Saturday, November 04, 2006

old becomes new



This one is interesting.

Last summer there was a fairly decent house at 5290 Bursill. It was listed at $425K. We felt that it was over-priced, and that the bubble would burst in the fall, so we enquired no further.

This year there is a brand new house at that address (v609708) listed at $698k. It is 1799 sq.ft., (with 5 bedrooms and 3 bathrooms). I have no idea if they paid the list price, or over/under list, so to be fair, I'll guess list. I read not too long ago that 2006 building prices in East Vancouver were about $186/sq.ft., so this house would have cost about $335k to build. Add that to the list price ($425k - 2005), add in PTT and commissions, and these people are losing their shirt on this one.

I'll admit that it is a little bit nebulous, they might have paid $375k for the house last year, and building costs may have been a bit lower. But it does not look to me like anyone is getting rich on this one.

13 comments:

bc_cele said...

Since I've been here, I still have problems wrapping my head around how someone could sell a house that size for 698K and not make a boat full of money. More proof that things are just insane.

Anonymous said...

it's a cash laundromat ;)

solipsist said...

The thing that gets me is that there is no real value added. A house is just a home, and you cannot pay for something like this by renting it out. It reminds me of trading in a car every year just to have the latest model. It just bleeds money, and does not get you where you are going any faster.

Who needs five bedrooms anyhow? - unless you have multiple generations living in the same house. And if there are three generations living in it, that knocks out demand for at least one other house.

solipsist said...

There would also be $41,880 in GST if this price is not net of GST. That would make for even more pain.

I tried to speak to the agent, but only got an answering service, so I can't verify the GST status.

Anonymous said...

Lot Size: 3003 sqft

solipsist said...

Lot Size: 3003 sqft

Yes, not much room for the kiddies to play...

Anonymous said...

Thanks to a free economy in 1st world countries, we are profiteering RE appreciation of 12% to 25% annually in the past 5 to 6 years … ….. Otherwise we had to stoop to gun-running or smuggling in war torn 3rd world regions and if caught, had to face a firing squad. Everyone prospers in time of chaos, not just Hallibuttock and greasypalms.

Babybull40 said...

There was a brand new house built on my street about 3 years ago.. It looks awful in the company of old homes that have been around for more 50 yrs. Anyone driving up the street knows it looks out of place.. So what will go next to artbag's house..? yes it will a newer home, but how will it look against all the older homes. Or will it be an improvement for the area?

solipsist said...

Naw, it will be another featureless, homogenized monster.

markx said...

There is some value added when a new house is built. The new house has more livable years than old house, and require less maintaince in the near term future.

New construction is always good, bull or bear market, from a renter's prospective. Of course, as soon as I buy, I would want a ban on all new development.

solipsist said...

Thanks for posting markx.

I agree that there is value added, but to whom?, or what?

Also, I'm not sure that new construction is always good from a renter's perspective. Condo construction perhaps, but the house that this monster replaced would have rented for $1200-$1500 per month. That affordable rental has been replaced by what is portrayed in the photo'. No idea what kind of mortgage the builder has, but it would cost $1850/month just to cover building costs, let alone the original purchase of the lot. If the buyer/builder put down 10%, there would still be another $2600 a month to cover. Rent would need to be ~$4500/month to cover that, and there are still property taxes, PTT, commissions, repairs and empty months to consider.

I'm not sure that this type of construction does benefit renters.

Will said...

The buyer of the original home made plenty of money in sudividing and selling off the parcels of land earlier this year. As to the builder of these two homes (where once there was one)... we'll see if they can sell.

solipsist said...

Thanks for that further information Will.

Maybe you can keep me posted?