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.