House ‘A’
2,000 sqft SFH, on 3,920 sqft lot
Built 1910
“..elegant living room with hardwood floors and two all-brick fireplaces with mantles. The kitchen is gorgeous with the cabinets and built-in breakfast bar. Other features include a wood fence and covered front porch. The bedrooms are outstanding with their sleek hardwood floors and baseboard trim. The bathrooms have shower-tub combinations, while one has a pedestal sink and another has a sink in the lovely wooden vanity. .. Great location to community parks, schools, restaurants…”
—
House ‘B’
2,136 sqft SFH, on 3,716 sqft lot
Built circa 1910
“..lovely home has been renovated. New paint, newer kitchen, bathrooms, wiring, plumbing, new roof, windows, water tank. Beautiful front and backyard. Steps to top schools.”
—
The reveal:
The first property is 1112 North 34th Street, Richmond VA, on the market for $130,000 ($65 per sqft)
The second property is 3043 Crown Street, Vancouver BC, on the market for $1,878,000 ($879 per sqft)
[hat-tip Ralph Cramdown for the idea for this particular comparison]
Yes, we know that Richmond VA isn’t Vancouver BC, but then $130,000 is a lot, lot, lot less than $1,878,000.
Ninety-three percent less, to be precise.
Buy 14 houses in Richmond for the price of the one in Vancouver, and still have change.
- vreaa
Excellent post VREAA. That’s so illustrative of why people are actually leaving this city. Even if you happen to have a good career well underway here, and might make less money or have fewer clients elsewhere, would it be a 2 million dollar difference (plus interest) over the remainder of your career? Probably not even close. Eleswhere you can work fewer hours for less money, and so you’d gross less, but end up with *more* home and *more* net disposable income after mortgage, and also *more* spare time not having to work 24/7 to feed a stupid 2 million dollar mortgage on an East Van crack house. It really is tempting, and understandable why so many are bailing.
Rflol! This is the definition of cooking with gas. Actually, it’s westside – near ubc, where people can better afford a modest premium.
Add a wrinkle. Similar house a/b in mtn view ca (near top end of uplift for primo local incomes) would probably go for $800k-$900k today.
“Actually, it’s westside – near ubc, where people can better afford a modest premium”
Okay but C’mon it’s still a POS for 2 million!?? Gimme a break they want 2 million for that old asbestos hive?
joking. but dude, don’t forget you can rent out part of it for mortgage helper.
LOL of course, I forgot about a helper, and I’m already used to sharing a house with noisy tenants anyway. Who’s the realtor
“Similar house a/b in mtn view ca (near top end of uplift for primo local incomes) would probably go for $800k-$900k today.”
I’m sorry, do you mean Mountian View as in Silicon Valley? Where salaries start at 80k and go to 150k pretty quickly? Also, how’s the weather?
@rp1. yes. mediterranean climate – green hills for 2-3 months, brown hills rest of time. nix quickly, though would be income range for 1 member of 2 income hhld buying similar type ppty in mtn view. aren’t really super close matches. but mid is thereabouts, lower if north to bay, higher if south/east to los altos. for poster asking sea comps, know a bit there too. less competition and more 1 income hhlds – ergo prices maybe ~30%-40% lower for same. even at the height, no way this sort of thing fetches > $1.2M in mtn view. should know, i sold one. that crown price can’t be serious, must be fishing – no?
NB that open house is advertised as “every Saturday 2-4 PM.” Not “this Saturday, with bidding war to begin immediately thereafter,” but apparently however many Saturdays it will take now to find someone who will offer up something like the asking price. I have noticed this pattern on other west side properties recently — open houses on a series of weekends.
Oh, my, how trenchant! This cracked me up. And yes, people all over this city, from all professions and trades, are going to be voting with their feet. Why commit financial suicide if you have any opportunities to move elsewhere? In fact, I’m sure the absurdity of housing prices here is going to encourage residents to get enterprising about actually creating opportunities for themselves elsewhere.
Thanks, VREAA!
Trouble is, existing home owners actually enjoy the price increases, it makes them feel rich, and a bit superior (or smugly sympathetic) to any newcomers (or younger generation) who currently have no chance of buying a decent home in a decent location.
You have to be willing to leave this cesspool. I still haven’t made that choice, but who among us renters hasn’t honestly considered it?
Bank of Canada’s fault with the 1% target rate forever. And really inflation isn’t a problem? How about a 300% rise in home prices over ten years, is that not a little inflation?
Homeowner’s reply:
“I’d rather build $2 million in equity than $188,000 in equity.”
Seriously, I’ve heard arguments like this. Not with those extreme numbers of course, but two co-workers actually sold their $300,000 3 BR townhomes in order to upgrade to $400,000+ McMansions. (Ottawa prices remember – they sound tiny compared to Vancrazy.) Why? “Because I can cash in on the equity gains of my current house and use it as a down payment on a bigger one. It’s an opportunity to build more equity. There’s no downside.”
That’s not a verbatim quote, but a summary of the explanations they both gave me. Their answers were so similar it’s almost as if they compared notes before I asked them. I realized that this “logic” originates from the sales pitch the realtors, banks and developers are feeding them. Friends and colleagues then repeat this same rationale to each other, and the bubble continues.
Precisely: The local speculation rife in our markets.
And note that none of that buying crescendo rationale required the addition of external funding from immigrants or foreign investors.
credit availability + willingness to assume it is the driver. foreigners buying overpriced ‘westside detached’ will get burned as bad as locals.
[Agreed. -ed.]
The size of the asset is proportional to eventual net worth. God knows I would just spend my money on booze and hookers if I didn’t have that “forced savings plan” bringing me home at night.
I know. Every time I head to the crackhouse down the street for a fix (every day), I think to myself, “I could own this place. Why am I paying this @sshole when I could be paying myself?”
Guess I was born to be a rentard.
u go home at night?
Financed at 4% they will pay $71,400 in the first year in interest alone. That’s a great way to build a portfolio. Right?
Within two years they will have bought the richmond Va home, including closing costs and some repairs just with interest payments.
Know the story well – have a buddy who sold his condo then bought up to an attached home with half million dollar plus mortgage expecting the huge rebound in Calgary prices after the financial crisis. Expected gain in net worth at this point was about $150,000. Realized return: -10% not including the four years of interest paid on the jumbo mortgage. Plan now: try to keep maintenance costs at a minimum and WAIT along with everyone else stuck in the “waiting room”.
Would be more fun if you compared the house in Richmond VA with a house in Richmond BC.
Uh Oh, now that the HAM realizes that the is a “Rich”mond in Virginia, they may start migrating south.
Thought of that.
Any examples of 2,000 sqft, circa 1910 homes, on 3,800 sqft lots in Richmond, BC, that anyone would like to post?
Glad to have inspired you, VREAA!
With 20% down ($26k) and a decent credit score, you can finance that Virginia property for about 3.8%, or $480/mo in a 30 year fixed, or 3.25%=$730/mo in a 15 year fixed.
The Point Grey special will run you $6,590/mo with a $376,000 down payment and a 5 year fixed rate of 3.34% (30 yr. am.). But then you have to worry about rate risk in five years, unlike the Virginian.
Notwithstanding the risks and hassles of being a long distance landlord, you can buy a house in all kinds of wonderful places in the US for much less, monthly, than it can be rented for. TD has branches all down the East coast, from Maine to Florida, though RBC has just bailed out of US retail banking. If I was buying, I’d do it in a place where price/rent and price/income is below historical averages, not way above. And that certainly doesn’t limit one to declining rustbelt cities. They’re not making any more land in Miami Beach, either.
Wow Ralph that breakdown is crazy!
That’s a really bad comparison. Compare it to SF or even SEA and those numbers will be closer. I do think that Van home is overpriced
[We've already done what you suggest, a number of times.
Search 'Seattle' in the search window for much discussion.
Example:
Unashamed House Porn: Seattle Vs Vancouver
VREAA Aug 2011
http://wp.me/pcq1o-2M2
As we said, Richmond VA is NOT Vancouver, but the properties themselves are similar, and magnitude of price differential is ginormous. We could just as easily have chosen 10s of thousands of other US properties to make similar a similar point.
- ed.]
Some of us think Vancouver to Seattle or SF is also a really bad comparison — Vancouver not offering anything like what those cities do. Richmond VA is a nice small to medium sized city. I suspect they even have Starbucks.
please dont reveal the secret. vancouverites would leave this city to VA in drove. who here would be the first packing?
Hey
Trolly McTrollFred: plenty have packed or are packing (including one person I know for parts very close to Virginia). I and other young colleagues have begun more openly discussing this issue at work and taking the first steps towards leaving for our Southern neighbor.Young people are straight up leaving or staying away from Vancouver in growing numbers. Ya heard?
Fred, could you please confirm that you are not paid in any way, be it percuniary or payment in kind, to post comments on this blog? And confirm that you are not a Realtor or affiliated with a Realtor.
If you are not paid you are one sad individual for hanging around here making irrelevant, off-topic remarks. If you are paid your employer is being seriously ripped-off.
For the record I sincerely appreciate having bull posters here because it a) keeps me aware of my own confirmational bias and b) makes for a more interesting debate.
none of the above.
so hanging around discussing amageddon is relevant?
I’m no bull, and I fully expect the Van market to crash in a big way… but Fred has a point. I have friends who’ve left Vancouver, only to move to Alberta, where it was -46C yesterday.
Unless you’re lucky enough to have desirable skills that make you eligible to move to the U.S., you’re pretty much stuck in Canada. (Not that that’s a bad thing, but in terms of $ for housing, it is.)
No – it was actually closer to absolute zero yesterday and there were sasquatch in the street so please don’t think about moving to Alberta because it’s a terrible place to live! Face it, nobody really wants to have the highest disposable income in Canada, a beautiful house, recreational and financial opportunities everywhere. Fool!
Oddly enough, I know a Canadian who now lives in Richmond. Years ago while in Richmond I saw a great show put on by the New Orleans Klezmer All Stars. Good Times.
Virginia is pretty – lush green hills, ocean, and lots of rivers and mountains to the west. The summers are very hot, winters mild.
and, yes, unless you live in northern Virginia near WA DC the housing is very affordable.
Just heard from a friend yesterday that she & her hubby are moving to Seattle at the end of her maternity leave. Young, smart, educated (MBA) and they can’t imagine ever owning a home on a Vancouver wage.
Affordable housing action plan: just buy a bunch of houses in Richmond VA and move them here.
It’s telling that no lender would give you the loan(s) needed to buy those 14 houses with 5% down and inadequate income. It wouldn’t be considered prudent lending. But you can get such a loan for the house in BC. Hmmm.
you could buy 14 similar houses in Richmond VA for the same price as the dump near UBC. I’d venture to say that the rental income from those houses would probably be about 500% higher after taxes etc. are figured in than the Vancouver house, not to mention that your chances for capital appreciation are probably waaaaaaay better in VA
And another MSN article pointing to the danger of Real Estate!
Our love affair with home ownership might be doomed
Nor really a fair comparison.
Richmond VA has a 38k median family income, compared to Vancouver’s 61k (I think that’s it, could be off by a little).
Richmond VA has a population which is SMALLER now than it was in 1950 and has shrunk four of the past six decades (the first decade of the 2000s showed a small increase, but it was the first gain since the ’70s).
Yes, Vancouver Real Estate is grossly overpriced, but if you’re going to find comparables, find some realistic ones, not just the extreme fringe.
See responses to similar comments above.
And here we go again!
2-point rate hike would spell trouble for 2 million: TD
“rise in interest rates of two percentage points”
Sorry to be a realist, but is that likely to happen in the next decade? An asteroid would also spell trouble.
yes. eu is hitting wall now. all overleveraged economies will hit end of free lunch. officially, rates may not rise (eg. 30 yr mtg rates in us just hit new low) but one way or another, credit supply will be curtailed – brutally.
Central banks won’t do it unless they’re forced to do it. And they might be. Confidence in the bond markets can wane, leading to failed or almost-failed bond auctions, and suddenly a huge premium is demanded before anyone will lend anything. It’s happened before. It happened in Canada in late ’94 early ’95, when we almost had no buyers for our bonds. Interest rates were forced up at a time when the economy was begging for lower rates.
well strangely enough, the bank of china has taken a more responsible course by hiking rates (what ,125bp in CY11?). and the govts have also implemented curbs on property speculation. their real estate markets have fallen hard, there is a fair amount of pain and yet the official response amounts to a stern ‘we told you so’. maybe price inflation forced their hand. but, it sure seems there is the political will to do what no western central bank is willing to. this is an especially interesting observation for vanRE bears complaining about canadian central planning policies. this type of policy response is certain to curtail, perhaps even eliminate and reverse, investment flows to vanRE. i don’t see that those external investment flows are anywhere strong enough to inflate vanRE values to where they are now. but it is a psychologically influential bid; which, if it should go missing, could lead the decline.
the export vendor financing model between china and the west is grinding to a halt for structural reasons. and the asian bid for western bonds (free lunch) is disappearing.
apparently you and blogs are saved vreaa. the blackout protests appear to have worked and political support for sopa/pipa is like rats fleeing a sinking cruiseliner. yes-yes, it’s usa-only. but canada is usa-lite wrt most important matters.
http://tinyurl.com/6qmabho
nb. guess who was only presidential candidate to raise a fuss
Vreaa, you said a few weeks ago that you would welcome a bullish argument. I found this one on the DrBubble blog, which probably the most comprehensive bullish argument I’ve read…
Now is time for the Bears to respond
Only in Vancouver do you add the basement to the house’s square footage so the comparison is 65 $/sq ft to 1750 $/sq ft! Needs more 8′s in the list price to get the real stupid money into a bidding frenzy on this one!
“But we thought Vancouver had a much warmer climate than this”. And I laughed asking what they expected – a California climate in a Canadian city? The didn’t know the first thing about what they are buying – just following realtor advice and the rest of the heard!
Cuz that basement is where your tenants are going to live. The tenants you need to afford the place at all. I guess the realtors feel that this makes the basement square footage fair game for marketing. “Peoples gonna live down there you know.”
Is this a harbinger of real estate collapse, a realtor trying to cash out near $1000 sq. foot?
http://www.realtor.ca/propertyDetails.aspx?propertyId=11481979&PidKey=1354724349
“vanguy” – you are delusional if you think that Vancouver house is not bad priced. Keep drinkin’ up the “greatest place on earth” kool aid. I am with you Airedales, nobody wants to come to Calgary to have a proper job, earn 20-30% more, afford a nice leak free, mould free house, have beautiful sunny skies, recreational opps, good restaurants, no PST, be able to take 2 nice vacations a year etc. , oh yeah and not rely on basement squatter tenants.