Wednesday, June 06, 2007

Home of Insanity - Renfrew V643849


This morning we are featuring MLS V643849, a classic stucco covered Vancouver bungalow in the lovely Renfrew neighbourhood, situated between two larger homes (people with low self esteem need not pursue this listing). Buying this listing as a rental property would mean that you have some cajones and a big bank account. You can show off to your friends by telling them how much more your mortgage is than the rent.

Yes, this home with a 'low basement ceiling,' looks like the yard hasn't been maintained, and really needs a coat of paint, some new steps, and windows, is currently rented out at $1050 per month. The cost buying this property at list price by borrowing money and paying it back over 25 years is $3,259.84 per month. Add on some property taxes and basic upkeep and yes that's right you can subsidize your renter to the tune of $2500 per month.
Home of Insanity.

22 comments:

jesse said...

Normally I would tear it down and build a new house and rent out the two suites in the basement for around $1200/month. Now I can live in it AND rent it out!

But this house is on 12th Ave: try opening the front windows on a hot summer day without earplugs. You didn't hear me? I THINK I'LL PASS.

investbee said...

what a dump...

mohican said...

I know that this house would normally be torn down and a Vancouver super special would be built but what a location and what a price. Un-freakin-believable.

Dorker said...

Why would you rent it out and lose money each month? The whole point is to get in while I still can and live in it. I'm willing to pay more for the pride of ownership and knowledge that I'm not throwing my money away to a landlord each month.

Dorker said...

"House on a quiet street." is the first comment on the MLS listing. WTF! 12th Ave!? Don't the listing agents even look at these houses?

mohican said...

dorker - where do I even start with your comment about 'throwing money away every month.'

Lets see, according to the mortgage calculator I have your monthly interest payments on the purchase of this property are almost $2500 / month. Add in property taxes, necessary upgrades, and maintenance and you are likely at $3000 / month of money you are "throwing away." Lets compare that to renting a decent place (not this one!) for $2000 / month and saving the extra $1500 / month you have by not buying you will be way farther ahead by NOT buying.

M- said...

Note that the subject property is on W 12th, NOT Grandview! Google Maps

Ralf said...

Actually, if you look at the MLS listing it says EAST 12th close to Nanaimo... not a quiet street for sure in that location.

jesse said...

m-: my bad. The location may explain the higher price: close to Trout Lake, fringing on Grandview. Gentrification central. I'll predict demolition before the end of the summer.

M- said...

ralf: whoops, I meant E 12th, but not on the 12th-Grandview street-- as Jesse notes, it's a quiet street.

freako said...

I posted this on RE Talks, but I think it is worth a cross post (lots of interesting tidbits in the free CMHC reports)

While looking for some CMHC info, I found some interesting data in their Housing Now May 2007 Report:

There is chart of number of hours of work required at the average wage to own or rent a two bedroom (payments 30% of income)

You guessed it. Vancouver at the top with 407 hours. London Ontario? 154. Since there are 21.5 working days in a month, that would be 18.5 hours a day. Ouch.

They also list the averge wages, we're at $22., about a third from thet top.

freako said...

RelocationBC has posted the latest BCREA report, which has GV detached hitting $770K average price by the end of 2007. The expect 7% appreciation for 2008 to $825K. If so, those will be some hefty hefty stretching of affordability, especially if rates crawl up.

The also expect our population to grow 7.6% and 8.4% in 2007 and 2008 respectively.

They expect 5 year rates to rise gradually in 2007, but not by much.

The author of this report: None other than Cam Muir.

-\/- said...

Freako,

I don't get how it is possible to have 8% population growth per year....that's explosive!

Sauder Business School indicates that population growth in vancouver is at the lowest level in 20 years, just about 1% per year.

How do you reconsile the numbers?

freako said...

I don't get how it is possible to have 8% population growth per year....that's explosive!"

Good catch. Those numbers were change in increase. What the heck is the point of that? They have BC growing by 44,047, 47,400 and 51,400 in 2006 to 2008.

freako said...

What the heck is the point of that?

To answer my own question, is it spin to "mask" anaemic population growth? Because it is barely a percent, far below historical numbers. Or is it standard to give percentage change in absolute population growth?

-\/- said...

"Good catch. Those numbers were change in increase. What the heck is the point of that? They have BC growing by 44,047, 47,400 and 51,400 in 2006 to 2008."

Freako,

I still don't get it? How do they come up with an 8% figure? 8% of what? Which area?

I went back to the Sauder page and looked very hard to the migration and population growth numbers. The population growth for Quarter 4 of 2006 was the lowest in Vancouver since 1988 (there are no data before 1988).

It is below 1%. And well below the historicl average of 2.5% in Vancouver. It is below the other major cities, maybe with the exception of Winnipeg.

What is the truth here: is population growing a lot or very little? How does that compare to supply of housing?

I also have another question: prices were stationary in the middle 1990s, although population growth was the highest back then (at around 3% a year, just before the HongKong handover).

Prices started to pick up in the early 2000s, only when population growth had gone back to historical averages of around 2.5%.

The big price surge of the middle 2000s happened when population growth was going lower, averaging less than 2% a year. The peak we are observing is accompanied by population growth of less than 1.5%.

Is it fair to say that population growth anticipates trend in RE price growth?

freako said...

I still don't get it? How do they come up with an 8% figure? 8% of what? Which area?

Sorry that I didn't make it clear. They are giving percentage change in absolute net migration. NOT population growth.

In other words, growing 47,400 in 2007 is 7.6% faster than the 44,047 in 2006.

Like I said, this sounds assinine. Is this standard practice or are they downplaying low historical pop growth?

What is next? Is appreciation quoted as percentage change in appreciation from last year? A house that went from 500K to 600K in one year, and then 600K to 750K. Should that be taken quoted as a 50% increase in appreciation? WTF?

freako said...

Is it fair to say that population growth anticipates trend in RE price growth?

I think short and medium term prices are overpowered by other factors, such as interest rates, but most importantly, the propensity for ownership.

-\/- said...

Freako:

thanks!
do you know what is the long-term absolute population growth of GVRD over the past 20 years?
Do you know what it was in the mid90s? Early 2000s? Past 3 years?

I'd really love to know, to make sense of the increase in demand and its pace over time.

Also, do you have any idea regarding the new housing completions? How many of them over time? Are they outpaced by population growth?

patriotz said...

In other words, growing 47,400 in 2007 is 7.6% faster than the 44,047 in 2006.

You can really get some great numbers using second derivatives.

Lets see - last year I made 40K, this year I made 40.4K, but next year I'm going to get 41,006.

Hey, I got a 50% raise!

Costas Piliotis said...

Do you guys even look on a map before you say that "Grandview Highway" = E 12th?

http://maps.google.com/maps?f=q&hl=en&q=2469%20E%2012TH%20AV%20%20Vancouver%2C%20British%20Columbia&ie=UTF8&om=1

C'mon, really folks...

freako said...

C'mon, really folks...

I agree. A heinous crime has been committed. This travesty of justice must not go unpunished.