Post updated with original purchase price
This forlorn looking specimen of a single family house is located at 3955 Blenheim Street in Vancouver.
Situated near the corner of Blenheim and West 23rd, this was one of those prime candidates last year for a HAM flip on Vancouver's desirable westside.
Sitting in the Dunbar school catchment (with Lord Byng Secondary and Lord Kitchener Elementary just around the corner) it had all the elements a speculator could want including a slow speed school zone area, wide asphalt back lane and a large lot perfect to build a 4000 sqft mansion with a lane-way house.
When it was originally snapped up in 2009, the speculators who bought it up were focused on renovating the house.
But when the market started to turn this year, they tried to bail on their investment.
But when the market started to turn this year, they tried to bail on their investment.
You may recall we profiled their efforts back on March 1, 2012. The focus of our attention was a February 22nd craigslist ad (click on image to enlarge):
The speckers outline what they have done to the property so far:
Already spent $500,000 for the works. Will need about $250,000 interior works for your personal choices of flooring, kitchen and MBR bathrooms fixture, paint and partition layout, sprinkler & sewage upgrade. Permit with floor area 3497 sf plus bonus open space 400 sf of crawl space 3'11" high in the basement. Roof top has some winter water view with a flat roof in drawing for a potential roof top deck.
And the incentive is laid out for you to take this off their hands:
Quick $2.1m price for handyman or contractor who can do some finishing works and resell it easily for $2.6m-2.8m and up once completed.
So why are they selling?
Reason to sell - my partner and I have different tracks for our train of thoughts now.
Fast forward almost 10 months and the property still languishes on the market. As VREAA noted today, they have bypassed the craigslist route and opted for a realtor to professionally sell the property.
But instead of $2,100,000, their asking prices has now dropped to $1,599,000.
Their focus has also shifted from finding someone who might be interested in finishing the reno, to seeking a developer who will tear it all down and build a new mansion (i.e: someone catering to HAM).
If nothing else you have the primary reason potential buyers aren't buying right now. A $600,000 drop in asking price in 10 months? Who wants to catch this kind of falling knife?
It shows you how real estate is massively overprice right now. The speculative frenzy we've been through is nothing short of astonishing.
One of the contributors to the comments section (hat tip Eric Langhjelm) advises that this property was purchased for $1,180,000 in 2009. If the speculators who bought it have indeed already sunk $500,000 into the property in improvements, these speckers are already in a loss position particularly when you factor in transaction costs and interest on any money borrowed to finance the deal.
You have to imagine that if anyone wants to buy it for lot value, prospective buyers aren't going to give a damn that these speckers have already sunk $500,000 into the house. I would be surprised if they could even fetch their original purchase price for the lot right now.
It's crystal clear now that our market is unwinding.
At $1,599,000... this property is still massively overpriced.
But instead of $2,100,000, their asking prices has now dropped to $1,599,000.
Their focus has also shifted from finding someone who might be interested in finishing the reno, to seeking a developer who will tear it all down and build a new mansion (i.e: someone catering to HAM).
If nothing else you have the primary reason potential buyers aren't buying right now. A $600,000 drop in asking price in 10 months? Who wants to catch this kind of falling knife?
It shows you how real estate is massively overprice right now. The speculative frenzy we've been through is nothing short of astonishing.
One of the contributors to the comments section (hat tip Eric Langhjelm) advises that this property was purchased for $1,180,000 in 2009. If the speculators who bought it have indeed already sunk $500,000 into the property in improvements, these speckers are already in a loss position particularly when you factor in transaction costs and interest on any money borrowed to finance the deal.
You have to imagine that if anyone wants to buy it for lot value, prospective buyers aren't going to give a damn that these speckers have already sunk $500,000 into the house. I would be surprised if they could even fetch their original purchase price for the lot right now.
It's crystal clear now that our market is unwinding.
At $1,599,000... this property is still massively overpriced.
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Current owner paid $1,180,000 back in December 2009. Formally listed on the MLS back in April for $1,998,000. There is a $10,000 bonus incentive in place as well.
ReplyDeleteThanks Eric, post updated with this information.
ReplyDeleteRight about now these folks are probably thinking they will have done well to escape with a 5% loss. The way the market has turned though I would not be surprised if they just get stuck with it until it is foreclosed or they bankrupt. This is just one of many disasters in the making. I seriously doubt meanwhile that they really put 500k into the place given the way it looks. They are probably just puffing the input price based on their own self appraised and over-inflated labour costs.
ReplyDeleteDoes anyone really feel sorry for the greedy?
Per CL: "Price is subject to increase when newer works added on".
ReplyDeleteSo... did the owners do negative work? :P
That is such a laugh. So these people put the house out for sale and then add that the price is subject to increase?
DeleteThey must be living a dream of a speculators paradise where they get to keep calling the shots even in a falling market.
It is as though they are saying if the house catches a bid they will turn it down and shoot back with a higher price.
What arrogance. Gee, I dunno....would a potential buyer agree to that with sentiment as it now stands?
HaHaHaHa. I don't think those Jackasses really want to sell at all. They are playing games and bluffing that they are still in control even after a serious price reduction. If I were a realtor I would guide the buyer elsewhere and not waste my time.
The email address in the CL ad is a realtor's. And the ad is written in the first person. It seems odd that he'd CL it and offer to co-operate, but not put it on MLS right away. Hide the shame? Hadn't paid his dues?
ReplyDeleteApologies if this is obvious, but what is the acronym HAM?
ReplyDeleteHot Asian Money
DeleteIt is obvious prices in Vancouver and area have been falling for the past 6 months. However, the Teranet index showed a slight increase for Vancouver most recently, after only a small drop over the 3 or 4 month period prior to that. The index still shows Vancouver very close to its all-time high.
ReplyDeleteDid they change their methodology since 2008-2009 when the last crash was clearly indicated on their index?
We all know that the real estate boards of both Vancouver and Calgary have changed their HPI methodologies multiple times in the past year.
The Teranet index is information that is provided by banks. Are they manipulating the stats?
Remember that the Ternaet index compares recently sold properties to similar properties that sold in the past in the same city. This blog has shown a number of properties that have sold for well below assessment, giving the impression that current prices must be well below that of 2011. Yet, the Teranet index tells a different story.
Anon 1:01
ReplyDeleteHAM stands for Hot Asian Money.
Anon 2:13
The Teranet index is probably lagging because not many houses are selling right now. Houses that are selling are likely owned by people who have owned them for many years, and therefore can afford drop the price because they still bought for less than that. When that happens (say bought 15 years ago for $500K and sold now for $800K, despite being 'worth' a million last year) the index will still see that as an increase.
The index will start showing declines when houses recently purchased sell for less than the purchase price of the last sale, which will probably be soon and quite obvious come late spring.
It doesn't actually work like that. If the index has shown that over the last 15 years (in your example since the last sale), similar homes in that area are up 100% then it would assign a value of $1 million to the home and book this $800K sale as a 20% drop for the current year
DeleteThe problem with the HPI is that it is manually manipulated and based on what I am seeing in the real world vs what it is showing in the index there is definitely some sort of disconnect
An Observer
unless someone can firm the speckers really did put in improvements. My bet is they did nothing and just roll it out with some new paint job.
ReplyDelete$500k invested? I find that hard to believe. For $500k I could have built a brand new home!
ReplyDeleteThe owner's address on file is also listed on the MLS, with a price tag of a $1 million higher than purchase price. Owner must be a seasoned flipper/specker. God knows how many more properties this guy owns.
ReplyDeleteWhat is the other property he has for sale?
Delete3207 Quesnel Drive $2.48m asking, May 2009 sold for $1.4m.
DeleteListed for $2.788M in June
DeleteAn Observer