Inventory is rising on the Westside of Vancouver, reaching 500 by 5 Jan this year. Some sellers are looking for deep pocketed uninformed buyers with ‘hail-Mary’ ask prices. Here is as an example:
4306 W 8th Ave; V920530
SFH, 3876 sqft, built 2009, 56 x 115 lot
Asking price: $6,688,000
Some sales history:
Prior home/lot sold on 20 Apr 2006 for $1,708,000
Current SFH built 2009
On market 2009, ask price $4,680,000
Sold 28 Jul 2009 $4,050,000
—
A ‘million dollar’ home, perhaps, but $6.7M?
We’ll hang onto this example for future reference.
Homes like this will sell for less than $2M in the trough.
That would represent more than 70%-off. We’ll see.
– vreaa
Vancouver Real Estate Anecdote Archive 
Good grief. That’s one ugly house.
Fairly busy exposed corner, little sense of privacy. When you consider what you can get in other markets for $1M, $2M, etc, then this is quite a remarkable example of how overextended Vancouver prices have become.
not much to look at from the outside but from the looks this one might have some great design elements inside. typical spec sfh purchase/build numbers for west side – seems like a glut of new construction coming online to compete for these buyers. take a drive around. similar ppties in my area, westside US urban coastal, about $2M-ish. good eye, vreaa. is it crystal?
More of a home run swing 🙂
115 x 60 feet of dirt and maybe $500,000 worth of house. A microscopic view of the harbour (you can tell how small it is and how much the realtor lies by looking at the other exterior shots).
Nice to see they took the pics on a sunny day though. I’d almost forgotten such a thing exists.
Wouldn’t be quite so insane if we were some sun-drenched paradise where the price of everything else wasn’t also extreme. But we’re not.
Here’s what you can get in La Jolla, Califonia (one of the wealthiest and highest priced – and most beautiful – enclaves in the entire United States) for the same price:
http://www.realtor.com/realestateandhomes-detail/5410-Calumet-Ave_La-Jolla_CA_92037_M22918-06570?source=web
Or, you could buy five (5) of these in the same community, where the sun shines all year long and where a case of beer runs $8, not $20:
http://www.realtor.com/realestateandhomes-detail/8687-Glenwick-Ln_La-Jolla_CA_92037_M12263-84767?source=web
Swing on over to Fountain Hills, Arizona, literally just up the hill from Scottsdale, and you could buy this palace (and I don’t use the word lightly – it’s simply breathtaking) and still have four million left over:
http://www.realtor.com/realestateandhomes-detail/16410-N-Borrego-Trail_Fountain-Hills_AZ_85268_M24367-76556?source=web
Thanks, Gord, all eye-opening comparisons.
The La Jolla ocean front is truly world-class.
The ‘buy five’ comparison reminds one of the advice about selling your home in Vancouver, buying 5 identical homes in the US with the proceeds, and then living in one and retiring off the rent from the other four. Such differential should be arbitraged away, but it hasn’t been, yet.
The Arizona palace does look good. It’s on 1.36 acres (the Vanc property is on 0.15 acres). Note that it rents for $5.5K p.m. Now that’s a good deal 😉
Yup, seeing those properties, you do get the sense of the delusional nature of the Vancouver real estate scene… Things are different here… People are certifiable…
It truly is the best antidote for the local Kool-Aid.
This listing is perfect proof of how utterly delusional Vancouver has become. It would be interesting to know what the sellers ultimate goal is here. Which one of Gord’s scenarios are they thinking of? Or are they planning on “moving up” to something like 24 Sussex Drive ($7.4M)?
http://www.ajaxrealestate101.com/blog/p/how-much-is-this-building-worth
Hehe. Or you could buy sixteen (16) of these, also in the very pretty Fountian Hills.
http://www.realtor.com/realestateandhomes-detail/11214-N-Teller-Dr_Fountain-Hills_AZ_85268_M26543-64661?ex=AZ535967728&source=web
Really nice view from the top of point grey of the water and mountains….
But…tons of traffic up and down that road kids for dropped off at West Point Grey Academy, its a bike lane too. Nonstop parade of Range Rovers and Mercs every morning and afternoon and then there’s also soccer on weekends on the fields.
I stated I am bearish on the market going forward, since what I believe was the “prices remain high forever” capitulation top. I also said I don’t think Vancouver will see a correction of over 30% in nominal terms. However, I do see it as plausible that a property like this, and others like this could see a drop of over 60%. At a $2,000,000 price point that property will remain unattainable for 99.9% of Canadians anyway, but it offers nothing of value to be considered an ultra luxurious $6.7million property.
I do see it plausible that many properties like this exist, what we may end up seeing is the average sales prices collapse when we don’t see these $4+ homes pulling it up. In fact, perhaps we have already seen the start to this, going by REBGV Dec average chart. The drop could be precipitous when high end investors could feasibly start dropping these type of properties by $500,000 at a time to clear them off balance sheets.
Agree.
Median prices would be so much more useful.
(The most valid, of course, are verified sale-resale indexes like Case-Shiller). But they are hard to come by. A Zillow system for vancouver, with complete transparency regarding prior sales, would allow the industrious to analyse the market. But we won’t hold our breath.
Dear Burt – that’s the European/UK experience in a nutshell. Though prices — especially in London — are still about 20% overvalued, they won’t be dropping too much further, having gone down in real terms by around 30%. What happens next, in Europe at least, is very long-term stagnation, stand-offs between buyers and sellers, and years and years of very slow price falls – maybe for a decade – until wages catch up with stagnant prices. In saying this, I have to repeat my view that prices in YVR really are mad beyond all belief – this kind of house *might* go for £2m ($CDN 3.2m) in the very best area of London – but only on a good day. Craig Sterling
You can’t be serious about this house going for 2m in the very best areas of London.
There are 2-3 Bed apartments in London which will go for more however the reality is London is 1 of 2 of the world’s financial centre with a population of 25 million living within 1 hours travelling distance you can understand why their prices are amongst the most expensive.
No offence to Vancouver but it isn’t on the same stratosphere.
I am however genuinely gobsmacked at Vancouver prices which are way out of kilter with fundamentals – there is only 1 way they are going.
agree – you probably know London better than me, I left there years ago. Also agree about YVR – how the hell does anyone buy anything there?? Who has CDN$6.7 million lying around – Bill Shatner and Geddy Lee? 🙂
When I want to get perspective on the Vancouver market I look at what $1 million-ish gets you in desirable neighbourhoods in San Fran or Seattle.
In Seattle:
Magnolia
http://search.idxnw.com/flyer10046753.html?id=10046753&ln=283963
Queen Anne
http://queenannerealestate.com/index.cfm?fuseaction=listing-home&startrow=23&cfid=4042625&cftoken=27305533
In San Francisco
It is definitely more expensive, but you can still find in central San Francisco SFH under $1.5 million. Pacific Heights Neighbourhood to boot.
http://www.trulia.com/homes/California/San_Francisco/sold/7043261-2249-Webster-St-San-Francisco-CA-94115
While it’s not going to get you a palace, it certainly gets you more than in Vancouver. To me, that tells the story right there.
How much Vancouver will drop, I don’t know. But clearly houses on 50 foot lots, even new ones, are not worth north for $2 million, let alone $3 million , $4 million or more! I think that if you take 2002 average prices and inflation adjust them, you will get close to what homes will eventually fall to in Vancouver. That’s likely close to a 50% discount on current prices. For higher priced properties, the discount will be bigger. Minimum 30% is coming for Vancouver.
Agreed.
And thanks for the examples; they support the argument very well.
But some idiot did pay $4,050,000 only 3 years after it was sold for $1,708,000.
Anything is possible.
A new house (the current one) was built on the $1.7M ‘lot’ in the interim, though.
So a woodchip/glue frame house is worth the big difference in price? Would the same house add this much to the price in Calgary, Montreal or Phoenix?
I have walked by there and know that there is basically no back yard. I agree too that it can be quite busy, there is a small parking lot across the street at Trimble Park. But it probably does have amazing views. The lot cost 1.708, and then it was probably at least 1 million to build. To see the price now at 6 million is disgusting.
Some more stats. Assessed value now $4.8 up from $4.2. Build-out cost was approx $1.8 million for structure and interior. It is high-end on the inside. so if you go for a normalization of property values and bring this larger lot down to about $1 million (66% drop from current value), this would make this worth about $2.7M plus whatever you think a view is worth (less the traffic and noise issue).
uhhh…. ok this is ridculous. Meanwhile, this is what 5.75M gets for you in Malibu. You know, where it’s warm and by the beach:
http://www.malibuestates.com/listing-detail.cfm?listingid=26894
Yeah, but nobody in the World knows about Malibu, while West Point Grey is the dream of every wannabe millionaire watching Hollywood movies.
In Malibu, they may have this…
http://tinyurl.com/7skoabx
But in Vancouver, we have that…
http://www.vancouversun.com/5243763.bin?size=620x400s
They can’t compete!
Good one Makaya!
I actually know the homeowners quite well.
I believe their original intention was to sell for about $5.5M however after discussing things with their Realtor, it was listed for $6.7M. Im not sure the strategy for this high price, perhaps it’s set high on purpose. Maybe someone will think they are getting an incredible deal if they can “negotiate” a $1M off the price tag? I don’t know-just a guess.
My prediction is the house will sell, but probably for $1M-1.3M under current List Price.
It is a beautiful home. Traffic is not bad at all. The interior finishing is very nice. The views are phenomenal. It’s too bad this house is not shown better in photos and in the listing presentation.
I think that this is also an example of a high-bulk Realtor that has put very little effort into a “Million Dollar Listing” presentation.. It seems their approach is to take mediocre photos and simply list in on MLS..wait for an unassuming Buyer. Who knows, maybe they will pay a “referral fee” to a Visa Company and get a wealthy newcomer to buy it. Again, just guesses based on what I’ve seen happen before.
Another thing people need to realize is there is so much $$ in China, and the idea is to get it out and put it in a “stable” place. Overpaying for a property like this is not a worry to many Asian Newcomers because to them its a place to put their $$. I also believe if there was a slight market correction and a home that was purchased by a wealthy Chinese Buyer for an inflated price (such as this) went down in value, that they would not care at all. They are not Buying in Vancouver to make money. They are doing it for the stability and security of their money which they want to get out of China, and as well for the lifestyle here in Vancouver which is so adaptable and accommodating for their family/kids.
“They are doing it for the stability and security of their money which they want to get out of China”
If the market correct by 50%, would they still consider that their investment is still “stable and secure”. Why wouldn’t a Chinese person invest in a place that is much cheaper with less downside risk, and put the rest of his money into other investment vehicle? There is no logic to your argument.
ok, firstly I don’t believe the Market is not going to correct by 50%, not even close. Sure, there may be a slight market correction. I don’t think anyone knows for sure what the future holds. The housing economy in China, the Euro debt crisis and other economic happenings will have an effect at some point. I think we’ll all have to wait and see what that is.
My comment was not an argument, its just a fact – that’s what is going on on the West Side and other micro-markets. The logic behind it all is very simple, but just not something everyone understands or agrees with, absolutely. Even I find myself scratching my head, astonished by the rising prices of Real Estate.
whatdoiknow -> Thanks for the comments; appreciated.
When you say “My comment was not an argument, its just a fact”, we would humbly point out that you have actually offered an opinion that is not yet proven fact.
Yes, we know that foreign investors/immigrant investors have been buying properties in areas such as the Westside.
But we don’t know how these owners will respond to falling prices. You may assume that they’ll sit comfortably while prices drop 10%, then 20%, then 30%, happy that they are in a “stable and secure” setting, but this is far from proven. We humbly suggest that they may feel otherwise.
In fact, the evidence we have (from the 2008-2009 pullback) is that such buyers stop buying when prices start falling.
Our own thesis is that they (and the vast majority of other players) are momentum players who love assets on the way up and hate them on the way down. We expect them to stop buying on initial drops and then to add to supply with further drops.
This, too, is not fact, yet, but we’ll get a chance to test the hypothesis soon enough.
BTW, the argument that you are making is what we have called ‘The Limitless Demand Argument For Ongoing Market Strength’ and you can find a series of posts featuring prominent market commentators who have made similar arguments in the sidebar (Category 20).
” I don’t believe the Market is not going to correct by 50%, not even close”
I guess you meant you don’t believe the market is going to correct by 50%. So if I follow your logic, it’s normal if prices have appreciated 300% in Vancouver, but it’s impossible to envision that prices may correct by 50%, “not even close”. Interesting…
Now, have a look at this property in West Palm Beach
http://www.realtor.com/realestateandhomes-detail/6850-Aliso-Ave_West-Palm-Beach_FL_33413_M68385-84675
If you click on sales history, you’ll see the following:
“January 12, 2005: $368,865”.
This very same property is now for sale at… $170,000 (54% decline).
How many people do you think thought in 2005 that property prices would decline by more than 50% by 2011 there? West Palm Beach is world famous, quite a unique and very attractive place. It was different there as well…
By the way, for the same asking price of your friend’s house, you can buy 40 houses like the one in West Palm Beach. Don’t you see that something is wrong with this picture?
@whatdoIknow – exactly right based on UK/European experience. My prediction is down 20-30% then sideways for a very long time – that’s what we’re seeing, to different degrees, across Europe. Quite interestingly, perhaps, for everyone who frequents this site – Irish real estate is now down 75% from peak and is being touted as a good buy again…
whenever I write this, I always have to qualify my comment with “it IS diffferent in Canada” – and it really is. Rule of law, a growing economy producing stuff people need (commodities) a well-educated population: these are things that are making me want to move back, house prices or no!