What Would You Pay For This House?

“This three-bedroom Craftsman was built in 1922 and retains its original hardwood floors and crown molding. The living room has a wood-burning brick fireplace.
The dining room features original hutches and shelves.
The kitchen, which opens onto a back deck, was completely renovated with the addition of new wooden cabinets and floors, lighting fixtures and stainless-steel appliances.
The master bedroom is on the main level; there are two bedrooms upstairs, where there’s also a family room that opens to a balcony.
Behind the house, there’s a sitting area with a pergola, a few garden beds and a concrete patio.”

Reveal:
The house is on the market in Seattle for $499K.
‘What You Get for … $499,000.’, New York Times, 29 Feb 2012; Photos
[hat-tip Vesta]

More on the property:

SIZE: 2,460 square feet
PRICE PER SQUARE FOOT: $202.85
SETTING: This house is in the North Admiral neighborhood in the western part of Seattle on a small peninsula between Elliott Bay and the Puget Sound. The architecture includes Tudors, Dutch Colonials, Victorians and Craftsmans; more contemporary houses dot nearby bluffs and have better views of the city skyline, the bay and the sound.
Three blocks away is the neighborhood’s commercial strip, California Avenue, which has bars, banks, cafes, restaurants, grocers and the Admiral Theater, a 1942 Art Deco movie theater and concert hall. Several parks are within a mile, including the 53-acre Schmitz Preserve Park with its old growth forest and walking paths, Alki Beach Park and Hamilton Viewpoint, which overlooks Elliott Bay and the city skyline.
The house is five and a half miles from downtown.
INSIDE: The two-story house was built in 1922 and renovated within the last four years. It has retained the original hardwood floors, crown molding, and built-in hutches in the dining room. On the first floor, there’s a living room with a wood-burning brick fireplace, a formal dining room, a kitchen and a master bedroom. The kitchen, which opens onto a back deck, was completely renovated with the addition of wooden cabinets and floors, lighting fixtures and stainless-steel appliances. The carpeted second floor has two bedrooms and a family room that opens to a balcony. One of the house’s dormers was finished with drywall and shelves to make a small playroom.
OUTDOOR SPACE: There’s a small fenced-in front yard. Behind the house is a sitting area with a pergola, a few garden beds and a concrete patio.

All sounds very reasonable, by Vancouver standards.
Houses like these will likely sell for even less at Seattle’s bottom, perhaps below $400K.
In Vancouver? Definitely far below the $1.5+M that such a property would now be asking on the West-side.
$500K would represent 66% off. Hmmm. That could never happen, surely?
– vreaa

56 responses to “What Would You Pay For This House?

  1. 4SlicesofCheese

    I was gonna say 500.

    A friend recently bought a 2br+ den at 3333 main for 660.
    Physio-therapist, wife on maternity leave but works for the gov.

    Took out one of the bedrooms (facepalm…) to add more space for living/dining. So basically now a 1br+den. Says they will sell (flip) in a couple years for a profit.

  2. Renters Revenge

    And you can get a 30 year fixed rate mortgage for 3.6% to finance it with. Anyone know any good movers?

    • Don’t forget that you pay a lower rate of income tax, and the interest on the mortgage is tax-deductible without any fancy tricks.

  3. OK. I am confused. Is this comparing a 499k home to a 499k home ?

  4. The crazy thing here, of course, is that people from most places in the world look at this house as fairly pricey.
    Most of us deconditioned by years of Vancouver prices will see it as inexpensive, ‘cheap’ almost.

  5. Only-slightly-off-topic note:
    Recent post ‘Basement Suite In East Vancouver Sells For $590K’ now updated with 7 Mar 2012 Global TV news on same topic [story at 2:20](Video archived by Greenhorn.):

    • 4SlicesofCheese

      They are trying to sell the coach house on 19th ave for 950.

      It sounds crazy but the managed to sell the main house for 1.17+600k so at this point nothing will really suprise me.

      One thing for sure is no way HAM is going to buy a coach/laneway home.

    • Thanks for the clip. It sounds newsy on the surface. Did you notice the spin though? Vancouver is not slowing where buyer interest is concerned. Oh no, not at all.

      It has just shifted its attention to the East side where homes are cheaper. You know, just like the money shifted from Richmond to North Van, from the West side to Burnaby, from Downtown to New West.

      That is just subtle linguistic code for “hurry up and buy or you will miss the next big opportunity”. Even East Van hoods will be selling in multi millions as is evidenced by that basement suite sale. So don’t wait, these prices won’t last long folks!

      And there you have it. Everything is just fine. Even a one off insane basement sale can be used as an example of how much market demand exists in the countries poorest postal code. Pretty soon buyer interest will come back to your hood again too. That is the implication. We all know real estate works like that. And besides, if East Van is rising in price that assures West side price stability for years to come.

      And that is how “the news” pollutes normal thinking.

  6. I think reading what happened to Spain is appropriate for BCers.

    A couple of years of low pop growth would be unpleasant.

    • Links to any good reviews?

      • Here’s one, a bit academic, I’ll try to dig up the more prosaic one I read a few years ago:

        Click to access dt2010-09.pdf

      • Or this: http://www.youtube.com/watch?feature=player_embedded&v=xWrbAmtZuGc

        “…we were never rich in the first place.” Word.

      • And this:

        Click to access Session2-AlfonsoGarcia.pdf

        Something to think about is that Spain experienced different conditions and other constraints not present in BC. Let’s brainstorm on the situation in Spain to start:
        – Adoption of fixed currency regime led to growing negative trade balance
        – High in migration
        – Negative real rates
        – Extension of loan amorts
        – De facto underwriting of bank loans by the government
        – Dropping unemployment and large %GDP/employment in the construction sector
        – Relatively stiff labour mobility
        – Significant building activity
        – Flat real incomes
        – Decreasing household size (due to change in housing mix likely)
        – Expats buying properties too expensive for most locals

        BC has some, but not all of these. Let’s take a stab at what BC has:
        – Negative trade balance
        – Negative real rates
        – Flat real incomes
        – Negative real rates
        – Extension of loan amorts
        – De facto underwriting of bank loans by the government
        – Dropping unemployment and large %GDP/employment in the construction sector
        – Decreasing household size (due to change in housing mix likely)
        – Expats buying properties too expensive for most locals

        What does BC not have that Spain had?
        – Labour mobility is more flexible.
        – Overbuilding was nowhere near on the scale of Spain.
        – High unemployment is ameliorated by pulling funds from other parts of the country, via transfer payments and EI.

        Just off the top of my head. Nonetheless BC does not need to be precisely doppleganging Spain to have enough similarities to be worrisome.

        “The same yet different.”

      • So Vancouver is the new Barcelona, or is it the new Las Vegas, or Miami? I can’t keep up with all the places that Vancouver is now

      • Barcelona is the new Vancouver. Think big, think outside the shoebox. Barcelona’s prices, from what I have seen, aren’t what I’d consider cheap.

      • Maybe Vancouver can be the new Reykjavic!

        Remember Iceland and how its housing market imploded a few years back? Yesterday I heard that the Icelanders were seriously considering adopting the Canadian dollar as their own currency since theirs is pretty much in tatters as a result of the global financial crisis.

        This is great! Just 200 more countries and Canada can be the worlds reserve currency and the Bank of Canada can tell them all how to operate (you know, by following our own carrot up the butt, conservative, bow-tie, low risk philosophy and way of managing our markets).

      • Robert Dudek

        re: Rejkyavik

        Iceland has already recovered – after telling the financial terrorists to stuff it.

      • Kind of makes you wonder why Iceland would want our currency then, eh Robert? As the news was reporting, the outcome would be that country would effectively be importing the Bank of Canada’s monetary policy which could be problematic where it diverged from their own national interests.

        Mind you, they could do worse. Europe is not throwing a big invitation party for them anytime soon and they do see themselves as more similar to Canadians in many ways. Plus, there is pretty good evidence they have offshore oil and the country is well endowed with natural resources.

        Using our so-called petro-dollar might make good sense.

      • Iceland is already recovering because it went after and solved the real problem. It flat out defaulted and let its banks go bust. You won’t see that in Canada. It is the financial terrorists who are floating the idea of their adopting the loonies.

    • Good point Jesse. It could be a lot worse. Let’s all be thankful we are not in Spain…..or Greece….or Portugal………or even England (the English are so irritating, nobody likes them. I just threw them in the batch because they are snots)

  7. Some friends of mine moved from LA in around 1990. They considered Vancouver at Seattle, but Vancouver was too pricey so they moved to Seattle.

    Vancouver will never be cheap, as Dr. Davidoff said. Because (1) it’s the nicest city in Canada, and because (2) Canada only has two or three major population centers, so immigration policy has a big influence on these areas. Neither of those is true about the US & Seattle.

    I don’t believe you will ever see Seattle prices in Vancouver. Even though Seattle is better in many ways.

    • So, what would a fair ‘Vancouver-Over-Seattle’ premium be?
      25%?
      200%?

      • Good question. I’m not sure what “fair” means in this context. The current prices are “fair” in the sense that they are the inevitable consequence of bad government policy (on immigration, mortgages, backstopping CMHC, municipal incentives on development, etc.), a mass media that focuses on entertainment rather than information, and apathetic citizens that would rather watch reality TV than engage in political discussion.

        What is a better definition of “fair”? Maybe:
        (1) “if the immigration policy were kept as is, but the federal policy on mortgages made more reasonable”
        (2) “if both the federal policies on immigration and mortgages were made more reasonable”

    • 2 or 3 major population centres?

      If Canada only has 2 major population centres then Vancouver isn’t one of them. In terms of city only, Vancouver is 8th in Canada, and in CMAs we are third.

      • “2 or 3 major population centres?”

        I believe this is true in the sense that the bulk of immigrants settle in either Metro Vancouver or the GTA, and a few in Calgary & Montreal. I’m sure it’s not hard to find numbers supporting this claim.

        From the 1996 immigration data: http://epe.lac-bac.gc.ca/100/202/301/immigration_statistics-ef/mp22-1_1996.pdf

        Page 45
        170k out of 225k immigrants settled in Ontario or BC. That’s 75%.

        Page 86:
        Of those that settled in BC, 45k settled in Metro Vancouver (88%). Of those that settled in Ontario, at least 85k settled in the GTA (71%).

        Consequently, ridiculous policies like “Let’s allow rich immigrants to buy citizenship because they support the local economy by buying houses” have drastic impact on housing availability and affordability in Vancouver and GTA.

        Seattle does not suffer from this problem.

      • @Jeff, I don’t think the Conservatives are too fond of having to deal with the dirty fringes of real estate speculation and debt accumulation in two of the country’s left-leaning enclaves.

      • Jesse, that is a good point, as usual.

        Yes, it is foolish to think that our government cares one fig about the best interests of its citizens (even those in its largest cities).

    • Yes … Vancouver premium, I think it’s true, but it’s overboard now … It never stops … get used to less pay and higher costs for everything … at one point it stops making sense and the minuses are bigger than the pluses … you can trade quality of life for a little less money, but what if after overspending you get no quality of life ? then what ? I think we’re at that point … there’s a pain point where propaganda stops working …

      Outward bound: B.C. brain drain flows east

      Outward bound: B.C. brain drain flows east – Page: 1
      Gap between salaries and cost of living resulting in the province losing more interprovincial migrants than it’s gaining for the first time in nearly a decade

    • While Vancouver may never be “cheap” I think some consideration should be given to how sensitive Vancouver could be to external events. My speculation is that a big chunk of cash flows — more than many care to admit — propagating inside Vancouver are correlated.

  8. Van west: 1,000,000
    Van east: 600,000
    Burnaby: 500,000

    With interest rates where they are today, that’s what I think the prices should be. Some may disagree but realistically, the true market value is likely 30% higher than the numbers I posted.

    • Basement Suite

      “With interest rates where they are today”

      That is exactly the problem.

    • “true market value” I think you’re still a bit high. True market value is the asset value without leveraged ownership. The base line is what can be afforded using savings only in our market economy. When lending is introduced, the price appreciates on credit, and not a true valuation. Someone wrote 50-70% of buyers are mortgaged to the hilt? If so, true value is the sale price less the lender. People don’t understand that banks lose no sleep financing inflation.
      High price/inflation concepts:
      Keynesian=sellers are jacking the price
      Austrian=too much money in the market
      I caught a number yesterday, Canada is number nine in the world for per capita central bank cash reserves? The US is something like 39th? If so, we can afford to backstop the consumer a little further into debt, bring it right up to the bottom lip.

  9. Joe_Blown_Away_By_High_Housing_Costs

    I would have thought that house in Seattle was worth $2 million.

    Sorry this is off topic, but Vancouver Sun just put out a story saying housing starts were up in February in BC. The biggest increase was in multi family dwellings in urban markets, up 38% from Feb. 2011.

    Isn’t it the urban condo market the segment that is most bubblicious right now? Isn’t adding more supply at a time like this just going to sink prices?

    Choice quote from the article: “Residential construction activity during the first two months of 2012 is ahead of last year’s levels due to strength in a number of housing markets around the province,” said Carol Frketich, CMHC’s BC Regional Economist, in a release.

    Source: http://www.vancouversun.com/housing+starts+February+higher+multi+family+dwelling+projects/6270725/story.html

    Plus, I’m sure you have all heard about BMO’s new 2.99% 5 tear mortgage and the first 10 year mortgage under 4% in Canadian history: http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/bmo-kicks-off-new-mortgage-fight/article2362256/

    This bubble may inflate more yet!!!

  10. nice house. Exactly what I’d have chosen in here if it were available. Unfortunately my work and my family are in Vancouver. Aren’t there home movers that can bring this thing to BC for me? Oh ya, I forgot… I need a lot to put it on.

    • 4SlicesofCheese

      Move it onto your lot as a laneway house, oh wait your lot is the size of a postage stamp.

    • Put it on a barge and anchor it English Bay.

      Kidding aside, are floating homes still popular there. I think you used to be able to lease water lots near Granville Market but that was years ago. Must be a premium for those now. They were going to move Lafarge and make a mooring marina for housing once. I imagine that never got too far because of the Olympics…or did it?

  11. the border is having a long line up today. people are going to make a bidding war on this place in seatle. are you in the line up, vreaa?

    • There’s a line to get out of the province … bc business magazine

      Outward bound: B.C. brain drain flows east – Page: 1
      Gap between salaries and cost of living resulting in the province losing more interprovincial migrants than it’s gaining for the first time in nearly a decade

    • The border is having a long lineup EVERY day, fred. I’ve lived on said border for a half year now, and the lineups are *much* longer now than when I arrived. They’re colossal on the weekends of course (a half mile or more at times) but even during the weekdays – say, 9AM on a Monday morning – they’re hundreds of cars deep. I kid you not. These days, it just doesn’t stop.

      Now, why would that be? Could it be that citizens of the glorious world-class BPOE are priced out…of everything? Not only are they hit with the most ridiculously overpriced real estate on the planet, leaving them a pittance for necessities like groceries and fuel (and perhaps the occasional beer), but even the price of *those* necessities are onerous.

      Have you checked the price of a case of beer lately? I haven’t bought Canadian beer for months now, but I believe it hovers in the $25 range. Over the border: $10. Milk? BPOE: $5.00. Blaine: $2.99 (Indeed, I just bought two gallons at $1.99 per, with coupon). Gas? BPOE: $1.45. Blaine: $1.10. Eggs, meat, etc, etc, etc.

      I honestly have no idea how average income earners who’ve purchased a home here in the midst of the insanity manage to get by day to day, especially if they have a family to support, don’t get a chance to regularly shop in the US, and don’t have a secret fortune stashed away.

      • I believe those observations are relevant. Credit card bills should start coming in since the last fuel increase. four pillars: food, energy, shelter, debt service. I also watch for toy sales: rvs, quads, cottages, travel. RRSPs have tanked.

        Flashback, 2008, US devalues currency against trade during Chinese New Year, sixty days later stocks tank, oil hits $150 over summer, food inflates rapidly as we head to fall. Oct. 1st mortgages reset, and people skip their payment.

  12. Over at The Tyee

    “During a lecture last fall, I asked my 200 undergraduate students to raise their hands if they believed they would someday own a home. Only about one in 10 thought they would. ”

    http://thetyee.ca/Opinion/2012/03/08/Vancouver-Demographic/

    • if you ask the same 200 undergrads if they thought they’d have a family you might get less than 1 in 10 that raise their hands…yet 8 of 10 of them likely will.

      • ” if they thought they’d have a family you might get less than 1 in 10 that raise their hands…”
        I would say 100% of these undergrads have a family unless they were born without a mother and a father, which seems to be unlikely…

  13. You should see some of the palaces you can get in great neighbourhoods in Portland. I check the listings regularly (it’s porn for me), and every single house in the range I look at ($400,000 to $450,000) is beautifully staged, fully renovated and tastefully furnished. Many are 10 or 15 minutes from downtown, within walking distance of transit and trendy shops and restaurants. In contrast, Vancouver listings that cost twice as much are dirty and dilapidated; I’ve seen some with clothes and junk strewn all over the floor. Or the inside is so bad they don’t even bother to post interior photos, just a shot of the outside with the words “development opportunity!”

  14. oneangryslav2

    The punchline in the Global piece comes from Ted Chernecki near the end: the East Side prices are skyrocketing due to…you guessed it…”offshore buyers.” Didn’t somebody say that the basement suite in question was purchased by a real estate agent?

    • real estate agent=offshore buyer wannabe

      Moneybags comes to town and buys up dandelions cheap. Now dandelions are hip and people are selling, buying, and getting loans. Moneybags quietly sells back into the market and goes to the next town, franchising payday loans in his wake.

  15. Great comparison. I would disagree that Seattle still has 20% downside. I would say an additional 5% to 10% downside for Seattle and Portland, bottoming next winter. But then, my crystal ball is no clearer than anyone else’s.

  16. Yes and that is in a good area of Seattle. Comparable to w west side area of vancouver or the north shore. It again just shows the dellusion in Vancouver. That house would probably be 2 million + on the west side.

    • West Coast Woman

      It would be a 2 million+ on the west side, but only as a tear-down. After all, people who buy here now want new homes, with 6-8 bedrooms and 6-8 bathrooms, not some old house that’s been restored or renovated!!!

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