In Ten Years

History

Looking back one can always find financial lessons.

Case in point is 3929 West 31st Street, a Vancouver home located in the Dunbar neighbourhood.

August 2000

Described as a “Well maint character hme w/original finishing & decor. Inlaid H/W flr & leaded w indows. Full length LR, 3 bdrms, good size & bath up. Same owner for over 35 yrs . Close to parks, community ctr & schls, shpg & bus. Meas app/verify.”

In 2000 this home measured up at 2,496 square feet.

The asking price of this Vancouver home in August 2000 was $539,000. It sold for $548,000 after being on the market for 2 days.

December 2000

In a little over 3 months after some renovations this home is now described as being “WEST OF DUNBAR! Fully renov character home 2 blks to park. Leaded glass, inlaid H/W flrs, wainscotting, coved ceil, x-hall LR & DR. New everything – granite cou ntertops, shaker maple cabs, black appls, halogens, Kohler, alabaster. Gorgeous.”

It now boast 2,538 square feet of living space.

The asking price is now $699,000. It sold in three days for $695,000.

Six Years Later

It’s now September 2006, six years since this same Dunbar home last sold and is now on “One of the nicest streets in Dunbar. This four bedroom home has been totally upgraded four years ago. New kitchen, new bathrooms. Lot size is 50×130. This is hot!”

Actually it was upgraded six years ago according the the history books but, who is going to quibble over two years.

In that time the home’s measurements seem to have grown again as it now sizes up at 2,575 square feet.

The asking price has also grown. These seller’s are asking $1,289,000. Happily, it only took 7 days to sell at $1,275,000.

Four Years and Counting

Four years have passed – it’s now October 2010.

This Vancouver home is once again for sale. This time the home is a “Beautifully renovated Dunbar family home on a 50 x 130 foot lot. This 3,437 square foot home was basically completely re-built in 2008 including a new 2nd floor which has 3 spacious bedrooms and 2 full bathrooms. The main floor features a lovely gourmet kitchen with an attached family room. Both the family room and living room open onto a spacious 14 x 11 deck and nicely landscaped back yard. Lower level is ideal for a kids hangout or for in-laws with a spacious recreation room and guest bedroom. Fantastic West of Dunbar location within walking distance to St. Georges, Queen Elizabeth and Lord Byng.”

Like Jack and his Beanstock the home continues to grow. It now measures 3,437 square feet.

Justifiably, at least in the eyes of the marketplace the price reflects the new size as these sellers are asking $2,495,000. As fast paced markets go these sellers were not as lucky. Now, in what a great number of people consider to be a slow market, it took 28 days to sell. The price – $2,468,000.

Ten Years

It only took ten years for this Vancouver home to see it’s value increased by a factor of four. What must be on the minds of many buyers is will and can this continue?

There is one certainty on which we can lay our bets – it will be history in the making.

**Quotes: Unedited segments from MLS® Listing Description

About Larry Yatkowsky

Larry is a recognized real estate expert. A veteran professional, his experienced counsel leads Vancouverites in his west side community to place their trust in a man passionate about his work. Uncompromising ethics bring a balanced approach to realizing your real estate dreams.

When Life Moves You - contact Larry:

*Disclaimer: Statistics Courtesy REBGV. While believed to be accurate they are not guaranteed.
**Numbers provided may vary as they are dynamically posted by the REBGV.

Reader Comments:

french Says:
November 13th, 2010 at 6:10 pm

great post. I have only one thing to say: People in this city have become nuts. Completly nuts. The pain will be deep and prolonged for everybody.
For the same price you can buy in Seattle an apartment building with 40 apartments with a cap rate of 8%, that is 200 000 year income.
What kind of value has this cardboard garbage I have no idea, maybe it will rent for 15 000 $/month? I doubt it. There is no doubt that this property will come on the market as a foreclosure in not the distant future. Peope here are a bunch of retarded lunatic idiots. God!

BBcoq Says:
November 13th, 2010 at 6:29 pm

Nice house gets nicer and bigger-and remarkably more expensive

BBcoq Says:
November 13th, 2010 at 6:34 pm

one more thought….
Would this even be possible if interest rates were higher?
Who could carry such an expensive property at these prices withoyt historically low rates?

November 13th, 2010 at 6:54 pm

@french,@BBcoq
Why are you shocked by this? I’m sorry guys you have to take a deep breath and realize that the world you thought you knew is not as it appears.

Maybe this perspective will help –
Quoting – Gregg Wolpert, the developer of a new 76-unit condominium on the Upper West Side of New York
“There are a lot of people out there, in good times or bad, that have a lot of wealth.”

It is not any different in Vancouver or Seattle or anywhere else.

french Says:
November 13th, 2010 at 9:44 pm

mon Dieu! If you dont realise that people in this city have become nuts and are going through a transitory period of madness, then pls continue believing in your false reality of Vancouver. Sure it is different here.
Enjoy while it lasts.

BBcoq Says:
November 14th, 2010 at 12:37 am

I could see it if it was waterfront or downtown or kits but Dunbar? Great quiet leafy neighbourhood but very quiet and you are talking New York, not Dunbar.
Again, could the developer “carry” the property if rates were not this low while they added the square footage and value?

stats don't lie Says:
November 14th, 2010 at 8:00 am

Here’s the issue Larry — how could anyone buying this place at $2.47M expect this kind of appreciation to continue?

Is this place going to sell for $5million EVER?
Maybe in the year 2100?

L8erdude Says:
November 14th, 2010 at 9:13 am

@ BBcoq

are you suggesting that the buyer financed most of this purchase? I’m sure not – so what do low interest rates have to do with the price?
Just like I told Larry – buyers are bringing wealth to their purchase, not just incomes.

@french

the only pain experienced is from non-land owners. And it’s going to be deep and prolonged. Just watch single family home prices for the next 12 months

John E Veltheer Says:
November 14th, 2010 at 9:29 am

I’ve said it before, I will say it again – just keep renting French …

L8erdude Says:
November 14th, 2010 at 10:02 am

@ stats don’t lie

how about 10 years ago? Would you have thought this place would sell for 2.5M, or even 1.5M. In 10 years if this property is worth 3.5M…isn’t that enough? 1M appreciation in a decade? Don’t bet it won’t be worth 5M one day – and sooner than you think.
One thing is certain, the future holds higher prices not lower.

fish10 Says:
November 14th, 2010 at 10:24 am

As Larry says there are lot of people in this town making serious money.

If you are a mining executive making $1-2 M a year or a heart doctor making $1 M a year or a senior lawyer/ accountant or multi-franchise business owner- then this is a very reasonable multiple of their income.

If you own a factory in China, well then that could just be one year’s profit.

They probably aren’t looking at the price in 2000, they are thinking- this is where I want to live to be close to down-town where I make my money and good schools where my kids go and wealthy neighbours.

Will it quadruple from here?

Well interest rates cannot go any lower
Salaries have been pretty stagnant but there could be a continued boom in commodities and the executives would still mint $ from the stock options.
We could have even more wealthy mainland chinese coming
Money could be trash and inflation could soar- but in that case interest rates would also fly.

As Larry aludes to- logic defying.

french Says:
November 14th, 2010 at 11:52 am

With all due respect to the posters, the only explanation i can find for the person who paid 2.5m is that he/she is NUTS.
It does not make any difference if he/she took a morgage or paid cash. This is insane. People are in for a huge disspaointment.
Trying to rationally justify such a purchase is a waste of time as there is no rationality involved. Madness has unconcealed itself for everyone to see in this city. God save us.

Sam Says:
November 14th, 2010 at 12:18 pm

I bet all the bears will say that all the buyers that bought that specific home the last 10 year have been nuts.

Has there really been a good time to buy for you bears? NO!

Keep complaining…10 years and counting.

November 14th, 2010 at 12:23 pm

@french
Accordingly with due respect to you –
it is an absurd assumption to impose limited horizons/perspective on others in light of the fact that the baseline for home prices in Vancouver has shifted. The market has done so with complete disregard for those who cannot afford these price levels. There is nothing new about this – it applies to any market.

The intent here is not to sound righteous but you must understand and accept that there is untold wealth that exists within our city. So much so, that a paltry (to them) $2.5 mil is chump change. Adding to this mix – we have thrown nice parties (Expo – Olympics) that let the world know we exist and the objective of those parties has worked. From my perspective, what we are experiencing now is only a beginning.

BTW – No offense to your faith but God had nothing to do with it. Let’s keep that domain out of this discussion.

November 14th, 2010 at 12:28 pm

@sam
Slap on wrist –
I recognize the temptation to enter into a ‘tit for tat’ egg throwing session but it really doesn’t further discussion it just pisses people off. Let’s not go there!
That stuff can be had a plenty over at VancouverCondo Info or Garth’s home.

BBcoq Says:
November 14th, 2010 at 2:49 pm

As a former banker and lender I can tell you that the vast majority of home purchases-detached or atached-are financed and the cheaper the rent on money-the more one can afford and the higher prices can go.
Almost all all “flips” or longer term project houses are financed and the name of the game is get as big an asset in play and then push the value up.
It’s like playing with the house’s money. I am betting that you will see prices correct (not collapse) as rates go up and the “rent” on money gets more expensive.
People counting on reselling at a higher price need a lower entry price if their finance charges go up-it is simple arithmetic.
Sorry but wealthy people I agree can pay higher prices but they expect return on money too and rates cannot stay this cheap forever.
Real estate is a good investment and will continue to be but no stock goes up in a straight line and reale state is still subject to market fluctuations like any other asset.

french Says:
November 14th, 2010 at 5:25 pm

If you really think that someone with untold wealth will dump 2.5 million to be in that house just to be in the Dunbar neighbourhood then I am going to doubt your great insights into real estate. I guess time will tell how long the madness will continue.

November 14th, 2010 at 5:31 pm

@french
no need to doubt my insight and no need to wait for time to tell –
the proof is in the pudding – they did exactly that!

Bob Lucas Says:
November 14th, 2010 at 5:57 pm

I think it’s easy to lose sight of the fact the house appears to be significantly improved from the outside (and likely within)?? How much did the renovations cost? I know that doesn’t come cheap (from personal experience). Add to the list of the usual suspects (mining execs, owners of factories in China) general contractors, designers, and furniture / appliance stores.

beard of bees Says:
November 14th, 2010 at 7:15 pm

Larry…once again ….cleverly stirring the pot, with the bearish case in “Home Ownership = Heresy” followed by the bullish case detailed here. Good balance and well done!

Jumbo Says:
November 14th, 2010 at 9:01 pm

It is what it is and until it isn’t, it is.

Crash Says:
November 15th, 2010 at 11:32 am

Your Blog is such a waste of time… why do I bother to read it? It’s like a car wreck, I don’t want to look but I just can’t help it.

Charlie Parker Says:
November 15th, 2010 at 11:51 am

Bears will have you believe the “greater fool” that bought in 2006 was in for a lot of hurt. One thing is for sure, prognosticating that greater fools exists only makes one feel better about oneself. Should we really be taking financial advice from anonymous bears? At least you stake your reputation on the line Larry, even though your position is likely to be 100% only 50% of the time.

Charlie Parker Says:
November 15th, 2010 at 11:53 am

Garth should write a book on “How to Make Millions Telling People Why Other People Are Fools”.

November 15th, 2010 at 2:04 pm

@crash
Take 2 tylenol and call your doctor

@jumbo
prophetic

@charlie
re Garth – he does

John1 Says:
November 15th, 2010 at 4:32 pm

Greetings Larry! Just chiming in here – I highly doubt whoever bought this house is worried about how much rental income it can generate. They want to live in the neighbourhood and apparently think $2.5M is a reasonable amount to pay to accomplish that. Maybe they sold their $5M house and are downsizing? Who knows? Is the price crazy high? For us average folk, yes.. but for some people it’s “$2.5M, meh.. whatevs.”

November 15th, 2010 at 4:52 pm

@John1

Exactly!

November 15th, 2010 at 5:11 pm

Oooo Larry, this sounds far too familiar to me. Nice house, though. Around here…300k tops.

bearknowitall Says:
November 15th, 2010 at 5:24 pm

Do you have the history for this property beyond 10 years, Larry?

My bearknowitall crystal ball told me, it was $30K in 60s; and August 2000 was in bubble, otherwise, there was no way that “shit hole” could be sold for $540K in only 2 days… LOL

November 15th, 2010 at 5:28 pm

@Jack
yes but – they aren’t on the river and don’t have your view.

November 15th, 2010 at 5:30 pm

@bearknowitall
reading between the lines of the first MLS® description says the owner was there for 35 years. Probably bought the house for $5000.00

Oh and BTW – it did sell and aren’t you sorry you don’t own a ‘shit hole’.

Realist Says:
November 15th, 2010 at 5:43 pm

“From my perspective, what we are experiencing now is only a beginning.”
***********

Geez, you flip flop like a politician depending on the “market” winds. And you mince your words and imply in your statements even more than a bloody politician.

When prices were going down, you were a believer that the market was going down and some correction was coming. When things were soft, it was a flat market. And now after a month of strong list sell ratios, we are off to the moon again!

Always a good time to buy eh?

November 15th, 2010 at 5:58 pm

@Realist
“You flip flop like a politician depending on the “market” winds”
Your rhetoric is so tiring.
BE CLEAR – I DON’T MAKE THE MARKET!
I report on what’s happening or what might, could, would, should, maybe or really is happening. That it’s up, down or sideways is of no consequence to me other than to provide some experienced insight to those peoples who are trying to make a financial decision when buying or selling their home.
Based on your strong opposition to this formula I can only presume that you are riding a train heading down a one way track towards an abyss.

Markets are influenced by many sources and can change almost daily. When you figure that part out you might enjoy visiting this place.

bearknowitall Says:
November 15th, 2010 at 6:25 pm

Hahahaha well said, Larry. He enjoy talk to mirror in VCI and Greater Fool.

jesse Says:
November 15th, 2010 at 10:16 pm

Wowzas. Looks like everyone “made” money! Well the people who sold anyways. And the of course Realtors 😛

November 15th, 2010 at 10:34 pm

@jesse
and of course the Realtors® –
Yup! Everybody enjoyed the apple pie. 🙂

stats don't lie Says:
November 16th, 2010 at 7:13 pm

It could be worse… $2.5M buys you a tear-down in Richmond:

http://www.realtor.ca/propertyDetails.aspx?propertyId=9508204&PidKey=-2051624331

or, a fairly dumpy 1-bath place in Dunbar:

http://www.realtor.ca/propertyDetails.aspx?propertyId=10006033&PidKey=1380561100

Jim Says:
November 16th, 2010 at 9:07 pm

Why is it a hockey fan doesn’t bat an eye to hear that his hero earns $80k a game. To me that’s nuts.
A $2 million dollar home buyer might need a million dollar mortgage, assuming they sold something else, a which also benefited from 10 years of high appreciation. A millon dollar mortgage
can be had with a combined family income of $220 to $240k.
A middle manager in a Fortune 1000 company earns north of $150k. If both husband and wife are management or professionals-no big deal.
People are paying these prices-they must have the money. Seems like simple logic to me?

EM Says:
November 17th, 2010 at 12:01 am

Impressive price increase. However you forgot to factor in the cost of rebuilding this house as it sits today and all the renovations that took place before then.

If you did that, we would be talking at more than $500K on top of the $548K baseline. At most a 2x price increase (very significant), not the sensationalist 4x you mentioned.

One more thing. The suggestion of untold wealth in a given market has proven to be wrong many times. Think Dubai, Tokyo, California, Spain, etc.

There are very wealthy people out there, and sooner or later they find the right places to invest. Vancouver has been a great place to do it, but right now there’s more value in other parts of the world.

November 17th, 2010 at 8:14 am

@EM
“you forgot to factor in the cost of rebuilding”
nope – knew you were coming so I wanted to leave room for you to point that out

“most a 2x price increase (very significant), not the sensationalist 4x you mentioned”
guilty – but if it wasn’t sensational would you have read the post?

“sooner or later they find the right places to invest”
yup and right now it is here

Realist Says:
November 17th, 2010 at 3:22 pm

@Realist
“You flip flop like a politician depending on the “market” winds”
Your rhetoric is so tiring.
BE CLEAR – I DON’T MAKE THE MARKET!
I report on what’s happening or what might, could, would, should, maybe or really is happening. That it’s up, down or sideways is of no consequence to me other than to provide some experienced insight to those peoples who are trying to make a financial decision when buying or selling their home.
Based on your strong opposition to this formula I can only presume that you are riding a train heading down a one way track towards an abyss.

Markets are influenced by many sources and can change almost daily. When you figure that part out you might enjoy visiting this place.

*******

Actually, I like sites that are transparent in their predictions, and ones that don’t try to hide behind implied predictions within daily market commentary or “insights.”

If you want to make a prediction, grab a backbone, and say definitively that the market is going up, down or remaining flat, and give a timeline . The implied predictions within your daily commentaries often change weekly.

And you of all people should know that the real estate market is not the TSX – it does not change daily. Monthly, quarterly, yearly – for sure. “Insight” for investment purposes is not based on one day’s assessment.

If you don’t want to make such definitive predictive statements, then avoid all forward looking statements altogether. For example, in the future you would avoid the following:

“From my perspective, what we are experiencing now is only a beginning.”

I trust that you are now on the record as saying that real estate is only going up, and that future appreciation is just beginning.

If so, lets see that “we are only going up” statement maintained, even on those “days” when a bearish list sell ratio comes in. No flip flopping with the daily breezes…

November 17th, 2010 at 4:56 pm

@realist

“I like sites that are transparent in their predictions, and ones that don’t try to hide behind implied predictions within daily market commentary or “insights.”
– Transparancy! – That’s a brilliant statement coming from someone who is anonymous!

“If you want to make a prediction, grab a backbone, and say definitively that the market is going up, down or remaining flat, and give a timeline”
– On this blog being definitive about real estate in Vancouver means being right 50% of the time on any given day.

“Insight” for investment purposes is not based on one day’s assessment.
– This blog has never claimed to hold itself out as a source of real estate investment advice. That remains the juridiction of others who charge for that perceived benefit.
From this side of the coin, one day’s assessment is only a penny that adds or subtracts from the dollar you may or may not wish to spend on your next real estate purchase. The decision to do so remains yours.

“If you don’t want to make such definitive predictive statements, then avoid all forward looking statements altogether.”
– I don’t recall any statement declaring this free blog is responsible for predictive statements. Nor is there an statement that says his blog will fulfill your ‘definitive’ requirements.
Statements made herein are and shall remain opinion and are subject to change or, quoting you – the flip flop of the daily breeze.

“I trust that you are now on the record as saying that real estate is only going up, and that future appreciation is just beginning.”
– That may change.

L8erdude Says:
November 17th, 2010 at 6:51 pm

this thread is a good example of how not being able to afford a house has made a lot of folks grumpy – with a capital G

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