calguy asked today at VREAA: “Can someone confirm a sale recently, last week in Dunbar. A bungalow at 4035 west 28th was listed at 1.9 million and sold for 2.6!!! I thought I saw it somewhere but can’t remember where. It was listed as a building lot. A shame as it looked like a nice home for a reno. I remember when these homes were 1 million and we thought that was expensive then!”
4035 28th Ave W
3,057 sqft house; 52×130 lot; MLS V869100
Listed 10 Feb 2011: Ask price $1,988,000
Sold 19 Feb 2011: Sale price $2,683,000
$695k [35%] over ask.
Near private schools. Fairly solid house, by Vancouver standards, but clearly bought as a tear-down. It was advertised as “An excellent holding property or build your dream home.” It’s hard to imagine anybody sinking $2.7M into RE so they could live in this modest house. More likely they will spend another $1M on top of that to rebuild. So, we could use this sales price as rough lot value for this area. And, arguably, as another example of misallocation of resources (a perfectly usable home is destroyed).
As frequent readers know, we often cite the possibility of 50% off in the crash. Here we’ll make an exception and say that we wouldn’t be at all surprised if lots this size change hands for a lot less than $1M in Dunbar in future years. That’d be a drop of more than 63%.
It would be interesting to know if this house was purchased by a SFH developer or end-user. Anybody know more? -vreaa
Vancouver Real Estate Anecdote Archive 
Beverly Hills for $2.5 mil:
http://www.trulia.com/property/1081708603-9430-Readcrest-Dr-Beverly-Hills-CA-90210
Malibu for $2.9 mil:
http://www.trulia.com/property/1058709850-31643-Broad-Beach-Rd-Malibu-CA-90265
Upper West Side, Manhattan, NY for 2.95 mil:
http://www.trulia.com/property/3005852783-311-W-71st-St-New-York-NY-10023
[Apologies, bubbly, this was held up in moderation because more than one url. Good comparables. Absolutely nuts. -ed.]
Here’s another 2.6M USD LAX comp with the added bonus of celebrity cachet (depending on how you feel about Ashton Kutcher/Demi Moore)… 😉
http://tinyurl.com/4jx8msn
It’s not surprising these homes are selling at such high prices. They’re in the good private schools’ catchments.
Private schools don’t have ‘catchments’.
I know. Obviously some people don’t.
Do you reckon that’s what’s happening, that people are buying these houses because they think it’ll get their kids into the nearby private school/s?
I recall a few ads stating that the property is within walking distance to St Georges. Maybe it’s so they can walk to school to save money on gas but I don’t know: is it acceptable not to be driven to St Georges?
Do private schools have catchments?? I thought anyone who can meet the requirements and pay can get in, regardless of where they live. Considering the listing shows four pictures of the house, and five of the nearby private school, maybe you are right.
What surprises me is that all the neighbors who have also been there for 15+ years aren’t immediately selling their places on hearing this price.
Also what surprises me is that the seller didn’t negotiate a lower commission for the realtors when listing. It’s the standard 3.255% on first 100k and 1.16% on remainder. That’s a lot of money for a few hours work. At least they didn’t include spelling mistakes like so many other listing.
guarantee those neighbors will list, they’d be crazy not too, I can just imagine the monstrosity that is going to be built and tower over those poor neighbors.
That is a joke. What a fantastic purchase? I want to see that flip. I am not going to feel sorry for any RE investor when the price correction comes. I think this is becoming shameful, that these prices are being paid. Nobody and I mean nobody will be for the better if this continues.
Look up mls, and you will see a couple of similar houses, including one next door I believe have come up there for sale. As for St. Georges, you have to apply and do an entrance exam. Probably soem false hope for Asian investors who think they can just send their kid(s) to St. Georges. I walked by it last week and saw a lot of Asians going in to see it. There was no open house either. Another piece of Dunbar history will be gone. Those houses on 27th and 28th were annexed into the area in the 1950’s and the house and lot were about 15K at that time. (I read that in a history of Dunbar book I have) The house looks and probably is very well built, too bad it will be demolished.
I have no qualms about throwing away a laptop with an 800MHz CPU and 256MB of RAM. Even if it works fine and allows me to fire up a web browser, the incremental cost of replacing it with a new laptop is so small, why bother wasting your time with the old clunker?
For much the same reason, I don’t view the destruction of a home from that era as a misallocation of resources. What’s the point of having a $2m property with a house on it worth $50k? Might as well put up a house commensurate with the value of the land.
(That said, if that house were for sale for <$1m, I would happily buy it and live in it.)
Interesting.
I agree with your decision regarding the old clunker computer, but I don’t think it’s a perfect analogy to the situation with the house.
In the computer’s case, it is being thrown away because it is of little use to anybody at this point. If it was of any considerable use, you would be able to sell it, or give it away; you’d be happy for somebody to use it or cannibalize it or whatever. But it is, indeed, pretty much useless, so it is thrown out.
In the case of the house, arguably distorted and artificial circumstances (a speculative bubble based on temporarily cheap money and buyer psychology) has caused it to be seen as a worthless structure when it is, in actual fact, perfectly servicable.
The property is only seen as being ‘worth’ $2.7M because of the cheap money and speculation on the price of RE, and this concept of ‘worth’ then leads us to conclude that it’s obviously ‘worth’ spending another $1M (and destroying the house) to build new.
Sure, the new house will be bigger and newer, but will that improvement really be worth the resources destroyed to attain that improvement (the old house, plus the demolition effort, plus the effort & cost of building the new house)?
The new home will then be ‘worth’ $4M. But only while the bubble remains inflated.
Any economists with thoughts or relevant references?
Here you go, VREAA…
“awareness of the consumption habits of others tends to inspire emulation of these practices”…. aka ‘demonstration effect’… see also Veblen, ‘Conspicuous Consumption’…
http://tinyurl.com/nnpmx
Computers are a different kind of good. The price for a new computer has fallen steadily for decades now. You get a much better computer probably for the same or less than you paid for your obsolete one. House historically don’t get cheaper and cheaper. Though they’re about to.
(A build lot for $2.7 million. Insane. I don’ t think you’re bubble will last through 2011.)
The “seller’s interest” is listed as power of attorney, so I bet the previous owner had been there since the place was built, and now they have either passed away or gone into a care home and the family has sold off the property.
Why would you negotiate the commish? Look at the gains on that thing!
Wow. My own perspective is personal here – some years ago (2003?) my extended family sold a solid SFH – 2 levels, good shape – only a few blocks away for about $600,000. My extended family thought they’d made out like bandits. Not too long after that – 2006, I think – my friend’s family sold her childhood home in the same area for about $800,000. Both had standard lots, so there’s that, but both were nice houses.
If appreciation matched inflation, my extended family’s home would sell for about $700,000 today, and my friend’s for about $870,000.
$2.6 M for just the lot is astounding.
Of course, there has been some gentrification – price increase higher than inflation seems likely. I rented a 2 bedroom top floor suite (no laundry, no dishwasher, in good but not excellent shape) near Waterloo & 8th in 2000 for $1100. Matching inflation it would be just shy of $1400 … but it’s going for $1600. So price might be higher, sure. Plus that bigger lot But 2.6M dollars? I just don’t see it.
Gentrification? This is Dunbar, not DTES.
I think you’re right there is gentrification going on, as there ha been for 30 years. But look at the average region-wide. If a neighbourhood is gentrifying it is literally beggar thy neighbour.
I know it’s trite but when the tide goes out… you know the rest.
Yes, absolutely. Since this bubble started, wannabe rich enclaves have popped up like mushrooms and we just don’t have the income to support them.
Never believe anything that is read or said unless there is proof. Might have this also been a 21 year old buyer sitting in his car on his cell phone to his parents in China?
What I do suggest is reading about news that has proof. How about some real facts such as this executive house 6918 Vivian St. in Fraserview area of Vancouver reducing it’s price by over $200,000.00 since it was listed 37 days ago. See link for proof:
http://mlslink.mlxchange.com/EmailView.asp?r=952417033&s=BRC&t=BRC
From the pics the house is vacant and being on a HOT market for 37 days why hasn’t it sold and why a $200,000.00 reduction so soon?. I’ll tell you why cause the builder/speculator is changing his shorts right now. Builder’s are aways ahead of the curve just like the conductor of a locomotive who sits at the front of the train. He can see that the train tracks are about to end off a cliff a mile or two ahead so he is bailing out right now. The rest of regular folks are in the caboos and have no idea as to what is about to happen.
Chinese love get rich numbers such as 8, 18, 28 in the door numbers of houses so why hasn’t this 6918 Vivian St. home been snapped up by the ‘Take No Prisoners’ attitude of the Chinese buyers?. Why is the price going down instead of being bid up a few hundred grand?. Maybe because there isn’t that many of them and maybe because the handful of them have bought in already!.
Chinese love door numbers in that having 8 means ‘rich’ or 18 means ‘100% chance to get rich’ and 28 means ‘easy to get rich’. On the other hand Chinese hate door numbers with 4 which means ‘die’ or 14 means ‘100% chance to die’ and 24 means ‘easy to die’. So what do you think the chances are that a Chinese buyer bought ‘4035’ in Arbutus for 600+K above asking. Sounds funny but ask someone Chinese and they’ll say it’s the truth.
So it appears that RE agents are not able to make all the corpses look ‘Hot’.
It was and still is overpriced. Vivian street, not worth 1,700,000. I’m starting to wonder about all this chinese money. I would love to find a honest person in the business to confirm or deny all this hot asian money. If they are just buying every thing up, how do we make it out here? I am starting to believe it is the asian money. When will this surge stop? And when it does then what?
Hey Groundzero is it good luck to have an 8 in the sale price??? Just look at all the 8’s in the sale price of SFH ‘s in the Westside. Staggering, coincidence?
Yes, the seller will list with 888’s in the asking price for good luck if it is a Chinese seller. When the buyer makes offers it will be with 888’s in them if it is a Chinese buyer. Here something interesting too. Look at Chinese driver’s license plates on their cars and you’ll see most of them have 8’s in them and very few have 4’s. ICBC insurance broker office in Richmond says the 8’s plates go really fast while the 4’s stay.
My husband and I sold our house in Kitsilano (way too soon, we only tripled what we paid for it) and have been renting in Arbutus for a number of years waiting for prices to fall ((yes,we are fools). The owner of the house we’re in sold it this week to a bunch up the block from us – non-Chinese family of about six or eight over 50’s who have apparently pooled their money to be developers(I can tell by the blu-tooth in the ears). The house we’re in (they bought) is a knock-down on a 35 foot lot they paid over $1.3M for. We’re only here because of the cheap rent (less then $2,000/month). When people like this become “developers” you know the end is near.
Is this really true that people will sink 2.6million on that kitsch?
Have we all become mad in this city? where is all this dumb money coming from? Why on earth someone with 2.6million would want to live there? My city has gone mad.
Sethm aka Greenhorn over at RET offers a good view of who the marginal buyers may be. It could very well be, notwithstanding the elusive Rich Asian and spec builder, another round of locals thinking this is the last chance for Van West SFH to be affordable. Hence the frantic activity at the low end and stagnant listings a bit further up the food chain.
He provided an anecdote of friends thinking just that: buy detached now or be priced out of detached forever. Maybe Mar 18th is having an effect too…
On $2.5mm would 5/35 even be in play? 5% is $125k, loan of 2.125, at 4% is an income of ’bout $350k at full gdsr. Not likely, but who knows!
More likely large DP or builder.
jesse -> Thanks for the heads-up re SethM post: I’ll headline it.
the irony is a ridiculous price like this all but seals the fate for the “hot” 50′ + west side lots…at 4 million cost to build new, there is suddenly “value” again in the new builds on 50 footers that have been languishing on the market in the 2.9 t0 3.3 range.
like this Kerrisdale gem MLS®: V861558 … has been on the market for close to a year with price reductions and all…the market darlings are becoming narrower and narrower
Assuming, for the moment, a ‘cash’ buyer(s?) for this property… Chris Mathers (20-year RCMP veteran of undercover proceeds-of-crime investigations) remarks in this morning’s G&M give pause for reflection…
“The last thing the bad guys laundering money in Canada are worried about is going to jail.”
[G&M] – Canada says it is plugging money-laundering loopholes
http://tinyurl.com/5sqyz7f
If I had $2.7m to spend, rather than buying that Dunbar teardown, I’d have bought this:
http://www.realtor.ca/propertyDetails.aspx?propertyId=10366486&PidKey=772765939
A significantly bigger property in a more upscale neighborhood, and a gorgeous house.
Most of the St George’s kids live in Shaughnessy, not Dunbar anyways.
wah wah wah – why don’t YOU take the course so you too can be rolling in money? re “what surprises me is that the seller didn’t negotiate a lower commission for the realtors when listing. It’s the standard 3.255% on first 100k and 1.16% on remainder. That’s a lot of money for a few hours work.”
So typical 100% BS. Try it you won’t like the never-ending expenses 7 day weeks, collapses, dishonest people. And it’s soo much fun going months w/o any income. But what do I know, 20 years in?
I see the “domino effect” there as other similar houses on that street and one down have come up for sale, all over $2 million. People trying to make some serious coin on those sales, and probably not a bad idea right now, if people are downsizing or moving out of Vancouver.
Yeah! You think your housing price are crazy! Wait till you see Hong Kong Proerty price, a 400sq. foot cost you 1 million Canadian dollar. Mainland bursts flooded with cash, rush to pay off with cash or little down payment. We are dealing with a group of people who will buy salt for cdn100. In case of losing, those are not their money anyway. No tears! Blame Bernarke for printing monopoly money, and make this world crazy.He helped the whole world to get rich, but Americans!