Vancouver real estate often gets hailed for excellent returns, but this one has us scratching our head. Three single family detached homes have listed for less than the owners paid for them. The kicker? They were all purchased less than 8 months ago. Is this the beginning of the end for Vancouver’s market or are we just insanely good at finding deals? Check out the listings and you can decide.
15 GLYNDE AVENUE, BURNABY, BRITISH COLUMBIA, V5B 3J3
Taking a trip to the suburbs of Vancouver, there’s 15 Glynde Avenue in Burnaby, BC. The home is currently listed with New Coast Realty for $1,350,000. Located in the West Capitol Hill neighbourhood, the 2 bedroom, one bath home is 1623 sqft., and boasts of both city and mountain views. The place was built in 1950, and to be honest isn’t priced too far off from comps in the area.
The current listing price is $50,000 less than it sold for in just April of 2016. Yeah, that sucks for the current owner…until you realize that they’re on the hook for commission too. At basic commission (excluding transfer taxes they paid), they’re looking at another $40,163. That’s an estimated loss of $90,163, excluding additional costs of closing and assuming someone pays sticker. Hefty price to pay for just over a half year of ownership.
2871 ST. CHRISTOPHERS RD, NORTH VANCOUVER, V7K 2B8
2871 ST. Christophers Rd is a 4 bedroom, 2 bathroom home in the Lynn Valley area of North Vancouver. It’s currently listed with Ralph Maglieri for $1,448,900, and is “in need of renovation”. The home is 1881 sqft, and on a 9,400 sqft corner lot. Fairly normal for this neck of the woods recently, but not exactly what you think of when you think “$1.5 million” anywhere outside of Vancouver.
It was last purchased in June 2016 according to property records, just 5 months ago. While it’s listed only $1,100 under the previous purchase price, the seller is likely on the hook for another $42,759 in commission at 5%. That brings the total loss to at least $43,859, just over the average income in BC.
615 E 6th Street, North Vancouver, BC V7L 1R4
615 E 6th Street is in the Queensbury area of North Vancouver. Currently listed for $1,599,000 with Jimmy Nam, the 1771 sqft. property boasts of “moderate downtown views” that will become “panoramic” if you add a second story to the bungalow. The home was built in 1958, and has 3 bedrooms, 2 bedrooms, and comes on a “level lot”.
This place wasn’t just purchased once this year, but twice – once in February, and another time in June. The purchase price in June 2016 was $1,645,000, which is $46,000 over the current list price. There’s also the $46,699 in commission, bringing the potential loss to *drumroll* $92,699.
Deal or Crash?
Benchmark prices can sometimes skew lower due to the distribution of prices, and aren’t the best indicator of market direction. This however isn’t benchmark prices being skewed. These are the same homes that were purchased just a few months prior, that owners are selling at a lower price. It’s not a smoking gun indicator of a crash, but it’s not exactly the booming market of yester-year.
So what do you think? Are these three properties deals that should be snatched up, or is this actually the beginning of the end for Vancouver real estate? Leave your comments below.
Update November 22, 2016: The original commissions were stated at 5%, they have since been corrected. Although the seller would have also paid the provincial land transfer taxes, which would equal 1% on the first $200k, and 2% on the remaining balance. Therefore the estimated losses are actually higher than originally stated, even though the commission has been lowered.
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The real tell is going to be if they stay on the market long. With there only being a few houses sold last month, I’m guessing no one’s in a rush to snatch these up.
There was less than 20 sales last month, so I’m guessing demand for Vancouver real estate is shot.
It’s normal in the fall and winter for sales to drop
Compare october this year to october last year. Sales are way down. You sound like an agent. Volume first then prices. Detached home are already down in price 10-20% from peak in lots of areas in vancouver area. Noticing lots of price drops, houses sitting for months and sellers taking offers under ask. Market has changed huge.
The last two winters bucked historical trends by staying hot all year so comparison to a year ago doesn’t say much. Houses are selling around asking in my neighborhood and asking prices are very close to what there were last spring.
IMO, it’s mostly the 60+ year old unrenovated houses that are not moving as fast as competition from developers and speculators has softened.
Vancouver real estate market is a giant soap bubble floating around in a field of cactus. Monthly rents are half of monthly mortgage payments (even after down payment). The people that are now selling for less than they paid are the smart ones. It is going to get worse… we have all-time high home prices mixed with all-time low interest rates and near all-time low $Can exchange rates… and everything in the lower mainland is cash-flow negative by a very wide margin.
The Gov’t is now taking 15% off the top for foreign buyers, which is really 15% out of the seller’s pocket. When the full story about assignments, fake owners, fake offers, fake residents are fully understood – folks are going to realize that much of the hefty prices were to line the pockets of the sleazy agents, brokers, flippers and developers. So don’t confuse all the money flying around with prosperity, or rising home values… it is simply rising greed and grift in the very late stages of a psychotic housing mania where the average participant is hideously unsophisticated – and has no clue about the documents they’ve signed, or the true extent of the risks and liabilities they have incurred. The new mortgage rules for buyers – and stress tests for lenders and insurers… should be a wake up call.
If you bought in Vancouver in the last 5 years and don’t sell soon, you are likely going to lose your entire downpayment before this correction is over. In order to return to the historical mean in terms of valuations… home prices in Vancouver need to come down by minimum 42% before rents vs mortgage payments come back into alignment. Take foreign money out of the equation and you are left with a local population with average annual income of less than $50,000 p/yr.
This market is a bright flashing red light to anyone with even a modicum of common sense. Buyer and Seller beware!!
>Vancouver housing crash
>none of the properties are actually in Vancouver
I’m guessing you’re not an agent or work in real estate? The REBGV covers these regions as Vancouver, so when you hear that Vancouver prices are going up or down, they average in these properties. Most of the boom and sales are in Burnaby.
“Vancouverite” is either a terrible sales agent that thinks bullshiting is the best way to keep the market going or someone that’s naive and has probably never purchased a home. Burnaby is the hottest market in the GVA. Cracks in that market is a bad sign for the whole market.
You realize that Vancouver doesn’t just encompass the city of Vancouver right? And similarly, ‘Vancouver real estate news’ is also not just about housing in the city of Vancouver, but rather the metro area, which has experiences the ridiculous price inflation.
Waiting for a Boomer to say it’s normal to lose hundreds of thousands of dollars in just a few months.
This is great news, keep those prices tumbling, these “used car sales people” ahem realtors could use a dose of reality. One day soon we will welcome the 99% home and scatter all the Range Rovering douche bags.
632 E 20th Ave Vancouver.
Sold July 2016: $1.2M
Currently listed: $1.2M (on market since September)
[…] to be creating some losses out there. Southseacompany pointed out this article that finds 3 homes selling for less than they were purchased […]
Who fuckin cares….get a life people
Trump equals inflation equals higher rates…mortgage rates going to skyrocket Fact
Vancouver market is CRASGING, just wait 1 year and you’ll see.. this is going to be a huge fall!!
now tell me how many from the regular Vancouverites can afford houses priced over 1 million dollars..
it was foreign money all along.. not until the 15% foreign tax. now foreigner are thinking 10 times before they buy in Vancouver. So now, who’s gonna buy those expensive homes???? very very few.
PRICES WILL FALL! it is a cycle what goes up must go back down…
Yes chicken little. Whatever you say. Eventually prices will fall across the board in metro Vancouver…after a huge earthquake devastates Metro Vancouver.
Sooner or later, earthquakes happen.
you win the internet!
You guys are showing Toronto commissions . the average comission for Realtors on both sides in rebgv is 2.5%! GET your facts straight!
You sir are a realtard. The buyer’s 2.5% isn’t added on, it’s reduced from the cost. Doesn’t matter how you split that commission, the amount of money in the end is reduced by 5%. I really hope your mom doesn’t let you manage your own money.
They also didn’t mention land transfer taxes, which once again is another massive reduction on profits.
Who is the realtard? Buyer is not legally on the hook for commissions and you cannot be more wrong. http://www.erikhopkins.com/tools/british-columbia-real-estate-commission-calculator
@Turdeau Moroneau Great nick!
Ha, ha, ha…
I hate to tell you but… 5% commission?
I understand that you are in Toronto so may have a different model there, but if you are going to title yourself a “real estate lover” at least know the facts of the market you are writing about.
a) Commissions in Vancouver run less than 3% on average.
b) None of these properties is actually IN Vancouver.
c) There is definitely a wake up call happening in the market as greedy sellers are finding out that people are not just going to throw stupid amounts of money around anymore. “List it and they will pay!”
d) While sales volume is down from last year; So what? Sales to listings ratio is above 20% on average which STILL constitutes a sellers’ market. Comparing statistics to last year is not a realistic assessment of the market’s strength.
e) Believe it or not, as much as I don’t agree with the practice, there are still investors who INTENTIONALLY register a loss for tax purposes (doubtful here, but we don’t know the details)
a) Commission math isn’t exact, but in terms of the ballpark costs the author actually underestimated them at just 5%. The original buyer’s cost would have included transfer and luxury taxes that would have impacted their profit margin too.
b) No, it’s not in Vancouver. Vancouver real estate encompasses all of these regions too. Any Realtor worth their salt knows that they averaged these regions in on the way up, and they’ll be averaged in on the way down.
d) It’s actually a more accurate method to compare seasonal demand year over year than monthly demand. Spring/Summer almost always skews high because larger, nicer properties often show best during this time.
e) Intentional losses are a big money game. Unless these properties are being held by big a massive developer that changed their mind and need to dump by end of fiscal, this would be a very strange way to lower capital gains. In this short of a time, it’s likely someone that can’t afford the payments, but no one is going to know that but the owner.
If you treat the market like a commodity and it acts like a commodity you should not be surprised. Remember at the end of the day these homes need to house people so they can contribute to the society they live within. A few speculators will lose money and a few new homebuyers however if they bought it as a home over time they will recover their equity as it always does.
Round trip costs buy/sell $1.5M home
Property Transfer tax: $28,000
Appraisal/Inspection/Cheap Lawyer: $2,000
Cheap Lawyer: $1,500
Total: $75, 600 or 5%
What’s sad is most Realtor’s in the GVR don’t understand the commission split’s impact on final profits of the seller.
If my house in Vancouver proper goes down – so too will my taxes – in theory. It’s not like I have seen better service from city workers around my property with the rise in real estates values in recent years. The cops are just as invisible in south-east Van as they have been my whole lifetime. Now that we have had a taste of what a Vancouver property can command – I doubt people will sell for less if they don’t get what they want. It’s worth it to live in the city – who wants to fight traffic to the ‘burbs. Takes years off your life.
Commission Calculator Net proceeds for Sellers: http://www.mikestewart.ca/commission-calculator-for-realtor-fees-in-vancouver-with-net-proceeds-for-sellers/
[…] is acclaimed for exceptional returns. However, recently, this blooming road took a new turn when three single family detached homes bought were listed for less than the owners paid for them. At times, benchmark prices slump due to the distribution of prices, but this isn’t the situation […]
Vancouver Real Estate Commission Calculator Net proceeds for Sellers: