It's always fascinating to observe the manoeuvres of some of the participants in our real estate housing bubble.
It's not that it's different from that of sales in other product streams, as anyone who has spent time on eBay will attest. You see similar behavioural patterns amongst some sellers there as well.
And the underlying pattern? Greed and a compulsion to chase the market.
Increasingly on Observer's wonderful Vancouver Price Drop blog you see examples like 3711 West 11th Ave in Vancouver.
This 12 year old, 4 bedroom, 2,204 sq ft home sits on a 3,660 sq ft lot in Point Grey at W. 11th and Alma Street. The listing description says:
Well maintained, like new 12 years old 4 bedrooms home in most sought after Point Grey Area. Designed by Formwerks with Classic outlook with 2200 SF of contemporary living. Impressive formal living & dining room are great place for entertaining. Kitchen with open concept. Main floor features 10' ceiling, gleaming Brazilian cherry wood throughout and gas fireplaces in living & family room. Upper floor has 4 bedrooms or 3+den. N facing bedrooms have mountain view. Downstairs offers a nanny room & 3 piece bath. All appliances, hood fan and carpets were replaced in 2010. Double garage, security system, fully fenced front & back yards. Lord Byng High School & QE Elementary School Catchment. Priced below 2013 assessment
The house has been almost continuously listed for the past two years and it has sat empty all that time. It's actually been on the market since 2006 and got pulled during 2007-2009.
Clearly the seller doesn't have to sell. As a result, they are constantly chasing the market.
On October 06, 2006 it was listed for $1,374,800. Watch the history of price changes after that.
October 23, 2006 - $1,298,000
November 18, 2006 - 1,272,800
December 11, 2006 - removed after 66 days.
The house stayed off the market throughout 2007, 2008 and 2009. As the market rebounded in 2009, our intrepid sellers tried to capitalize on the rebound and chased a climbing market, presumably influenced by the market assessments.
January 22, 2010 - $1,575,000
March 05, 2010 - removed after 42 days
May 20, 2011 - $2,188,800
November 18, 2011 - removed after 182 days
November 23, 2011 - $2,088,000
At the start of 2012, the 2011 Assessment would have come out. The assessed value of this house: $1,763,000
February 22, 2012 - listing removed after 91 days
March 01, 2012 - $2,128,000
March 28, 2012 - $1,998,000
April 16, 2012 - removed after 46 days
April 26, 2012 - $1,888,000
June 11, 2012 - removed after 46 days
June 15, 2012 - $1,798,000
September 08, 2012 - $1,668,000
November 01, 2012 - removed after 139 days
Then the 2012 Assessment came out in January 2013. New assessed value: $1,618,000
On January 23, 2013 the house was relisted for $1,580,000
It's almost comical to watch. I'm sure when they eventually drop their asking price to the 2006 price of $1,270,000... they will still maintain they "just want what our house is worth."
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If they are able to sell it for the 2006 price of $1,270,000, they will undoubtedly tell anyone that asks that they broke even.
ReplyDeleteLet's see here, if they took out a $1million mortgage those 7 years would cost about $250k in interest payments alone. Taxes were likely 4-5k per year so let's call it $30k. According to Mike Stewart's realtor commission calculator there would be $35k for the purchase and sale so $70k. So all in we're talking about $350k. Of course they must have rented it out at least and even at $3k per month they'd have collected $250k so they are still be in the hole by $100,000. While we're picking away at it, they also lost the opportunity to invest that 250k down payment they started with which at a measly 2% over 7 years would be worth about $40k. They also replaced the appliances and carpets, so over the course of 6 years they managed to lose a total of around $150k just by selling for the same price they bought at. Good thing this isn't a bubble or it would be really ugly!
how much did the person purchase it for?
ReplyDeleteWonder if they ever got any offers during all that time?
ReplyDeleteThere's a number of places like this in the Point Grey/Kits area.
ReplyDeleteSome are rented out, some just seem to sit empty... for years/
At the very least, there should be a special tax on those that sit empty. If Vancouver actually gives a fuck about "affordable" housing, rather than trying to build the stuff, just force speculators to offer it or lose even more money.