You may be wondering how much speculation is going on in the red-hot real-estate market.
For sure you’ve heard of stories about buyers trying to outbid each other, homes getting sold way above their listed prices, and not enough listings to satisfy demand.
There are also a lot of opportunities to make a buck.
An economist has acknowledged that there could be a certain level of speculative activity happening.
Specifically, Robert Hogue with RBC Economics wrote on April 15, 2021 that rapidly rising home prices across Canada have “likely opened the door to speculative activity in several markets”.
As for how much speculation is occuring right now, analysts may have to figure that out later on.
Speaking about this subject, it’s a matter that piques the interest of realtor Adam Major, managing broker with Holywell Properties.
As CEO of the company’s real-estate information site Zealty.ca, Major has access to tons of data of listings and sales.
When asked what he has noticed lately, the experienced realtor cited a couple of properties that were sold just months after these were purchased.
Major related that he has been looking at houses that have sold twice in the last year to see which one has had the biggest price increase.
“It is a bit tricky as some have been bought and renovated and then flipped, so I have been looking for houses that have been bought and sold in the same condition,” Major wrote in notes sent to the Straight.
He said that the “most extreme in percentage terms” is one in Chilliwack.
The property at 46194 Gore Avenue made a margin of 52 percent in six months.
To illustrate, the two-bedroom home sold for $480,000 on August 11, 2020.
On February 10, 2021, the same property came on the market for $549,000.
It sold a week later on February 17 for $730,000.
That’s $250,000 more than it sold for six months previously.
“Not bad to make a quarter million dollars in half a year,” Major said.
That is not all.
“What I like is that the listing agent the second time around just copied and pasted the exact same listing description from six months earlier,” Major said.
Another house, this time in Langley, made $255,000 in a shorter time of three months.
The three-bedroom home at 20023 36A Avenue sold on November 4, 2020 for $885,000.
The new owners listed the same property on the market three months later on February 8, 2021 for $1,150,000.
A buyer picked up the home a week later on February 15 for $1,140,000.
This is means that the Langley property sold nearly 29 percent over its purchase price three months earlier.
Major said that a $255,000 increase in three months is a “pretty good uplift”.
“As everyone knows, houses in Langley usually go up in value about a million bucks a year!” Major said in humour.
For clarity, Major relied simply on Zealty.ca data and did not say that the sellers are speculators.
To reiterate, there could be personal or other reasons why the properties returned to the market in less than a year.