Monday, March 5, 2012

What A Million Dollars Will Buy In Vancouver

Recently, the Canadian Real Estate Association released its quarterly forecast stating that, for the first time in many quarters, national real estate prices were expected to dip by 1.1 percent in 2012 to $359,100, largely because of a drop-off in multi-million dollar condominium sales in Vancouver.  Here is a look at what CREA projects for all provinces noting that British Columbia prices are only expected to soften by a paltry 4 percent to $541,800:


With that in mind, I thought that it was time to revisit the real estate market in Vancouver, British Columbia, the most expensive real estate market in Canada in both real terms and when measured using the multiple of median household income to median house price, an affordability measure used in the Demographia annual study.  Keeping in mind that Demographia considers homes severely unaffordable when the median multiple exceeds 5.0, here is a graph showing what has happened to home affordability in Vancouver over the past few years:


In this posting, I'll concentrate on what buyers of single family homes in Vancouver can get for a cool million dollars.  Certainly, if you visit the MLS website, there are homes available in that price range that have more "curb appeal" than the four examples I'll provide but I'll leave that up to you.  Here then, is a sampling of what buyers in Vancouver might buy for a million dollars:

1.) Here's a two bedroom, two bathroom 1500 square foot home on a 36 foot wide lot being sold "as is, where is" and listed for $1,038,000:


There is no age attached to the house, rather, the realtor has described it as an "old timer".  Most helpful when you're laying out seven figures for a house, isn't it?  There are also no pictures of the inside, suggesting that it's a "fixer upper", a conclusion that is more-or-less confirmed by the realtor comment "Build your new home here".  This tells me that the potential purchaser is paying just over $1,000,000 for a 36 by 110 foot building site.

2.) Our next listing, a 60 year old, three bedroom, two bathroom 1320 square foot bungalow, is listed for $1,039,000 as shown here:


It has updated kitchen appliances and roof but my suspicion is that neither of those "upgrades" are intended to help sell the home.  No interior photos are available and the lot size is also not included.  The realtor has stated that the property is "priced at lot value, this is a property for those willing to do some updating to get into the Edgemont Village area, or start over and build a new home.".  Once again, we have a million dollar building lot for sale.

3.) Here's a cute, little 1400 square foot bungalow built in 1947 listed for $1,050,000:


This house has four bedrooms and one bathroom with an added bonus of a fireplace.  It is located on a 40 foot by 122 foot lot.  The two photos of the interior look passable but the exterior and landscaping definitely need upgrading.  My suspicion - another tear down; notice that the houses on either side are much larger than the listed home as shown on this Street View screen capture:


Yet again, a million dollar building lot.

4.) For my last example of what a million dollars plus will buy potential home buyers in Vancouver, I'm going to jump a hundred thousand dollars to this home which is listed for $1,128,000:


The listing realtor describes the home as a three bedroom, two bathroom 1886 square foot two story (although, where I live it would be described as a bungalow) built in 1954.  There are no interior pictures but the home is described as "...in mostly original condition...".  It is located on a rather large 44 by 152 foot lot.  The realtor describes the property as one that can be held, renovated or built on, suggesting that the lucky purchaser may well level the current dwelling and rebuild.  At the very least, it certainly sounds like the home needs tens or hundreds (most likely) of thousands of dollars in upgrades.

To summarize, I find it interesting to note that, basically, there are homes listed in the inner part of Vancouver for more than a million dollars that are basically slated for demolition.  Purchasers are willing to pay a million dollars or more to buy a lot with an existing home, pay to demolish and then pay again to rebuild, likely spending another half a million dollars before they move in to their new purchase!

That said, it is reassuring to know that there is no housing bubble in Vancouver and that CREA only predicts a 4 percent "readjustment" in prices.  It's nice to know that they have that kind of confidence in Vancouver's real estate market.   It's also comforting to know that, at long last, our Minister of Finance is taking every opportunity to remind Canadians that they should not buy more house than they can afford; apparently, a lesson that has not been learned by some.

20 comments:

  1. Hello Everyone,
    Thank you very much for your ideas to post comments. The content was really very interesting. I am really thankful to you for providing this unique information. Please keep sharing more and more information....

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  2. Location, location, location. In parts of Vancouver, $1 million for an almost vacant lot is a "reasonable" price to pay. Not by me, of course. The whole lower mainland needs a reorganization along the lines of Mike Harris's Toronto. They need LRT in a big way to allow more folks to spread out and travel in but all the small "cities" cannot agree on anything.

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  3. Blog Fodder

    I realize that but how many households can really afford four walls, a roof AND food when paying $1.5 million plus for a family dwelling? Heaven help them all when interest rates go back to historical norms.

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    1. That"s really not the point ,there are many homes east of downtown Toronto that need to be taking down,just take the Go train ,an you will see why so many have moved to Ajax. It's like renewing the hood :)

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  4. You are looking at the most prime areas of Greater Vancouver. The West Side of the City of Vancouver has about 300,000 people out of a metropolitan area with 2.3 million. So this is prime real estate for a little over 10% of the metro area.

    What does a building lot in the most prime areas of other large cities go for?

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    1. You are wrong, and obviously don't know much about Vancouver. Except for the second one, the other 3 houses are deep in East Vancouver which is most definitely NOT prime real estate. East Van is the most high crime, run down, grimy part of the lower mainland. East Van is the butt of many a joke. Perhaps the only area that is worse than East Vancouver is the Whalley area in Surrey.

      If those 3 lots were in the westside of Vancouver as you say, you'd be looking at 2 million dollars easily. Most likely more if they were in Kerrisdale or Shaughnessy. That's how big the bubble is in Vancouver.

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    2. Thats a pretty naïve look of East Vancouver for someone who professes to know so much about it. East Vancouver does not equal the Downtown Eastside where the homeless and drug problem is obvious (and even there I feel safe). East Vancouver is a huge area and is a lovely place to live. I lived there for 6 years -- Until the house I was renting was sold out from under me for a million dollars...

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  5. I took a brief look through Toronto MLS listings at neighbourhoods that were roughly the same distance from the downtown core and there was only one rental property/house that I could find for over a million dollars that was not great looking (but still nicer than those in Vancouver). All of the houses on the street were similar; no tear me downs. All of the other houses over a million looked like what one would expect for over a million in one of Canada's other most unaffordable cities, quite nice by most standards with none being sold as building lots that I could see.

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  6. Vancouver is a bad joke, it's going to come down by 50%....at least

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  7. Restrictions on property ownership in China is driving the Vancouver market. Don't expect prices to go down even as the core starts to take on the skyline of Hong Kong or Shanghai.

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    1. Yes China is driving prices in Vancouver but are they for investing or living? I believe a lot of them are purchasing with the idea of selling later for more. China is experiencing large growth rite now and they have money to invest. What will happen when things slow down or they have to liquidate? What happens when they realize they can't buy a 1 million dollar property and sell for 2 million next year? What if they find a more attractive return in real estate investing somewhere else? I personally think all the money from China buying homes in Van hoping to flip it is in for a real rude awakening.

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  8. The home prices go crazy, when Chinese are buying in that area.

    Multiple offers 100,000 to 200,000 over the asking price in my neighborhood near Cupertino, California. While few miles away, prices are keep on reducing.

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  9. Fascinating. I had no idea Vancouver was beyond San-Francisco ballistic...

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  10. Vancouver is seen as a world class city and its prices although high for Canada- are not high when compared to Hong Kong,New York,London etc. The idea that prices would drop 50% is laughable.Any kind of 'correction' would be minimal- and shortlived, there is just too much demand for limited housing. Like any major city, the suburbs offer much greater affordability. As for East Vancouver, its an area filled with older homes that most see as an investment-ie if you cant afford downtown, then this is the best place to build your dream home (no highrises) it is NOT the downtown eastside- which is a relatively small area in disrepair, completely undesirable

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  11. Yes you can buy your dream home if you have those millions of dollars, you can buy your own condo too. :) manila condominiums

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  12. What goes up must come down!

    No doubt Vancouver is a world class city - but this is not the only beautiful city in the world to live in, there are many more Classy cities in this world. House prices are way less Florida, California and even in Washington and US housing market is getting better. May be they will soon attract international buyers. There are indications that international buyers have already started moving toward Toronto housing market.

    Our Household income vs debt ratio is now historic high and the number of foreclose houses are increasing in Kelowna and small BC cities.

    The only way to keep our house price up in Vancouver is to sell it to more foreign buyers. In a free market economy it may not be impossible through aggressive marketing and advertisement but only down side of this - when they will pullout from this investment market to a different market there will be catastrophe.

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  13. Compared to all this, Tulum Mexico, the Mayan Paradise where life is calm, relaxed and home to many Canadian expats including me, land is dirt cheap (pun intended) and the entire area is booming.
    Not uncommon to get your ROI within 2-3 years. Can't say that for most parts of the world.
    btw. there is none of the 'crime' that you hear about in the rest of Mexico here in paradise. Some of the best beaches in the world to boot is just one of the many reasons to invest in Tulum, Mexico. Check it out

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  14. You can know what million dollars will buy in vacouver. Useful information

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  15. superb! This looks so good. Thanks for sharing it through your blog

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  16. I must say that this is an interesting article, but there are not many tourists here, there must be more visitors , I will come back.

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