James writes [via e-mail to VREAA, 12 and 14 Mar 2013]:
“A couple of properties that I’ve been watching in my neighborhood with interest...
Unit #1 2482 W 8th Ave; 1132sqft; Ask $699K
Granted this is a garden suite (but a nice one at that), I’m pretty sure that this is the first 3+ bedroom property of any type that I’ve seen since I’ve lived here (5 years) priced below the 700K mark in Kits. MLS blurb states: “NO HST & PRICED $146K BELOW ASSESSED VALUE!”
Nov 2012 list price: $810K
Dec – price reduced: $799K
Today’s price: $699K -> -14% in 4 months! ouch!”
“Two other units in the same heritage-tear-down-and-subdivide Kits special..
Unit #2 2488 W 8th Ave; 1331 sqft; Ask $899K
This one is great because it’s a 2 bedroom and yet priced at a full $200K above the one above…but still “PRICED $106K BELOW ASSESSED VALUE & NO HST!”
Previous list price: $950K -> I wasn’t able to find a date on this…
Current list: $899K
Price Reduction: -5.4% in 4 months. Though I bet any money that the $950K price was an interim price drop given the obvious desperation on the other units.”
“Third still listed on one site but not Realtor.ca which means that some poor sucker paid too much money or they are in the process of relisting it:
Unit #3 2486 W 8th Ave; 1197sqft; Ask $950K
3 bedrooms but $250K more than the “garden suite”. “PRICED $79K BELOW ASSESSED VALUE & NO HST!”
La piece de resistance as they say.
Previous list price November: $1,050,000 (!)
Dec price reduction: $998,000
End of Feb price reduction: $950K
-9.5% haircut on a property that the city has deemed to be worth $1,030,000.
If it did sell, I would bet money it was NOT at $950K and therefore was probably -10% below assessed value at the time of sale. I’m sure all the other people on that street that are trying to sell , and there are a number of them, are not thrilled with this…”
“So, total $110K + $100K + $50K = $260K of assumed profit vaporized in 4 MONTHS.
Further, I managed to stumble across cached web pages with original purchase price of the property that was sold in May 2008 and subsequently torn down and replaced with the 3 “heritage style” Kits units above.
The original house looks like it was sold back in 2008 for $1.388M. Here it was then:
“I’m certainly not well versed in what it would cost to tear down to the foundations and then some, rebuild, subdivide and then flip a ~4K sq ft home like this, but an educated guess would be somewhere around ~$2-2.3M total for the 3 units once it’s all said and done including costs to sell each unit.
For the original list prices that WOULD have worked out to ~$500K profit. I didn’t consider cost of carrying the original mortgage since I’m not sure how these things work for developers, but 5 years of interest would be significant on a $1M+ mortgage.
Current list prices that profit drops to ~$200K.
And that’s with an assumed 1 out of 3 units sold and the nicest unit at that. No wonder they are getting desperate.”
Thanks to James for the above info and thoughts.
Anybody else got ideas on the math on a development such as this? -vreaa