Underwater Builders?

[Whybuywhenucanrent]

Re: contractor costs, on these houses "the rice is cooked." They were built at 2008 costs. I'm wondering if the quoted costs we see today were higher in Jan 2007.

Re: actual costs for builders, any estimates? Even at $185/sf the builders will likely be underwater, since buyers are hard to find these days and prices are headed south.

Re: buy a lot and build your own -- that's the competition. Buy at 2009 prices, build at 2009 prices, but wait a year for occupancy. A 50' lot on the 4000 block of W 15TH AV sold for $995K in November, that's a $600K discount over the $1.6M the builder paid for 4256 W 14TH AV. There's 3 nice 50' lots for sale listed for $1.25M now.

Time will tell.
In the meantime,
Whybuywhenucanrent?

[Greenhorn]

Lower.
Green's price is for public, not for builders.

Thompson, the cost data I posted is from the quantity surveys done for the biggest and best builders in B.C. There is no retail/wholesale demarcation in these costing estimates.

[rentah]

Thanks, Whybuywhenucanrent, for all the numbers, and others for discussion.
By the time this is done in PGrey, we'll have:
33 ft lots for <$500K
50 ft lots for <$800K
These house you're discussing for <$1500K

[Whybuywhenucanrent]

rentah wrote
> By the time this is done in PGrey, we'll have:
> 33 ft lots for <$500K
> 50 ft lots for <$800K

rentah--
What is the basis for your prediction? Those are 2004 or 2005 price levels, as I recall.
Why not a return to 2000 price levels, or 1988 price levels? (Did you crunch any numbers/draw lines on a chart, or is it more of a general prediction?)

Thanks in advance,
Whybuywhenucanrent'til'13?

[Whybuywhenucanrent]

2 new homes have sold in Point Grey. A 47' lot and a 33' lot

47' lot:
3861 W 14TH AV sold for $2.425M V728268
I think it was originally listed at $3.24M about a year ago, cut to $3.0M, then to $2.9M, and finally $2.7. So it sold for 25% off the original asking price (can anyone confirm?).

The lot was bought on May 5, 2007 for $1,594,500. With $230/sf construction costs, the builder would be under water $375K + 10 months of extra holding costs ($20K/mo * 10 mos = $200K), total of ...

$575K underwater (Ouch)

So for our comparable 4256 W 14TH Av V746647, we're definitely below $2.425M. The property that sold had much fancier finishings and a fabulous water/city/mountain view, but was 100sf smaller in size. So let's just do a mark-to-market valuation and knock 4256 down to about $2.3M. Mr. Builder is now ...

$400K underwater (Ouch) And not sold yet.

***********

And, 33' lot:
4183 W 11TH AV sold for $1.7M. V746534
I don't recall the original list price, maybe $2.2M about 10 months ago? Can anyone get the original list price, list date, and lot sale info?

Let's just figure they bought the lot for $1.1M in May '07, and paid $230/sf for construction costs. Plugging those numbers into the 4597 W 14TH sheet, we get a construction cost of $550K, a total cost of $1.85M. So, the builder lost $150K on the basics plus 10 months of holding ($15K/mo) for a total of

$300K underwater. (Ouch)

For our comparable 4597 W 14TH AV V750981 with similar finishings but no view, if we mark-to-market let's take off $150K for that nice view, and we get $1.55M. The builder is now

$500K underwater (Ouch) And not sold yet.

***********

Note that even if construction costs were only $187/sf, they're only $100K less underwater per house. Hope they bought flood insurance...

Comments, corrections?
Whybuywhenucanrent'til'13?

[theman604]

you'd guys be surprised at how low some of these builders can get their costs down to

especially the east indian one's where they have their whole family working 7 days a week on it including all the uncles, nephews, and even grand parents and some of them don't even get paid

all the guy in charge says
"sallie guta, i bring you to canada, give you house and food, so now you must work for me, no pay and no break time"

[rentah]

theman: The kind of assistance that the builder you describe is getting from his family has value, and for that, in Canada, as a buyer, you'd pay $180-$250 per sqft. It's not that the 'costs are down' so much as the builder is paying in other ways.

[rentah]

Whybuywhenucanrent: Good question, and I apologize as they are very roughly calculated: for instance.. I figure that these new homes on 33 ft lots in PGrey that have been changing hands for $1.8->$2 are going to go for <$1M at the bottom. At $200/sqft building costs, that's $500K for the standard 2400sqft house, and less than $500K for the lot.
I'm in agreement that prices could go significantly lower.

[Whybuywhenucanrent]

rentah wrote
"I apologize as they are very roughly calculated:"

Thanks for responding. No apologies needed!

My money is that your forecast will turn out to be more accurate than the REBGV, Cameron Muir, Ozzie Jurock, the dude from UBC, the Royal Bank of Canada, the Governor General of Canada, the average Vancouver builder, Merrill Lynch and 99% of the population... Not to mention those Point Grey builder outfits that are losing their shirts.

My forecast is that we return to 1988 pricing (in 2008 dollars). It's "the usual bottom" for RE busts.
http://www.flickr.com/photos/29638096@N08/3268112417/

Why buy when you can rent like a king until 2013?

[holdem]

4256 W 14TH sold for $2.3M. $300k to $500k loss based on previous discussion.

[The 604]

"sallie guta, i bring you to canada, give you house and food, so now you must work for me, no pay and no break time"

I take it you know this from first hand experience, Mr. Guta...or would that be mrs./miss or ms. if your first name is sallie ?

Tell us about these homes that are built by your brethren -- how is it that you are able to convince your family to work with "no pay and no break time" ?

[Whybuywhenucanrent]

4597 W 14TH AV sold for $1.69M on April 1.

As of Feb 1 at a $1.79M list, I estimated they were $260K underwater. At 2 more months of $15K debt service and a $100K hit on the price, they're underwater $390K when all is said and done. To drive this home, they bought the place 12 months previous for $1.25M, bulldozed a house, built a brand new house on the lot, and sold it for a whopping $1.69M. That's only $340K more than they bought the lot for. And they paid $50K in Realtor fees if they did a standard contract. (And I left out landscaping costs in the original post, so subtract another $10K?)

Another way of looking at it -- to break even, they would have had to have brought construction costs from $250/sf to $90/sf.

Thanks for the info on 4256 W 14th, holdem.

WhyBuyWhenUCanRent'til2013?

[52pickup]

From the Vancouver Sun on Saturday

West Vancouver - 5611 Daffodil Drive

Sold for $1.095 million - Feb 10th, completion April 29th.
List for $1.199 million

July 2008 assessment $1.7 million
July 2007 assessment $916,000

"the sellers of this property recently gutted and renovated this home."