Sunday, April 27, 2008

report



Yesterday, the Missus and the Ba, and I (Da) checked out this "lovely 1912 home" just for fun (it was an Open House, and we were passing by). The first thing that the agents said (beyond "hello") was that the price had been dropped from $799k to $709k, and that the sellers were "very motivated". The male agent started blathering about how the market was strong for another 4-5 years. I did not ask why the price reduction in the face of all that market strength.

The agents seemed a bit dejected.

The house is tenanted, with the main and upper floor rented at $1300/month, and the basement suite rented at $700/month. The two bedrooms at the top were very small, and the Missus said that it would be good for a couple, but not so much for a family. The kitchen has been recently modernized, and the basement suite was all modernized -with new plumbing, wiring, drains, etc. I asked if there was still knob and tube wiring in the house, and the agents were...evasive - pointing out the original fir trim and panelling.

The female agent looked at our gorgeous Ba, and said "Hi. You're kind of cute." The Missus looked at her sharply (usually, we hear "gorgeous", beautiful", or "adorable"), and I muttered that the house was "kind of over-priced".

It is a character-filled house, but I would not offer more than $400k.

26 comments:

N2V said...

Nice report. By the way, how did the neighborhood in general look? Good place for a family?

Anonymous said...

According to the Vancouver Sun's "RE Myths" story, a place you can rent out for X should cost about 100X to make sense. So this place, at 2,000 a month rental imcome, ought to cost 200K in a normal market. At 709 "reduced" price, goes to show just how rediculously overpriced this city is.

After the prices in slowly crash over the next 2 years, I hope you'll go back to these places and show their list prices at 50% off current levels. Kind of a Vancouver version of the famous SoCal "Real Homes of Genius".

solipsist said...

how did the neighborhood in general look? Good place for a family?

The area is very good (Renfrew Heights). One block from elementary school, and 2 blocks from Community Centre/Pool/Library/Park.

Way over-priced though.

So this place, at 2,000 a month rental imcome, ought to cost 200K

Too true, though, the rent is likely well below (present) market.

The upper two levels could probably fetch $2k/month, and the basement $1k/month. Still ridiculous.

seeker said...

Yes, nice report.

Grossly overpriced to be sure but a pretty big reduction compared to what some pass off.

But if that place is overpriced compared to the 100 X rent valuation, in which orbit are some of those prices on the westside?

I mean, can you really expect to get 14,000k a month? Yikes.

Sometimes, even 50% off seems like not enough.

On another topic, I had a friend from Ft. St. John drop in yesterday. He made a comment that he's going to sell his place when the market "picks up". Of course my ears perked up...what do you mean? says I. He said that shortly after he bought, last year, the market stopped dead. Flatlined. Nothing moving apparently.

Here's hoping the ailment spreads.

rentah said...

"Sometimes, even 50% off seems like not enough."

Yeah, I've been predicting ">50% off" for sometime, but there are times now when I think even that is going to be an underestimate.

Thanks for the thread and the ongoing work on the blog.

seeker said...

I've been wondering lately about the velocity of a downturn.

I know there will be resistance at first by the sellers to accept that they have to reduce, but once the idea is out there and the mindset says sell or be slaughtered, how fast can it go?

My feeling is that things could unwind fairly quickly simply because of how far from fundamentals this market has gotten. Throw in rising food and gas prices and I'm not sure we'll even need interest rates to rise to cause a calamity.

Speaking about reductions, one of the places I'd been looking at in Killarney (MLS®: V703720 )which sold last year for 640, reno, then back on the market asking 828. Get real. It's a 52 yo bungalow. First reduced 20 k and today listed for 758.

Anonymous said...

Character houses? Wouldn't give you more than $50,000 for one of the bombs. Give me a nice 70's mid-century modern with glass walls anyday. Even a track ranch house is preferable to these gingerbread witch houses with their 5' x 5' kitchens and 7' x 7 ' bedrooms with no closets and SINGLE bathrooms (unless they've been chopped up to hell and made into even worse tenement buildings.)

And modern builders copying these exteriors for their "masterpieces" with particleboard cove molding in every room? The height of ugliness. Let's all pretend that it's 1890 and Frank Lloyd Wright never existed.

solipsist said...

Give me a nice 70's mid-century modern with glass walls anyday.

Yeah, I would take that too, but I would prefer 1950s MCM.

gingerbread witch houses with their 5' x 5' kitchens and 7' x 7 ' bedrooms with no closets and SINGLE bathrooms

To it's credit, this place had an acceptably sized kitchen, but done in dark wood, and at the expense of the dining room. The two bedrooms would not accommodate a queen-sized bed.

The ginger bread witch house line cracked me up. I'm just a sucker for turrets. And ginger bread.

Let's all pretend that it's 1890 and Frank Lloyd Wright never existed.

No need for such a broad brush. Some of us just don't have multiple millions to buy one. I'd like to see more of those styles though.

Anonymous said...

thanks for the report.. i saw the open house too. Character indeed. though i fear some loser is going to pay something in the high 600's even for this.. then slap some more lipstick on the pig and try to flip it again for 800k.

how about the green monster, took a spin by that house and it's either sold or off the market (though looks vacant still). Anyone able to update on that one.. i like to think that's my sign of the end of the world coming to a neighbourhood near you.

Anonymous said...

love to troll and stay anonymous (same anon as above)

another dropping price for tracking.
one you brought up some time back in Oct. re-listed new mls number and a lower price! though it took 6 months for another 4k off... that 1k/day will be soon though i bet.

V681373
http://www.realtylink.org/prop_search/Detail.cfm?areatitle=&ARPK=&ComID=&agentid=&MLS=V681373&rowc=34&rowp=31&BCD=GV&imdp=10&RSPP=5&AIDL=242&SRTB=P_Price&ERTA=False&MNAGE=0&MXAGE=200&MNBT=0&MNBD=0&PTYTID=5&MNPRC=200000&MXPRC=900000&SCTP=RS

hope that url comes through.

jesse said...

"The upper two levels could probably fetch $2k/month, and the basement $1k/month."

This is not Main, it is RENFREW HEIGHTS and not the best part of it either. $2K -- maybe, but don't be surprised if you snag lemon tenants at that price. Also a short lot at 109'.

Anonymous said...

http://www.tdcanadatrust.com/cgi-bin/mortcalc.pl

Suppose you put 20% down and took out a 5 year fixed mortgage with 25 year amortization.

"For a mortgage of $565,000.00 at an interest rate of 6.99%, amortized
over 25 years, your monthly payment is approximately $3,953.87."

So, you're already down close to $1000 per month even if you were able to get the $3k in rent. How much would property tax and insurance add?

I'm not surprised he's a "motivated seller."

solipsist said...

I was being extremely generous in the rent forecast - call me the angel's advocate.

Such is the state of the market here - nothing can be rationalized any longer. The last rationaliztion - "RE always goes up (doesn't it?)" is pretty much toasted.

I had a fleeting thought - could it be that the whole idea of density is really about maximizing everyones debt liability? (except for the renters') Freak them out with the "priced out forever" bs, and even 20 year olds who were not even thinking of buying anything, will scramble to indenture on a teensy-tiny-crappy condo.

solipsist said...

*Third word, second sentence, second paragraph should be rationalization.

patriotz said...

a place you can rent out for X should cost about 100X to make sense.

That applies to fully developed properties such as houses with suites (condos should be lower). Houses with suites really were selling for 100x rent in the mid-1980's. As they were for the whole time before the inflation of the 70's (apart from the 30's, when they were less than half as much).

Houses without suites will have a higher multiple because the potential rental income is higher than the current income. Around 150 or so. Higher in central areas where the potential density increases are greater, maybe 200. Central Toronto SFH without suites are going for around 225-250 these days, which is overpriced, but not obscenely so like here.

seeker said...

http://www.canada.com/burnabynow/news/business/story.html?id=1ba7592c-9f66-4e74-9693-533d2ab8af44

Hope the link works.

From the Burnaby Now..

Local housing market will reflect U.S. problems

Billy TwoBaulz said...

That's an amazingly frank article, Seeker - do you mind if we cross-post it to the Victoria blogs? They'll be keen to read it, at least those who don't already read this blog. :^)

Anonymous said...

A little OT but I saw this ad on the MLS and cracked up, an adult-oriented building (ie: no kiddies allowed) within walking distance of schools? Who is the target audience for this RE gem? Pedophiles?

"Incredible value concrete Bldg at Arbutus village. Surrounded by acreage of green. Adult orientated and quiet Bldg. Well managed. Totally updated tastefully done, great value. Walking distance to Kerrisdale minutes to Point Grey High School and Prince of Wales."

mk-kids

seeker said...

Billy..

Please, use the article link anywhere you want. Spread the joy.

I thought the fellow was rather refreshingly frank as well.

And mk-kids..had to chuckle (sort of only cuz I have kids) at your possible target selection. yikes.

markoz said...

Boo. Coco shut down her blog. I really enjoyed all her posts and the (mostly) civil discussion. Each of the local blogs that don't toe the msm line, like this one and hers, are little gems. Without you guys it would be a desert of "RE only goes up" and various other forms of endless pumping. It is too bad she felt unappreciated and left. It is even worse that people swiped her stuff to use on other blogs. Solipsist I hope you feel appreciated, you are. It's a sad day when any of you feels they have to call it quits.

mk-kids said...

Just read Coco's blog, so sad. Loved reading Coco's links. Shame on those folks who used/ copied her work without credit!

Hopefully Coco you will go back to linking news stories here or at Solipsist's place or Chipman's? I'm sure any of those guys would love to have you post & many of us do appreciate your hard work!!!

BBY said...

If Coco cannot be persuaded to re-open the blog, hopefully coco could keep posting items on another blog (like olden times on chipman's blog). Perhaps one of the bloggers could post a vote to determine which blog could win Coco's newsfeed.

markoz said...

Hi Guys, I think that for Coco to post her links on other blogs may just be rubbing salt in the wound. She is upset because people used her hard work on other blogs without giving her credit. I doubt she is going to want to give those same people the benefit of her work now. No one on this blog ever did it so she might post here but I imagine that right now she is just tired and p*ssed off.

Anonymous said...

Hey everybody! Employment income is getting higher and higher in B.C. NOT!

http://www.canada.com/vancouversun/news/story.html?id=f3bc45da-1a34-4836-829d-967c2cceb1a6&k=65123

solipsist said...

Thanks for all the comments, and the votes of confidence. I haven't packed it in, it's just been one of those weeks.

Anonymous said...
Hey everybody! Employment income is getting higher and higher in B.C. NOT!


Yeah, ain't that a story? I mean to address that...soon.

Anonymous said...

Actually, one of Coco's bloggers started up a copycat blog of their own within a few hours of her shutting down her blog. Ouch!