponsored, government-encouraged consumer blow-up-the-planet fracking gas global catastrophe imminent shenanigans of this day. but mostly all things real estate and i just wanted you all to know that i no longer believe things will ever change. we’re doomed, screwed, tatooed. i’m going to bed to plan my next depressive episode. it will take place in a little cabin in some woods far, far away from here… someday. when buying real estate isn’t financial suicide. crap. apparently i still have a little faith prices will revert to the mean.
tcgirl -> You are experiencing a wave of the exhaustion and exasperation that many market observers feel, periodically.
We used to consider it a sign of a possible turning point, but global markets are behaving in such a bizarre fashion lately, that almost anything is possible… even Vancouver RE strength, who knows? (not what we expect, but possible).
The stock markets really are for traders only; currently chasing their tails over EU breaking news. There always seems to be some group, somewhere, exasperated at any point.
In a quantum universe (or for pedantic diehards, multiverse)…. everything/anything is possible (simultaneously!). I like to think of YVR’s RE market as really just another QuantumConundrum (which only looks intractable – albeit, Nem’s math ain’t hardly up to that challenge)… a la, “Schrödinger’s cat” or, in this particular instance (bearish spectators encountering ‘waves of exhaustion’), maybe Heisenberg or vonNeuman (wave function collapse)…
http://tinyurl.com/62d9ko5
http://tinyurl.com/2nqyud
Hey!, just a wild-assed conspiracy theory/idea here, but maybe if we took TRIUMF’s cyclotron ‘off-line’… the quantum distortions in YVR RE would ‘collapse’?… I’m betting VESTA knows someone who could unplug the ‘extension cords’ (and if not, ‘Nem’ does!).
PS – cheers! TCG…
Nem, this one is for you: “Quantum levitated jewellery”
http://www.youtube.com/user/vulgarisation#p/u/6/DsrRfGEPDpE
Don’t you love french people?
TCG is weakened and may be forced to buy. Be strong, save your cash for the great deflation.
wow, you mean I can own in yaleclown for only…
HALF A MILLION DOLLARS!!
200-250k only? that is still high. probably 10-25k so every person in occupyvancouver would not have to work but could still own a couple condos each.
$10-25k? That’s how much we’ll each be shelling out to CMHC to paper over this fiasco. Grrr.
The other thing that isn’t accounted for here is that many homeowners with variable rates are aggressively paying down their mortgages with relatively small payments (less than rent) that allow for increased savings/investing in equity markets (diversification).
At least that is my experience.
Blammo, do you really think anyone will ever pay off a half million dollar mortgage like we did in the olden days? Life, literally, is too short.
No, it can be done, especially couples without kids. Witness how many people saved 6 figure down payments in a couple of years.
At current variable rates (2.5%) you could pay off half a million in 15 years ($4k/mos). In 15 years half a million dollars will be nothing.
Having said that, I am not a condo guy and I am RE agnostic but at 2.5% I think wage earners and savers are at risk.
Price would have to drop by $100K to scrape a 4 cap. This would be fine if you paid cash and know there is very little vacancy and condo fee risk. Including any significant financing and business cylce risk, the price would have to drop by $200K to be an investment worth considering. Otherwise, just buy a bond for a better return! There’s a reason why the seller is selling – he/she’s finally figured out the math!
Sorry didn’t read your comment before posting very similar observations.
That reminds me of an interesting anecdotal tidbit: one of the townhouses the in-laws were interested in got de-listed. They were calling to set up an offer, when the listing realtor told them the property had been pulled off the market. The reason: the seller found someone to rent it from them for $1800. So they decided not to sell. Interesting… would they have HAD to sell if the rescue tenants had not arrived? Sure seems like it. (It was a newish place near Patterson skytrain).