Over the past few days, a number of homes have begun listing – all in the same area of Vancouver. The curious move now makes a little more sense, real estate agents have convinced 43 homeowners on the same street to list their homes for sale. The deal is being pitched as land assemblies, for a developer to buy multiple strips of land in the area. The buyer will likely need to be deep pocketed, and politically connected however – there’s an up to 80% premium on the land, and it’ll need to be rezoned to likely make a profit.
Where Is This?
The prime strips of land are on East Broadway, between Nanaimo Street and Rupert Street. Multiple agents and brokerages are involved in the deal, and are hoping the sellers hold out for a developer. They’re all priced in the $2 million to $3.3 million range, just a tad over the assessed value.
Premium Pricing
The plot of land east of Kaslo on East Broadway is one of the more readily available pieces pieces of land for sale. 11 of the 13 homes on the strip are currently listed for sale, but it’s unclear if the other 2 are scheduled to go on sale. The homes vary in size and style, but they all went with a $3.3 million price tag. All 13 homes have a combined assessment value just over $20 million, but the 11 listed have a combined ask $36 million. That’s an 80% premium in case you were just going to do the math.
Zoning and Rezoning
The agents are targeting a deep pocketed buyer, and not just because of the premium on the property. Re-zoning restrictions will likely prevent the developer from just building a luxury condo. As the city densifies, the rules will likely evolve going forward. So the potential buyer will have to wait out the city’s current rules. How long that will take is anyone’s guess, but carrying the property in the meantime won’t be cheap.
A deal of this size will likely take a while, since the cost and ability to zone will take some homework. It will be an interesting benchmark for Vancouver real estate however. Land’s only worth what someone is willing to pay for it, so if a developer thinks there’s a little more steam in redeveloping single-family detached homes, there might be a few more speculators that jump into the market.
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Photo via listing.
[…] more properties are being purchased for land assembly deals , there’s been an premium placed on single family homes, which means the trend of multi-unit […]
[…] more properties are being purchased for land assembly deals, there’s been an premium placed on single family homes, which means the trend of multi-unit […]
Supply of single detached housing is shrinking because of land assembly. Vancouver city hall is thinking it’s increasing overall supply by allowing more multifamily development (which it is), it’s also increasing the prices of detached houses. There’s been a lot of talk of what’s causing bidding wars, but I haven’t seen anyone consider if you just sold your house (usually on a busy street) for $1M over market value to a developer, you now have an extra $1M to go in a bidding war to buy your next house. People that grew up in a house tend to want to live in a house and people that grew up in a condo tend to want to live in a condo. I’ve seen entire blocks of houses (Boundary and Kingsway), some of them in perfectly good condition, get torn down to build condos. These houses are now gone forever and can never be sold again to anyone that wants to live in a house. Before realtors started getting into land assembly, developers had to slowly buy 1 house at a time, usually at market prices (not hyper-inflated prices) and keep them rented for years until they had assembled what they needed. Because this took years, the market could absorb the changes. In the last decade, City Hall has been quietly rezoning nearly every neighbourhood in Vancouver for multifamily dwellings to the benefit of developers. They do it under the guise that creating more supply will control the rising prices. The result has been the opposite. A 7.8% increase in number of homes but only a 6.5% increase in population! This means we’re in an oversupply situation but prices keep going up? I believe the extra 1.3% of housing is being bought by investors. At the first sign of a downturn, investors will dump their holdings, while resident owners usually stay put. IMHO as a majority of these new condos get completed in the next 2-3 years people are going to wake up to this oversupply and the condo market will fall, but we’ll never get those single family homes back. Sad.
P.S. – yes, this area has been rezoned:
http://vancouver.ca/home-property-development/neighbourhood-planning-projects.aspx
[…] to cash out, begin selling their properties. Whole blocks of homeowners that think they’re clever begin offering developers massive lots of property for development. Smart developers are just finishing up their cycles however, so they probably aren’t […]
[…] to cash out, begin selling their properties. Whole blocks of homeowners that think they’re clever begin offering developers massive lots of property for development. Smart developers are just finishing up their cycles however, so they probably aren’t interested […]