Up until now, we’ve only looked at individual examples of properties selling for a loss. I’m sure many people question if these examples are cherry-picked exceptions, or whether these losses are common.
Today I thought we’d do something different and look at a hypothetical five year situation. What would be expected if someone bought a Vancouver condo five years ago and sold today?
The Real Estate Board of Greater Vancouver (REBGV) tracks the price of a “benchmark” condo. The benchmark is intended to measure the price change for comparable properties over time. Similar to the Teranet HPI, or the Case-Shiller Index in the US, it should provide a better estimate for a given property than the average or median price.
According to the REBGV website:
The HPI benchmarks represent the price of a typical property within each market. The HPI takes into consideration what averages and medians do not – items such as lot size, age, number of rooms, etc. These features become the composite of the ‘typical house’ in a given area.
Each month’s sales determine the current prices paid for bedrooms, bathrooms, fireplaces, etc. and apply those new values to the ‘typical’ house model.
- July 2008 Benchmark: $381,687
- July 2013 Benchmark: $368,300
- Property Transfer Tax: $6,634
- Real Estate Commission: $16,391
- Loss: ($36,411)
The typical condo purchased five years ago and sold today would lose $36,411 – or 9.54%.