East Vancouver Sale Datapoint – 2132sqft SFH; 32×110 lot; $1.26M

4785 ROSS St; MLS V884604
Asking price $1,088,000
2132 sqft house, 32×110 lot (3542sqft)
Assessed at $834,000
SOLD after just 6 days on the market for $1,260,000
(16% over ask)
[Thanks to eyesthebye at RE Talks 6 May 2011 for this example.]

It’s the picket fence that did it.
As a consumer or an investor, the trick is to find assets that are valuable to you that are being undervalued by everyone else. No such luck in Vancouver RE at present. – vreaa

66 responses to “East Vancouver Sale Datapoint – 2132sqft SFH; 32×110 lot; $1.26M

  1. There are many similar examples of this type of property. The high quality stuff and teardowns appear to be moving at a quick pace. I cannot claim this to be good, but I do respect the market’s seeming rejection of abject crap.

  2. inexperienced buyers that bought with emotion.
    lot is not even a standard lot. When the market turns watch these people cry uncle.

  3. Pter,
    what if this is the norm? Heck, 3 years ago when this home was 900K you could have said the same thing i.e. overpaid, buying with emotion, crying when prices come down. Yet the price has gone up and up and up. This home could reach 1.5M just as easily as it could drop to 900K again. Why do you think you’re an expert? That is, why should anyone believe you when you’re predicting a crash?

  4. This is ridiculous, it just goes on and on.

    Pter, saying that it’s inexperienced buyers, who are these people that can get a mortgage that big? They must have an income of $250,000 a year? These aren’t dumb people. Are they buying with emotion? I’d like to see it, “Profile of a Million-Dollar Home Owner: Just who are these people?”

  5. Rusty -> This home was overvalued at 900K three years ago. And, yes, it could go to $1.5M before this is all over. That’s what happens in a speculative mania, nobody can time the top.
    Houses like these will change hands for $500K-600K by the time we hit the trough. Yeah, I know that’s just my opinion, but let’s all stay tuned and watch it play out.

    • As vreaa says, the trick is timing the top. Housing is illiquid, particularly in a falling market. So this home could reach a point where it would hypothetically sell for $1.5 million or more. But what do you want to bet that the owners don’t sell there?

  6. ACP -> Agree regarding ridiculous, but it is what it is until it isn’t. This’ll all stop hard sometime, and the more it goes up, the more spectacular will be the blow up.
    Regarding income, there is a high chance that the guys who bought this used RE funds to do so (sold their condo/townhouse and rolled all the profits into this; or, if they’re really lucky, they moved down into this (sold westside, bought eastside)). Anybody increasing their exposure to Vancouver RE will be killed in the crash; the very, very small percentage taking profits (selling out and moving away, downsizing, selling and renting) will come out ahead.

  7. PS: On the way down, the move-upper-wannabes are crippled by the dropping prices of their holdings: condo and townhouses drop, bank lending tightens (via interest rate or policy), and suddenly there is nobody around to buy the above house at $1.1M or $1M or 900K, etc. That is why all sectors of the market will fall by roughly the same percentage amounts. Rusty recently suggested worse case scenarios of 50%-off for condos and 15%-off for SFHs… ain’t going to happen.. in other busts, all boats sink similar amounts when the tide goes out.

  8. You are a bufoon sir Rusty.
    Have you had your RE for very long?
    Well I can tell you I have lived through the lean years in the ’80 and in the 90’s. I have tried to sell property in those times and let me tell ya, sub standard lots is not even viewed. Condos with only 1 bathroom is also a good example.
    I don’t think you are more than 35yrs. old based on your logic. Only inexperience can have your logic, you’ve never been burned correct? Always just keep making the dough..like taking candy from a baby right? LOL u crack me up.
    Name five fundamentals that is positive for RE and I will give you 10 for your five why its not a good time to buy.
    One of yours cannot be “the f*ckin Chinese are comin”. LOL your not even worth saving from your eventual demise.

  9. vreaa,
    you assume it’s speculative mania that’s bringing these prices. Others argue that it’s a severe shortage and land and ergo detached properties. This fact coupled with an ever increasing migration to Vancouver is causing prices to hit the roof. What makes you an authority anyway vreaa? You believe a crash is coming, but how much of this position is based on reality and how much is wishful thinking? I think your position is motivated by emotion and ought to be dismissed; unless you have it on good authority that the migration taps are about to be shut off.

    • Europe is much shorter on land and even more populous than Canada, and yet, even there the bubble popped (or never formed, e.g. Germany). Land limit is a myth in Vancouver, you run out of money before land, we live in an odd time where banks make loans they full know they shouldn’t but because it’s backstopped by the tax payer, no risk for them.

      • “Land limit is a myth in Vancouver”
        Exactly. And it’s one of the most idiotic myths that has been repeated in most other bubble cities (now crashed).

      • Indeed. Few regions in the developed world have more open land than the North American west.

      • What about Tokyo? Seems like they have a real lack of land and that didn’t stop their market from crashing, right?

    • If inward migration determined growth rates of Real Estate then places like London, Paris, Madrid, Barcelona, Berlin et al would be going up like a rocket.

      They ain’t & all this despite their metropolitan areas being far larger & average incomes significantly higher than Vancouver.

      Why?

      Hype is one reason the other is greed.

      Put the 2 together & OMG you have the makings of a spectacular bust which will be on a par with the US implosion.

  10. Rusty -> You are using the ‘Limitless Demand’ argument for prices going up and up, regardless of fundamentals such as price:income ratio, price:rent ratio, and housing-value:GDP ratio.
    Your earlier suggestion that Vancouver SFHs have a worse case scenario of 15% price downside is, IMHO, bizarre.
    RE prices always, ALWAYS, return to fundamentals such as income growth rates… see USA, Spain, Ireland, historical examples, etc, etc, etc…
    You are welcome to disregard my opinion, go ahead, your privilege. But you’d be doing yourself a disservice by simply disregarding the bearish opinion as ’emotion’… it is most definitely based on an analysis of the local RE market and a comparison to other markets (geographically and historically removed). Sure, the whole issue evokes emotion, but that doesn’t mean the core arguments should be disregarded.
    We’re obviously going to have to simply agree to disagree for now.
    As I said above, let’s all stay tuned and we’ll see how it plays out.

  11. @rusty

    You’re a troll. You obviously don’t agree with 99% of people that frequent this site. Why do you bother wasting your time here? Go back into your highly leveraged troll house and begone.

    • agreed, even if hes not a troll, do some fraking light reading into the points youre trying to make, they’ve been debunked here and other blogs 1000 times.

  12. He still believes “there’s no more land” theory……..that explains it all.
    Food for thought Rusty,
    We are not bears by heart, we are fundamentalist that cannot believe the idiocy of this market. Could we be wrong , yes but not likely. I think we just have very poor timing as there is no alarm clock for stupidity.

  13. It *is* a nice house though. Probably earthquake proof too!

  14. Agree, it looks like a perfectly nice house.

  15. vreaa,
    what about when prices break with fundamentals? How do you explain Hong Kong, Manhattan, London, Singapore, Rome, Tokyo, Paris, Moscow, Monaco, Sydney, etc? They all easily eclipse Vancouver in $/sqft and price/income? If prices “always return to fundamentals”, why haven’t prices followed this path in the aforementioned? At some point you have to say that these places don’t follow fundamentals because there is more at play than you can wave a simplistic formula at.
    I’m not saying prices can’t dip, or can’t raise. The market is the market. What would help me with a more conclusive argument is if I knew how much wealth detached home buyers are bringing to their purchase. I don’t think the banks are ready to share this information, but I suspect there’s a lot of wealth coming here from locals, other parts of Canada, and international buyers (not just China).
    Try to keep an open mind vreaa, if it doesn’t hurt too much

    • “if it doesn’t hurt too much”; right there he gives away his hand.

    • Again, the idiotic comparisons to Manhattan, London, Monaco, etc.
      Have you ever been to any of those places? I doubt that. Only a complete ignorant can mention those places when arguing for higher RE prices in Vancouver.

  16. rusty -> Take a look at price:rent ratios in all of the places you have listed (except Sydney, which is, like us, in a bubble) and you will see that the real demand for accommodations in those cities is far more supportive of their prices than that in Vancouver.

  17. Further to above:
    Article on price:rent ratios in the US, from CNN Jan 2011.
    Note that these are calculated by dividing price by ANNUAL rent.
    Manhattan 28; Seattle 27; Los Angeles 15.
    “As a general rule of thumb, you should often buy when the ratio is below 15 and rent when it’s above 20. If it’s between 15 and 20, lean toward renting.”
    By these standards, Manhattan is still overpriced.
    Vancouver ratios for comparison? Often over 40.

  18. low rent and high price/rent ratio show that we have a widening gap between have and have nots. Again, you use the data for the wrong interpretation. The correct one is that buyers continue to afford these higher prices but are unable to pass off an increase in rents to tenants. Your assumption is that prices must come down, the correct assumption is that, while prices may rise rents will not necessarily follow. You make a lot of broad, sweeping conclusions from innocuous data

    • You are really dull. Gap between have and have nots? Seriously? Which ones are which? Is a no money down variable rate mortgage speculator with half a million dollars debt a “have” or a “have not” in your world?

  19. rusty -> It’s clear there is little more for us to say other than to agree to disagree. Again: we’ll see how it all plays out.

  20. ps
    you didn’t answer this question:
    “what about when prices break with fundamentals? How do you explain Hong Kong, Manhattan, London, Singapore, Rome, Tokyo, Paris, Moscow, Monaco, Sydney, etc? They all easily eclipse Vancouver in $/sqft and price/income? If prices “always return to fundamentals”, why haven’t prices followed this path in the aforementioned?”

    • Now you have proven beyond any doubt that you are just a troll.

    • The fundamental you are missing is home ownership rate. Compare the home ownership rate of Manhattan to Vancouver’s and then come back to discuss.

  21. rusty -> You are making the ‘New Monaco’ argument for being forever bullish on Vancouver RE. We understand that. We’ll see if your wish comes true.//

    • Yes. And Monaco (the original) actually is running out of land, unlike Vancouver. And it’s a tax haven, unlike Vancouver. And requires at least half a million euros in a local bank for permanent residency, unlike Vancouver. And has a nice sunny mediterranean climate, unlike Vancouver.
      But all these facts do not exist for bulls and trolls. For them Vancouver = Monaco and the prices of RE will go up forever.

  22. no, I’m making an argument that high priced locations in the world do not follow your “fundamentals”. And Vancouver is just like any other high priced area of the world. The problem you have is that you can remember a time when this city was affordable for you and you missed your chance. Better that you forget this and move on with your life

  23. rusty -> FYI, the city remains affordable for me (I’ve told you that before); and I am (and always have been) ‘moving on with my life’. None of that is pertinent to the fact that Vancouver is in the grips of a massive speculative real estate mania.
    So, let’s just agree to disagree on this at this point, “move on with our lives” and over time we’ll see what position prevails. Okay?

  24. If it smells like a bubble, talks like a bubble, and walks like a bubble, it’s a bubble. 10, 20% annual increases are not driven by any real demand. In migration? Sorry, not up, historically. Incomes? Bzzt! Speculation. Mania.

    Bubble.

    All through the bubble, all the way to the top, and even past, there are people telling us “guys, this is the new normal, get used to it”. They’re right, until they’re not. If they drunk their own cool-aid, they’ll be hurting. If they levered into the bubble, they’ll be in a world of hurt. Seeing your investment go to zero is one thing, going negative is a whole other ball game.

  25. Vancouver is no different than any other high priced area in the world and does not fit into your simplistic fundamental argument.
    i.e. price to rent: NY 39.3, SanF 48.8, LA 33.2
    i.e. price to income: SanF 9.9, NY 9.5, LA 8.5
    After several years of US housing crisis these are still have not “returned to fundamentals” as you say always happens. Why?
    In fact, if this is your argument then there would be very few expensive real estate locations in the world. Your assumptions are flawed at their core.

    • Home-ownership rate: NY 30%, SanF 35%, LA 39%, Vancouver 65%

      Economic and cultural importance aside, I hope this explains why most people think Vancouver RE prices cannot be compared with New York, San Fran and LA.

      • PS. These numbers come from Google-able census data. Vancouver’s number is from 2006 and had increased by 15 percentage points in the preceding five years.

  26. @Rusty.

    This guy is a joke. Whether it is “different” or not is defined by you?

    Japan is 80% down from the real estate. And you say it is “different”. Let time plays out, if interest rate is up 2-3% in a few years. Many people will be naked after tide goes away.

  27. A few new-money in China can buy off the whole vancouver East in a whim.

    Just reported in today news, the most expansive Condo in Hong Kong was purchased as a Valentine day’s gift. The price is 346,000,000 HKD. This is 42M CAD. It is merely a few block of houses in E. Vancouver.

    The owner refused to disclosed who her valentine is.

  28. Joe Q,
    Not sure where you get your stats. Home ownership rates are as follows:
    LA 50.5%, San Fran 58.3%, New York 51.2%

    Click to access ci16-5.pdf


    and if you look at the city of Vancouver ownership rate I think you’ll find it’s around 50% (as opposed to the Vancouver CMA)

  29. Mr Rusty seems to have hijacked this thread..

    Where is my friend “Nem the Nemesis” when you need him??

    • As strange as it may sound, GetReal… (my NewFan!!! Gasp!!!! WillWondersNever…. I know you can finish that line!)…

      I have been au so bizy creating NewContent! Yes! NouveauContent!

      For you! For this very Blog! Damn! For EverYbody! [and ‘Posterity’, too]

      …that our IllustriousPublisher (aKA VREAA &Nem’sEditor) will soon be SWAMPED with a veritable TSUNAMI! of material (how I pity him!/her? – &, contrary to rumour, we’ve never actually met).

      Well. There it is!

      Back to the DigitalGrindStone!

      PS – FocusGroup/MarketSurvey sort o’Query… do you want ‘Nem’ to continue ‘writing crazy’ – or do you want it ‘straight-up’ without typographical&punc. affectations/stylization???? I think ‘crazy’ is more fun… but there is a seriousSLASHoldSchool way of delivering it to you, as well…

      YouAllDecide!… [and in accordance with your vociferousDEMANDS, it shall be written]…

      PS to LoftyEditor re: yourPriorPrognostications… my money’s on Bifurcation… (figuratively speaking and for sporting purposes only, VREAA – as ‘Nemesis’ would really MuchRather inhabit an AirStream International CCD28 occasionally/climatically ‘relocated’ by a Ford F350SuperDutyFX4LariatDualHub6.7ltrPowerStroke [what a NameForAnEngine!] than a WestSideShack! – albeit I never have been able to reconcile my MechanicalPassion for such monstrosities with my sense of the ‘ridiculous’; and that would include “taking buildings on motoring holidays, towed by appliances designed for serious WorkingPeople vs. PoserDilletantes.” I think I’ll just stick to TwoWheels & SeedyMotels – better for writing, too!).

      • Thanks Nem. Yes, I am a fan of the pictures that you post on the Okanagan “blast-radius” series.
        You put in a lot of hard work..dude

  30. vreaa,
    you didn’t answer this question:
    “what about when prices break with fundamentals? How do you explain Hong Kong, Manhattan, London, Singapore, Rome, Tokyo, Paris, Moscow, Monaco, Sydney, etc? They all easily eclipse Vancouver in $/sqft and price/income? If prices “always return to fundamentals”, why haven’t prices followed this path in the aforementioned?”

    • Those cities are all the political and/or financial capitals of their respective countries, and most are major world financial or cultural centres. Vancouver is neither. Those cities (with the exception of Sydney, which is also in a major bubble) also have a much smaller fraction of the population participating or attempting to participate in the housing market.

  31. Vancouver is the jewel of Canada, so what’s the difference? Is this country not permitted to have a city the defies vreaa definition of fundamentals? Or is it just not allowed here because this is where you live and it effects you personally?

    • I live nowhere near Vancouver, so I don’t really have horse in the race, but if Vancouver really is The Best Place On Earth for you then I’m not sure any quantitative argument would sway you. (Besides, my Buzzword Bingo card is now just about full.)

  32. http://www.nytimes.com/2005/12/25/business/yourmoney/25japan.html?pagewanted=all

    “Take It From Japan: Bubbles Hurt”

    This thread needs a serious kick of reality about what a bubble can do…

    First lets debunk the “rich” people coming from faraway lands… pure wishful dreaming…

    2nd, about the 42 milllion dollar HK purchase and the comment about buying all the east side…. You have to be a stupid and young to believe that crap… you don’t remember this tid bit from a few years ago??

    “At the height of the bubble economy all the property in Japan, which is smaller than California, was worth five times that of the United States.”

    http://factsanddetails.com/japan.php?itemid=522&catid=16&subcatid=110 <<<< READ your HISTORY HERE

    to argue Vancouver is different and that it is the new normal is 100% wishful thinking…

  33. Vancouver IS different until it isn’t. Talk to me then

  34. “Vancouver IS different until it isn’t. Talk to me then” <<< in a year when Van is bouncing lower and lower you will be long gone from here… all you have to do is look outside of your "perfect lie (Vancouver)" to see the future of the place…

  35. [Readers we respect have pointed out the trollish nature of some of rusty’s comments here, and we’d agree. Having said that, rusty’s position does genuinely reveal beliefs that are shared by many buyers/owners of Vancouver RE, and for that reason, we respond.]

    rusty –
    80% of Singaporeans live in public housing, so how can we begin to compare that market with Vancouver’s?
    Manhattan has lower ownership rates than Vancouver, and has price:GDP and price:rent ratios that supports prices far, far better than similar ratios in Vancouver. We’d argue that Manhattan hasn’t really ‘broken’ with fundamentals.
    The city you list that is arguably most comparable to Vancouver is likely Sydney, which is, like Vancouver, still in a large RE bubble.
    The city that best supports your argument is possibly Monaco, a tax haven/resort town/plaything for Europe’s wealthy (which, BTW, really has run out of land. Visit and you’ll see.)

    We see and understand the argument you are making. You’re saying that Vancouver has moved from being a town in which, prior to 1995, or 2000, or 2003, housing prices tracked fundamentals such as income, into a town where externally generated wealth is driving prices up beyond local fundamentals, such that local incomes don’t matter (Rents still should matter, but let’s put that aside for now).

    In prior discussions here we have weighted the possibility of this being the case (Vancouver = ‘New Monaco’) as low (we’d say less than 5%).
    So, yes, we’ll give you that there is a small chance that we transition to become China/Asia’s Monaco, with Vancouver becoming a resort town/political haven for thousands of millionaires from elsewhere, but we rate that possibility as much lower than you do, for various reasons (China is less robust economically than people imagine; there are many alternatives to Vancouver; the foreign buyers are momentum players who will desert the market; etc).
    So, that is the essential difference in our positions: You say “New Monaco”, we say “Not”. OK?

    You should realize that, making an ‘all-in’ bet on “New Monaco” being the case (as you have, with leverage) is very gutsy because such an event only happens once in a town’s history, if it ever happens at all. In other words, it is a very low frequency event, and you are betting that it’s happening here and now. For every city that you list above where such a distortion may have occurred, there are thousands of others where such a distortion has never occurred and will never occur. So, you’re betting that this is ‘it’ for Vancouver. We see the Vancouver market action as being far, far more likely to be result of a far, far more common occurrence, that of a speculative market bubble.

    Either way, we have little alternative other than to wait and see how it plays out.
    – vreaa

  36. We’ll headline the above exchange for the record and for ongoing discussion.//

  37. kc,
    I’ve been hearing the, “wait until next year” or, “wait until interest rates” or, “wait until…” for 25 years now.
    Not waiting to buy property has made me wealthy. How are you doing with the waiting?

  38. How are you doing with the waiting?

    not waiting for anything… Don’t own never wanted to, never will…

    Cash in bank is worth more than Debt to bankers and taxes.

  39. When the government sets out to create a “world class city”, it really means the following:
    1) we invite any and all speculators from abroad who have made money under whatever legal or corrupt circumstances to come and buy up our city,
    driving locals who have a decent (but not top) wage to Langley if they want
    to have a family in a decent house with decent schools…
    ii) interesting and unique city stores/facilities (remember what Denman
    used to look like?… the interesting local stores on Robson in the 1980’s?…
    the Ridge theatre effectively gone….. the vibrant fringe festival of the 1990’s….)… all replaced by high-end crappy stores selling gucchi bags and
    fancy shoes…. in a few years Commerical drive will go the same way…

    Locals who have a very good, but not world class income, frantically try to keep and try to move up the property market, first via an expensive condo, then a main street 1M reno-project…. being in a very vulnerable position with regards to much higher interest rates, and praying that when your kids are 14 years old that Sir Charles Tupper will become a decent school.. Nothing like working so hard for years to establish some financial security, only to send your kids to some very mediocre school (because it is the only areas that you can afford), and have the next generation not have the education to compete in the “global marketplace”. Clearly, this boot-strapping up the property ladder will not work for those starting in the bottom rung (i.e. buying a 400K apartment and hoping for a huge appreciation to get to 600K and then get to the next rung)……. there is no hope to climb up one rung at a time….

    Unless one has purchased a long time ago, or inherited a huge whack of cash, living in this city (west of the port mann bridge) in a decent sfh in a good school district will result in a very difficult financial struggle on a combined salary of less than 150K….

    I have lived here my whole life, my wife and I are mid career professionals (university profs) and have almost paid off a nice 1M (but only 1400 sq foot duplex in Kits).. we don’t see it as prudent to move up to a 1.6M shack on the westside, and spend the last 25 years of my working career making 4.5K monthly payments on some crappy house…

    The only hope for this city is to follow Australia’s recent lead (as of about a year ago) to restrict foreign speculative buying of real estate… Look it up… In the past year the Melbourne market is going down, and locals have a chance…
    By giving up the fallacious “world class city” concept, 90% of the locals will have a much improved quality of life….

    The “world class city” concept has destroyed the liveability of this city for locals, and many of the unique features of the pre-world class Vancouver have been lost…. We are actively looking to sell out and escape to either Alberta or Montreal…. there is no future in Vancouver for the next generation (unless one is off-the-scale rich)….

  40. mjw -> Many thanks for this account of your situation. We will headline it.

  41. Pingback: “I have lived here my whole life, my wife and I are mid career professionals (university profs). … We are actively looking to sell out and escape to either Alberta or Montreal…. There is no future in Vancouver for the next generation (unless

  42. Pingback: “I have lived here my whole life, my wife and I are mid career professionals (university profs) … We are actively looking to sell out and escape to either Alberta or Montreal…. There is no future in Vancouver for the next generation (unless

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