Yesterday a nice development property sold in Montgomery for $501k. This is interesting because the clueless realtor tried to list it for $425k and double end the deal by bringing in her own buyer to offer the asking price. By listing it (her flaw here - if what she was doing was legitimate - I think that is debatable) she immediately received another dozen offers, so she was no longer able to earn both commissions by doing that hour or two of work.
I actually offered $475k, I figured why not see if I could get a quick offer accepted and figure out later how to develop the site. There must have been a bunch of better offers than me because we never heard back from the selling agent.
This land deal is a classic example to show the disconnect between the government fantasy of inflation statistics, and what is observed in the economy today. This property sold in 1949 for $150. Using the government inflation calculator, that $150 is supposedly only worth $1605 today. $1605 today may get you a months rent, but it certainly will not buy you land in the City.
In reverse, the $501k today was supposedly worth $47k back in 1949. I think it is fair to assume that $47k in 1949 had vastly more purchasing power than $501k does right now. For a half million dollars, a person can only get a condemned shack in Calgary. In 1949 a nice development property could be acquired for only $150. The buyer of that montgomery land in 1949 could have bought entire neighbourhoods if he had access to $47k.
Much of the increase in apparent value of land is attributable to the banking system making money available by introducing it into the economy through loans. With the vast increase in currency digits the land is trading for in 2017 vs. 1949, you have to wonder what it will be worth in 2049. In another 20 years will a decent development site in Calgary cost over $1M? If so the government is going to have to push that minimum wage a little higher than $15/hr, or we are going to run right out of credit worthy buyers.
This title also came with that gift from the past, the restrictive covenant. These are a pain to get removed and can cause serious headaches to the purchaser. The covenant on the lot prevents, among other things, raising fur bearing animals, and building anything more than single structure on the property. To use the lot for row housing, the ultimate best use, the covenant will have to be taken off by a lawyer who must appeal to a judge. It is amazing to me that sellers don't bother to do this prior to the sale. It could improve the selling price significantly if they could provide a real property report and a clean title. More than like the seller of this was an elderly person who was nearly taken advantage of by a dishonest realtor trying to double end a deal. The market ended up getting the seller another $76k for his retirement (no thanks to his useless snake-agent who still got paid).
I'm not sure how this blog post turned into a diatribe against realtors as it was supposed to be about the banking system creating crazy inflation numbers for Calgary property. Here is shot of the title transfer from back in '49...
The Shouldice family sold a lot of property super cheap back in the 40's. Old Man Shouldice would be turning in his grave if he knew that a $150 plot would get a half million dollars 70 years later. You'd have to be a mad hatter to sell land for the 2017 equivalent of $150 in 1949 today.